Kerala High Court
Sauda Beevi Shoukathali vs The State Tax Officer on 29 January, 2020
Author: Alexander Thomas
Bench: Alexander Thomas
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.103 OF 2020(K)
PETITIONER/S:
SAUDA BEEVI SHOUKATHALI
AGED 37 YEARS
VARAPILLIKUDY HOUSE, VENDUVAZHY, KARUKADAM P.O.
BY ADVS.
SMT.S.K.DEVI
SRI.SHANMUGHAM D. JAYAN
SRI.M.RAJ MOHAN
SMT.P.K.MAYA DEVI
RESPONDENT/S:
1 THE STATE TAX OFFICER
STATE GOODS AND SERVICE TAX DEPARTMENT,
KOTHAMANGALAM , KERALA 686 691.
2 THE INTELLIGENCE OFFICER,
SQUAD NO.1, SGST DEPARTMENT, MATTANCHERRY AT ALUVA
683 101.
3 THE DEPUTY TAHASILDAR, KOTHAMANGALAM 686 691.
OTHER PRESENT:
SMT.M.M.JASMINE, GOVT.PLEADER
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
29.01.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
ALEXANDER THOMAS, J.
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W.P.(C).No. 103 of 2020
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Dated this the 29th day of January, 2020
JUDGMENT
The prayers in the above Writ Petition (Civil) are as follows:
"i) to call for the records leading to Ext.P-1 order.
ii) to issue a writ of certiorari and quash Ext.P-1 assessment order.
iii) to declare that the 1st respondent acted against the provisions of the Act and the Rules made thereunder.
iv) to declare that the action of the 1st respondent is not to protect the interest of the revenue.
v) to grant such other relief as this Hon'ble Court may deem fit and proper to grant in the circumstances of the case."
2. Heard Smt.S.K.Devi, learned counsel appearing for the petitioner and Smt.M.M.Jasmine, learned Government Pleader appearing for the respondents.
3. The petitioner would aver that the petitioner is doing business in hatchery and that the impugned Ext.P-1 assessment order dated 29.7.2019 rendered under Sec. 22(3) of the Kerala Value Added Tax Act, 2003 (KVAT Act), has been issued by the 1 st respondent State Tax Officer for the assessment year 2012-13. It is stated that an inspection was conducted on 12.2.2016 by the 2nd respondent and the entire records upto that date were seized by him from petitioner. It is further stated that as per the mandate of Rule 63(7) of the KAVT W.P.(C).103/2020 - : 3 :-
Rules, the seized records have to be returned to the dealer within 30 days and the said period upto 60 is provided, subject to condition that permission is obtained from the designated higher authorities concerned. That immediately after receipt of pre-assessment notice, the petitioner submitted Ext.P-2 letter dated 27.3.2019 to the 1 st respondent and requested for return of the seized documents in view of the mandate contained in Rule 63(7) of the KVAT Rules, but that without returning the seized documents and without granting reasonable opportunity of being heard to the petitioner, as mandated under Sec.22(4) of the KVAT Act, the 1 st respondent has rendered the impugned Ext.P-1 order dated 29.7.2019 which, according to the petitioner, is on sole base of the penalty order. Further it is stated that the illegality of the said penalty order has already been impugned by the petitioner in W.P.(C).No. 16930/2018 filed by the petitioner herein before this Court and that the said Writ Petition is pending.
The petitioner would contend that the impugned Ext.P-1 assessment order has been passed in flagrant violation of the principles of natural justice and against the provisions of Sec. 22(4) of the KVAT Act, etc. It is in the light of these aspects that the petitioner has filed the instant Writ Petition (Civil) with the aforementioned prayers.
W.P.(C).103/2020 - : 4 :-
4. The 1st respondent was directed to give specific and precise factual instructions to the learned Government Pleader as to whether an opportunity of personal hearing was granted to the petitioner before the impugned Ext.P-1 assessment order was rendered by him. Today when the matter was taken up for consideration, Smt.M.M.Jasmine, the learned Government Pleader would fairly submit on the basis of the instructions from the 1 st respondent that the petitioner was not afforded a reasonable opportunity of being heard by the 1 st respondent before the impugned Ext.P-1 order was issued.
5. Smt.S.K.Devi, learned counsel appearing for the petitioner would place reliance on the decisions as in Yeses International v.
