M. Sajith Lal Malayil House Ponnada V. Agricultural Income Tax and Commercial Tax Officer: VAT Circle, Kalpetta-670644

WP(C)/17167/2014

AI Insights

The case revolves around a writ petition filed by M. Sajith Lal, challenging the assessment orders issued by the Agricultural Income Tax and Commercial Tax Officer, VAT Circle, Kalpetta, for the assessment years 2005-06 to 2012-13. The petitioner, who operated a quarry, argued that the assessments were based on an incorrect assumption of 600 'P Forms' issued annually from 2005-06 to 2012-13, whereas only 600 'P Forms' were actually issued in total on 21.12.2012 and 30.01.2014. The respondent contended that the petitioner had not registered under the KVAT Act and was engaged in a large-scale business, thus exceeding the limits of taxable turnover. The court found that the assessments were made without proper consideration of factual aspects and supporting documents, leading to the decision to set aside the orders and remand the matter for re-assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 818100 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 21-08-2023
• Assessment Year: misc
• Laws Referred To: KVAT Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: V K SHAMSUDHEEN
• Assessee Lawyers: P RAGHUNATH; PREMJIT NAGENDRAN
• Keywords: Assessment orders; Ex parte assessment; Taxable turnover; Writ petition; Quarry License; P Form Permit
• Section: 25; 67

