KERALA STATE BEVERAGES (MANUFACTORING AND MARKETING) CORPORATION LIMITED V. PRINCIPAL COMMISSIONER OF INCOME TAX

WP(C)/41006/2018

AI Insights

The case involves the Kerala State Beverages (Manufacturing and Marketing) Corporation Limited, which contested an order from the Principal Commissioner of Income Tax that required a 20% deposit of disputed tax to stay coercive proceedings. The petitioner argued that the order was issued without statutory backing and was improperly based on an office memorandum meant for appeals to the Commissioner of Income Tax (Appeals), not the Tribunal. The Department defended the order, asserting the applicability of the memorandum and the inherent powers of the first respondent. The High Court found in favor of the petitioner, highlighting the lack of statutory authority for the order and granting a conditional stay on the proceedings.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 768318 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 19-12-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: ANIL NAIR; ARYA ANIL; NILOOFER NIZAM; R SREEJITH
• Keywords: Appeal; Assessment; Coercive Recovery; Income Tax; Stay of Proceedings
• Section: 143(3); 263; 220(6)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU WEDNESDAY,THE 19TH DAY OF DECEMBER 2018 / 28TH AGRAHAYANA, 1940 WP(C).No. 41006 of 2018 PETITIONER: KERALA STATE BEVERAGES (MANUFACTORING AND MARKETING) CORPORATION LIMITED SASTHAKRIPA OFFICE COMPLEX, P.B.NO.2263 SASTHAMANGALAM, THIRUVANANTHAPURAM - 695 010 REPRESENTED BY ITS COMPANY SECRETARY JOHN JOSEPH BY ADVS. SRI.ANIL D. NAIR SMT. ARYA ANIL SMT. NILOOFAR O. NIZAM SRI.R.SREEJITH RESPONDENTS: 1 PRINCIPAL COMMISSIONER OF INCOME TAX 4TH FLOOR, AAYAKAR BHAVAN, KOWDIAR THIRUVANANTHAPURAM - 695 003. 2 INCOME TAX APPELLATE TRIBUNAL COCHIN BEACH - 695 001. SRI. CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19.12.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 41006 of 2018 2 JUDGMENT The petitioner had its assessment completed under Section 143(3) of the Income Tax Act. Thereafter, the Department initiated proceedings under Section 263 of the Act. Objecting to the Department's invoking Section 263 of the Act, the petitioner filed an appeal along with a stay petition, before the 2nd respondent. As the matter stood posted to 10.01.2019, the petitioner apprehended coercive steps from the authorities and so applied for stay of the proceedings, through the Ext.P5. 2. Responding to the petitioner's Ext.P5 application, the 1st respondent passed the Ext.P6 order. Through that order the authority imposed a pre-condition of the petitioner's depositing 20% of the disputed tax to have the coercive proceedings stayed until the appellate authority could consider the Ext.P5. Assailing the Ext.P6 the petitioner has filed this writ petition. 3. Sri Anil D Nair, the petitioner's counsel, submits that the 1st respondent has passed the Ext.P6 order supposedly exercising his power under the Ext.P7 office memorandum. According to him, the Ext.P7 applies to appeals pending before the Commissioner of Income Tax (Appeals), but not WP(C).No. 41006 of 2018 3 those before the Tribunal. He has also submitted that, in the first place, the petitioner's Ext.P5 representation is of no consequence, because the 1st respondent has no power to pass an order like the Ext.P6. Thus Sri Nair concludes that once an order lacks a source of power, merely the applicant is inviting that order does not alter the position. In other words, no order without any statutory backing can affect an individual. 4. Sri Abraham, the learned Standing Counsel for the Department, strenuously contends that the Ext.P7 eminently applies. He also contends that the 1st respondent has inherent power to pass an order in the nature of the Ext.P6. 5. Heard Sri Anil D Nair, the learned counsel for the petitioner, Sri Abraham, the learned Standing Counsel for the Government of India (Taxes). 6. Indeed, the Ext.P6 order refers to the Ext.P7 office memorandum as the 1st respondent's source of power to order a stay on a pre-condition. On going through the Ext.P7, I reckon that that is an office memorandum that applies to the appeals pending before the CAT (Appeals). 7. So the 1st respondent cannot take recourse to the Ext.P7. Then essentially, he should have been conferred the power under the provisions of WP(C).No. 41006 of 2018 4 the statute, to stay proceeds with or without any pre-condition. The Department could not bring to my notice any such power being enjoyed by the 1st respondent. 8. That said, the petitioner's counsel, however pleads that unless the coercive recovery proceedings are stayed, the appeal now pending before the Tribunal will become infructuous. According to him, he has recited Ext.P6 order only on the premise that the authority lacks the power, though the order may have been passed at the very petitioner's behest. According to him, this Court under Article 226 of the Constitution may pass a conditional order as does the first respondent in Ext.P6. 9. Under these circumstances, there shall be a stay of all further proceedings until the Tribunal decides the petitioner's appeal, subject to the condition that the petitioner remits 20% of 430,05,99,970, that is 86,01,19,994, in two months from today. With the above observations, I dispose of the Writ Petition. Sd/- DAMA SESHADRI NAIDU JUDGE WP(C).No. 41006 of 2018 5 APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE ORDER OF THE RESPONDENT U/S.263 OF THE ACT DATED 25/09/2018. EXHIBIT P2 TRUE COPY OF THE APPEAL FILED BEFORE THE 2ND RESPONDENT. EXHIBIT P3 TRUE COPY OF STAY PETITION FILED BEFORE THE 2ND RESPONDENT. EXHIBIT P4 TRUE COPY OF THE POSTING NOTICE DATED 10/01/2019. EXHIBIT P5 TRUE COPY OF APPLICATION UNDER SECTION 220(6) FILED BEFORE THE 1ST RESPONDENT. EXHIBIT P6 TRUE COPY OF THE ORDER OF THE 1ST RESPONDENT DATED 6/12/2018. EXHIBIT P7 TRUE COPY OF THE OFFICE MEMORANDUM DATED 31/7/2017 BEARING NO.F.404/72/93-ITCC. RESPONDENTS' EXHIBITS NIL // TRUE COPY // P.A. TO JUDGE SD "