IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.M.JOSEPH THURSDAY, THE 14TH FEBRUARY 2008 / 25TH MAGHA 1929 W.A.No.371 of 2008 -------------------------------------- (AGAINST THE JUDGMENT IN W.P.(C) No.243 of 2008 DATED 31-1-2008) .................... APPELLANT/ PETITIONER:- ------------------------------------- VIANI PAPERS, COCHIN-18, A TRADER REGISTERED UNDER THE SALES TAX ACT, REPRESENTED BY ITS MANAGER FR.JAMES PERAPODAN. BY ADV. SRI.S.VIJAYAN NAYAR RESPONDENTS/ RESPONDENTS:- ------------------------------------------------ 1. FAST TRACK TEAM, COMMERCIAL TAXES, KALAMASSERY, REPRESENTED BY SALES TAX OFFICER, I CIRCLE, KALAMASSERY. 2. THE SALES TAX APPELLATE TRIBUNAL, COCHIN BENCH, REPRESENTED BY ASSISTANT SECRETARY. R1 BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 14/02/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L.Dattu, C.J. & K.M.Joseph, J. ---------------------------------------- W.A.No.371 of 2008 ---------------------------------------- Dated, this the 14th day of February, 2008 JUDGMENT H.L.Dattu,C.J. This Writ Appeal is directed against the orders passed by the learned Single Judge in W.P.(C).No.243 of 2008 dated 31.1.2008. (2) The appellant before us is a dealer registered under the provisions of the Kerala General Sales Tax Act, 1963 (“Act” for short). The assessee, for the assessment years 2002-03, 2003-04 and 2004-05, had filed his annual returns before the assessing authority. In the returns so filed, he had indicated that his taxable turnover is “nil”. (3) The returns so filed by the assessee had been placed before the Fast Track Team, as provided under Section 17D of the Act. (4) The assessee had appeared before the Fast Track Team and had produced the books of accounts. After verification of the same, the Fast Track Team was of the view that the returns filed by the assessee are untrue, incorrect and improper and, therefore, has proceeded to complete the best judgment assessment. (5) Aggrieved by the same, the assessee was before this Court in W.P.(C).No.243 of 2008. The learned Single Judge, being of the view that since the assessee has got a right of appeal under the statute, has declined to entertain the writ petition. (6) Before the learned Single Judge, the assessee's primary contention was that when he files an appeal under Section 17D of the Act, he has to pay the quantified tax liability only if the orders passed by the assessing W.A.No.371 of 2008 - 2 - authority is ex parte and not in any other case. He had argued before the learned Single Judge that in view of the Budget Speech, 2007 of the Finance Minister, it is only in the case of an ex parte asseessment, the quantified tax need be deposited and not otherwise. The learned Single Judge has not accepted the aforesaid contention canvassed and, accordingly, has rejected the writ petition. That is how the petitioner is before us in this appeal. (7) The assessee has given up all those contentions argued and urged before the learned Single Judge. Before us, it is stated by the learned counsel appearing for the assessee, that, the orders passed by the assessing authority is contrary to Circular No.17/07 dated 12.4.2007, issued by the Commissioner of Commercial Taxes. It is further stated that, before passing the best judgment assessment, the Fast Track Team should have issued a pre-assessment notice and, therefore, stated that the orders passed by the Fast Track Team are in violation of the Circulars/Instructions issued by the Commissioner of Commercial Taxes. It is further stated that the Circular/Instruction so issued by the Commissioner of Commercial Taxes is binding on all assessing authorities, including Fast Track Team. Since the Fast Track Team has ignored the aforesaid Circular, this Court should interfere with the orders passed by the assessing authority. (8) In the instant case, the assessee had filed his annual returns for the assessment years in question and in all those returns he had indicated that the taxable turnover is “nil”. However, the Fast Track Team is of the opinion, after going through the books of accounts produced by the assessee, that the returns so filed by the assessee are untrue and incorrect and, therefore, has proceeded to complete the assessment by best judgment assessment. W.A.No.371 of 2008 - 3 - (9) After the introduction of Section 17D of the Act, the Commissioner of Commercial Taxes has issued Circular No.17/07 dated 12.4.2007. The said Circular is binding on the assessing authorities. In the said Circular, in Clause-18, it is stated that in cases where best judgment assessment is required to be passed, pre-assessment notices shall be issued and reasonable opportunity to file reply shall be given to the assessee. (10) As we have already indicated, the assessee in his annual returns filed had stated that his taxable turnover is “nil”. However, the Fast Track Team is of the opinion, after going through the books of accounts produced by the assessee, that the returns filed by the assessee are untrue, incorrect and improper and, therefore, the returns require to be rejected. After coming to the aforesaid conclusion, the fast track team was expected to issue pre-assessment notice before passing the best judgment assessment. Since that has not been done, the same is contrary to the Circular/Instruction issued by the Commissioner of Commercial Taxes and, therefore, we cannot sustain the order passed by the assessing authority. (11) Therefore, we pass the following:- Order (i) The order passed by the learned Single Judge in W.P.(C).No.243 of 2008 dated 31.01.2008 is set aside. (ii) The orders passed by the Fast Track Team for the assessment years 2002-03, 2003-04 and 2004-05 are set aside. (iii) The matter is now remanded to the Fast Track Team to redo the matter in relation to the assessment years in question after complying with the conditions contained in Circular No.17/07 dated 12/04/2007 issued by the W.A.No.371 of 2008 - 4 - Commissioner of Commercial Taxes, as expeditiously as possible, at any rate, within two months from the date of receipt of a copy of this Court's order. (iv) All other contentions of the parties are left open. (v) In view of the order passed in the Writ Appeal, the reliefs sought for in I.A.No.161 of 2008 need not be considered by us. Accordingly, the said application is closed. Ordered accordingly. H.L.Dattu Chief Justice K.M.Joseph vku/DK Judge