IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 19TH JANUARY 2010 / 29TH POUSHA 1931 WP(C).No. 32814 of 2009(V) -------------------------- PETITIONER: --------------- MOON TIMBER SUPPLIERS, ALAPPARA P.O., PERUMBAVOOR, REPRESENTED BY ITS MANAGING PARTNER - C.M.MUJEEB. BY ADV. SRI.PREMJIT NAGENDRAN RESPONDENT: --------------- THE COMMERCIAL TAX OFFICER - 1, 2ND CIRCLE, PERUMBAVOOR. BY GOVERNMENT PLEADER ADV. MR. C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19/01/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R. RAMACHANDRA MENON, J. .............................................................................. W.P.(C) No. 32814 OF 2009 ......................................................................... Dated this the 19th January, 2010 J U D G M E N T The petitioner is aggrieved of Ext. P4 notice issued by the first respondent demanding additional security to the tune of Rs.15 lakhs which was stated as being half of the tax payment of the previous year, alerting the petitioner that in case of failure to do so, the registration would be cancelled. 2. The learned counsel for the petitioner submits that the contentions raised by the petitioner in the Writ Petition against Ext.P4 notice are 'multi fold' and that Ext. P4 notice is not correct or sustainable either on facts or in law and is liable to be intercepted. 3. Heard the learned Government Pleader as well. 4. Coming to the nature of the contentions put forth by the petitioner before this Court; the first contention of the W.P.(C) No. 32814 OF 2009 2 petitioner is that Ext.P4, though styled as a notice, is actually an 'order' by itself, in so far as the first respondent has already made up his mind as to the course of events to be followed and also as to the liability intended to be mulcted on the shoulders of the petitioner. It is very much discernible from the penultimate paragraph of Ext. P4 that the intention of the authority is only a proposal based on the available materials, to be confirmed or varied after hearing the petitioner; for which opportunity has been extended to the petitioner. The petitioner is at liberty to file statement of objections in response to Exts. P4 and it is for the first respondent to consider the same untrammeled by any observations in Ext. P4 as to the necessity for imposing additional security . 5. The second contention raised by the petitioner is that no 'delivery notes' are being issued to the petitioner and hence the petitioner is being prevented from conducting his business, which in turn has infringed the constitutional provisions as to the right to carry on trade and business . 6. The learned Counsel for the petitioner submits that the W.P.(C) No. 32814 OF 2009 3 course pursued by the respondents is only because of the pending proceedings as shown in Ext. P4 and it is stated that the petitioner has been told that unless and until the additional security demand is satisfied, no delivery notes would be issued. After hearing the petitioner, this Court finds that no such plea has been raised in the Writ Petition. However, this Court observes that issuance of delivery notes by the first respondent would be reconsidered independently and appropriate orders would be passed, in accordance with law. 7. With regard to the third contention raised by the petitioner that absolutely no reason has been stated by the first respondent in Ext. P4 notice while demanding additional security, the version of the respondents as put forth in the statement filed before this Court and as pointed out by the learned Government Pleader, also with reference to mandate under the relevant provisions, particularly under Section 17 of the KVAT Act, is that the course and conduct pursued by the petitioner very much established that the petitioner was pursing some dubious exercise with regard to the tax liability cast upon W.P.(C) No. 32814 OF 2009 4 the dealer and in the said circumstance, the respondents are perfectly justified in demanding the additional security as permissible. In any view of the matter, the facts and events as narrated in the statement have been taken note of by the petitioner, who has filed the reply and in the said circumstances, it cannot be taken that much prejudice has been caused to the petitioner with regard to non-furnishing of the details in Ext.P4 so as to enable the petitioner to have submitted the reply. The petitioner is at liberty to submit an exhaustive reply, taking note of the contents in the statement filed from the part of the respondents. 8. The 4th contention urged by the learned Counsel for the petitioner is with reference to the contents of paragraph Nos. 3 and 4 of the statement, wherein the first respondent has stated that many of the 'C' forms submitted by the petitioner were found 'not genuine' and hence they have been referred to the investigating agency for further steps. Obviously, issuance of 'C' forms, their genuineness or the consequential steps with reference to the same do not form the subject matter of the W.P.(C) No. 32814 OF 2009 5 present Writ Petition; as the prayer involved is only with regard to the sustainability of the demand for additional security. This being the position, this Court does not propose to go into the merits or de-merits of the case as to the genuineness of the 'C' forms, for the time being. 10. The last and final contention raised by the petitioner is that Section 17 of the Act is not at all attracted to the case in hand and the circumstances contemplated thereunder for demanding any additional security are conspicuously absent in the case of the petitioner, simultaneously adding that the maximum additional security which could be demanded by the Department is only 50% of the tax liability. The learned Government Pleader appearing for the respondents submits with specific reference to the documents produced by the petitioner along with the Writ Petition, that the admitted turnover in respect of 2008-09 exceeds Rs.10 crores, for which the tax liability will be more than Rs.35 lakhs. It is also pointed out that in the first two quarters pertaining to the subsequent year, i.e, the current year 2009-2010, the admitted turnover has exceeded W.P.(C) No. 32814 OF 2009 6 Rs.6 crores and the tax liability is likely to be of much higher level. In view of such admitted facts, which do not require to be proved, the learned Government Pleader submits that the demand to furnish additional security to an extent of 15 lakhs vide Ext. P4, is well within the four walls of the law having not exceeded 50% of the tax liability as contemplated under the relevant provisions of the law. 11. In the above facts and circumstances there is absolutely no infringement of any provisions of law and the petitioner is at liberty to submit statement of objections, if any, within 10 days, in response to Ext. P4 and the matter shall be finalised by the first respondent in accordance with law, taking note of such 'statement of objection' to be filed by the petitioner , of course, after giving an opportunity of hearing to the petitioner, which exercise shall be finalised as expeditiously as possible, at any rate within one month from the date of receipt of a copy of the judgment. It is made clear that the pendency of the above proceedings will not bar the way of the respondents to consider W.P.(C) No. 32814 OF 2009 7 the request of the petitioner for issuance of 'delivery notes' so as to enable him to pursue his business, which will be considered and dealt with independently. P.R. RAMACHANDRA MENON, JUDGE. lk