SMT.THEYYAMMA PAUL V. THE COMMERCIAL TAX OFFICER

WP(C)/16670/2010

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The case revolves around the dismissal of an appeal by the Kerala Agricultural Income Tax and Sales Tax Appellate Tribunal (3rd respondent) against the rejection of the petitioner's appeal by the 2nd respondent, the Appellate Assistant Commissioner, for non-payment of admitted tax. The petitioner, Theyyamma Paul, contested the assessment order and, during the appeal process, had paid the admitted tax but failed to provide proof of payment on time. The Tribunal dismissed the appeal without considering the proof of payment, citing a precedent that such appeals are not maintainable under Section 39(1) of the KGST Act. The High Court, referencing an earlier decision, found that the Tribunal's dismissal was incorrect and that the appeal should be considered under Section 39, as the dismissal for non-compliance with tax payment requirements does not preclude an appeal on merits.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 727073 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 01-06-2010
• Assessment Year: misc
• Other Referred Cases: Solar Cashew Vs. State of Kerala [2009 (2) KLT 486], Andhra Steel Corporation Vs. State of Kerala (67 STC 348)
• Laws Referred To: Kerala General Sales Tax Act, 1963, Section 39(1) of the KGST Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: E P GOVINDAN; G DEEPA
• Keywords: Admitted tax; Appeal Dismissal; Commercial tax; Legal Remedy; Writ petition
• Section: 39(1); 34(1); 34(3)

