The Lakshadweep Development Corporation LTD. vs. The State Tax Officer - Kerala High Court, 29 January 2020

Cause title — parties, addresses and appearances

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS WEDNESDAY, THE 29TH DAY OF JANUARY 2020 / 9TH MAGHA, 1941 WP(C).No.624 OF 2020(C) PETITIONER: THE LAKSHADWEEP DEVELOPMENT CORPORATION LTD., (A GOVERNMENT OF INDIA UNDERTAKING), 56/2366, PANAMPALLY NAGAR, ERNAKULAM, KOCHI-682036. BY ADV. SHRI.SIVANKUTTY S. RESPONDENTS: 1 THE STATE TAX OFFICER, 1ST CIRCLE, STATE GOODS ANDSERVICES TAX DEPARTMENT, SALES TAX COMPLEX BUILDING, 4TH FLOOR, JAWAHAR NAGAR COLONY, ERANHIPALAM.P.O., KOZHIKODE-673006. 2 STATE OF KERALA, REPRESENTED BY SECRETARY (TAXES), GOVT.SECRETARIAT, THIRUVANANTHAPURAM-695002. 3 DEPUTY TAHASILDAR, KANAYANNUR TALUK OFFICE, KANAYANNOR, ERNAKULAM, KOCHI-682011. OTHER PRESENT: SMT.M.M.JASMINE, GOVT.PLEADER THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 29.01.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)No.624/2020 2 ALEXANDER THOMAS, J. ------------------------------------------- W.P.(C)No.624 of 2020 ---------------------------------------------- Dated this the 29th day of February, 2020

JUDGMENT The prayers in the above Writ Petition (Civil) are as follows:- “i) To call for records leading to Exhibit-P1 assessment order for the year 2011-12 and to issue Writ of Certiorari quashing the same as it was issued beyond the period of limitation under section 25(1) of the KVAT Act 2003. ii) To call for records leading to Exhibit-P2 Revenue Recovery notice/attachment order issued under Revenue Recovery Act for collection of the demand illegally created and to issue a writ of Certiorari quashing the same.”

Heard Sri. S. Sivankutty, learned counsel appearing for the petitioner and Smt. M.M. Jasmin, learned Government Pleader appearing for the respondents.

The case projected in this Writ Petition (Civil) is as follows:-The petitioner, a Government of India Undertaking, is a limited company, registered under the Companies Act, managed by Board of Directors appointed by the Government and acting as an agent of the Government for doing the business of Manning of Vessels owned by the Lakshadweep Administration, Government of India, supplying of Stores, fuel, water and other consumables to the Vessels, port clearance, Technical Management of the Vessels etc. The petitioner was registered under the erstwhile KVAT Act, 2003 with TIN 32110682062 in the roles of the 1st respondent assessing authority. As pat of the function in connection with the supply of stores, fuel, water etc to the Vessels, technical management of the vessel including repair and maintenance of the Vessels Appellant had made some purchases and supply for the year 2011-12 also. All the purchases and supply amounting to sale had been properly accounted, filed Return and completed assessment u/s 21 of the KVAT Act 2003 and paid all tax due under the Act in the ordinary course. But the 1st respondent issued notice dated 23/02/2019 proposing for completion of escaped assessment u/s 25(1) of the erstwhile KVAT Act 2003 and completed assessment ex-parte on best judgment for the year 2011-12 on 29/03/2019 as per Exhibit P1 assessment Order No.32110682062/2011-12 dated 29/03/2019.of the Assessment Order dated 29/03/2019.The Exhibit P1 assessment order for the year 2011-12 completed u/s 25(1) on 29/03/2019 is without juri iction. As per section 25(1), the escaped assessment could have been initiated within five years from the last date of the year to which the return relates originally. By amendment through Finance Act, 2017, the word 'five years' in the section was substituted as 'six years' and hence the time limit was extended to 6 years. Accordingly, the period of limitation for completion of assessment for the Year 2011-12 was extended from 31/03/2017 to 31/03/2018. While so, the KVAT Act 2003 was repealed by the Kerala State Goods and Services Tax Act, section 174 with effect from 22/06/2017 and implemented the new Tax system, 'Goods And Services Tax' in the State in pursuance to the One Hundred And First Amendment of the Constitution of India, except in respect those items coming under the entry 54 of the State List in the VIIth Schedule as stood by the said amendment. Again, by Finance Act 2018 the period of limitation ended on 31/03/2018 was further extended upto 31/03/2019 by substituting the 3rd Proviso to section 25(1) of the Act. This amendment made to the 3rd proviso to section 25(1) for extending the period of limitation from 31/03/2018 to 31/03/2019 by Finance Act was challenged among other issues in a batch of Writ Petitions, Biju A.A. v. State Tax Officer and another (W P No.9963 of 2019 (U)), M/s Calicut Land Mark Builders and Developers India (P) Ltd. v. State Tax Officer and others (W.P (c) No.36953 of 2018 (T) etc., before this Court. By Exhibit P3 Judgment dated 06-12-2019, this Court declared that the amendment made through the Finance Act 2018 is illegal and unconstitutional. This Court held in Paragraph 21 of the judgment that:- the amendments to section 25 of the KVAT Act, through the Kerala Finance Act, 2018 are declared illegal and unconstitutional in as much as they were beyond the legislative competence of the State Legislature. It is submitted that the matter is covered and hence the Exhibit P1 assessment order, completed u/s 25(1) of the Act on 29/03/2019 is without juri iction. Now, the 1st Respondent pressed the already initiated coercive action to recover the amount illegally created by the Exhibit P1 assessment Order. As a consequence, the 3rd Respondent is hastily taking further coercive steps as per the issued Exhibit P2 notice under Revenue Recovery Act in Form No.1 dated 02/08/2019. Hence, it is contended that the impugned Exhibit P1 assessment order has been passed without juri iction and is illegal, ultra vires and unconstitutional and is liable to be set aside as the matter in issue is fully covered in favour of the petitioner as per the dictum laid down by this Court in Exhibit P3 common judgment dated 06-12-2019 in W.P.(C)No.36953/2018 and connected cases. Hence it is prayed that the impugned Ext.P1 assessment order and the consequential Ext.P2 attachment notice etc., issued under the Revenue Recovery Act are liable to be quashed in the interest of justice by this Court. In the light of these factual averments and contentions, the petitioner has filed the instant writ petition with the aforementioned prayers.

