Kerala High Court
Sri. M.S.Divakaran (Director) vs State Of Kerala on 10 November, 2014
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR
TUESDAY THE 31ST DAY OF OCTOBER 2017/9TH KARTHIKA, 1939
,
WP(C).No. 13388 of 2016 (W)
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PETITIONER(S):
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SRI. M.S.DIVAKARAN (DIRECTOR),
M/S PRABHA JEWEL INDUSTRIES (INDIA) PVT. LTD.,
CHERATTUKUZHY ROAD, DOWN HILL.P.O.,
MALAPURAM-676 519.
BY ADV. SRI.K.J.VINCENT (MUNDAMVELI)
RESPONDENT(S):
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1. STATE OF KERALA,
REPRESENTED BY THE SECRETARY TO GOVERNMENT,
TAXES DEPARTMENT, SECRETARIAT,
TRIVANDRUM-695 001.
2. THE INTELLIGENCE OFFICER (INVESTIGATION BRANCH),
MATTANCHERRY AT ALUVA, CIVIL STATION,
ALUVA-683 101.
BY GOVERNMENT PLEADER SRI.SHAMSUDHEEN V.K.
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION
ON 31-10-2017,ALONG WITH WPC.NO.33399/2017, THE COURT ON THE
SAME DAY DELIVERED THE FOLLOWING:
TS
WP(C).No. 13388 of 2016 (W)
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APPENDIX
PETITIONER(S)' EXHIBITS
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EXHIBIT P1 TRUE COPY OF CERTIFICATE OF PARTICIPATION DATED 10.11.2014
BY THE KERALA GEM AND JEWELLERY SHOW 2014 BY THE
ORGANIZERS.
EXHIBIT P2 TRUE COPY OF DOCUMENT OF TRANSPORTING THE ORNAMENTS
TO THE EXHIBITION DATED 5.12.14.
EXHIBIT P3 TRUE COPY OF SHOP INSPECTION REPORT BEARING NO.075188
DATED 7.12.14(BETWEEN 1600 HRS TO 2200 HRS) INTELLIGENCE
OFFICER (IB) MATTANCHERY AT CIVIL STATION, ALUVA.
EXHIBIT P4 TRUE COPY OF THE APPLICATION FOR PERMISSION TO
PARTICIPATE IN THE EXHIBITION DATED 8.12.14 ALONG WITH E
RECEIPT FOR PAYMENT OF FEE.
EXHIBIT P5 TRUE COPY OF THE NOTICE BEARING NO. IBM/14-15 DATED 7.12.14
OF THE SECOND RESPONDENT.
EXHIBIT P6 TRUE COPY OF REPLY DATED 9.12.14 FILED BY THE PETITIONER
ADMITTING THE NON APPLICATION FOR PERMIT TO PARTICIPATE IN
THE EXHIBITION.
EXHIBIT P7 TRUE COPY OF ORDER OF THE INTELLIGENCE OFFICER(IB)
MATTANCHERY NO.IBM/IV/IR/205/14-15 DATED 9.12.14 ALONG WITH
CHALAN FOR PAYMENT.
EXHIBIT P8 TRUE COPY OF REQUEST UNDER SECTION 66 OF THE KVAT ACT
FOR RECTIFICATION OF MISTAKE DATED 12.2.15 FILED BY THE
PETITIONER.
RESPONDENT(S)' EXHIBITS - NIL
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/TRUE COPY/
PS TO JUDGE
TS
A.K.JAYASANKARAN NAMBIAR, J.
...................................................................
W.P.(C).No.13388 Of 2016
&
W.P.(C).No.33399 Of 2017
.....................................................................
Dated this the 31st day of October, 2017
JUDGMENT
As both these writ petitions involve a common issue, they are taken up together for consideration and disposed by this common judgment.
