The Kerala Minerals And Metals LTD. vs. Deputy Commissioner-Ii
Original PDF →IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH WEDNE AY, THE 31ST DAY OF JANUARY 2024 / 11TH MAGHA, 1945 WP(C) NO. 15471 OF 2023 PETITIONER/S: THE KERALA MINERALS AND METALS LTD., SANKARAMANGALAM, CHAVARA, KOLLAM, KERALA REPRESENTED BY ITS DEPUTY GENERAL MANAGER (FINANCE), MR. V. ANIL KUMAR., PIN - 691583 BY ADVS. ANIL D. NAIR TELMA RAJU ANJANA A. AADITYA NAIR RESPONDENT/S: 1 DEPUTY COMMISSIONER-II, STATE GOODS & SERVICES TAX DEPARTMENT, SPECIAL CIRCLE, KOLLAM, PIN - 691002 2 THE DEPUTY COMMISSIONER (REVENUE RECOVERY), TAX PAYERS SERVICES CIRCLE, STATE GOODS AND SERVICE TAX DEPARTMENT, KOLLAM, PIN - 691002 3 TAHSILDAR., TALUK OFFICE, KARUNAGAPPALLY, KOLLAM, PIN - 690518 4 STATE TAX OFFICER, TAX PAYER SERVICES CIRCLE, KOLLAM WEST, STATE GOODS AND SERVICES TAX DEPARTMENT (KERALA), TAX COMPLEX, ASRAMAM, KOLLAM, PIN - 691002 OTHER PRESENT: JASMINE M.M.-GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C)No.15471 of 2023 2 JUDGMENT Dated this the 31st day of January, 2024 The petitioner, is a State of Kerala Government’s undertaking. In respect of the assessment year 2016- 17, the petitioner conceded the total turnover of Rs.7,86,11,16,969.46 and taxable turnover of Rs.7,05,51,41,357. 81. The petitioner was issued a notice under Section 25(1) of the Kerala Value Added Tax Act, 2003 on 19.04.2022, pointing out the defects/differences in the returns filed by the petitioner. The petitioner filed reply to the said notice and thereafter an assessment order came to be passed in Ext.P7 on 30.07.2022, assessing the tax liability of the petitioner at Rs.12,57,36,130/- and after giving credit of Rs.7,12,40,267/-. The balance tax due along with interest has been calculated at Rs.10,32,92,366/- for which demand notice has been issued. The petitioner thereafter filed a rectification application under Section 66 of the KVAT Act,2003. In the rectification
WP(C)No.15471 of 2023 3 application, it was said that while filing the Audit Report (Form 13A) by the Auditor, M/s.Joseph & Nampiathiri, Chartered Accountants, an inadvertent error in calculation of the interstate and local purchases had occurred. The interstate purchase was only for Rs.69,00,33,240/- and local purchase was for Rs.5,87,91,361/- only and not of Rs.127,95,02,425/- on which the tax @ 20% has been calculated. It was also said that the petitioner had issued debit notes to the suppliers in connection with the quantity variation of raw materials used for plant operations of the petitioner. The debit notes are issued only for reducing the Input Tax Credit, which has been correctly reduced from the total input tax credit. Though the detailed workings were produced at the time of hearing. However, the entire amount of debit notes plus gross profit @20% has been assessed, which has resulted in assessing the tax liability on the debit note value twice.
The assessing authority considered the said rectification application and vide impugned order
WP(C)No.15471 of 2023 4 dismissed the said rectification application on the ground that all these aspects were already considered by the assessing authority while passing the impugned assessment order.
Sri.Anil.D Nair, learned counsel for the petitioner submits that while considering the rectification application, the assessing authority has not adverted to the inadvertent mistake of the auditor in respect of the interstate and local purchase and on debit notes despite the petitioner having relevant evidence to substantiate its claim that it was an inadvertent mistake of the auditor. As a result thereof, the figures of sale got inflated on with the tax liability has been determined. Learned counsel for the petitioner further submits that the petitioner may be given one opportunity before the assessing authority to substantiate the claim of the inadvertent mistake of their auditor.
