Kerala High Court
U.V.Martin vs Commercial Tax Officer on 12 April, 2012
Author: P.R.Ramachandra Menon
Bench: P.R.Ramachandra Menon
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON
THURSDAY, THE 12TH DAY OF APRIL 2012/23RD CHAITHRA 1934
WP(C).No. 1000 of 2008 (R)
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PETITIONER:
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U.V.MARTIN, PROPRIETOR, UKKENS TIMBERS,
ARAKKAL JUNCTION, KARUKUTTY, ANGAMALY.
BY ADV. SRI.N.MURALEEDHARAN NAIR.
RESPONDENTS:
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1. COMMERCIAL TAX OFFICER,
ANGAMALY, ERNAKULAM.
2. COMMERCIAL TAX OFFICER,
(AUDIT ASSESSMENT), COMMERCIAL TAX DEPARTMENT,
MATTANCHERRY.
BY SR. GOVERNMENT PLEADER SRI. S. SUDHISH KUMAR.
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 12-04-2012, THE COURT ON THE SAME DAY DELIVERED
THE FOLLOWING:
W.P.(C).NO.1000/2008-R:
APPENDIX
PETITIONER'S EXHIBITS:
EXT.P.1: COPY OF THE REFUND APPLICATION FOR THE MONTH OF MARCH 2006
DTD. 10/05/2006.
EXT.P.2: -DO- -DO- -DO-.
EXT.P.3: COPY OF THE REFUND APPLICATION FOR THE MONTH OF MARCH 2007
DTD. 17/05/2007.
EXT.P.4: COPY OF THE LETTER FILED BY THE PETITIONER BEFORE THE R.1. DTD.
10/05/2006.
EXT.P.5: -DO- -DO- -DO-.
EXT.P.6: COPY OF THE NOTICE ISSUED UNDER SECTION (1) OF THE K V A T ACT
DTD. 09/11/2006.
EXT.P.7: COPY OF THE REPLY FILED BY THE PETITIONER BEFORE THE R.1. DTD.
13/11/2006.
EXT.P.8: COPY OF THE NOTICE ISSUED BY R.2. UNDER SECTION 24 (1) OF THE
K V A T ACT, 2003 DTD. 13/12/2007.
EXT.P.9: COPY OF THE REFUND ADJUSTMENT ORDER ISSUED BY THE R.1. DTD.
24/01/2008 FOR THE YEAR 2007-08.
EXT.P.10: -DO- -DO- FOR THE YEAR 2008-09 DTD. 13/05/2008.
EXT.P.11: COPY OF THE RELEVANT PAGE OF THE LOCAL DELIVERY BOOK.
RESPONDENTS' EXHIBITS: NIL.
//TRUE COPY//
P.A. TO JUDGE.
Prv.
P.R.RAMACHANDRA MENON,J.
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W.P.(C) No.1000 of 2008
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Dated this the 12th day of April, 2012
J U D G M E N T
The rights and liberties of an assessee to carry forward and to set off adjustment of excess input tax credit as provided under Section 11 (6) of the KVAT Act to the next return period, instead of having it sought to be refunded, forms the subject matter in this writ petition. The claim preferred in this regard has been negated issuing Ext.P6 and P8 notices, pointing out that the petitioner is liable to satisfy the tax liability, in respect of subsequent return period with interest and penalty, which are under challenge.
2. The sequence of events is as follows. The petitioner, in the course of the business, purchased various commodities from outside the State of Kerala satisfying the 'Entry Tax' payable under Section 12 of the KVAT Act at the check post. By virtue of the mandate under Section 12 W.P.(C) No.1000 of 2008 2 (2) of the KVAT Act, the petitioner is entitled to have the said payment of tax, to be adjusted against the 'output tax' actually payable by him. Sec 11(6) enable the assessee to carry forward the excess input tax in respect of the return period, to the next return period, to be adjusted against the liability in respect of such return period. By virtue of the above provisions, the petitioner filed Ext.P4 and P5 requests, to adjust the excess input tax credit for the concerned return period,ie, March 2006, to be adjusted against the tax payable for the next return period of April 2006. This request however was not acceded by the concerned respondent, who issued Ext.P6 notice, stating that no such adjustment was possible and that the remedy of the petitioner /assessee was to have it claimed by way of refund. The petitioner was also asked to satisfy the liability in respect of the 'next return period' with interest and penalty, in view of the failure/ lapse on his side.
3. On receipt of Ext.P6 , the petitioner submitted Ext.P7 reply, stating that the petitioner did not require any refund and sought to have it adjusted, more so in view of W.P.(C) No.1000 of 2008 3 the specific enabling provision under the statute. According to the petitioner, nothing was heard for about one year and thereafter Ext.P8 notice was issued under Section 24(1) of the KVAT Act, virtually reiterating the stand as referred to in Ext.P6 notice. This made the petitioner to approach this Court by filing the writ petition, challenging Ext.P6 and P8.
