IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 7TH DECEMBER 2009 / 16TH AGRAHAYANA 1931 WP(C).No. 34968 of 2009(M) -------------------------- PETITIONER: --------------- JOSEPH KURIAKOSE, PROPRIETOR, HOTEL ELITE CONTINENTAL, M.C.ROAD, THIRUVALLA. BY ADV. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENTS: --------------- 1. ASST.COMMISSIONER (AUDIT ASSESSMENT), DEPARTMENT OF COMMERCIAL TAXES, PATHANAMTHITTA. 2. DEPUTY COMMISSIONER (APPEALS), DEPARTMENT OF COMMERCIAL TAXES, KOLLAM. 3. DEPUTY TAHSILDAR (REVENUE RECOVERY), TALUK OFFICE, THIRUVALLA. BY GOVT. PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K.ABDUL RAHIM J. ----------------------------- W.P(C) No. 34968 of 2009-M ------------------------------ Dated this the 7th day of December, 2009. J U D G M E N T 1. Challenge in this writ petition is against Ext.P5 order passed by the second respondent on a stay petition which is filed along with the appeal filed against Ext.P1 order of assessment made under Section 25 of the Kerala Value Added Tax Act (KVAT Act). On an earlier occasion, the second respondent issued an interim order as per Ext.P3, wherein stay was granted imposing a condition for payment of 50% of the balance tax in dispute. The petitioner challenged that order before this Court and this Court in Ext.P4 judgment set aside the order and remitted the matter to the second respondent for reconsideration. In Ext.P4 judgment this Court observed that the appellate authority, having referred to the contentions in the appeal had recorded satisfaction about prima- facie case being made out, but for imposing condition for payment of 50%, no reason was stated. This Court referred to the settled legal position in the decision in Supreme Electrical Engineering (P) Ltd. Vs. Commissioner of Income Tax Officer (2008(3) KLT 805), wherein it is held that the authorities will have to specify reasons for W.P(C) No. 34968 of 2009-M 2 imposing conditions while passing interim orders. 2. On a perusal of the order impugned herein, it is noticed that the appellate authority has not even referred to the judgment of this Court nor had it referred to the decision cited above. The contentions in the appeal were narrated once again. It is stated that the contentions were verified by the appellate authority and that the appellate authority became convinced that credit has not been given by the assessing authority with respect to an amount of Rs.3,25,126/-, which is the input tax claim made. Thereafter without mentioning any reason, the appellate authority observed that the petitioner had made out a prima-facie case for conditional stay and imposed a condition for payment of 40%. 3. Contention in the appeal is mainly pertaining to eligibility of the petitioner for compounding of tax, under Section 8 of the Kerala Value Added Tax Act. According to the petitioner with respect to the assessment year 2005-06, he was permitted to pay compounded tax calculated at 140% of the value of purchase of liquor. But in Ext.P1 assessment order it is held that the dealer is liable to pay tax on the actual turn over conceded in the entire year. The above stand is taken based on the provisions contained in SRO W.P(C) No. 34968 of 2009-M 3 No.1122/2005 dated 31.12.2005. The legal question in dispute is as to whether the above said notification can have retrospectivity. Contention of the petitioner is that the amendment to Section 92 of the Kerala Value Added Tax Act which permits bringing of notifications with retrospective effect, came into force only with effect from 1.7.2006, and therefore the notification in question could not have any retrospectivity as on the date of its promulgation, ie. on 31.12.2005. 4. While adverting to the above contentions, I am of the opinion that the issue raised in the appeal is purely a legal in question, which has to be considered elaborately while disposing of the appeal. Further it is evident from Ext.P5 that the appellate authority was convinced about non-credit of considerable amount under the input tax claim. However it is evident that even after specific directions issued under Ext.P4 judgment, the appellate authority had failed to issue an order on proper application of mind with reasonings set forth therein. Hence the challenge against Ext.P5 has to be upheld on the basis that the order itself is non- explanatory and will not reveal proper application of mind. 5. Under the above circumstances, considering the fact that W.P(C) No. 34968 of 2009-M 4 the main dispute is pertaining to a legal aspect, I am of the opinion that ends of justice will be achieved by directing the appellate authority to have an earlier disposal of the appeal. At the same time, I am of the opinion that a lesser condition can be imposed, especially taking note of the admitted non-credit of input tax claim. 6. In the result, the writ petition is disposed of directing the second respondent to consider and pass orders on Ext.P2, appeal after affording an opportunity of hearing to the petitioner, as early as possible and at any rate within a period of one month from the date of receipt of a copy of this judgment. 7. Ext.P5 order is hereby set aside and the respondents are directed to keep in abeyance realization of the amounts covered under Ext.P1 on condition of the petitioner remitting a sum of Rs.2,00,000/- within two weeks from today. Sd/- C.K.ABDUL RAHIM JUDGE //True Copy// ab PA TO JUDGE