IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER WEDNESDAY, THE 6TH AUGUST 2008 / 15TH SRAVANA 1930 WA.No. 1641 of 2008 --------------------- AGAINST THE JUDGEMENT IN WPC.20591/2008 Dated 22/07/2008 .................... APPELLANT: PETITIONER : ------------------------------------- M/S.SUPREME ELECTRICAL ENGINEERING(P)LTD 61/2301, CHAMMONY HOUSE, KATTAKARA ROAD EAST, KALOOR COCHIN-682017, REPRESENTED BY ITS DIRECTOR M.B. SIVAKUMAR. BY ADV. SRI.DALE P.KURIEN RESPONDENTS: RESPONDENTS : --------------------------------------------- 1. COMMERCIAL TAX OFFICER (W & LT), COMMERCIAL TAXES DEPARTMENT, COMMERCIAL TAX COMPLEX, M.G.ROAD, PERUMANOOR, KOCHI. 2. DEPUTY COMMISSIONER (APPEALS)-II, COMMERCIAL TAXES, ERNAKULAM. R1 & R2 BY SPL. GOVERNMENT PLEADER, SRI. VINOD CHANDRAN. THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 06/08/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - W.A.No. 1641 OF 2008 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 6th day of August 2008 JUDGMENT H.L.DATTU, C.J. This Writ Appeal is directed against the order passed by a learned Single Judge in WP(C) No.20591 of 2008 dated 22.07.2008. By the impugned order, the learned Single Judge has sustained the interlocutory order passed by the first Appellate Authority, dated 11.06.2008. 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:- “These three appeals were filed by M/s.Supreme Electrical Engineering (P) Ltd., Kaloor, Kochi-17 and are directed against the orders of the Commercial Tax Officer (WC), Commercial Taxes, Ernakulam for the years 2005-06 & 2006-07 (1st and 2nd Quarter) under KVAT Act. Appellant filed petitions for stay and Sri.T.S.Ramaswamy, Chartered Accountant was heard. It was contended that the Assessing Authority went wrong in levying 12.5% tax on works contract involved in the transfer not in the form of goods with retrospective effect from 01.7.2006. WA No. 1641/2008 2 Examination of the contentions and verification of records revealed that there is prima facie case for granting conditional stay. In the circumstances the following orders are passed: ORDER NO.SP.333/08 IN KVAT-1488/08, 1489/08 & 1490/08 DATED 11 - 06 - 2008 Payment of balance tax for the years 2006-07 & 2007-08 (1st and 2nd Quarters) are stayed till the disposal of appeals, on condition that the petitioner remits 40% each for both the year of the balance tax and furnishes security for the balance amount to the satisfaction of the assessing authority within a period of one month from the date of this order. If the conditions are not fulfilled, the stay order passed will stand vacated automatically.”. 3. We have heard Sri.Dale P.Kurian, learned counsel for the assessee and Sri.Vinod Chandran, learned counsel for the revenue. 4. The assessee being aggrieved by the order passed by the assessing authority for the assessment year 2005-06 and 2006-07, 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 orders passed by the assessing authority and the demand notices issued pursuant thereto. 5. The first appellate authority while considering the application filed by WA No. 1641/2008 3 the assessee, has directed the assessee to deposit 40% of the tax payable each, for both the years 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 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 WA No. 1641/2008 4 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. In the circumstances the following orders are passed”. 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 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 WA No. 1641/2008 5 writ petition and the order passed by the first appellate authority in Order No..SP.333/08 IN KVAT-1488/08, 1489/08 & 1490/08 dated 11-06-2008 A direction is issued to the first appellate authority to restore the application filed by the assessee dated 2.6.2008 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. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE ttb