It is not in dispute that the impugned Ext.P1 assessment order under Section 25(1) of the Kerala Value Added Tax Act, 2003 issued on 29.3.2019 is pertaining to the assessment year 2011-12. It is also not in dispute that the period of limitation in this case is initially for five years, which has been subsequently extended for further additional one year, thus totally for a period of six years and even after such extension, the permissible limitation period is upto 31.3.2018. In the instant case, the impugned Ext.P1 assessment order under Section 25(1) of the Kerala Value Added Tax Act, 2003 issued on 29.3.2019. That even a notice thereto has been issued only on 23.2.2019 and 18.3.2019 as can be seen from the reference made in that regard on Page No.1 of Ext.P1 order. Therefore, the matter is barred by limitation. Further the matter in issue is fully covered in favour of the petitioner as per the dictum laid down by this Court in Ext.P3 common judgment dated 6.12.2019 rendered in W.P.(C)No.36953/2018 and connected case. Further it is also seen that the impugned order has been passed in flagrant violation of the elementary principles of natural justice in as much the petitioner was not given any opportunity of being heard. Therefore, both on the ground of limitation and also on the ground of violation of principles of natural justice, the impugned order cannot have any existence in the eye law, as it is illegal, ultra vires and unenforceable and hence, it is liable to be quashed and set aside. Accordingly, it is ordered and declared. In that view of the matter, it is ordered that the impugned Ext.P1 assessment order dated 29.3.2019 rendered by the 1st respondent State Tax Officer will stand set aside. Resultantly, it is also ordered that all consequential orders issued in pursuance of Ext.P1 order for enforcement of the said order including orders as per Ext.P2 revenue recovery notice for attachment etc. will also stand quashed and rescinded. With these observations and directions, the above Writ Petition (Civil) will stand disposed of. ALEXANDER THOMAS, JUDGE. acd APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1OF THE ASSESSMENT ORDER DATED 29.3.2019 UNDER SECTION 25(1) OF THE ERSTWHILE KVAT ACT, 2003 FOR THE YEAR 2011-

12.

EXHIBIT P2OF THE REVENUE RECOVERY NOTICE/ATTACHMENT ORDER DATED 2.8.2019. EXHIBIT P3OF THE JUDGMENT IN WPC.NO.9963 OF 2019 (U), WPC.NO.36953 OF 2018 (T) ETC., DATED 6.12.2019 (ONLY RELEVANT PAGES OF PREFIX AND APPENDIX OF THE JUDGMENT).