State of Kerala [(2009) 23 VST 130 (Ker)(D.B)] as well as the decision in U.K.Monu Timbers v. State of Kerala [2012 (3) KHC 111(D.B)]. It has been held by this Court in para 20 of the decision in Yeses International's case supra as follows:
"20...... ...The assessment order so passed is only yet another affirmation or confirmation or endorsement of the penalty order passed by the intelligence officer, except an addition made towards the probable suppression during the assessment year in question. This is not what is expected of the assessing authority, even while completing the assessment proceedings by resorting to best judgment assessment. The order of assessment should definitely indicate the application of mind by the assessing authority even while completing the best judgment assessment and he is not expected to emboss his "seal of approval" to the orders made by the intelligence officer of the department, since both W.P.(C).103/2020 - : 5 :-
these proceedings are distinct and different. In our considered view, the assessing authority has not independently applied his mind, but has merely adopted whatever that was done by the intelligence officer of the department for the purpose of imposing penalty under Section 45A of the Act. As we have already observed that the assessing officer is a quasi judicial authority and while exercising his quasi judicial function, he has to apply his mind independently and while doing so, can also take into consideration the findings of the intelligence officer of the department and at any rate, that cannot be the sole basis. In this view of the matter, we cannot sustain the order passed by the assessing authority. ........"
In para 16 of the decision in U.K.Monu Timbers v. State of Kerala [2012 (3) KHC 111 (D.B), this Court has held as follows:
"16. Art.265 of the Constitution of India provides that no tax shall be levied or collected except by authority of law. No tax can be levied by the Government in the absence of specific authorisation by statute. Taxation necessarily takes within its fold four aspects or components, being (i) the taxable event, (ii) the person on whom the levy is imposed,
(iii) the rate of tax, and (iv) the measure or value to which the rate is applied. These four aspects being the essential components of taxation, necessarily falls within the exclusive jurisdiction of the legislature.
Briefly stated, these components are to be decided by the legislature and spelt out in the statute. There cannot be any delegation on this aspect and the source of such power cannot at all be thrown or left to sprout within the thickets of subordinate legislation. The mandate under Art.265 read with Art.245 and the words employed in Entry 54 in List II of the Seventh Schedule empowers the State Legislature to impose and collect tax on sale of goods and the imposition shall be only in such manner and none other."
6. Sec.22 of the KVAT Act, 2003 reads as follows:
"Sec.22: Assessment in case of non-filing of return and filing of defective return.- (1) Where the return submitted under sub- section (1) of section 20 is not in the prescribed manner or not accompanied by the prescribed documents or with incorrect particulars, the assessing authority shall, after recording its reasons, reject the return with due notice to the dealer.
Provided that the payment of any tax declared as payable as per the return shall be provisionally accepted.
(2) A dealer whose return is rejected under sub-section (1) may, file a fresh return curing the defects in such manner and with in such time as may be prescribed file a fresh return curing the defects in such manner and accompanied by such documents as provided under sub-
W.P.(C).103/2020 - : 6 :-
section (1) of section 20 together with proof of payment of interest on the tax payable at the rates provided under section 31 for the period from the due date of filing of return till the date of filing of such fresh return. On the receipt of such return by the assessing authority, the assessment for the return period shall, subject to the provisions of section 24 and section 25, be deemed to have been completed.
(3) If any dealer fails to submit any return as provided under subsection (1) of section 20 or files incorrect return and fails to file a fresh return as provided under sub-section (2), the assessing authority shall estimate the turnover of the return period and complete the assessment to the best of its judgment.
(4) No assessment under subsection (3) of this section shall be completed without affording the dealer an opportunity of being heard.
(5) On receipt of the notice under sub-section (4), if the dealer files a return for the return period as provided under subsection (1) of section 20 and accompanied by proof of payment of tax payable and interest on this amount from the due date for filing of return till the date of filing of return at the rates specified in section 31 and double the amount of interest so due as penalty the assessing authority shall drop the proposal for assessment under sub- section (3) and the assessment for the return period shall be deemed to have been completed on receipt of such return.
(6) Any assessment, levy and collection of tax under this Act shall be in such manner as may be prescribed.
(7) Where on scrutiny of returns or verification of accounts in any proceedings under this Act, in respect of dealers paying tax under sub section (5) of section 6, it is found that the amount of tax, if any, paid by such dealer is less than the amount of tax he is liable to pay on finalizing such proceedings, the assessing authority shall direct the dealer to pay difference of tax between the amount of tax already paid and that fixed in such proceedings, together with thrice the amount of such difference as penalty.
(8) No proceeding made under sub-section (7) shall be completed without affording the dealer an opportunity of being heard.
