Muhammed Siddik M.S. vs. The State Tax Officer-I - Kerala High Court, 03 December 2019

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM & THE HONOURABLE MR.JUSTICE T.V.ANILKUMAR TUE AY, THE 03RD DAY OF DECEMBER 2019 / 12TH AGRAHAYANA, 1941 WA.No.2426 OF 2019 AGAINST THE JUDGMENT IN WP(C) 31085/2019(I) OF HIGH COURT OF KERALA APPELLANT/PETITIONER: MUHAMMED SIDDIK M.S., AGED 35 YEARS, PROPRIETOR, M/S. SAAD ASSOCIATES, KAYAMKULAM. BY ADVS.SRI.HARISANKAR V. MENON SMT.MEERA V.MENON SMT.K.KRISHNA RESPONDENTS/RESPONDENTS: 1 THE STATE TAX OFFICER-I, STATE GST DEPARTMENT, KAYAMKULAM - 690 502. 2 THE MANAGER, SOUTH INDIAN BANK LTD., KAYAMKULAM - 690 502. OTHER PRESENT: SR.GP- SRI. MOHAMMED RAFIQ THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 03.12.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.A.No.2426/2019 -:2:- C.K.ABDUL REHIM & T.V. ANILKUMAR ,JJ. = = = = = = = = = = = = = = = = = = W.A. No.2426 of 2019 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 3rd day of December, 2019 J U D G M E N T C.K.ABDUL REHIM

, J. Assessment completed against the appellant herein, under Section 25 of the Kerala Value Added Tax Act,2003(KVAT Act, for short) with respect to the year 2015-16, was challenged in a statutory appeal filed before the Assistant Commissioner (Appeals), Commercial Taxes, Alappuzha. Through Ext.P2 order, the assessment was set aside and remanded to the Assessing Authority to re-do it afresh. The observations made by the Appellate Authority are as follows: “Heard the case. The main issue connected with the case is unaccounted purchase and sales. On verification of records it is noted that the assessment completed based on KVATIS scrutiny only. The officer ought to have verify the books of accounts and other aspects before completing the assessment. The impugned assessment order is the violation of rules of best judgment. At the time of hearing the appellant submitted that a cross verification of alleged transaction is needful, because the appellant denied alleged transactions as stated in the assessment order.

W.A.No.2426/2019 -:3:- Considering huge volume of turnover I find that a cross verification is needful. The assessing authority has to follow all guidelines of assessment, and cross verification. In the result of verification, the assessing authority has to re-do the assessment and to be summarised the addition. Order accordingly.”

After the remand, the Assessing Authority had issued notice to the appellant in Form No.17 provided under the KVAT Rules, requiring him to produce all the Books of Accounts pertaining to the year concerned. The said notice was dated 13.08.2019. After about two months, on 10.10.2019, the Assessing Authority passed Ext.P3, a cryptic order confirming the original assessment by raising an allegation that the appellant had not responded to the notice issued calling for production of the Books of Accounts.

Case of the petitioner is that, he was ready with the Books of Accounts and was willing to produce the same, on the date stipulated in the Form No.17 notice. But the Assessing Authority did not verify the Books of Accounts on that day and had informed the appellant that they need to produce the same on another date, for which a separate notice will be issued. But it is not specifically mentioned in the writ petition as to which is the date fixed for production of the Books of Accounts

W.A.No.2426/2019 -:4:- in the Form No.17 notice, or as to whether the Books of Accounts were actually produced on that date. Nor the writ petition reveals that anybody representing the appellant had appeared on the date stipulated.

Ext.P3 order was challenged before this Court in the writ petition. The learned Single Judge observed that, there is no merit in the submissions of the petitioner, because there is no explanation forthcoming as to why he failed to produce the Books of Accounts in response to the Form No.17 notice. Based on such an observation, interference was declined on finding that the appellant has got an effective alternative remedy against Ext.P3 order, read with Ext.P1 order. The learned Single Judge had shown indulgence in directing to keep the revenue recovery steps in abeyance, in order to facilitate the petitioner to file statutory appeal against Ext.P3 order read with Ext.P1. It is aggrieved by the said judgment, the above writ appeal is filed.

Heard; counsel for the appellant and learned Government Pleader appearing for 1st respondent.

It is to be noted that, Ext.P1 original order of assessment was challenged before the first Appellate Authority

W.A.No.2426/2019 -:5:- and the said Authority had considered the same on merits. The matter was remanded for fresh assessment, after being convinced that a cross verification of the Books of Accounts with the details obtained from KVATIS is necessary to ascertain the real facts, which are in dispute. It is for that purpose the remand is made with specific direction to verify the Books of Accounts. Evidently there occurred failure to produce the Books of Accounts, on the dates stipulated through Form No.17 notice issued. Nothing is discernible from the impugned order as to whether the 1st respondent had afforded any further opportunity in between the date of the hearing fixed and the date on which the order was passed. However, the appellant has also failed to give any proper explanation for the non-production. Under such circumstances, the view taken by the learned Single Judge cannot be blamed.

But, we take note of the fact that Ext.P3 order is not on the merits; but passed simply by observing that there occurred failure to produce the Books of Accounts. What the Assessing Authority had done is only a restoration of Ext.P1 order. But already there exists an appellate order against Ext.P1, in which it was found that a verification of the Books of

W.A.No.2426/2019 -:6:- Accounts would be necessary. In such situation, even if the petitioner files a further appeal against Ext.P3, it may again require verification of the Books of Accounts, either by the original authority or by the first Appellate Authority. We are of the considered opinion that such an exercise would result only in multiplying the proceedings.

Learned counsel appearing for the appellant submitted that, the appellant is ready and willing to produce the Books of Accounts before the 1st respondent on any date, which may be stipulated from this court.

Under the above mentioned circumstances, in order to achieve the ends of justice and to avoid multiplicity of proceedings, we are of the considered opinion that one more chance can be given to the appellant to produce the Books of Accounts before the Assessing Authority and the Assessing Authority can be directed to finalise the assessment afresh after verification of the Books of Accounts and after affording an opportunity of personal hearing to the petitioner. Therefore, the above writ appeal is hereby allowed. The impugned judgment of the Single Judge in W.P.(C) No.31085 of 2019 is hereby set aside. The writ petition is allowed to the

W.A.No.2426/2019 -:7:- extent of setting aside Ext.P3 order of assessment. The matter is remitted to the 1st respondent for fresh consideration and disposal of the matter in accordance with the directions contained in Ext.P2 order of the Appellate Authority. The appellant shall appear before the 1st respondent with all available Books of Accounts and other records on, 18.12.2019 at 11 a.m. The 1st respondent shall consider the matter, after affording an opportunity of hearing the appellant, on the same day itself or on any other day to which the matter is adjourned. Fresh proceedings shall be finalised at the earliest, at any rate, within a period of one month from the date of receipt of a copy of this judgment. C.K.ABDUL REHIM,JUDGE T.V. ANILKUMAR,JUDGE DST //// PA.To Judge