2. The petitioner company is a registered dealer on the rolls of Commercial Tax Officer, Manjeri, and engaged in the manufacture of gold ornaments. Pursuant to penalty proceedings that were initiated against the petitioner, the petitioner approached the respondents and compounded the offence by remitting a compounding fee of Rs.2,91,000/-. In W.P.(C).No.13388 of 2016, it is the case of the petitioner that the compounding fee was paid on an erroneous legal advise obtained by the petitioner and the actual compounding fee payable was only Rs.10,000/-. In the writ petition, the petitioner seeks a direction to the 2nd respondent to pass an order in Ext.P8 rectification application preferred by the petitioner, seeking a rectification of the compounding fee payable W.P.(C).No.13388 Of 2016 & W.P.(C).No.33399 Of 2017 2 by him in respect of the offence that he had compounded. In W.P. (C).No.33399 of 2017, the petitioner impugns Ext.P6 pre- assessment notice issued by the 3rd respondent therein, on the ground that, Ext.P6 pre-assessment notice is based entirely on the compounding, by the petitioner, of the offence alleged against him. It is the case of the petitioner that inasmuch as the compounding proceedings itself have been challenged in W.P.(C).No.13388 of 2016, Ext.P6 notice issued to him under Section 25 (1) of the Kerala Value Added Tax Act (hereinafter referred to as 'the KVAT Act') ought not be permitted to proceed for adjudication.
3. I have heard the learned counsel appearing for the petitioner and also the learned Government Pleader appearing for the respondents.
4. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I find from a perusal of the averments in the W.P.(C).No.13388 of 2016 that what the petitioner seeks to do is to wriggle out of an option exercised by him to compound an offence that was alleged against him under the KVAT Act. It is trite that an assessee who seeks to compound an offence by paying the tax and the necessary W.P.(C).No.13388 Of 2016 & W.P.(C).No.33399 Of 2017 3 compounding fee, enters into a contract with the Department from which neither side can resile. By choosing to compound the offence, the petitioner obtained an immunity from further proceedings such as prosecution, and therefore, at this belated stage, after having enjoyed the fruits of exercising the compounding option, the petitioner cannot turn around and resile from the option exercised by him. I am, therefore, of the view that the prayer sought for in W.P.(C).No.13388 of 2016 cannot be granted. The said writ petition, therefore, fails and is accordingly dismissed.
As regards W.P.(C).No.33399 of 2017, as already noted the prayer of the petitioner is for a direction to keep in abeyance further proceedings pursuant to Ext.P6 pre-assessment notice that has been served on the petitioner. The petitioner would contend, based on the judgment of this Court in Velimparambil Hardwares v. State of Kerala [(1994) 92 STC 98 (Ker)] that the assessing authority cannot place reliance on a compounding option exercised by the petitioner, to compound an offence that was alleged against him under the KVAT Act, without understanding the circumstances in which the compounding option was exercised, while completing the assessment proceedings. The W.P.(C).No.13388 Of 2016 & W.P.(C).No.33399 Of 2017 4 reliance is placed on the decision to contend that in the assessment proceedings, it would be open to the petitioner to demonstrate by specific pleadings and evidence that the details of facts contained in a compounding proceedings are incorrect or untrue or the admissions and statements made in those proceedings were mistakenly made or rendered under peculiar context of circumstances. The petitioner also places reliance on the decision of the Karnataka High Court in Assistant Commercial Tax Officer (Intelligence) v. N.N.Jariwala [1992 86 STC page 229] for the same purpose. On a consideration of the submissions of the learned counsel for the petitioner, I find force in the said submission of the learned counsel for the petitioner based on the decisions cited above, and while relegating the petitioner to his remedy of getting the pre-assessment notice adjudicated before the assessing authority, I make it clear that the assessing authority shall, while adjudicating the pre-assessment notice, after considering the contentions of the petitioner and also hearing him, also take note of the decisions referred above and consider the objections of the petitioner with regard to the alleged peculiar circumstances under which the compounding proceedings were completed against the petitioner. Leaving open the liberty of the petitioner to adduce such evidence as is necessary to support W.P.(C).No.13388 Of 2016 & W.P.(C).No.33399 Of 2017 5 the aforesaid contention, before the assessing authority W.P.(C). No.33399 of 2017 is also dismissed without interfering with Ext.P6 notice impugned therein, and relegating the petitioner to his alternative remedy of getting the matter adjudicated before the assessing authority. The 3rd respondent Assessing Officer shall consider and pass orders pursuant to Ext.P6 notice within a period of two months from the date of receipt of a copy of this judgment, after hearing the petitioner. To enable the 3rd respondent to do so, I direct the petitioner to appear before the 3rd respondent at his office at 11 a.m on 10.11.2017. The respondent shall pass orders as directed within a month thereafter. The petitioner shall produce a copy of this judgement, together with a copy of the writ petition before the 3rd respondent for further action.
Sd/-
A.K.JAYASANKARAN NAMBIAR JUDGE mns/31.10.17