IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN FRIDAY, THE 11TH DECEMBER 2009 / 20TH AGRAHAYANA 1931 WA.No. 2685 of 2009() --------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.25752/2009 Dated 14/10/2009 .................... APPELLANT(S): PETITIONER ------------------------ P.B.ABDUL BASHEER, PEEYES INDUSTRIES, THOTTUPALAM, ERIMAYUR, PALAKKAD DISTRICT. BY ADV. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENT(S): RESPONDENTS: --------------------------- 1. AGRICULTURAL INCOME TAX & COMMERCIAL TAX OFFICER, ALATHUR. 2. TAHSILDAR (REVENUE RECOVERY) TALUK OFFICE, ALATHUR. BY G.P. SRI. MOHAMMED RAFIQ THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 11/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & V.K. MOHANAN, JJ. -------------------------------------------- W. A. No. 2685 OF 2009 -------------------------------------------- Dated this the 11th day of December, 2009 JUDGMENT Ramachandran Nair, J. Writ Appeal is filed against the judgment of the learned single Judge declining to interfere with the orders impugned in the WPC for the reason that appellant has effective alternative remedy under the statute. We have heard counsel appearing for the appellant and Government Pleader appearing for the respondent. 2. Appellant is a registered dealer under the Kerala Value Added Tax Act, hereinafter called the "Act" engaged in blasting, crushing and sale of granite chips and jelly popularly known as crushed metal. During the assessment year 2008-09, vide Ext.P1, the assessing officer granted appellant the facility to pay tax at compounded rate which was based on machine capacity at Rs. 1.6 lakhs. However, appellant's case is that on account of objections from neighbours, appellant could not run the unit and consequently he could not remit tax in terms of Ext.P1. When notice for recovery was issued vide Ext.P2 dated 19.2.2009 2 appellant remitted Rs. 55,000/- in three instalments. However, on account of continued default in payment of balance amount, appellant was called upon to furnish additional security for retaining registration. Since the appellant failed to furnish additional security of Rs. 3 lakhs in terms of demand by the officer, his registration was also cancelled. After cancelling the registration, the assessing officer made regular assessment for the very same year determining tax on estimated turnover. For the failure to pay tax, appellant was also levied heavy penalty vide Ext.P7. WPC was filed challenging four separate orders issued by the Officer, one against cancelling the assessment issued under compounding scheme, second against the assessment made on estimated turnover, third against penalty order and fourth against cancellation of registration. Since appellant has remedy against all these orders before the statutory authorities, the learned single Judge declined to consider the case on merits against which this Appeal is filed. 3. Counsel for the appellant pointed out that the peculiar circumstance, that is resistence from the neighbouring owners, is the ground for appellant's failure to continue business and to pay arrears of tax. According to him, all the impugned orders are illegal, arbitrary 3 and without jurisdiction because the only default on the part of the appellant is non-payment of tax assessed under the compounding scheme vide Ext.P1. We find force in this contention because Ext.P1 is an agreed assessment under the compounding scheme and had the appellant carried on the business, he would have certainly made payment, continued his registration and carried on the business. We do not find any justification for the assessing officer to cancel an assessment completed under the compounding scheme merely because appellant has committed default in payment of tax. Of course, if tax is not paid Officer is free to cancel registration and proceed for recovery. However, cancellation of assessment completed under the compounding scheme and making an assessment on estimated turnover is not justified in this case because the officer has not found anything against the appellant's entitlement for payment of tax under the compounding scheme. So much so, in our view, there is no justification for the learned single Judge to relegate the appellant to statutory authorities because orders are prima facie illegal and without jurisdiction. Further statutory proceedings will only cause undue delay and hardship and the same is not going to benefit the department as well. In our view, a case of failure to run business of this kind should 4 be met with orders which should help the party to restart the business at the earliest which serves the interest of the revenue better. In the circumstances we hold that the cancellation of Ext.P1 assessment completed under the compounding scheme is illegal. Ext.P3 order is therefore quashed. So long as Ext.P1 stands, there is no justification for making assessment on estimated turnover. We therefore vacate Ext.P7 order. The balance orders under challenge are the orders cancelling registration and penalty levied for chronic default committed by the appellant. We feel default is explained by the appellant and therefore a token penalty will serve the ends of justice. We therefore fix the penalty at Rs. 10,000/-. Ext.P8 will therefore stand modified to this extent. Appellant is granted one month's time to remit the entire balance arrears of tax with interest due for the default period under Section 31(5) read with Section 31(6) of the Act. So far as cancellation of registration is concerned, we direct the Officer to recall the order and grant fresh registration after the appellant clears the arrears as above and furnishes security by way of Bank guarantee for Rs. 1 lakh for the prompt payment of tax. We make it clear that registration should be renewed immediately on the appellant complying with all the formalities as above and thereafter Officer will verify the monthly 5 returns filed by the appellant, and he is free to invoke the bank guarantee for recovery of arrears, as and when default is committed in monthly payments and if default is chronic, registration can again be cancelled without any right for renewal. While renewing registration in the same business for the assessee, the Officer will examine the real reason for his stoppage of business and orders renewing registration should be consistent with the licence and other permits required for carrying on business. Writ Appeal is allowed as above. (C.N.RAMACHANDRAN NAIR) Judge. (V.K. MOHANAN) Judge. kk 6