IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH TUESDAY, THE 8TH JULY 2008 / 17TH ASHADHA 1930 WP(C).No. 32444 of 2007(K) ---------------------------------------------- PETITIONER: ------------------ CHIDAMBARAM TEA ESTATE, PAMBANAR- 685537. REPRESENTED BY ITS MANAGING PARTNER, MR. M.MUTHIAH. BY ADV. SRI.JOSEPH MARKOSE (SR.) SRI.TERRY V.JAMES RESPONDENTS: ---------------------- 1. SALES TAX OFFICER, PEERMADE. 2. DEPUTY COMMISSIONER(APPEALS) COMMERCIAL TAXES, ERNAKULAM. BY GOVERNMENT PLEADER SHRI C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX IN W.P.(C). NO.32444 OF 2007 K PETITIONER'S EXHIBITS: EXT.P1 TRUE COPIES OF CERTIFICATES ISSUED BY THE AUCTIONEERS. EXT.P2 TRUE COPY OF GOVERNMENT ORDER GO(MS) NO.161/2003/TD DATED 22.10.2003. EXT.P3 TRUE COPY OF SRO 491/2006. EXT.P4 TRUE COPY OF JUDGMENT DATED21.2.2007 OF THIS HONOURABLE COURT IN W.P.(C). NO.18046/2006. EXT.P5 TRUE COPY OF ORDER DATED 30.1.2007 OF THE APPELLATE TRIBUNAL, KOTTAYAM IN T.A.110/2006 TO T.A.112/2006. EXT.P6 TRUE COPY OF ASSESSMENT ORDER DATED 26.7.2007 OF THE 1ST RESPONDENT IN RESPECT OF KGST FOR 2002 - 03. EXT.P6(A) TRUE COPY OF ASSESSMENT ORDER DATED 26.7.2007 OF THE 1ST RESPONDENT IN RESPECT OF CST FOR 2003 - 04. EXT.P7 TRUE COPY OF ASSESSMENT ORDER DATED 30.11.2006 FOR 2002 - 03 ` ISSUED TO M/S. BEST TEA BROKERS PVT. LTD. EXT.P8 TRUE COPY OF ASSESSMENT ORDER DATED 30.11.2006 FOR 2003 - 04 ISSUED TO M/S. BEST TEA BROKERS PVT. LTD. EXT.P9 TRUE COPY OF APPEAL DATED 18.10.2007 OF THE PETITIONER AGAINST EXT.P6 ORDER. EXT.P10 TRUE COPY OF APPEAL DATED 18.10.2007 OF THE PETITIONER AGAINST EXT.P6(A) ORDER. EXT.P11 TRUE COPY OF STAY PETITION DATED 18.10.2007 OF THE PETITIONER AGAINST EXT.P6 ORDER. EXT.P12 TRUE COPY OF STAY PETITION DATED 18.10.2007 OF THE PETITIONER AGAINST EXT.P6(A) ORDER. RESPONDENTS' EXHIBITS: NIL. // TRUE COPY// PS TO JUDGE K. M. JOSEPH, J. -------------------------------------- W.P.C. NO. 32444 OF 2007 K -------------------------------------- Dated this the 8th July, 2008 JUDGMENT Petitioner challenges Exts.P6 and P6(a). Exts. P6 and P6 (a) are revised assessment orders passed in relation to the petitioner under the KGST Act pursuant to Ext.P5 order passed by the Appellate Tribunal. 2. Briefly put, the case of the petitioner is as follows: Petitioner is a planter. The tea belonging to the petitioner was sold in the auction held at Kochi. Petitioner engages brokers who sell the tea. Under the KGST Act liability is cast on the seller of tea at the point of first sale in the State by dealer liable to pay tax. Tax is leviable at eight per cent. According to petitioner, for a long period of time, the practice which was obtaining was that in respect of the tea sold at Kochi auction, tax is being assessed at the hands of the auctioneers/brokers on condition that they give a Certificate to the effect that the tea which has been sold in the auction as being exported. The tea WPC.32444/07 K 2 planters were being exempted from payment of tax in respect of the export turnover on the basis of the Certificate given by the auctioneers/brokers. For the assessment years 2002 - 2003 and 2003 - 2004, the claim for exemption came to be rejected. SRO No.691/99 came to be issued. Therein also, tea sold for export came to be exempted on fulfillment of three conditions. one of the conditions was that a Certificate in Annexure II be produced by the seller. Petitioner did not produce the Certificate in Annexure II as required in the Notification in 1999. It was consequently that exemption was rejected. In Appeal, the Tribunal by Ext.P5, took note of the subsequent Notifications issued under Section 10 which is produced as Ext.P3. In Ext.P3, the Government apparently taking note of the position obtaining in the past, ordered exemption of tea sold for export on condition that Certificate is issued by the auctioneer/broker to the effect that he has paid the entire tax and also undertakes to clear any liability. Referring to the subsequent Notifications issued in 2006, by Ext.P5, the Tribunal took the view that in WPC.32444/07 K 3 respect of the assessment years 2002 - 2003 and 2003 - 2004, Certificate of the petitioner must be accepted and order passed in accordance with law. Exemption has been denied. It is thereupon that Exts.P6 and P6(a) came to be passed. Petitioner has preferred Appeals. 3. I heard Shri Joseph Markos, learned senior counsel appearing for the petitioner and also the learned Government Pleader. Learned senior counsel for petitioner would submit that the Tribunal having directed the assessing authority to accept the Certificate, the assessing authority has acted illegally and it was not correct in denying exemption. The denial of exemption in Exts.P6 and P6(a) orders is for the reason that while the petitioner has produced Ext.P1 Certificates from the broker for both the years, there is no undertaking in the Certificates that the broker would pay any tax, if any liability arises in terms of Ext.P3 Notification. It is for this reason that exemption has been apparently denied to the petitioner. According to the petitioner, the denial of exemption should not WPC.32444/07 K 4 be sustained as it is too technical. He would submit that when once the broker has certified that he had paid the tax, it is illegal to deny the benefit of exemption. He would also refer to Rule 9k of the KGST Rules to contend that when once an agent has been assessed, the principal cannot be taxed all over again and that would amount to levying tax twice, which is impermissible in law. 4. Per contra, learned Government Pleader would submit that it is legally sustainable. I would think that having regard to the fact that the petitioner has preferred Appeals which are pending since October, 2007, petitioner can pursue the appellate remedy. In such circumstances, the Writ Petition is disposed of directing that recovery proceedings initiated against the petitioner pursuant to Exts.P6 and P6(a) shall stand stayed on condition that the petitioner deposits twenty per cent of the amount demanded within a period of one month from today. Sd/= K. M. JOSEPH, JUDGE kbk. // True copy// PS to Judge WPC.32444/07 K 5