IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH THURSDAY, THE 12TH JUNE 2008 / 22ND JYAISHTA 1930 WP(C).No. 9272 of 2008(D) -------------------------------------------- PETITIONER: ------------------ T.P.FINIMOLE, D/O.T.K.PURAVATH, ADVOCATE, AGED 32 YEARS, THEKKILAKKATTU HOUSE, NO.VI/349, THATTEKKADU P.O., PALAMATTAM, KOTHAMANGALAM, PIN-686 691. BY ADV. SRI.M.M.ABDUL AZIZ (SR.) SRI.M.A.ABDUL HAKHIM SRI.JYOTHISH.J.KALLINGAL RESPONDENTS: ----------------------- 1. ASSISTANT COMMISSIONER (AA), COMMERCIAL TAXES, KASARGOD. 2. DEPUTY COLLECTOR (RR), CIVIL LINES, KAKKANAD, ERNAKULAM. BY GOVERNMENT PLEADER SHRI C. K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12/06/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K. M. JOSEPH, J. -------------------------------------- W.P.C. NO. 9272 OF 2008 D -------------------------------------- Dated this the 12th June, 2008 JUDGMENT Petitioner challenges Exts.P6 and P7. They are orders of assessment passed against the petitioner, apparently under Section 26 of the Kerala Value Added Tax Act, 2003. Ext.P8 and P9 are demand notices issued proposing to recover the amounts from the petitioner. Petitioner is an Advocate. 2. Case in brief of the petitioner is as follows: Exts.P2 and P3 notices were issued against the petitioner for the assessment years 2004 - 2005 and 2005 - 2006. The case against the petitioner under Section 26 of the Kerala Value Added Tax Act is that the petitioner attested the photographs of certain persons, helping them to get registration under the KVAT Act and introduced them as neighbour. They were allegedly benamies of petitioner's brother Shri T.P. Varghese, who carried on business, resulting in large scale evasion of tax. Petitioner submitted Exts.P4 and P5 replies to the two WPC. 9272/08 D 2 assessment orders. However, overruling the objections of the petitioner, Exts.P6 and P7 assessment orders are issued and following the same, Exts.p8 and P9 demand notices were issued for a huge amount against the petitioner also. A Counter Affidavit is filed to which a Reply Affidavit is also filed. 3. I heard Shri M. M. Abdul Aziz, learned senior counsel appearing for the petitioner and also the learned Government Pleader appearing on behalf of the respondents. 4. Learned senior counsel appearing for the petitioner submits that the petitioner cannot be made liable on the basis of Section 26 of the KVAT Act. He would submit that indispensable for the application of the said provision, is the element that the person is or was carrying on business. He would submit that even going by what is attributed against the petitioner, it would not amount to carrying on business, within the meaning of Section 26 of the Act. He would contend that the Section requires the existence of a state of mind with the WPC. 9272/08 D 3 Assessing Officer where he has reasons to believe that the ingredients of the said Section exist. In this connection, he relied on the decisions in Sheo Nath Singh v. The Appellate Assistant Commissioner of Income Tax (Central), Calcutta and Others (AIR 1971 SC 2451) and N. Nagendra Rao & Co. v. State of A.P. ((1994) 6 SCC 205). He would contend that as held by the Apex Court, it is not sufficient that there is suspicion in order to satisfy the requirement of the term "reason to believe". There must be material from which the Officer should form an opinion that he has a "reason to believe" so that the elements of the Section are satisfied, he contends. In the same way, he drew support from the decision in N. Nagendra Rao & Co. v. State of A.P. ((1994) 6 SCC 205). He would submit that this is a clear case where there is no jurisdiction with the authority to either commence proceedings against the petitioner or conclude the same against her. It is the definite case of the petitioner that the petitioner has not carried on any business with any person either alone or in association with another or in the WPC. 9272/08 D 4 name of another. It is her case that she is a fully practising Lawyer. Learned Government Pleader submits that Section 26 is attracted and that the activities of the petitioner are such as is sufficient to come to the conclusion that the requirements of Section 26 are fulfilled. 5. Having considered the facts and the provisions, I would think that this is a case where the petitioner should be relegated to prefer an Appeal against Exts.P6 and P7. But, at the same time, I feel that this is also a case where there should be an order to the effect that recovery against the petitioner based on Exts.P8 and P9 should be kept in abeyance till a decision is arrived at by the Appellate Authority on her Appeal. Accordingly, the Writ Petition is disposed of as follows: If the petitioner prefers Appeals against Exts.P6 and P7 within a period of fifteen days from the date of receipt of a copy of this Judgment, the Appellate Authority will consider the Appeals on merits, including the question of jurisdiction if raised, and take a decision in accordance with law. If the WPC. 9272/08 D 5 petitioner prefers Appeals as aforesaid, recovery steps against her pursuant to Exts.P8 and P9 shall be kept in abeyance till a decision is taken on the Appeals. Sd/= K. M. JOSEPH, JUDGE kbk. // True Copy// PS to Judge