IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH MONDAY, THE 13TH OCTOBER 2008 / 21ST ASWINA 1930 WP(C).No. 11147 of 2008(B) -------------------------- PETITIONER(S): --------------- STATE OF KERALA, REPRESENTED BY DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. BY GOVERNMENT PLEADER ADV.SRI.C.K.GOVINDAN RESPONDENT(S): --------------- M/S. STEELAGE INDUSTRIES LTD., ZAINA BUILDING, WEST HILL, CALICUT. ADV. SRI.ARIKKAT VIJAYAN MENON FOR R1 SRI.HARISANKAR V. MENON FOR R1 SMT.MEERA V.MENON FOR R1 SRI.MAHESH V.MENON FOR R1 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX PETITIONER'S EXHIBITS: P1 COPY OF AFFIDAVIT FILED BY RESPONDENT P2 COPY OF ORDER OF STAT DT 13.2.08 P3 COPY OF CIRCULAR. P4 COPY OF ORDER DT 31.5.07 BY THE DY. COMMISSIONER UNDER KGST ACT FOR 2000-01 P5 COPY OF - DO - CST ACT. P6 COPY OF - DO - KGST ACT FOR 2001-02. P7 COPY OF - DO - CST ACT FOR 2001-02. // TRUE COPY // P.A. TO JUDGE K.M. JOSEPH, J. ```````````````````````````````````````````````````` W.P.(C) No. 11147 OF 2008 B ```````````````````````````````````````````````````` Dated this the 13th day of October, 2008 J U D G M E N T Petitioner challenges Ext.P2. Petitioner is the State of Kerala. Assessment was completed against the respondent by applying 8% as rate of tax. The Deputy Commissioner took the view that the rate of tax should be 12% and having regard to the differential tax which the assessee was liable to pay, it was a matter attracting section 35 of the KGST Act. He, accordingly, set aside the order of the assessing authority and directed to redo the assessment. The respondent/assessee preferred appeal. The respondent/assessee also filed application under section 53 of the KGST Act for production of the assessment records and the approval register. The said application though opposed by the petitioner came to be allowed. It is stated that the said assessment records and approval register are relevant documents to decide the issue. The petitioner challenges the said order. WPC.11147/08 : 2 : 2. I heard learned counsel for the petitioner Sri.C.K.Govindan and learned counsel for respondent Sri.Harisankar V. Menon. Learned Government Pleader would contend that the Tribunal has acted illegally in finding that the production of the documents in question is warranted as relevant documents. According to the learned Government Pleader, the power under section 35 of the Act is available to be exercised if the circumstances mentioned under section 35 of the Act exist irrespective of the fact that approval may be granted under the procedure involved in Ext.P3 circular. He would contend that no purpose is served by calling for the said documents by the Tribunal. The complaint of the learned Government Pleader is directed specifically against the order in Ext.P2 directing production of the approval register. He would point out that section 35 of the Act is a statutory provision endowing the Deputy Commissioner with the statutory power and that the power cannot be diluted in any manner by the existence of a procedure for granting approval WPC.11147/08 : 3 : for the issuance of notices or assessment orders. Learned Government Pleader further points out that under section 19 of the Act the assessing authority is free even if there is an approval granted by the superior authorities to proceed to reassess if grounds exist therein. If the assessing authority were to proceed under section 19 of the Act, he contends that could it be contended that the approval granted or the file relating to the approval would be relevant? He points out that the only question which arises is the rate of tax and therefore the approval register is not at all relevant. He also submits that under section 53 of the Act, the respondent cannot be compelled to produce the documents. 3. Per contra, Sri.Harisankar V. Menon, learned counsel for respondent, submits that mere perusal of Ext.P3 circular would show that it cannot be said that the approval granted is not relevant. Ext.P3 in so far as its material is extracted hereunder. “ Circular No.13/99/TX/7-5-99 Sub : Approval of assessments - WPC.11147/08 : 4 : reintroduced -instructions issued. Ref : 1. Circular No.A5-60557/95/TX dated 1.1.96 (Circular 1996) 2. Circular No.39356/96/TD dated 18.4.98 (Circular No.14/98) 3. Circular No.C2-57243/98/TX dated 7.11.98 (Circular 30/98) 1. As per the Circular 2nd cited, the system of approval of assessment by Deputy Commissioners/Inspecting Assistant Commissioners was disposed within the following cases: (a) Assessment/Pre-assessment notice issued by Officers newly promoted to the cadre of Assistant Sales Tax Officer/Sales Tax Officer for a period of one year. (b)Assessment/Pre-assessment notices issued by officers who have been shifted from one branch to another (ie. Intelligence Wing or Agri. Income Tax Wing or Administrative Wing or the Sales Tax Assessment Wing etc.) for a period of one year. This was done with an intention to save the time of the supervisory officers so as to enable them to concentrate on other items of work and also to avoid delay in the completion of assessments. 2. However in order to ensure that WPC.11147/08 : 5 : the statutory provisions as complied with and the interest of revenue is safeguarded by the assessing officer, it was also directed as per Circular 3rd cited, that Deputy Commissioners/Inspecting Assistant Commissioners shall scrutinize a minimum of 10% of the assessment orders passed by the assessing authorities. 