M/S. Saj Batteries Private Limited vs. The Deputy Commissioner (Intelligence) - Kerala High Court, 21 February 2018

Cause title — parties, addresses and appearances

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR WEDNESDAY, THE 21ST DAY OF FEBRUARY 2018 / 2ND PHALGUNA, 1939 WP(C).No. 2192 of 2018 PETITIONER(S) M/S. SAJ BATTERIES PRIVATE LIMITED 18/1490,KALLUTHANKADAVU,PUTHIYARA P.O, KOZHIKODE 673 004, RERPESENTED BY ITS MANAGER, JIJO V CHERIAN, AGED 37 YEARS,S/O. V.J CHERIAN BY ADVS.SRI.N.M.MADHU SMT.C.S.RAJANI RESPONDENT(S): 1. THE DEPUTY COMMISSIONER (INTELLIGENCE) STATE GOODS AND SERVICES TAX DEPARTMENT, KOZHIKODE 673 018 2. THE INTELLIGENCE OFFICER(IB) COMMERCIAL TAXES,KOZHIKODE 673 001 BY SR.GOVERNMENT PLEADER SRI.V.K.SHAMSUDEEN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21-02-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 2192 of 2018 (Y) APPENDIX PETITIONER(S)' EXHIBITS EXHIBIT P1 TRUE COPY OF THE SPECIAL RESOLUTION OF THE PETITIONER COMPANY DATED 16-01-2018 EXHIBIT P2 TRUE COPY OF THE ORDER BEARING NO. IB/1/20/14-15/C DATED 10-09-2015 EXHIBIT P3 TRUE COPY OF THE JUDGMENT DATED 03-02-2016 IN W.P(C0 NO 3372/2016 EXHIBIT P4 TRUE COPY OF THE ORDER DATED 02-05-2017 EXHIBIT P5 TRUE COPY OF THE NOTICE DATED 10-01-2018 UNDER SEC. 56(1) OF KVAT ACT EXHIBIT P6 TRUE COPY OF THE FIRST INFORMATION REPORT (FIR) FILED AGAINST THE PRACTITIONER EXHIBIT P7 TRUE COPY OF THE ARGUMENT NOTES SUBMITTED ON BEHALF OF THE PETITIONER BEFORE THE SECRETARY, TAXES. RESPONDENTS EXHIBITS: NIL /TRUE COPY/ PS TO JUDGE P.B.SURESH KUMAR, J. --------------------------------------------- W.P.(C) No.2192 of 2018 --------------------------------------------- Dated this the 21st day of February, 2018

JUDGMENT In terms of Ext.P2 order, the petitioner was imposed a penalty of Rs.3,53,862/- under Section 67(1)(b) and (d) of the Kerala Value Added Tax Act, 2003 (the Act). The petitioner challenged Ext.P2 order before this Court in W.P.(C) No.3372 of 2016. As per Ext.P3 judgment, this Court set aside Ext.P2 order and directed the competent authority to consider the matter afresh on the ground that the order was passed without affording the petitioner an opportunity of hearing. Pursuant to Ext.P3 judgment, Ext.P4 order absolving the petitioner from penalty was passed. Later, the first respondent, in exercise of the power under Section 56 of the Act, issued Ext.P5 notice to the petitioner calling upon them to show cause why Ext.P4 order shall not be cancelled. Ext.P5 notice is under challenge in the writ petition.

Heard the learned counsel for the petitioner as also the learned Government Pleader.

The learned counsel for the petitioner contended that the impugned notice indicates that the first respondent has already taken a decision to cancel Ext.P4 order and therefore, the opportunity of hearing is a farce. On merits, it is contended by the learned counsel that sufficient grounds for invoking the power of the first respondent under Section 56 of the Act are not made out in Ext.P5 notice.

The first sentence in the unnumbered third paragraph of Ext.P5 notice reads thus: “For the reasons stated above, I am convinced that the above said order is prejudicial to the interest of State revenue.” It is relying on the aforesaid sentence, the learned counsel for the petitioner contended that the first respondent has already taken a decision to cancel Ext.P4 order. The second sentence in the unnumbered third paragraph of Ext.P5 notice reads thus: “Hence it is proposed to cancel the above proceedings dated 02.05.2017. Suo motu, by invoking powers conferred upon me U/s.56(1) of KVAT Act 2003, as it is prejudicial to the interest of the revenue.” A combined reading of sentences one and two in the unnumbered third paragraph of Ext.P5 notice would indicate beyond doubt that the first sentence contained in the said paragraph only conveys the tentative decision of the first respondent and a final decision will be taken only after the hearing proposed in terms of the said notice. Section 56 of the Act confers power on the first respondent to call for and examine any order passed under the Act by any officer subordinate to him which in his opinion is prejudicial to the interest of revenue and pass such orders thereon as he thinks fit. In Ext.P5, it is alleged by the first respondent that Ext.P4 order has been passed by the competent authority without conducting an effective enquiry in the matter and thus the order is prejudicial to the interest of the State revenue. The petitioner has no case that the first respondent has no power to issue a notice in the nature of Ext.P5. His contention is only that the statement therein that Ext.P4 order has been passed by the competent authority without conducting an effective enquiry is incorrect. If the statement in Ext.P5 that Ext.P4 order has been passed by the competent authority without conducting an effective enquiry is incorrect, it is for the petitioner to point out the said fact to the notice of the first respondent at the time of hearing. The petitioner cannot challenge a notice on that ground in a proceedings of this nature as it is not for this Court to adjudicate the said contention even before the competent authority adjudicate the same. In the said view of the matter, there is no merit in the writ petition and the same is, accordingly, dismissed. P.B.SURESH KUMAR, JUDGE vps 22/2 // PS to Judge