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 1ST JUNE 2010 / 11TH JYAISTHA 1932 WP(C).No. 16670 of 2010(G) -------------------------------------------- PETITIONER(S): ------------------------- THEYYAMMA PAUL,PROPRIETOR, PARAGON RESTAURANT & BAR, HIGH ROAD,THRISSUR. BY ADVS. SRI.E.P.GOVINDAN, SMT. G. DEEPA. RESPONDENT(S): --------------------------- 1. THE COMMERCIAL TAX OFFICER, FIRST CIRCLE,COMMERCIAL TAXES, TRICHUR. 2. THE APPELLATE ASST.COMMISSIONER III, COMMERCIAL TAXES,PALAKKAD. 3. THE KERALA AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL ADDITIONAL BENCH, PALAKKAD. 4. THE STATE OF KERALA REPRESENTED BY SECRETARY, TAXES DEPARTMENT,GOVERNMENT SECERTARIAT, TRIVANDRUM. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01/06/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss P.R.RAMACHANDRA MENON, J -------------------------------------------- WP(C) NO. 16670 OF 2010 -------------------------------------------- Dated this the 1st day of June, 2010 REFERENCE ORDER The basic issue to be dealt with in this Writ Petition is whether the Tribunal is justified in having passed Ext.P1 order, dismissing the appeal preferred by the petitioner challenging the order passed by the first appellate authority (rejecting the statutory appeals, allegedly for non- payment of the admitted tax) is correct or not. 2. The essential facts which require to be considered are as follows: Being aggrieved of the Ext.P2 assessment order, Ext.P3 was filed before the Deputy Commissioner (Appeals) which subsequently was transferred to the 2nd respondent so as to facilitate disposal of the all pending cases. During the pendency of the Ext.P3 appeal, the petitioner had effected payment of the admitted tax along with the return. But the proof of payment could not be produced by the petitioner on time; under which circumstance, the 2nd respondent rejected the appeal as per Ext.P4 order holding that, for want of proof as to the remittance of the admitted tax, the appeal was not liable to be entertained. 3. Met with the circumstances, the petitioner approached the 3rd respondent Tribunal by filing Ext.P6 appeal, producing necessary proof as 2 WP(C) No. 16670/2010 to the remittance of the admitted tax (as borne by Ext.P5 produced herein) and explaining the circumstances under which the petitioner/appellant was not in a position to have it produced earlier. It is also the case of the petitioner, that the petitioner subsequently paid the disputed tax as well. However, without even referring to Ext.P5 proof of payment produced by the petitioner before the 3rd respondent, Ext.P6 appeal was dismissed as per Ext.P1 order holding that no such appeal was maintainable under Section 39 (1) in view of the law declared by a Division Bench of this Court in Solar Cashew Vs. State of Kerala [2009 (2) KLT 486]. The learned counsel for the petitioner submits that, the course pursued by the Tribunal is not correct or proper; both on facts as well as in law. 4. Heard the learned Government Pleader as well, who placed much reliance on the decision cited supra, contending that the course pursued by the petitioner by filing Ext.P6 appeal was only on the basis of wrong and misconceived idea as to the legal position and that the impugned orders passed by the concerned authorities are not assailable under any circumstance. 5. Coming to the legal position, it is true that the Division Bench of this Court as per the decision cited supra in Solar Cashew Vs. State of Kerala [2009 (2) KLT 486] has held that, against the order of rejection of an appeal by the first appellate authority for non- payment of admitted tax, 3 WP(C) No. 16670/2010 no appeal is liable to be entertained under Section 39 (1) before the Tribunal; for the reason that the rejection of the appeal by the first appellate authority cannot be held as an order passed “in appeal” and that the rejection is only because of the non compliance of the statutory requirements. For the very same reason, it was held that, since no appeal was entertainable by the Tribunal under Section 39 (1), ST Revision was also not maintainable in such case; simultaneously observing in ‘the last paragraph’, that the remedy, if any, might be by filing a Writ Petition before this Court challenging the order of appellate authority rejecting the appeal. 6. During the course of hearing, it is brought to the notice of this Court that the above judgment was passed unfortunately without any reference to the earlier verdict on the point by a co-ordinate bench in Andhra steel Corporation Vs. State of Kerala (67 STC 348). The observation made by the Division Bench in the said case is as follows: “The direction in the second proviso to sub-section (1) of section 34 of the Kerala General Sales Tax Act, 1963 is that the Appellate Assistant Commissioner shall not proceed to admit to consideration an appeal which is not accompanied by satisfactory proof of payment of the admitted tax. What is barred, therefore, is the consideration of the appeal on merits. An appeal so filed, and which is an appeal in the eye of law, has necessarily to be disposed of. Any disposal of the appeal, whether on merits or on preliminary grounds like limitation, non-payment of admitted tax, etc., has necessarily to be under section 34 (3). It is therefore appealable to the Tribunal under section 39. Moreover, the order of rejection of the appeal for 4 WP(C) No. 16670/2010 on-compliance with the second proviso to section 34 (1) and refusing to entertain it on merits, is in substance one confirming the assessment. The only difference between this and the regular disposal, is that, in one case, the appeal gets rejected at the threshold, before being entertained, while in the other, the disposal takes place after its being entertained. Various situations could be visualised, which an assessee may be able to put forward to explain the non- payment of amounts “admitted” by him to be due, for example, the assessee may have to get a refund from the department. These are not matters which will be apparent from a perusal of the records. The assessee has to be apprised of the proposal to reject the appeal for non-compliance with the second proviso to section 34 (1), and heard before any order refusing to entertain the appeal is passed. An oral or personal hearing may not always be necessary, depending on the facts of each case. But an opportunity to the assessee to put forward his case is imperative in every case.” After detailed discussion, it was held that the Tribunal had erred in holding that the Section 39 of the KGST Act did not sanction an appeal against the order of the Deputy Commissioner rejecting the appeal for non compliance with the ‘second proviso’ to Section 34 (1) of the Act. It was made clear that, such an order has the effect of confirming the assessment and hence is appealable under Section 39. 8. It is obvious that, the above dictum laid down by this Court earlier in Andhra steel Corporation Vs. State of Kerala (67 STC 348) was not by the parties concerned to the notice of the subsequent Division Bench while passing the verdict in Solar Cashew Vs. State of Kerala 5 WP(C) No. 16670/2010 (2009(4)KLT 486) whereby diametrically opposite views are seen expressed in declaring the law. This being the position, this court finds that an authoritative pronouncement is very much required by ‘larger bench’. Points of reference:- i) Whether an appeal under Section 39(1) of the KGST Act lies to the Tribunal, when the appellate authority dismisses the appeal, on account of the non- payment of admitted tax. ii) If not, what remedy could be aspired by the aggrieved party, under such circumstances. Place the matter before the Hon’ble Chief Justice, for consideration and appropriate orders. P.R.RAMACHANDRA MENON JUDGE dnc "