Judgement Text

"iIN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN MONDAY, THE 21ST DAY OF AUGUST 2023 / 30TH SRAVANA, 1945 WP(C) NO. 17167 OF 2014 PETITIONER: M.SAJITH LAL MALAYIL HOUSE PONNADA: MANIYANCODE P.O, KALPETTA, WAYANAD DT. BY ADVS. SRI.P.RAGHUNATH SRI.PREMJIT NAGENDRAN RESPONDENT: AGRICULTURAL INCOME TAX AND COMMERCIAL TAX OFFICER: VAT CIRCLE, KALPETTA-670644. BY ADV.V.K.SHAMSUDHEEN-SENIOR GOVERNMENT PLEADER THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P. (C) No.17167 of 2014 2 JUDGMENT The writ petition is filed by the petitioner with the following prayers: “A: Issue a writ of certiorari quashing the originals of Exts.P 7 to P 14 assessment orders: B: Pass such other orders as the Petitioner may pray for and this Hon'ble Court may deem fit to grant in the circumstances of the case; C: Award costs of the Petitioners.” 2. The case of the petitioner is as follows: The petitioner challenges the assessment orders Exts.P7 to P14 passed by the respondent for the assessment years 2005-06 to 2012-13. The petitioner obtained a license on 17.10.2012 from the Municipality, to operate a quarry in Ward No.I in R.S. No.97/PT in Kalpetta Village after obtaining a quarrying permit from Geology Department for extraction of granite building stone on 22.12.2010. Even after issuance of license by the Municipality, the petitioner could transport metal only on the strength of “P Form” permit issued by the Geology W.P. (C) No.17167 of 2014 3 Department. Though, the formalities commenced on 22.10.2010, the effective license was issued only on 17.10.2012 and thereafter the permit for transportation – Form “P” permits were issued only on 21.12.2012. 3. After obtaining the above license, the petitioner started operations at the quarry and applied to the Geology Department for issuance of “P Forms” which were necessary for transporting of each lorry load of metal which is extracted from the quarry. The Department, on 21.12.2012 and 30.01.2014, issued 600 “P Forms” which would enable to the petitioners to transport 600 loads. Apparently, the petitioner could have achieved a sales of only Rs.6,05,000/- from 21.12.2012 to 29.01.2014 (13 months) even going by the rate per load, as fixed by the Assessing Authority. Since the petitioner did not have sales in excess of Rs.5 lakhs either during the year ended 31.03.2013, the petitioner did not get himself registered under the KVAT Act and the land surrendered to the original owner and the business was closed during the year 2013-14 . 4. The respondent issued pre-assessment notice W.P. (C) No.17167 of 2014 4 proposing to carry out the assessments under Section 25 of the KVAT Act for the years 2005-06 to 2012-13. On receipt of the notice, the petitioner appeared before the respondent personally and pointed out the facts that he had been issued only 600 “P Forms” on 21.12.2012 and 30.01.2014 and a license to run the quarry was issued only on 17.10.2012. Without considering the objections raised by the petitioner, the assessment orders were finalised by the assessing Authority as per Exts.P7 to P14 orders. Aggrieved by the same, the petitioner has approached this Court with the above writ petition. 5. The respondent has filed a counter affidavit contending that the petitioner has not registered under the KVAT Act, 2003, who was engaged in the business of sale of granite, metals and rubbles. The assessment notice were issued on the basis of the local enquiry conducted by the respondent. Though, notice was issued to the petitioner, the petitioner did not turn up to submit their objections. The details were gathered from the Geology Department that the petitioner was engaged in the sale of rubbles during the period W.P. (C) No.17167 of 2014 5 from 2005-06. The details of royalty paid against the “P Form” to the Department of Geology itself proved that the petitioner was engaged in large scale business of rubbles and that exceeded the limits of taxable turnover. But no tax on sales was seen remitted and the petitioner has not taken registration under the KVAT Act, 2013. Proposals were initiated for imposition of penalty of Rs.10,000/- under Section 67 of the KVAT Act. Though notice was served on the petitioner, the petitioner did not respond to the said notice and all the assessment orders were decided ex-parte. The Authority had no other option but to complete the best judgment assessment. It is further contended that, every year, the petitioner had received average 600 “P Forms” from the Geology Department. So number of “P Forms” issued is treated as minimum 2 number of lorry load rubbles and estimation is made on that basis. The proposal for assessment was communicated to the petitioner and duly served, but no reply has been filed by the petitioner. It is also contended that without availing the statutory remedy, the petitioner has approached this Court and the writ petition is liable to be W.P. (C) No.17167 of 2014 6 dismissed. 6. Heard the learned counsel for the petitioner as well as the learned Government Pleader. 