3. But it has been brought to notice that the scrutiny as mentioned above is not so effective with the result that the quality of assessment is drastically coming down and legal mistakes in the assessments have increased and consequently the number of defects pointed out by the Accountant General has also gone up, which invites adverse criticism from the Public Accounts Committee. 4. In the circumstances, the system of approval is re-introduced in the following cases:- (i) All Assessment Orders/Pre- assessment notices issued by Sales Tax Officers and Assistant Commissioners in the Sales Tax Offices (Special Circles). (ii) All Assessments other than those WPC.11147/08 : 6 : falling under section 17(4) of the KGST Act, passed and pre-assessment notices issued by Assistant Sales Tax Officers/Sales Tax Officers. 5. In cases where approval is required, the assessing authorities and the approving authorities shall directly follow the instructions given in the Circular first cited. Extracts from it is appended to this Circular. Any discrepancy notices will be promptly reported to the Commissioner for appropriate action. 6. The Deputy Commissioner shall acknowledge receipt of this Circular and obtain acknowledgment by their sub- ordinates.” Ext.P3 is a circular, he submits, which can be traced to section 3 of the Act and it is meant to be followed by the officers. The approval granted under the circular cannot be said to be irrelevant when the question which falls for decision is whether the assessment is prejudicial to the interest of revenue, he contends. He further relies on the decision of a learned single Judge of this court in State of Kerala Vs. WPC.11147/08 : 7 : Sales Tax Appellate Tribunal, Kozhikode Bench & another [2002 (10) KTR 466]. There is power to order document to be produced by a party, he contends. In this regard, he relied on the decisions of this court in Jortin Antony Vs. S.P.D. Marthanda Varma [2000 (2) KLT 680] and Joseph Moolayil Vs. Devakiamma [2004 (1) KLT S.N. 99]. He further submits that the respondent need not be shown the document which has been called for by the Tribunal. 4. In a proceeding under Article 226 of the Constitution, the court will not interfere if two views are possible. The court does not sit as an appellate forum to correct mere errors. Accordingly, if the view taken by the Tribunal is a possible view, it may not be appropriate for me to interfere under Article 226. 5. Section 53 of the Act clothes the Appellate Tribunal that the power conferred on a court by the Code of Civil Procedure compelling production of the documents. Undoubtedly, compulsion of production of documents may not WPC.11147/08 : 8 : be a matter of course and the Tribunal must apply its mind also bearing in mind the principles governing the matter under C.P.C. 6. Having regard to the procedure which is mandated under Ext.P3 circular, it may not be proper to characterise the order as illegal on the ground that the document in question is not relevant. In this case also, we are not concerned with essentially calling upon the opposite party to give oral evidence. The petitioner does not have a case that the officer can act in disregard of Ext.P3 circular. In other words, an assessment to be completed going by the scheme of the Act and the terms of the circular, the Deputy Commissioner has to grant approval. The granting of approval apparently was a system which is evolved in view of the circumstances which is indicated in Ext.P3 which have already been extracted. Section 35 of the Act confers a statutory power to be exercised upon the fulfillment of the statutory ground which has been embedded therein. The passing of the interlocutory WPC.11147/08 : 9 : order as Ext.P2 cannot amount to a decision of the lis. Finally, the question which will fall for consideration before the Tribunal is whether the Deputy Commissioner was justified in exercising power under section 35 of the Act. Proceeding on the basis that the document is relevant would not mean that the Deputy Commissioner under section 35 of the Act is robbed of his legitimate power under section 35. That is the question to be decided when the appeal is decided. 7. In such circumstances, I need not interfere with Ext.P2. However, I hasten to add that it will be open to the petitioner to contend before the Tribunal that even if approval is granted under Ext.P3, it will in no way effect the power under section 35 of the Act and that the power under section 35 will be available if the statutory condition mentioned therein is presented. In other words, the mere fact that perceiving the approval as relevant as was done by the Appellate Tribunal will in no way militate against the availability of the power under section 35 of the Act is certainly an argument which will WPC.11147/08 : 10 : be available to the petitioner and I make it clear it is open to the Tribunal to decide the question as to the availability of power under section 35 on the basis of the true scope of section 35 of the KGST Act. As to whether any weight is to be attached to the approval being granted is a matter I leave open. With the above observations, writ petition is dismissed. Sd/- (K.M.JOSEPH, JUDGE) aks // TRUE COPY // P.A. TO JUDGE