Augustan Textile Colours Pvt. Ltd. V. The Assistant Commissioner(Assmt), Special Circle, Commercial Taxes, Palakkad

WP(C)/31051/2014

AI Insights

The case involves M/S Augustan Textile Colours Pvt. Ltd., the petitioner, challenging the assessment order for the year 2010-11 issued by the Assistant Commissioner of Commercial Taxes, Palakkad. The petitioner argued that the assessment was finalized without providing a proper opportunity to present necessary documents, such as the Books of Accounts, which led to an incorrect and hasty conclusion. The court referenced previous judgments to emphasize the necessity of a fair hearing and the opportunity to present documents before finalizing any assessment. The court's decision to set aside the assessment order was based on the principles of natural justice and the right to a fair hearing.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 799124 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 21-11-2014
• Assessment Year: misc
• Other Referred Cases: Suzion Infrastructure Services V. Commercial Tax Officer (WC), Ernakulam [2010 (3) KHC 299], M.S. Jewellery V. Assistant Commissioner (Assessment), Agriculture Income Tax and Sales Tax [1994 (2) KTR 389]
• Laws Referred To: KVAT Act, KVAT Rules, KGST Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SHOBA EAPEN
• Assessee Lawyers: N NAIR; V K SHAMUSUDHEEN
• Keywords: Assessment; Best Judgment Assessment; Books of Accounts; KVAT Act; Objection; Pre-assessment notice
• Section: 25(1); 17(3); 10(2)(b)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON FRIDAY, THE 21ST DAY OF NOVEMBER 2014/30TH KARTHIKA, 1936 WP(C).No. 31051 of 2014 (F) ------------------------------------------ PETITIONER: ------------------- M/S.AUGUSTAN TEXTILE COLOURS PVT. LTD., MALAMPUZHA ROAD, CHEDAYAN KALAI (P.O), KANJIKODE WEST, PALAKKAD, REPRESENTED BY ITS HUMAN RESOURCE MANAGER SRI S.SOUNDARARAJ BY ADVS.SRI.N.MURALEEDHARAN NAIR SRI.V.K.SHAMUSUDHEEN RESPONDENT(S): ---------------------------- THE ASSISTANT COMMISSIONER(ASSMT), SPECIALCIRCLE, COMMERCIAL TAXES, PALAKKAD 678001 R BY SR. GOVERNMENT PLEADER SMT. SHOBA ANNAMMA EAPEN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21-11-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 31051 of 2014 (F) --------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS: ------------------------------------- EXHIBIT P1: TRUE COPY OF THE NOTICE U/S 25(1) OF KVAT ACT ISSUED BY THE RESPONDENT FOR THE YEAR 2010-11 DATED 17-10-2014. EXHIBIT P2: TRUE COPY OF THE OBJECTION FILED BY THE PETITIONER BEFORE THE RESPONDENT DATED 29-10-2014. EXHIBIT P3: TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE RESPONDENT FOR THE YEAR 2010-11 DATED 30-10-2014. EXHIBIT P4: TRUE COPY OF THE PROCESS ISSUE DATED 17-10-2014. EXHIBIT P5: TRUE COPY OF THE JOB WORK INVOICE DATED 09-11-2014. EXHIBIT P6: TRUE COPY OF THE DEMAND NOTICE IN FORM NO 12, ISSUED BY THE RESPONDENT FOR THE YEAR 2010-11 DATED 31-10-2014. RESPONDENT(S)' EXHIBITS: NIL --------------------------------------- /TRUE COPY/ P.A. TO JUDGE AK P.R. RAMACHANDRA MENON, J. --------------------------------------- W.P.(C) No.31051 of 2014 --------------------------------------- Dated this the 21st day of November, 2014. JUDGMENT Finalisation of the assessment for the assessment year 2010-2011 under Section 25(1) of the KVAT Act by the respondent, passing Ext.P3 order dated 30.10.2014, is under challenge in this writ petition. On receipt of Ext.P1 pre- assessment notice dated 17.10.2014, the petitioner filed Ext.P2 statement of objection on 29.10.2014, also pointing out that there was no basis for having proceeded against the petitioner, more so since the table attached in Rule 10(2)(b) of the KVAT Rules was not applicable in the case of the petitioner, by virtue of the nature of transaction. The factual position could have been substantiated by producing all the relevant documents, including the Books of Accounts, which opportunity was virtually denied to the petitioner. On the very next date of filing the statement of objections, the proceedings were finalised by the respondent by passing Ext.P3 on 30.10.2014, paradoxically observing in the concluding paragraph that the assessee had not produced any W.P.(C) No.31051 of 2014 2 contract agreement or connected records relating to the work done and as such, the Books of Accounts were not reliable for the purpose of assessment. This is per se wrong and illegal and hence under challenge in this writ petition, submits the learned counsel. 2. The learned Government Pleader points out that, the Books of Accounts were verified earlier and it was thereafter that the pre-assessment notice was issued. But, there is no case that the Books of Accounts and other documents, including the contract agreement or such other connected records, as mentioned by the respondent in Ext.P3, were caused to be produced by giving such a chance to the petitioner, taking note of the contents of the reply. Obviously, the notice itself was issued to the petitioner on 17.10.2014, the reply was submitted on 29.10.2014 and the proceedings were finalised on the very next date. What was the necessity for having shown such unwarranted haste is not discernible from Ext.P3. The necessity to have given opportunity of hearing to the petitioner, after submitting the reply, was highlighted and explained by this Court way back in the year 2011, as per the decision reported in Suzion W.P.(C) No.31051 of 2014 3 Infrastructure Services V. Commercial Tax Officer (WC), Ernakulam [2010 (3) KHC 299]. That judgment still stands, as the same has not been set aside. Incidentally, it is also worthwhile to refer to the scope of hearing as explained by another Division Bench of this Court with reference to the best judgment assessment under Section 17(3) of the KGST Act and all concerned were alerted of the necessity to be given in this regard, as per the decision reported in M.S. Jewellery V. Assistant Commissioner (Assessment), Agriculture Income Tax and Sales Tax and another [1994 (2) KTR 389]. Still, the respondents are pursuing such an exercise, without any regard to the law declared by this Court and thus driving the assessees to this Court, unnecessarily wasting the time of this Court. This Court finds that, the proceedings finalised by the respondent as per Ext.P3 are not at all correct or sustainable and this Court does not require any second thought, to have it set aside. It is ordered accordingly. In view of the repeated course and events being pursed by the Departmental authorities, this Court finds it fit and proper to impose a cost of Rupees Five thousand to be paid to the Kerala W.P.(C) No.31051 of 2014 4 State Mediation and Conciliation Centre within one month. At the same time, this Court is vigilant enough to see that the public money is not wasted for the 'mischief' committed by the concerned Officer. As such, it is open for the Government to take appropriate steps to recover the cost from the concerned Officer in the due course, in accordance with law, giving an opportunity of hearing as well. The writ petition stands allowed. P.R. RAMACHANDRA MENON, JUDGE sp "