Jurisdictional limits under sales tax law and Article 14 scrutiny shaped validity of penalty action and recovery protection.

Section 45A of the Kerala General Sales Tax Act was examined against Article 14 and was upheld because it applied to a different factual setting from the escaped-assessment penalty provisions and was supported by revision and supervisory remedies. The notifications granting statewide jurisdiction to the Intelligence Officer were found to exceed the parent Act's requirement that officers act within assigned local limits, as statewide authority would create overlapping and conflicting jurisdiction; actions taken on that basis were treated as without jurisdiction. Pending the statutory appeal, recovery was kept in abeyance and interim protection continued subject to existing security conditions.

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Issues: (i) Whether section 45A of the Kerala General Sales Tax Act, 1963 was unconstitutional as discriminatory under Article 14 of the Constitution of India. (ii) Whether the notifications conferring statewide jurisdiction on the Intelligence Officer, Kottayam, were ultra vires section 3(2) of the Kerala General Sales Tax Act, 1963 and rendered the penalty proceedings without jurisdiction. (iii) Whether recovery pursuant to the assessment could be kept in abeyance pending disposal of the statutory appeal.

Issue (i): Whether section 45A of the Kerala General Sales Tax Act, 1963 was unconstitutional as discriminatory under Article 14 of the Constitution of India.

Analysis: The penalty under section 45A and the penalty under section 19(2) operated in different factual settings. Section 45A dealt with non-maintenance of true and complete accounts with intent to evade tax, while section 19(2) applied to escaped assessment caused by wilful non-disclosure of assessable turnover. The remedies under section 45A were also held to be adequate, because the Act provided revision before the Deputy Commissioner and further control by the Board of Revenue. The absence of the same appellate structure as under section 19(2) did not by itself create hostile discrimination, and the provision did not single out similarly situated persons for unequal treatment.

Conclusion: The challenge to section 45A on the ground of Article 14 failed and the provision was upheld.

Issue (ii): Whether the notifications conferring statewide jurisdiction on the Intelligence Officer, Kottayam, were ultra vires section 3(2) of the Kerala General Sales Tax Act, 1963 and rendered the penalty proceedings without jurisdiction.

Analysis: Section 3(2) required officers appointed under the Act to perform their functions within the local limits assigned to them. The scheme of the Act linked assessment-related functions to the area in which the dealer carried on business, and statewide jurisdiction would create overlapping authority, conflicting proceedings, and administrative chaos. A notification empowering officers to exercise jurisdiction throughout the State exceeded the power conferred by section 3(2). The later notification under explanation II to section 45A(1) only enabled Intelligence Officers to function as assessing authorities; it did not authorise statewide territorial jurisdiction. Once the statewide notification was held invalid, the earlier limited arrangement could not be revived to validate the impugned action.

Conclusion: The notifications were held ultra vires to the extent they conferred statewide jurisdiction, and the penalty order and show-cause notice were quashed for want of jurisdiction.

Issue (iii): Whether recovery pursuant to the assessment could be kept in abeyance pending disposal of the statutory appeal.

Analysis: The assessment itself was already the subject of a pending statutory appeal, and it was not proper to decide its merits in writ proceedings. At the same time, recovery had earlier been stayed by the Court on conditions which had been complied with. In those circumstances, the existing protection was continued so that coercive recovery would remain suspended while the appeal was decided.

Conclusion: Recovery was directed to remain in abeyance pending the statutory appeal, subject to continuance of the bank guarantee and security bond.

Final Conclusion: The writ petition challenging the penalty proceedings succeeded on the jurisdictional ground, while the separate writ concerning recovery was protected by continuation of interim relief pending the statutory appeal.

Ratio Decidendi: A notification issued under a statute empowering appointment of officers within local limits cannot validly confer statewide territorial jurisdiction where the parent enactment restricts functions to assigned local limits; actions taken beyond such jurisdiction are void.

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