MERCY JOHN V. THE COMMISSIONER OF COMMERCIAL TAXES

WP(C)/28283/2014

AI Insights

In this writ petition, Mercy John, the proprietress of M/S Matha Coir Webbing Industries, challenged the revised assessment orders issued by the Deputy Commissioner of Commercial Taxes, Alappuzha, for the assessment years 2005-06. The petitioner argued that the item 'cotton tape', which falls under Entry 51 of the 1st Schedule to the KVAT Act, is exempt from tax, and that the revised assessments were improperly conducted following audit objections. The court found that the petitioner was not given a reasonable opportunity to respond to the notices issued under Section 25(1) of the KVAT Act, leading to a decision in favor of the petitioner.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 694042 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 05-11-2014
• Assessment Year: misc
• Laws Referred To: Kerala Value Added Tax Act, 2003
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SHOBA EAPEN
• Assessee Lawyers: K B MOHAMEDKUTTY; K M FIROZ; M SHAJNA; S KANNAN
• Keywords: Audit objection; KVAT; Limitation; Revised Assessment Order; Tax Exemption
• Section: 56; 25(1)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON WEDNESDAY, THE 5TH DAY OF NOVEMBER 2014/14TH KARTHIKA, 1936 WP(C).No. 28283 of 2014 (I) --------------------------------------- PETITIONER: ------------------- MERCY JOHN, PROPRIETRESS, M/S MATHA COIR WEBBING INDUSTRIES, PANACKAL HOUSE, CANAL WARD, ALAPPUZHA. BY ADVS.DR.K.B.MOHAMEDKUTTY (SR.) SRI.K.M.FIROZ SMT.M.SHAJNA SRI.S.KANNAN RESPONDENT(S): ---------------------------- 1. THE COMMISSIONER OF COMMERCIAL TAXES, OFFICE OF THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM - 695 001. 2. THE JOINT COMMISSIONER (AUDIT AND INSPECTION), OFFICE OF THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM - 695 001. 3. THE ACCOUNTS GENERAL, (ECONOMIC & REVENUE SECTOR AUDIT) OFFICE OF THE ACCOUNTANT GENERAL, THIRUVANANTHAPURAM - 695 001. 4. THE AGRICULTURAL INCOME TAX AND COMMERCIAL TAX OFFICER, ALAPPUZHA - 688 001. 5. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, ALAPPUZHA - 688 001. 6. THE DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, KOLLAM - 691 001. 7. THE DEPUTY TAHSILDAR, (REVENUE RECOVERY), AMBALAPPUZHA, ALAPPUZHA DISTRICT - 688 561. BY SR.GOVERNMENT PLEADER SMT. SHOBA ANNAMMA EAPEN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05-11-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 28283 of 2014 (I) -------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS: ------------------------------------- EXHIBIT P1 : A TRUE COPY OF THE APPEAL ORDER DATED 14-12-2009 IN KVATA NO. 281 OF 2009 ISSUED BY THE 6TH RESPONDENT. EXHIBIT P2 : A TRUE COPY OF THE APPEAL ORDER DATED 14-12-2009 IN KVATA NO 282 OF 2009 ISSUED BY THE 6TH RESPONDENT. EXHIBIT P3 : A TRUE COPY OF THE REVISED ASSESSMENT ORDER DATED 07-12- 2010 PASSED BY THE 4TH RESPONDENT FOR 2005-06. EXHIBIT P4 : A TRUE COPY OF THE REVISED ASSESSMENT ORDER DATED 21-12- 2010 PASSED BY THGE 4TH RESPONDENT 2006-07. EXHIBIT P5 : A TRUE COPY OF THE ORDER DATED 30-06-2014 OF THE 5TH RESPONDENT. EXHIBIT P6 : A TRUE COPY OF THE NOTICE DATED 02-07-2014 ISSUED BY THE 4TH RESPONDENT UNDER SECTION 25(1) OF THE KVAT ACT TO THE PETITIONER. EXHIBIT P7 : A TRUE COPY OF THE NOTICE DATED 02-07-2014 ISSUED BY THE 4TH RESPONDENT UNDER SECTION 25(1) OF THE KVAT ACT TO THE PETITIONER. EXHIBIT P8 : A TRUE COPY OF THE LETTER DATED 05-07-2014 SUBMITTED BY THE PETITIONER TO THE 4TH RESPONDENT. EXHIBIT P9 : A TRUE COPY OF THE REVISED ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2005-06 ISSUED BY THE 4TH RESPONDENT. EXHIBIT P10 : A TRUE COPY OF THE PROCEEDINGS OF THE 4TH RESPONDENT FOR THE YEAR 2006-07. RESPONDENT(S)' EXHIBITS: NIL --------------------------------------- /TRUE COPY/ P.A. TO JUDGE AK P.R. RAMACHANDRA MENON, J. ======================== W.P.(C). No. 28283 of 2014 -------------------------------------------- Dated this the 5th day of November, 2014 JUDGMENT The validity of Exts.P9 and P10 revised assessment orders passed by the fourth respondent in respect of the assessment years 2005-2006 is under challenge in this writ petition. 