JUDGMENT : A.K. Jayasankaran Nambiar, J. Since the above writ petitions involve a common issue, they are taken up together for consideration and disposed by this common judgment. 2. All these writ petitions are filed against the orders passed by the Intelligence Officers of various squads under the Commercial Tax Department whereby, penalty has been confirmed on the petitioners for various assessment years, pursuant to an inspection conducted at the business premises of the petitioners. The facts in these writ petitions would reveal that, pursuant to an inspection carried out by the Officers attached to the Commercial Taxes Department, the petitioners were asked to produce their books of accounts for verification. Thereafter, notices were issued to the petitioners proposing the levy of penalty under Section 67 of the Kerala Value Added Tax Act (for short, ‘the KVAT Act’). The petitioners filed replies to the notices issued and thereafter, the Intelligence Officers proceeded to confirm the penalty on the petitioners in terms of Section 67 of the KVAT Act. A perusal of the penalty orders passed in the various writ petitions would reveal that the orders are more or less identical in nature and, apart from noticing the discrepancies in the accounts maintained by the petitioners in connection with the business carried on by them, and quantifying the amounts towards alleged turnover suppression and consequent tax evasion based on the materials detected at the time of inspection, the Intelligence Officers proceeded to undertake an exercise of estimation of the actual turnover of the petitioners. This exercise of estimation of the turnover, was done based on a study of the consumption pattern of raw materials such as electricity and furnace oil that were obtained from the Kerala State Industrial Development Corporation Ltd. (KSIDC). Based on the estimation of suppressed turnover as above, the tax amount that was alleged to have been evaded by the petitioners was worked out and double that amount was levied as penalty on the petitioners. It is these orders of penalty that are impugned in these writ petitions. 3. Counter-affidavits have been filed by the respondents in all the writ petitions, wherein, the findings in the impugned orders are sought to be justified based on the data that was received by the Intelligence Officer from the KSIDC. 4. I have heard the learned Senior Counsel Sri. K. Srikumar and Dr. 3. Counter-affidavits have been filed by the respondents in all the writ petitions, wherein, the findings in the impugned orders are sought to be justified based on the data that was received by the Intelligence Officer from the KSIDC. 4. I have heard the learned Senior Counsel Sri. K. Srikumar and Dr. K.B. Mohammedkutty, appearing on behalf of the petitioners in the writ petitions as also the learned Government Pleader appearing on behalf of the respondents. 5. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I am of the view that the challenge in these writ petitions, as against the orders of penalty that have been impugned therein, must necessarily succeed. It is apparent from a reading of the impugned orders of the Intelligence Officers in these writ petitions that, after computing the suppressed turnover, based on the material that was obtained at the time of inspection of the business premises of the petitioners, the Intelligence Officer abandoned the course of computing the penalty amount based on the said figures a and resorted to an estimation of the turnover of the petitioners, based on the data regarding consumption of electricity and furnace oil that was obtained from the KSIDC. The Intelligence Officer, thereafter, proceeded to quantify the tax amount, allegedly evaded by the petitioners, and imposed twice that amount towards penalty on the petitioners. 6. In my view, this exercise of estimation done by the Intelligence Officers, in the various writ petitions, was wholly illegal when viewed in the context of the jurisdiction that they were called upon to exercise. While considering the imposition of penalty in terms of Section 67 of the KVAT Act, the Intelligence Officers were not required to undertake an exercise; of estimation of turnover, which is more appropriately the task of an Assessing Officer called upon to do a best judgment assessment under the KVAT Act. This settled position of law has been reiterated in the decision of a Division Bench of this Court in U.K. Monu Timbers (M/s.) v. State of Kerala, 2012 (3) KHC III : 2012 (4) KLT SN 19 wherein, at paragraphs 8, 10 and 12 stated as follows: 8. The question first to be considered is with respect to the estimation of I the turnover made by the Intelligence Officer based on the rates prescribed in the circular. The question first to be considered is with respect to the estimation of I the turnover made by the Intelligence Officer based on the rates prescribed in the circular. The circular if held by us to be indicative or determinative of the actual price for which the goods are sold, the question posed is as to whether in penalty proceedings estimation can be adopted. The provision authorising imposition of penalties, coming up for consideration in the instant case, is Section 67 of the KVAT Act. Clauses (a) to (1) of Section 67 enumerates the various offences that attract imposition of penalty. If any authority empowered under the Act is satisfied that any person has committed any or all of the offences enumerated in Clauses (a) to (1). "such authority may direct that such person shall pay, by way of penalty, an amount not exceeding twice the amount of tax or other amount evaded or sought to be evaded where it is practicable to quantify the evasion or an amount not exceeding ten thousand rupees in any other case." When action is initiated under Section 67 of the KVAT Act for defects/offences mentioned in Clauses (a) to (1), it is to be noticed that the authority is clothed with the power to impose, by way of penalty, an amount not exceeding twice the amount of tax or other amount evaded or sought to be evaded, where it is practicable to quantify the evasion or in any other case, Rs. 10,000/-. It is pertinent that in imposing penalty at twice the tax evaded or sought to be evaded, it should be practically possible to determine and quantify the amount evaded or sought to be evaded. This does not contemplate any estimation, however reasonable it may be, since the same would be in the realm of "best judgment", of, an individual-authority. 