Kallat Builders PVT.LTD vs. The State Of Kerala - Kerala High Court, 19 February 2019

Cause title — parties, addresses and appearances

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU TUESDAY ,THE 19TH DAY OF FEBRUARY 2019 / 30TH MAGHA, 1940 WP(C).No. 4889 of 2019 PETITIONER/S: M/S.KALLAT BUILDERS PVT.LTD KALPETTA, WAYANAD, PIN-673 122 REPRESENTED BY ITS MANAGING DIRECTOR MR. TAHIR KALLAT, BY ADVS. SRI.SOJAN MATHEW SMT.K.J.VALSALA KUMARI SRI.K.N.KRISHNAN NAMBOOTHIRI SRI.V.C.CHARLY RESPONDENT/S: 1 THE STATE OF KERALA REP. BY THE PRINCIPAL SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695001. 2 THE STATE TAX OFFICER (INTELLIGENCE) SQUAD NO.III, STATE GOODS AND SERVICES TAX DEPARTMENT, MANANTHAVADY, WAYANAD, PIN-673121. OTHER PRESENT: GP DR. THUSHARA JAMES. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.4889/2019 -2-

J U D G M E N T The petitioner, a private limited company, is a registered dealer under the KVAT Act. Initially, the petitioner has opted for compounding under Section 8A of the Act. When it undertook two construction projects during the year 2014-15, it paid the tax at the compounded rate, and filed audited statements.

On 26.02.2015 the then incumbent Intelligence Officer inspected the petitioner's business and prepared a Shop Inspection Report. After a gap of about two years, the successor Intelligence Officer issued the Ext.P3 penalty notice and proceeded with the matter. Eventually that has resulted in the Ext.P8. 3. The petitioner in this writ petition assails the Ext.P8 on twin grounds: One, the order suffers on merits; and two, it violates the principles of natural justice.

In response to the submissions made by the petitioner's counsel, the Government Pleader has taken me through the impugned order. She read out a few portions from it to underline that the second respondent has followed the procedure to perfection and that there is no violation of any principles of natural justice.

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Heard the petitioner's counsel and the Government Pleader, too.

As I gather, the petitioner's counsel has persisted with her plea that the initial Intelligence Officer was convinced of the explanation the petitioner had submitted. But his successor, after a gap of about two years, issued the Ext.P3. According to her, the successor Intelligence Officer did not insist on any further records from the petitioner. Then, the learned counsel has also drawn my attention to the Ext.P8 impugned order, especially the extracted reply the petitioner submitted, and it reads: “Inviting kind attention to the notice cited above. We have submitted the books of accounts with audited statement of Accounts in response to your notice before your authority on 04.01.2019. We have also produced reconciled statement of bank transaction relating to the Firm for the year 2014-15, which shows that all the transaction in the recovered documents find a place in the books of accounts and audited statement of Accounts. We hope that the books of accounts, audited statements of accounts and reconciliation statement are sufficient to prove that there is no irregularity in the books of accounts produced before you. However if you feel that further clarification and statements are required please inform us, so that we will file a detailed reply with supporting documents for which a further period of two weeks may be granted to us.”

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Indeed, before the outgoing Intelligence Officer, the petitioner submitted its entire record. So it asserts. The successor officer, of course with some delay, proceeded with the matter from the stage his predecessor had left that. The question of the successor officer’s asking for the record once again from the petitioner does not arise. For the petitioner itself maintains that it submitted the record before the first officer. I reckon the successor officer's issuing a notice satisfies Section 95 of the KVAT Act, too

The record submitted, the first Intelligence Officer might not have acted immediately. That inaction, I am afraid, cannot be regarded as his getting satisfied with the petitioner’s explanation. That satisfaction, if any, must translate into some concrete measure: an order by the Intelligence Officer, say, resulting in the closure of the proceedings. That has not happened. On the contrary, the successor Intelligence Officer simply proceeded with the matter from where it had been left. She, in fact, issued notice and proceeded further. So the replacement of one officer with another does not lead to any disruption in adjudication. The proceedings are deemed to have been continued.

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Then the petitioner's counsel has also, on merits, insisted that the second respondent has not considered the petitioner's books of accounts and other materials the petitioner produced. If that were so, it would not amount to the second respondent’s violating the principles of natural justice. It is then, at best, a shortcoming on merits.

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I, therefore, hold that the petitioner has an efficacious alternative remedy, and must approach the appellate authority.

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Thus, I dismiss the writ petition. But the petitioner has prosecuted this writ petition bona fide. So if it chooses to go for the appellate remedy, the authority concerned will exclude the time the petitioner has spent before this Court. No orders on costs. DAMA SESHADRI NAIDU JUDGE JJJ -6- APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1OF ANNUAL RETURN IN FORM NO.10B EXHIBIT P2OF AUDIT STATEMENT OF ACCOUNTS IN FORM NO.13&13A EXHIBIT P3OF THE PENALTY NOTICE DATED 12.11.2018 ISSUED BY THE 2ND RESPONDENT. EXHIBIT P4OF THE POSTING NOTICE DATED 15.12.2018 ISSUED BY THE 2ND RESPONDENT. EXHIBIT P5OF THE RECONCILIATION STATEMENT. EXHIBIT P6OF THE LETTER DATED 05.01.2019. EXHIBIT P7OF THE REPLY DATED 18.01.2019. EXHIBIT P8OF THE PENALTY ORDER DATED 19.01.2019 ISSUED BY THE 2ND RESPONDENT.