K.S.Pareed vs. State Of Kerala - Kerala High Court, 16 March 2020

Heard together (2 matters)

WA.No.534 OF 2020

WP(C) 4608/2020

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM & THE HONOURABLE MR. JUSTICE T.R.RAVI MONDAY, THE 16TH DAY OF MARCH 2020 / 26TH PHALGUNA, 1941 WA.No.534 OF 2020 AGAINST THE JUDGMENT IN WP(C) 4608/2020(A) OF HIGH COURT OF KERALA DT.18.2.2020 APPELLANT/PETITIONER IN WPC: K.S.PAREED, AGED 61 YEARS KOPPARAMBIL HOUSE, ARACKAPPADY, VENGOLA P.O., PERUMBAVOOR, ERNAKULAM-683562. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM RESPONDENTS/RESPONDENTS IN WPC: 1 STATE OF KERALA, REPRESENTED BY THE SECRETARY (TAXES), GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM- 695001. 2 THE ASSISTANT COMMISSIONER (WORKS CONTRACT), OFFICE OF THE DEPUTY COMMISSIONER, STATE GOODS AND SERVICES TAX DEPARTMENT, COMMERCIAL TAX BUILDING, BAZAR ROAD, MATTANCHERRY, ERNAKULAM-682002. GP- SRI. P.SHAMSUDHEEN THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 16.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A.No.534 of 2020 2 C.K.ABDUL REHIM & T.R. RAVI,JJ. ------------------------------------------------ W.A.No.534 of 2020 -------------------------------------------------- Dated this the 16th day of March, 2020

JUDGMENT T.R.Ravi, J. The above Writ Appeal is filed challenging judgment dated 18.02.2020 of the Single Judge in W.P.(C)No.4608/2020. The Writ Petition was filed, praying to call for the records leading to Ext.P5 assessment order and Ext.P6 demand notice issued by the 2nd respondent, and to quash the same; and for a direction to the 2nd respondent to keep in abeyance any recovery proceedings that may be initiated in pursuance of Ext.P5 assessment order and Ext.P6 demand notice.

The issue relates to assessment made under the KVAT Act for the year 2013-14. As per the pre-assessment notice, Ext.P1 dated 26.10.2019, the 2nd respondent sought to assess the appellant under Rule 10(2)(b) of the KVAT Rules, 2005 by treating the appellant as a dealer who has not maintained the Books of Account. The appellant submitted reply to Ext.P1 on 25.11.2019, wherein it was stated that the appellant had submitted the requisite statutory Audit Report online and the hard copy of the same with audited Profit and Loss Account, Balance Sheet and supporting schedules for the year 2013-14 duly certified by the Chartered Accountant, are being produced. The appellant has produced copy of the reply as per Ext.P3 and also the copy of the mail from the appellant's authorised representative, along with the attachment which contain the calculation statement of taxable turnover as per Exts.P4, P4(a) and P4(b), along with the writ petition. The 2nd respondent had, issued Ext.P5 assessment order on 30.12.2019. It can be seen from Ext.P5 that the 2nd respondent decided to accept the Books of Accounts, and to treat the appellant as a dealer coming under Rule 10(2)(a) of the KVAT Rules. Having taken such a decision, the 2nd respondent proceeded to assess the appellant without considering Exts.P3, P4, P4(a) and P4(b), which had been placed before him. Contention of the appellant was that, if the Assessing Authority was not satisfied with the explanation submitted by the appellant and the reconciliation statement produced, the Assessing Authority ought to have issued notice to the appellant regarding the proposal to deviate and with respect to the intention to complete the assessment. The appellant contends that, unless such a notice is issued, the appellant will not be able to satisfy the Assessing Authority regarding correctness of the documents submitted by the appellant.

The learned Single Judge, after noticing the requirements under Rule 10(2)(a) and Rule 10(2)(b), disposed of the writ petition by relegating the appellant to the remedy of appeal. The appellant is challenging the judgment on the ground that, since Ext.P5 order was issued in total violation of principles of natural justice and in non-compliance of the mandatory procedure, it is without juri iction and submits that the learned Single Judge ought not to have relegated the appellant to the alternate remedy of appeal and ought to have exercised juri iction under Article 226 of the Constitution of India.

We find considerable force in the contention of the appellant. It is evident from Ext.P5 that the Assessing Authority had decided to deviate from the original proposal for treating the appellant as a dealer under Rule 10(2)(b), as contained in the pre-assessment notice; and assessed the appellant treating them as a dealer under Rule 10(2)(a) of the KVAT Rules. Having decided to proceed with the assessment under Rule 10(2)(a), the 2nd respondent ought to have issued a proposal notice to the appellant regarding the assessment proposed, on the basis of the Books which were placed before the authority. It is evident from Ext.P5 assessment order that no such notice was issued to the appellant and the Assessing Authority had proceeded to assess the appellant without considering Exts.P3, P4, P4(a) and P4(b). The order is passed in clear violation of principles of natural justice and we find that this is a fit case for interference under Article 226 of the Constitution of India. In the result, we set aside the impugned judgment in W.P. (C)No.4608/2020 and Ext.P5 assessment order. The 2nd respondent is directed to complete the assessment, after issuing a fresh proposal notice and after taking into account the contentions of the appellant contained in Exts.P3, P4, P4(a) and P4(b); and after affording opportunity of hearing the appellant. Fresh orders of assessment shall be issued within one month from the date of receipt of a copy of this judgment. C.K.ABDUL REHIM JUDGE T.R. RAVI JUDGE dsn APPENDIX PETITIONER'S EXHIBITS: ANNEXURE A AOF THE RECOVERY NOTICE DATED 04.03.2020, ISSUED UNDER SECTION 7 OF THE KERALA REVENUE RECOVERY ACT, 1968.