IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURALE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER TUESDAY, THE 5TH AUGUST 2008 / 14TH SRAVANA 1930 W.A.No. 1604 of 2008 ----------------------------------- AGAINST THE JUDGEMENT IN WPC.14246/2008 DATED 26/05/2008 .................... APPELLANT/PETITIONER: ------------------------------------ TOJO MATHEW, AGED 35, S/O. MATHEW, PULIKOTTIL HOUSE, ARANATTUKARA VILLAGE, THRISSUR DISTRICT, PROPRIETOR, M/S. HI-MECH VENTING SERVICES, THRISSUR. BY ADV. SRI.G.SREEKUMAR (CHELUR) SRI.K.RAVI (PARIYARATH) SMT.PREETHY KARUNAKARAN RESPONDENTS/RESPONDENTS: ----------------------------------------------- 1. THE DEPUTY COMMISSIONER APPEALS, I.S. PRESS ROAD, ERNAKULAM. 2. THE COMMERCIAL TAX OFFICER, OFFICE OF THE ASSISTANT COMMISSIONER, COMMERCIAL TAXES, THRISSUR. 3. THE STATE OF KERALA, DEPARTMENT OF FINANCE, GOVT. SECRETARIAT, THIRUVANANTHAPURAM. 4. THE INSPECTING ASSISTANT COMMISSIONER, DEPARTMENT OF COMMERCIAL TAXES, THRISSUR. BY SR.GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 05/08/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------- W.A.No.1604 of 2008 ------------------------------------------ Dated, this the 5th day of August, 2008 JUDGMENT H.L.Dattu, C.J. This writ appeal is directed against the order passed by the learned Single Judge in W.P.(C) No.14246 of 2008 dated 26.5.2008. By the impugned order, the learned Single Judge has sustained the interlocutory order passed by the first appellate authority dated 19.3.2008. 2. The impugned order passed by the first appellate authority on the interlocutory application filed by the assessee along with the memorandum of appeal reads as under:- “This appeal is filed by M/s. Hi mech Vending Services, Civil Lines Road, Ayyanthole, Thrissur and is directed against the orders of assessment under section 24(1) of the KVAT Act, 2003 passed by the Commercial Tax Officer (A.A.), Commercial Taxes, Thrissur for the year 2005-06. Appellant filed petition for stay and as per orders of the Hon'ble High Court of Kerala in WP(C) No.36357/2007 dt.10.12.2007 stay petition was posted for hearing. When the case was posted for hearing Sri.S.Ramakrishnan, Sales Tax Practitioner appeared and heard. It was contended that the assessing authority went wrong in levying 12.5% tax on the sales of Tea making machine and premix as against 4% tax disclosed. The monthly addition made by the assessing W.A.No.1604 of 2008 2 authority was also unwarranted and excessive. Examination of the contentions and verification of the records revealed that there is a prima facie case for granting conditional stay and hence the following orders:- Order No.S.P.162/08 in KVATA 1721/2007 dated 19.3.2008. Collection of Balance demand for the year 2005-06 under KVAT Act is stayed till the disposal of appeal on condition that the petitioner remits 50% (Fifty percent) of the Balance amount due on or before 28.3.2008 and furnish security before the assessing authority for the balance amount to the satisfaction of the assessing authority within One month from receipt of this order . If the conditions are not fulfilled the stay order passed will stand vacated automatically”. 3. We have heard Sri.Sreekumar.G.(Chelur), learned counsel for the assessee and Sri.Muhammed Rafiq, learned counsel for the revenue. 4. The assessee being aggrieved by the order passed by the assessing authority for the assessment year 2005-06 has filed the first appeal before the first appellate authority as provided in the statute. Along with the appeal, the assessee has also filed an application for grant of interim stay of the order passed by the assessing authority and the demand notice issued pursuant thereto. W.A.No.1604 of 2008 3 5. The first appellate authority while considering the application filed by the assessee, has directed the assessee to deposit 50% of the tax payable and to furnish security for the balance amount to the satisfaction of the assessing authority. 6. We were not interfering with the discretionary order passed by the first appellate authority though at times we felt that the appellate authorities are not justified in signing the “Tailor made order”. The reason was, that, the Sales Tax Act is an indirect tax and the assessee is expected to collect the tax as provided in the Schedule to the Act from the purchasers and remit it to the State Government within the time prescribed under the Act and the Rules framed thereunder. We had also kept in our view, that, the State's economy which primarily depends on the sales tax collections, which is required for the developmental activities of the State though on several. occasions, we had orally directed the learned Government Advocate to inform the appellate authority to pass a reasoned order while considering the interlocutory application filed by the assessee. To say the least, the things have not improved. Therefore, we have no other alternative, but to interfere with the mechanical orders passed by the first appellate authorities. 7. In the instant case, a perusal of the order passed by the first W.A.No.1604 of 2008 4 appellate authority while considering the interlocutory application filed by the assessee would only show, that, it has narrated the facts and arguments advanced by the assessee's representative and without expressing its tentative opinion on the controversy involved in the case, has disposed of the application in a cursory manner only by saying: “Examination of the contentions and verification of the records revealed that there is prima facie case for granting conditional stay and hence the following orders”. 8. In our considered view, the first appellate authority while considering the interlocutory application filed along with the memorandum of appeal, should apply its mind to the facts of the case and pass a reasoned order. When we say this, we do not mean that elaborate consideration on each one of the issues raised in the memorandum of appeal. The first appellate authority is expected to express his tentative opinion, why the assessee is entitled for only conditional stay and why not absolute stay. If this consideration is not reflected in the order itself, the only inference that the superior forum would draw is, that, there is total non-application of mind by the first appellate authority while considering the application filed by the assessee. Therefore, it is incumbent upon the appellate authority to give reasons. The order as such must be a speaking order and the decision must be supported by reasons, so that the superior W.A.No.1604 of 2008 5 court is assured that it is in accordance with law. A laconic order unsupported by reasons cannot be upheld. 9. In view of the above, the assessee has to succeed. Accordingly, we allow the appeal and set aside the order passed by the learned Single Judge in the writ petition and the order passed by the first appellate authority in Order No.S.P.162/08 in KVATA 1721/2007 dated 19.3.2008. A direction is issued to the first appellate authority to restore the application filed by the assessee dated 29.10.2007 on its board and dispose of the same in accordance with law and in the light of the observations made by in the course of our order. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE vns/dk