2. The sequence of events given in the writ petition shows that the petitioner is mainly dealing with 'coir mats' and also is a registered dealer under the Kerala Value Added Tax Act dealing with 'cotton tapes' as well. According to the petitioner, the item 'cotton tape' comes under Entry 51 of the 1st Schedule to the KVAT Act and therefore, there is complete exemption from the tax liability. It is stated that the assessment proceedings were finalized pursuant to Exts. P1 and P2 orders passed by the appellate authority, leading to Exts.P3 and P4 revised assessment orders. Years after passing the said order, the proceedings were sought to be 'suo moto' revised by the 5th respondent, invoking the power and procedure under Section 56 of the KVAT Act, 2003, presumably based on some audit objection. The petitioner W.P.C. No. 28283 of 2014 -2- was served with Exts. P6 and P7 notices under Section 25(1). Said notices are dated 2.7.2014. Though the petitioner sought for reasonable time to file reply, the same was not acceded to and the assessing authority simply proceeded to finalize the proceedings on the basis of his own convictions, leading to Exts. P9 and P10 orders, which in turn are under challenge. 3. Heard Mr. K.B. Mohammedkutty, the learned Senior Counsel for the petitioner, as well as the learned Government Pleader for the respondents. 4. The learned Senior Counsel for the petitioner submits that the proceedings have been finalized by the concerned respondent, simply signing at dotted line, dancing to the tunes of somebody else, who is behind the curtain. It is stated that, the proceedings have been made a mockery of, leading to finalization of the proceedings in the manner as designed by the authorities of the audit department, which is totally alien to the scheme of the statute. It is also stated that, the proceedings are barred by limitation, which contention is sought to be rebutted by the learned Government Pleader with reference to the facts and figures and the materials on record. W.P.C. No. 28283 of 2014 -3- 5. On going through the materials on record, this Court finds that the assessing officer, by issuance of pre-assessment notice to the petitioner, granted only three days' time for filing objection. The fact that the petitioner sought for adjournment for filing reply and for producing the books of accounts stands conceded in Exts. P9 and P10 orders itself. The version of the concerned respondent is that, since it is a long pending case and since he has to report the matter to the higher authority, it had to be finalized and hence Exts. P9 and P10 orders. 6. After hearing both the sides, this Court finds that, the proceedings have been finalized by passing Exts. P9 and P10 orders by the fourth respondent with unwarranted haste, and virtually denying an effective opportunity of hearing to the petitioner. In the said circumstance, this Court finds that, the said orders cannot stand the test of judicial scrutiny of this Court and they stand set aside. It will be open for the 4th respondent to finalize the proceedings afresh, after giving an effective opportunity to produce the relevant books of accounts and hearing. The proceedings as above shall be finalized and orders shall be passed in accordance with law, on the basis of merits W.P.C. No. 28283 of 2014 -4- involved and untrammelled by any direction from any corner, to have the assessment finalized in any particular manner. This shall be done at the earliest, at any rate, within 'six weeks' from the date of receipt of a copy of this judgment. It is further made clear that an independent decision shall be taken by the 4th respondent with proper application of mind. The petitioner shall produce a copy of the judgment along with a copy of the writ petition before the concerned respondent for further steps. The writ petition is disposed of. P.R. RAMACHANDRA MENON, JUDGE. kp/- "