7. Learned counsel for the petitioner submits that, though the formalities commenced on 22.10.2010, the license was issued only on 17.10.2012 and 550 “P Forms” were issued on 21.12.2012 and 50 “P Forms” were issued on 30.01.2014. But the Assessing Authority has passed Exts.P7 to P14 orders by taking into consideration 600 “P Forms” without any supporting documents and have completed the assessment by fixing huge liability on the petitioner for no reason. It is further submitted that, as revealed from Ext.P15, issued by the Geology Department, the petitioner was issued 550 “P Forms” in 2012 and 50 “P Forms” in 2014 and the assessment have been completed by the assessing authority by taking estimation of 600 “P Forms” each from 2005-06 upto 2012-13 which is illegal and has to be set aside. It is also submitted that on the date of finalisation of assessment order on 30.01.2014, there was nothing on record to show that the petitioner was issued 600 “P Forms” every year from 2005-06 W.P. (C) No.17167 of 2014 7 to 2012-13. 8. Per Contra, the Learned Government Pleader submits that the petitioner was conducting business of granite metals and rubbles from 2005-06 and was paying royalty of Rs.25,000/- from 2005-06. On the basis of the enquiry conducted by the Assessing Authority, Exhibits P7 to P14 assessments have been completed. Though notices were served on the petitioner, he did not appear and hence assessments were completed as ex-parte. The petitioner has got efficacious statutory remedy, by way of appeal before the statutory authority. 9. On perusal of Ext.P15 letter issued by the Geology Department, it is seen that only total 600 'P forms' issued to the petitioner on 21.12.2012 and 30.01.2014. However, in Exts.P7 to P14 assessment orders, the Assessing Authority has estimated local sales of the rubbles by calculating 600 “P Forms” for the years from 2005-06 to 2012-13. Other than the contentions raised in the counter affidavit, the respondents have not produced any supporting document to show that the petitioner was issued 600 “P Forms” every year from 2005-06 W.P. (C) No.17167 of 2014 8 to 2012-13. On a perusal of Exts.P7 to P14 assessment orders, it is seen that the assessing Authority has come to a conclusion that 600 of “P Forms” were issued every year from 2005-06 to 2012-13 which appears to be factually not correct. No supporting documents could be produced by the assessing Authority. Ext.P15 letter issued by the Geology Department dated 11.06.2014 ie after the date of the assessment orders. 10. Learned counsel for the petitioner further submits that the petitioner may be given one more opportunity to substantiate the entire grievance before the Assessing Authority. 11. On consideration of the entire facts of the case, I am of the opinion that Ext.P7 to P14 orders were passed by the assessing authority without considering the factual aspects with supporting documents, and hence interest of justice will be best met, if one more opportunity is granted to the petitioner to contest his case before the respondent. Accordingly, the Writ Petition is disposed of as follows: 1. Exts.P7 to P14 orders are set aside. W.P. (C) No.17167 of 2014 9 2. The Assessing Authority is directed to reconsider the entire issue, in accordance with law, taking into consideration Ext.P15 certificate issued by the Geology Department which is produced along with this writ petition. 3. The petitioner shall appear before the Assessing Authority on 20.09.2023 at 11.00 a.m. along with objections if any, and with all supporting documents. The petitioner is free to raise all contentions including the question of limitation, before the Assessing Authority. 4. Before any such orders are passed, the Assessing Authority shall afford the petitioner an opportunity of being heard. The petitioner shall produce a certified copy of the judgment along with the copy of the writ petition before the Assessing Authority for compliance. The writ petition is allowed accordingly. Sd/- SHOBA ANNAMMA EAPEN JUDGE SMF W.P. (C) No.17167 of 2014 10 APPENDIX OF WP(C) 17167/2014 PETITIONER EXHIBITS EXHIBIT P1A: PHOTOCOPY OF QUARRYING PERMIT DT. 22.12.2010 FOR 2010-11. EXHIBIT P1B: PHOTOCOPY OF QUARRYING PERMIT DT.26.12.2011. EXHIBIT P1C: PHOTOCOPY OF QUARRYING PERMIT DT.21.12.2012 VALID UPTO 20.12.2013. EXHIBIT P2: PHOTOCOPY OF \"CONSENT TO OPERATE\" DT.22.07.2011 ISSUED BY KERALA STATE POLLUTION CONTROL BOARD. EXHIBIT P3: PHOTOCOPY OF \"NO OBJECTION CERTIFICATE\" DT.25.10.2011 ISSUED BY ADDL. DIST.MAGISTRATE. EXHIBIT P4: PHOTOCOPY OF NO OBJECTION CERTIFICATE DT.17.12.2011 ISSUED BY ASST. DIVISIONAL OFFICER, FIRE & RESCUE SERVICES. EXHIBIT P5: PHOTOCOPY OF LICENSE ISSUED EXPLOSIVE RULES DT.07.03.2012 ISSUED BY DISTRICT MAGISTRATE. EXHIBIT P6: PHOTOCOPY OF LICENSE DT.17.10.2012 ISSUED BY KALPETTA MUNICIPALITY. EXHIBIT P7: PHOTOCOPY OF ASSESSMENT ORDER FOR 2005- 06 DT.30.05.2014. EXHIBIT P8: PHOTOCOPY OF ASSESSMENT ORDER FOR 2006- 07 DT.30.05.2014 EXHIBIT P9: PHOTOCOPY OF ASSESSMENT ORDER FOR 2007- 08 DT.30.05.2014. EXHIBIT P10: PHOTOCOPY OF ASSESSMENT ORDER FOR 2008- 09 DT.30.05.2014. EXHIBIT P11: PHOTOCOPY OF ASSESSMENT ORDER FOR 2009- 10 DT.30.05.2014. EXHIBIT P12: PHOTOCOPY OF ASSESSMENT ORDER FOR 2010- 11 DT.30.05.2014. EXHIBIT P13: PHOTOCOPY OF ASSESSMENT ORDER FOR 2011- 12 DT.30.05.2014. EXHIBIT P14: PHOTOCOPY OF ASSESSMENT ORDER FOR 2012- 13 DT.30.05.2014. W.P. (C) No.17167 of 2014 11 EXHIBIT P15: PHOTOCOPY OF CERTIFICATE DT.11.06.2014 ISSUED BY GEOLOGIST: DISTRICT OFFICE. EXHIBIT P16A: PHOTOCOPY OF APPLICATION UNDER RTI ACT DT.16.06.2014. EXHIBIT P16B: PHOTOCOPY OF COVERING LETTER FOR EXT.P 16A. "