IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER TUESDAY, THE 15TH JULY 2008 / 24TH ASHADHA 1930 WA.No. 1473 of 2008 ---------------------------------- AGAINST THE JUDGEMENT IN WPC.19659/2008 Dated 02/07/2008 .................... APPELLANT: PETITIONER: ------------------------------------- M/S.SHWAS HOME WORKS, CC 33/2328 (B) 20, ROYAL PARK APARTMENTS, NH BYE PASS ROAD, CHALIKKAVATTOM, VYTTILA P.O., KOCHI-19, REPRESENTED BY ITS PARTNER SHRI AJAI REGHU. BY ADV. SRI.DALE P.KURIEN RESPONDENTS: RESPONDENTS: ----------------------------------------------- 1. THE COMMERCIAL TAX OFFICER (AA), OFFICE OF THE DC (AA), COMMERCIAL TAXES, ERNAKULAM. 2. THE DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, THEVARA, ERNAKULAM. 3. M/S.CHITTILAPPALLY BUILDERS AND ENGINEERS, NO.33/2477, A8, IST FLOOR, VYSALI, ERNAKULAM BYE-PASS, KOCHI. R1 & R2 BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 15/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ----------------------------------------------------- W.A.No.1473 of 2008 ---------------------------------------------- Dated, this the 15th day of July, 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.19659 of 2008 dated 2nd July, 2008. By the impugned order, the learned Judge has rejected the writ petition and thereby has confirmed the interim orders passed by the first appellate authority dated 13-5-2008. 2. The assessing authority has quantified the tax liability payable by the petitioner/appellant under the provisions of Kerala Value Added Tax Act, 2003. 3. Aggrieved by such quantification of the tax liability, the assessee has filed an appeal before the first appellate authority. Along with the appeal, the assessee has also filed an application for grant of interim order. The appellate authority after considering the request made in the application for grant of stay, has passed the following orders: “These appeals were filed by M/s.Shwas Home Works, Vyttila P.O., Kochi-19 and are directed against the orders W.A.No.1473/2008 -2- of the Commercial Tax Officer (AA), Ernakulam for the years 2005-06 & 2006-07. Appellant filed petitions for stay and Sri.T.S.Ramaswamy, Chartered Accountant was heard. It was contended that the Audit Officer went wrong in not considering the fact that the appellant had given sub contract for all the work and the levy of tax at 12.5% is not correct and the proof for the same is available. Examination of the contentions and verification of records revealed that there is prima facie case for granting conditional stay and hence the following orders are passed:- ORDER NO.SP 265/08 IN KVAT-564/08 & 565/08 DATED 13-05-2008 Payments of balance amount for the above years are stayed till the disposal of appeals on condition that the petitioner remits 50% each for both the year and furnishes security for the balance amount to the satisfaction of the assessing authority within a period of one month from the date of this order. If the conditions are not fulfilled the stay order passed will stand vacated automatically.” 4. Aggrieved by the said order, the assessee was before this Court in the aforesaid writ petition. 5. The learned Single Judge, in our opinion, has rightly rejected the writ petition filed by the petitioner/appellant and thereby W.A.No.1473/2008 -3- has confirmed the orders passed by the first appellate authority. It is the correctness or otherwise of the orders passed by the learned Single Judge is the subject matter of this writ appeal. 6. We have heard Sri. Dale P.Kurian, learned counsel appearing for the appellant. 7. The orders passed by the first appellate authority is a discretionary order. The said discretionary order passed by the appellate authority can be interfered by this Court, only if the order so passed is either arbitrary, capricious, whimsical or contrary to statutory provisions . 8. Time and again the Apex Court has observed, that, in indirect tax matters there cannot be absolute interim orders. Reference can be made to the decisions in Assistant Collector of Central Excise Vs. Dunlop India Ltd. {1985 (154) ITR 172} and Empire Industries Limited Vs. Union of India {1987 (64) STC 42}. In the last paragraph of the judgment in Empire Industries Limited Vs. Union of India {1987 (64) STC 42} it is stated as under: “If we may venture to suggest, in fiscal matters specially in cases involving indirect taxes where normally taxes have been realised from the consumers but have not been paid over to the exchequer or where taxes are to be realised from consumers by the dealers or others who are parties before the court, interim orders staying the payment W.A.No.1473/2008 -4- of such taxes until final disposal of the matters should not be passed. It is a matter of balance of public convenience. Large amounts of taxes are involved in these types of litigations. Final disposal of matters unfortunately in the present state of affairs in our courts takes enormously long time and non-realisation of taxes for long time creates an upsetting effect on industry and economic life causing great inconvenience to ordinary people. Governments are run on public funds and if large amounts all over the country are held up during the pendency of litigations, it becomes difficult for the Governments to run and becomes oppressive to the people. Governments' expenditures cannot be made on bank guarantees or securities. In that view of the matter as we said before, if we may venture to suggest for consideration by our learned brethren that this Court should refrain from passing any interim orders staying the realisations of indirect taxes or passing such orders which have the effect of non-realisation of indirect taxes. This will be healthy for the country and for the courts.” 9. In view of what has been stated by the Apex Court, in our opinion, the first appellate authority was justified in putting the appellant on terms for granting the interim order. 10. The main prayer in the writ petition was for a direction to the first appellate authority to dispose of the appeal filed by the petitioner which is dated 6-3-2008. The second prayer was to direct the assessing authority not to resort to recovery proceedings till the appeal filed by the assessee is decided by the first appellate authority. 11. One way or the other, both the prayers cannot be granted by this Court. The appeal that is filed by the petitioner is of the W.A.No.1473/2008 -5- year 2008. We cannot be expecting the appellate authority to give an out of turn hearing to a matter which is recent. In that view of the matter, even the first prayer cannot be granted by this Court. 12. So long as the orders passed by the assessing authority is not disturbed by the superior forum, this Court is not expected to pass a negative order asking the authority not to recover the quantified tax liability pursuant to an order of assessment passed. In that view of the matter, the second prayer also cannot be granted by this Court. Keeping all these aspects of the matter in view, in our opinion, the learned Single Judge was justified in rejecting the writ petition against the interim orders passed by the first appellate authority. 13. We do not see any error in the orders passed by the learned Single Judge which would call for our interference. Therefore, the writ appeal requires to be rejected and it rejected. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE MS/dk