The main legal point established in the judgment is that the assessing authority must afford an opportunity to the petitioner before levying penalties, and fines should only be imposed for contumacious acts with mens rea, and the quantum of fines should be proportionate to the gravity of the offence.

1. The petitioner is the managing partner of a firm. The respondent is the assessing authority under the Kerala Tax on Luxuries in Hotels and Lodging Houses Act, 1976. By Ext.P1 dated 19-11-1986 the respondent served a notice on the petitioner proposing to levy a penalty of Rs.1,000/- for each month from January 1979 to October 1986 for contravention or violation of S.5 of the Act. The petitioner filed objections thereto. Rejecting the objections, the respondent by Ext.P3 levied a penalty of Rs.1,000/- per mensem from January 1979 to October 1986. By Ext.P4 notice dated 30-1-1987 the petitioner has been directed to pay the penalty levied under Ext.P3. In this Original Petition the challenge is against Ext.P1 notice, Ext.P3 order levying the penalty and Ext.P4 notice directing the petitioner to remit the said amount.

2. I heard the counsel for the petitioner, Mr.Mathews P. Mathew as also the Government Pleader, Mr.Divakaran Pillai. Under S.5 of the Act (Act 32 of 1976) the petitioner-proprietor of a hotel is liable to pay luxury tax. The petitioner proprietor of a hotel is liable to submit a return for payment of luxury tax. S.5 provides for assessment and collection of tax. Under S.6(1) on receipt of a return under S.5, the assessing authority shall assess the luxury tax payable in respect of the period to which the return relates. S.6(2) enables the assessing authority to pass a best judgment assessment, if the proprietor fails to submit the return under S.5 in due time or if the return submitted by him appears to the assessing authority to be incorrect or incomplete. Before doing so, the assessee should be given an opportunity of being heard. S.6(3) enables the assessing authority to levy a penalty equivalent to a sum not exceeding the amount of the luxury tax payable under the Act, if the luxury tax is not paid within the prescribed period. S.17 provides for penalties to be levied. S.17 of the Act is as follows:

"17. Penalties.-(1) Any person who

(a) knowingly submits an untrue return or fails to submit a return as required by this Act or the rules made thereunder; or

(b) wilfully acts in contravention of any of the provisions of this Act or the rules made thereunder for the contravention of which no express provision for punishment is made by this Act, shall be punishable with fine which may extend to one thousand rupees. (2) Any person who

(a) prevents or obstructs inspection, entry, search or seizure by the assessing authority; or

(b) fraudulently evades the payment of luxury tax or other amount due from him under this Act. shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

(3) A person shall not be proceeded against under this section except at the instance of the assessing authority."

3. Counsel for the petitioner submitted that Ext.P3 order levying the penalty is totally unauthorised and illegal. It was argued that the petitioner prayed for an opportunity before the levy of penalty as per Ext.P2. According to the petitioner, he was not liable to pay the tax under the Act. In order to substantiate the said plea, petitioner prayed for an opportunity in Ext.P2. No such opportunity was given before the penalty was levied as per Ext. P3 order. On this short ground Ext.P3 should be annulled. Secondly, it was argued that a look at S.17 will show that it is only a court which can levy the fine specified in S.17 and the respondent has absolutely no jurisdiction to pass Ext.P3 order. On this ground Ext.P3 is totally a court which can levy the fine specified in S.17 and the respondent has absolutely no jurisdiction to pass Ext.P3 order. On this ground Ext.P3 is totally unauthorised and without jurisdiction. Finally, it was argued that S.17 is a penal provision and before "fine" specified in S.17 is imposed, it is the duty of the Revenue to allege and prove mens rea. Admittedly, it has not been done in the instant case. On this