4. The respondents have filed a counter affidavit rebutting the averments and stating that the idea and understanding of the petitioner to have the excess payment, to be carried forward encroaching into the 'next assessment year', without confining the same to the 'next return period' within the same assessment year, is quite wrong and mis conceived . With reference to the statutory provisions, it is said that the action pursued by the petitioner is perfectly within the four walls of the law. It is also pointed out in paragraph 5 of the counter affidavit that the petitioner admittedly has not filed any refund applications.
5. The learned counsel for the petitioner submits that there is absolutely no basis for placing reliance on the proviso to section 11(6) and that there is no bar under the W.P.(C) No.1000 of 2008 4 statute to give adjustment of the excess input tax of March 2006 to be adjusted against the tax liability of the next return period ,ie, April 2006. Reliance is also sought to be placed on Rule 47(5) of the KVAT Act to say that the authorities are justified and are empowered to set off the liability, if any.
6. The learned Counsel for the petitioner submits that the statement in paragraph 5 of the counter affidavit, that the petitioner 'admittedly' has not filed any refund application is not correct and that Exts.P1 and P2 refund applications, produced along with the writ petition, were in fact served upon the concerned respondent, as borne by the receipt given in the local delivery book. A copy of the relevant portion has been produced before this Court as Ext.P11. It is also brought to the notice of this Court, that the very same authority has considered the excess input tax credit for the year 2006-07 and has adjusted the same in respect of the next assessment year 2007-08, as revealed from Ext.P9. Similarly, since there was excess input tax credit in respect of the assessment year 2007-2008 and the W.P.(C) No.1000 of 2008 5 same was kept to be adjusted against the next assessment year ie, 2008-09 as per Ext.P10 and it has been adjusted accordingly. This being the position, the contention raised from the part of the respondents that the excess input tax credit from one assessment year cannot be carried forward, to be adjusted in the next assessment year stands contrary to the stand taken by the respondents themselves and is rather a paradox, submits the learned Counsel.
7. The learned Counsel for the petitioner points out that the only request of the petitioner was to adjust the excess payment in respect of 'March 2006', against the amount payable in respect of 'April 2006', which was liable to be entertained by virtue of mandate under Section 11(6), as the statute does not say in so many words, that the benefit contemplated therein will stand confined to the particular assessment year. It is also stated that, scope of the proviso to Section 11(6) is only to enable the party concerned to have refund; which in no case shall place a bar on the way of the petitioner in claiming the benefit under Section 11(6).
W.P.(C) No.1000 of 2008 6
8. The learned Government Pleader appearing for the respondents fairly concedes that the averment in paragraph 5 of the counter affidavit that the petitioner admittedly has not produced in Ext.P1/P2 refund applications is not correct, as per the materials on record . It is stated that Ext.P1 and P2 refund applications are very much there in the file. It is also stated that there is no dispute with regard to the course pursued by the concerned authority as per Ext.P9 and P10, providing for adjustment on the excess payment, for the assessment years 2006-07 against 2007-08 and the still excess of 2007-08 was adjusted in the next assessment year 2008-09 . It is however added by the learned Government Pleader that, such course is not in conformity with the statutory prescriptions, going by the mandate of Section 11(6) .
9. The fact remains that the petitioner has effected much payment well in advance, resulting in excess input tax credit and the amount is lying at the hands of the Government/department, who was virtually generating funds, making use of the same . It is also a fact that the W.P.(C) No.1000 of 2008 7 petitioner has filed Ext.P1/P2 refund applications, acceptance of which now stands conceded from the part of the revenue. It is a fact, as revealed from Ext.P9/P10, that the respondents have adjusted the excess payments against the subsequent liablity in respect of the subsequent assessment years, while the amount of the petitioner was lying at the hands of the Government, without having the same refunded in spite of Ext.P1/P2 refund applications. There appears no rationale on the part of the respondents in claiming interest and penalty with regard to the payment to be effected by the petitioner in respect of the subsequent assessment years. However, in view of the submissions made by the learned Government Pleader that, an enquiry by the concerned officer, in view of Rule 47 (3), can be caused to be conducted and appropriate orders will be passed, this Court finds it not necessary to consider the scope and effect of the concerned legal provisions; especially with reference to 11(6) in the relevant context; which is left open.
10. The concerned respondent is directed to reconsider W.P.(C) No.1000 of 2008 8 the matter, especially with regard to the objection to be placed by the petitioner and also on the other points, if raised, which are not covered in this writ petition but form the subject matter of Ext.P8. The proceedings as above shall be finalised passing appropriate orders, in accordance with law, as expeditiously as possible, at any rate, within one month from the date of receipt of the additional objections, if any, in response to Ext.P8. It is made clear that, such objections, if any, shall be preferred by the petitioner within 'two weeks' from the date of receipt of a copy of this judgment.
The writ petition is disposed of accordingly.
P.R.RAMACHANDRA MENON.
JUDGE smm W.P.(C) No.1000 of 2008 9 W.P.(C) No.1000 of 2008 10