(9) Notwithstanding anything contained in this Act, where an offence has been detected under the Act in respect of a return filed by a dealer or otherwise and proceedings initiated under this Act, the dealer shall not be permitted to revise the return till such proceedings are finalized.
(10) Where the proceedings referred to in the above sub-section are finalized under section 74 on payment of tax due along with the compounding fee, the dealer may thereafter file a revised return W.P.(C).103/2020 - : 7 :-
incorporating such turnover covered in such proceedings within a period of three months from the finalization of such proceedings and on the receipt of such return by the assessing authority, the assessment for the return period or periods shall, subject to the provisions of sections 24 and 25, be deemed to have been completed:
Provided that where a pattern of suppression is detected the assessing authority shall proceed with best judgment assessment in accordance with the provisions of sections 24 and 25, as the case may be."
7. It is well established that, in view of the abovesaid provisions contained in Sec. 22(4) of the above Act, the assessee not only has the right in the general law to be heard before an adverse decision is taken, but also has statutory right conferred as per Sec. 22 (4) of the KVAT Act to be heard before the assessment order as in the above nature is rendered. In the instant case, such reasonable opportunity of being heard to the petitioner has been denied. Therefore, the impugned decision is patently illegal and ultra vires and is liable to be quashed. Accordingly, it is so declared and ordered. In that view of the matter it is ordered that the impugned Ext.P-1 order will stand quashed and the matter in relation to the assessment in question shall stand remitted to the 1 st respondent for consideration and decision afresh. The 1st respondent will issue notice of hearing to the petitioner and thereafter, the petitioner will submit her written submissions in the matter and the 1 st respondent will afford a reasonable opportunity of being heard to the petitioner W.P.(C).103/2020 - : 8 :-
through the authorised representative/counsel if any, and then will advert to and consider all the contentions of the petitioner and after taking into account all the relevant aspects of the matter, may render a considered decision in the matter of the assessment in question for the assessment year concerned. Action in this regard may be duly finalised without much delay, preferably within a period of 2 to 3 months from the date of production of a certified copy of this judgment.
8. Rule 63(7) of the KVAT Rules, 2005, reads as follows:
"Rule 63. Search and seizure of documents. - (1) ....
xxx xxx xxx (7) If on search, such officer finds any accounts, registers or other documents which he has reasons to suspect that the dealer is maintaining with a view to evading the payment of any tax or fee due from him under the Act, he shall, for reasons to be recorded in writing, seize such accounts, registers and documents of the dealer as may be necessary and shall give the dealer a receipt for the same. The records seized shall be signed by the offices seizing them and a note to that effect shall be made in the receipt given to the dealer. The accounts and registers so seized shall be returned to the dealer within 30 days and, in cases where permission of the next higher authority under sub-section (6) of section 44 has been obtained, within 60 days from the date of seizure, unless they are required for a prosecution."
As regards the subsidiary plea made by the learned counsel for petitioner regarding non-furnishing of the originals of the seized documents as envisaged in Rule 63(7) of the KVAT Rules, Smt.M.M.Jasmine, learned Government Pleader appearing for the W.P.(C).103/2020 - : 9 :-
respondents would submit that photocopies of the seized documents have already been furnished to the petitioner on 22.3.2018. However, Smt.S.K.Devi, the learned counsel for the petitioner would submit on the basis of the instructions of her party that the photocopies furnished to the petitioner are not authenticated copies of the original records and that the originals of the seized records are now with the 1st respondent. If that be so, the 1 st respondent will ensure that attested photocopies of all the records seized from the petitioner shall be immediately furnished to the petitioner without any further delay, within a period of one week, so as to enable the petitioner to submit written submissions in the matter as aforestated. Further the 1 st respondent may seriously consider the return of the original records in the light of the mandate contained in Rule 63(7) of the KVAT Rules without much delay, if a request is made by the petitioner in that regard, taking into account the provisions contained in Rule 63(7) of the KVAT Rules.
With these observations and directions, the Writ Petition (Civil) stands finally disposed of.
Sd/-
sdk+ ALEXANDER THOMAS, JUDGE
W.P.(C).103/2020 - : 10 :-
APPENDIX
PETITIONER'S/S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE ORDER NO. 489/18/2012-13 DATED 29.7.2019.
EXHIBIT P2 TRUE COPY OF THE LETTER DATED 27.3.2019. EXHIBIT P3 TRUE COPY OF THE DEMAND NOTICE NO. RRC NO.
2019/15790/07 DATED 29.11.2019 U/S. 7 AND 34 OF THE KRR ACT.