City Sights vs. The Intelligence Officer-Ib
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JUDGMENT Vinod Chandran, J. Two Writ Appeals arise from identical judgments of the learned Single Judge. The learned Single Judge found that the grounds raised of (i) Section 174 of the Kerala General Sales Tax Act, 1963 ['KGST Act' for brevity] being ultra vires the Constitution amendment bringing in Goods and Service Act regime and (ii) the proceedings being barred under Section 25(1) of the Kerala Value Added Tax Act, 2003 ['KVAT Act' for brevity] has been decided against the assessees by judgment of 11.01.2019 in W.P(C) No.11335 of 2018 & connected cases.
The learned Counsel for the appellants would contend that there was yet another ground raised of the penalty proceedings not being possible against the appellants, which has not been considered by the learned Single Judge. It is also brought to our notice
WA.1120 & 1121 of 2019 that the decision based on which the writ petitions were dismissed, also has been challenged in appeal.
Both the assessees carry on business of outdoor advertisement display, on hoardings erected by the assessees in the property leased out by them. The question was as to whether the display of advertisements of third parties, with whom the assessees enter into agreements, result in a transfer of right to use the hoardings, thus making the transaction exigible to sales tax. The assessees contended that they were liable only to service tax till the specific proceedings were brought under the negative list in the Finance Act.
The learned Senior Government Pleader submits that the issue is covered on the question of exigibility to tax, against the appellants, as held by a Division Bench in O.T.Rev.No.103 of 2012 dated 31.07.2015 [M/s.Delta Communications v. State of Kerala].
In this context we have to notice that the issue with respect to the taxability of the specific
WA.1120 & 1121 of 2019 transaction was before this Court in O.T.Rev. No.103 of 2012 and the judgment aforecited was passed on 31.07.2015. On 11.09.2015, on the application made by a similarly situated assessee, there was a clarification issued under Section 94 of the KVAT Act as to the said transaction being not exigible to sales tax. The said clarification order, after a series of proceedings, was modified by the Commissioner in a suo motu revision under Section 94(7) of the KVAT Act wherein a hoarding was found to be a movable article, possible of being dismantled and shifted from one location to another, without any damage to the fixture. It is also argued by the learned Senior Government Pleader that in fact no clarification could have been issued under Section 94 for reason of the decision in O.T.Rev.No.103 of 2012; which came before the order under Section 94. 6. The contention of the appellants is that only on the decision in the year 2015, there was an authoritative pronouncement with respect to the transaction being taxable. It is also admitted by both sides that the said decision of the Division Bench of WA.1120 & 1121 of 2019 this Court is challenged before the Hon'ble Supreme Court, wherein there is an interim order in a Civil Appeal staying recovery of 50% of the demand made. The specific question raised is as to; when the taxability of the transaction itself was debatable, whether penalty proceedings could have been initiated or not. The learned Counsel also relied on various decisions of the Hon'ble Supreme Court and also that of this Court to press home the point that there could be no contumacious conduct found on the assessees. We have also today interfered with the cancellation of the clarification Order, on distinct facts noticed, in two other cases.
We cannot but observe that the question of sustainability of a penalty proceedings, though raised in the writ petition, was not looked into by the learned Single Judge. In such circumstances, we set aside the judgment of the learned Single Judge and restore the writ petitions for fresh consideration. We make it clear that the setting aside of the judgment is only for the purpose of consideration of the aspect we
WA.1120 & 1121 of 2019 have pointed out. We also make it clear that if in the meanwhile the appeals against the cited decisions are disposed of, the learned Single Judge would also be entitled to follow the same. We hasten to observe that the above reservation is only insofar as the appeals filed from the cited decisions being disposed off in favour of the assessees and against the Department. The Writ Appeals are disposed of with the above observations restoring the writ petitions. Parties are left to suffer their respective costs. K.VINOD CHANDRAN JUDGE T.R.RAVI JUDGE Vku/- []
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.