IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH TUESDAY, THE 9TH DECEMBER 2008 / 18TH AGRAHAYANA 1930 WP(C).No. 35687 of 2008(W) -------------------------- PETITIONER: --------------- ELECTRONICS CORPORATION OF INDIA LTD 3RD FLOOR, MARKET ROAD NORTH,THURUTHUMMEL BUILDING TATAPURAM POST, COCHIN 682 014, REPRESENTED BY ITS DEPUTY GENRAL MANAGER, MR.M.V.NAIR. BY ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.ANIL D. NAIR RESPONDENTS: --------------- 1. COMMERCIAL TAX OFFICER, I-CIRCLE, ERNAKULAM 682 018. 2. INTELLINGENCE OFFICER OFFICE OF THE INSPECTING ASSISTANT COMMISSIONER (INT) DEPARTMENT OF COMMERCIAL TAXES,NEW C-BLOCK PUBLIC OFFICE BUILDING, OPP.MUSEUM, THIRUVANANTHAPURAM 695 033. 3. THE TRANSPORT COMMISSIONER MOTOR VEHICLES DEPARTMENT GOVERNMENT OF KERALA, TRANS TOWER, VAZHUTHACAUD THIRUVANANTHAPURAM 695 014. 4. STATE OF KERALA, REP. BY ITS SECRETARY TAXES, SECRETARIAT, THIRUVANANTHAPURAM 695 001. BY GOVT. PLEADER SHRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09/12/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K. M. JOSEPH, J. -------------------------------------- W.P.C. NO. 35687 OF 2008 W -------------------------------------- Dated this the 9th December, 2008 JUDGMENT Petitioner is a dealer registered under the Kerala Value Added Tax Act. It is executing the total total computerisation of project of the Offices of the Motor Vehicles Department. This e-governance project called “FAST' (Fully automatic services of Transport Department), is the subject matter of penalty proceedings under Exts.P1, P3 and P6 to which the petitioner has preferred Exts.P2 and P4 replies. It is the further case of the petitioner that the petitioner has appeared and the matter was argued on merits on 20.2.2008. In the meantime, petitioner is aggrieved by the issuance of Ext.P7 dated 17.1.2008 issued at the instance of the second respondent and served on the third respondent calling upon him to deduct tax at 12.5% on the payments to be made to the petitioner on the basis that the transaction is a works contract, and that the awarder is duty bound to deduct the amount. Ext.P8 is an order dated 29.3.2008 WPC.35687/08 W 2 issued by the Transport Commissioner providing for deduction. Petitioner challenges Ext.P7. 2. I heard Shri Anil D. Nair, learned counsel for the petitioner and the learned Government Pleader. It is the case of the petitioner that notices have been issued purported to be under Section 67 of the Act and the petitioner has filed its objection and the matter was heard and a final decision is yet to be taken. According to petitioner, in short, there is no works contract and it is while the penalty proceedings are yet to be completed that Ext.P7 is issued seeking recovery at 12.5%. He would further submit that the penalty proceedings are not brought to its logical conclusion. Learned Government Pleader on instructions submits that actually this is a case of works contract liable to tax at 12.5% and all that is done is the discharge of duty to call upon the awarder to deduct tax at 12.5%. He would submit that the petitioner proposes to apply for compounding under Section 8 of the Act. Shri Anil D. Nair, learned counsel for the petitioner joins issue with the learned Government Pleader on this aspect and submits that there is no WPC.35687/08 W 3 such proposal. I would think that it may not be open to the petitioner to challenge the direction to deduct tax at 12.5% merely for the reason that penalty proceedings are not concluded. No doubt, deduction of the amount at 12.5% shall be done strictly in accordance with law. Also, I feel that the penalty proceedings should be brought to its logical conclusion at the earliest, as it is the definite case of the petitioner that there is no companding proposed. 3. The Writ Petition is disposed of directing that the proceedings commenced vide Exts.P1, P3 and P6 shall be concluded without delay, at any rate, within a period of three months from the date of receipt of a copy of this Judgment. It is further directed that the deduction of tax at 12.5% ordered in Ext.P7 shall be done strictly in accordance with law. Sd/= K. M. JOSEPH, JUDGE kbk. // True Copy // PS to Judge