On the other hand, Ms. Jasmin M.M, learned Government Pleader submits that this very aspect was
WP(C)No.15471 of 2023 5 considered by the assessing authority and as the petitioner/assessee could not provide relevant and cogent evidence for the alleged inadvertent mistake of the auditor, the claim of the petitioner has been rejected as that has been reflected in the balance sheet submitted before the assessing authority. Therefore, it has been considered on which the tax has been assessed. She submits that this Court in exercise of its power of judicial review may not interfere with the impugned assessment order and rectification order, and if the petitioner is aggrieved by the said orders, there is a remedy of appeal .
I have considered the submissions. The petitioner is a Government undertaking. While considering the rectification application under Section 66 of the KVAT Act, 2003, the assessing authority is required to see that whether there is an error apparent on the face of record which required to be rectified. The assessing authority is not required to review the assessment order or initiate proceedings for passing a
WP(C)No.15471 of 2023 6 fresh order. However, if there is an error apparent on the face of record, then it is to be rectified under Section 66 of the KVAT Act,2003 on an application filed by the assessee or the Revenue as the case may be. If the petitioner’s stand is correct that the inadvertent mistake of the Auditor, the same amount was debited twice in the excel sheets, these aspects required to be verified by the assessing authority even in the rectification application. The assessing authority has merely rejected the rectification application on the ground that the very same aspect was considered by the assessing authority. The mistake of the Auditor should not be the reason for saddling the petitioner with liability which otherwise he is not liable to discharge under the provisions of the KVAT Act. Thus, I find that the petitioner should be afforded another opportunity of hearing by the assessing authority and if the assessing authority is of the view that the claim of the petitioner regarding inadvertent mistake of the
WP(C)No.15471 of 2023 7 Auditor is correct, he should be given the credit for the said mistake by reducing the turnover to that extent.
Thus, in view thereof, the Ext.P13 impugned order is set aside and the matter is remitted back to the assessing authority to pass a fresh order after giving an opportunity of hearing to the petitioner to substantiate his claim that there is an error apparent on the face of record inasmuch as the same amount was twice debited in the excel sheet by inadvertent mistake of the Auditor of the petitioner. Thus, the writ petition is allowed, and the matter is remanded back to the assessing authority. The petitioner is directed to appear before the assessing authority or such other officer on 06.02.2024 with all the relevant records. DINESH KUMAR SINGH AP JUDGE
WP(C)No.15471 of 2023 8 APPENDIX OF WP(C) 15471/2023 PETITIONER EXHIBITS Exhibit P1OF RELEVANT PAGES OF 25(1) NOTICE DATED 18.1.2022 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. Exhibit P2OF THE REPLY DATED 14.3.2022 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. Exhibit P3OF THE RELEVANT PAGES OF NOTICE DATED 19.4.2022 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER Exhibit P4OF REPLY DATED 10.5.2022 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. Exhibit P5OF THE NOTICE DATED 3.7.2022 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. Exhibit P6OF THE REPLY DATED 20.7.2022 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. Exhibit P7OF ORDER DATED 30.7.2022 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. Exhibit P8OF THE RECTIFICATION APPLICATION DATED 17.8.2022 ALONG WITH THE CLARIFICATION ISSUED BY THE AUDITOR BOTH FOR THE INTERSTATE AND INTRA STATE PURCHASES FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. Exhibit P9OF NOTICE DATED 31.8.2022 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. Exhibit P10OF REPLY DATED 16.9.2022 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. Exhibit P11OF THE NOTICE DATED 31.1.2023 ISSUED BY THE 4TH RESPONDENT TO THE PETITIONER. Exhibit P12OF THE LETTER DATED 14.2.2023 SUBMITTED BY THE PETITIONER BEFORE THE 4TH RESPONDENT. Exhibit P13OF THE ORDER DATED 28.4.2023 ISSUED BY THE 4TH RESPONDENT TO THE PETITIONER.
WP(C)No.15471 of 2023 9 Exhibit P14OF REVENUE RECOVERY PROCEEDINGS DATED 30.1.2023 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER. Exhibit P15OF THE LETTER DATED 31.1.2023 ISSUED BY THE 2ND RESPONDENT TO THE 3RD RESPONDENT
Reproduced from the public record of the Kerala High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.