10. In penalty proceedings the offences indicated under Section 67 should be evidenced by the materials recovered on inspection or otherwise and the enquiry is pointedly against any actual suppression or omission in the course of the business transactions, which would lead to the definite conclusion of evasion or attempt to evade. 10. In penalty proceedings the offences indicated under Section 67 should be evidenced by the materials recovered on inspection or otherwise and the enquiry is pointedly against any actual suppression or omission in the course of the business transactions, which would lead to the definite conclusion of evasion or attempt to evade. On detection of such offences; in the event of the tax evaded or sought to be evaded being determinable, the officer initiating penalty proceedings is perfectly justified in imposing penalty at the maximum rate of twice the rate of tax actually evaded or sought to be evaded. Such officer conducting penalty proceedings cannot exceed his jurisdiction by finding out as to whether the evasion detected would in fact lead to an inference of earlier or subsequent evasion. Nor can such inferences regarding the earlier or subsequent conduct be reflected in the penalty proceedings by way of estimation of turnover based on such inferences. This, going by the clear words employed in the Statute, is within the realm of the assessment proceedings. 12. Section 67 does not confer power to make a reasonable estimate. The suppression or omission must be clearly disclosed from the materials available and there should be evidence of the amounts sought to be suppressed from the turnover. In cases where the same is not discernible, the only option is to make an order of imposition of fine not exceeding Rs. 10,000/-. Any suppression detected or rather any file generated on a crime so detected and penalised necessarily gives the assessing authority the power to make estimations to compensate the State against probable omissions and suppressions. Such exercise, as is mandated by the Statute, has to be regulated by the best judgment of the individual officer which definitely is subject to the principles of reasonableness, proportionality and of course natural justice. Such estimation on best judgment would definitely have to be done with due notice and after affording a personal hearing. Such estimation should be reasonable and should have a nexus with the gravity and frequency of the commission of offences as also the quantum of loss suffered by the State. This exercise, in our opinion, cannot be undertaken by the officer empowered with the power to impose penalty under Section 67 of the Act. Such estimation should be reasonable and should have a nexus with the gravity and frequency of the commission of offences as also the quantum of loss suffered by the State. This exercise, in our opinion, cannot be undertaken by the officer empowered with the power to impose penalty under Section 67 of the Act. Section 67 contemplates imposition of penalty on proof of commission of offences as a measure of deterrence; best judgment assessments are made to compensate the loss caused to the State. The first question hence is answered against the Revenue and in favour of the assessee. 7. Inasmuch as in the instant case, the Intelligence Officers have chosen to impose penalties on the petitioners, based on the figures arrived at by them consequent to an estimation of the alleged suppressed turnover, I am of the view that the orders impugned in these writ petitions namely, Ext. PI order and Ext. P2 Demand notice in WP (C) No. 16630/2009, Ext. P10 in WP (C) No. 16652/2009, Ext. P10 in WP (C) No. 16656/2009, Ext. P10 in WP (C) No. 16657/2009, Exts. P5 and P5(a) in WP (C) No. 17519/2009, Exts. P16 and P17 in WP (C) No. 32034/2010 and Exts. P16 and P17 in WP (C) No. 32543/2010 are liable to be quashed, and I do so. The Intelligence Officers shall proceed to pass fresh orders in the matter, after affording the petitioners an opportunity of being heard, and after considering the materials that were collected at the time of inspection of the business premises of the petitioners and without resorting to any estimation of turnover. It will be open to the petitioners to file such objections, as they may deem necessary, against the proposals contained in the notices issued to them under Section 67 of the KVAT Act and, thereafter, the Intelligence Officers shall pass orders in the matters as expeditiously as possible and, at any rate, within a period of three months from the date of receipt of a copy of this judgment. 8. I make it clear that while quashing the orders passed by the Intelligence Officers in the various writ petitions, I have only pronounced on the impropriety of the Intelligence Officer in undertaking an exercise of estimation of suppressed turnover while passing orders imposing penalty on the assessee. 8. I make it clear that while quashing the orders passed by the Intelligence Officers in the various writ petitions, I have only pronounced on the impropriety of the Intelligence Officer in undertaking an exercise of estimation of suppressed turnover while passing orders imposing penalty on the assessee. I have not expressed any view on the merits of the case with regard to the materials that were collected, at the time of inspection, from the business premises of the petitioners. With these directions, these writ petitions are disposed.