IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON THURSDAY, THE 5TH AUGUST 2010 / 14TH SRAVANA 1932 WP(C).No. 19179 of 2010(V) ------------------------------------------ PETITIONER(S): --------------------- HINDUSTAN NEWSPRINTS LTD., VELLOOR, KOTTAYAM. BY ADV. SRI.A.KUMAR RESPONDENT(S): ------------------------- 1. THE ASSISTANT COMMISSIONER, KVAT, SPECIAL CIRCLE, KOTTAYAM. 2. THE INSPECTING ASSISTANT COMMISSIONER(RR) DEPARTMENT OF COMMERCIAL TAXES, KAKKANAD. GOVERNMENT PLEADER MR. V.K. SHANMUGHAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05/08/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sou. P.R. RAMACHANDRA MENON, J ----------------------------------------------- W.P.C. No.19179 OF 2010 ------------------------------------------ Dated this the 5th day of August, 2010 J U D G M E N T Petitioner, a Public Sector Undertaking, is before this Court, challenging Ext.P3 assessment finalised by the first respondent, in respect of the assessment year 2005-06 u/s.6(5) of CST Act. Prima facie, it may appear that the petitioner is not justified in approaching this Court directly, when the petitioner is having effective alternate remedy by way of appeal. But then, the question is whether this Court 'should' relegate the petitioner to avail the statutory remedy, if the course pursued by the 1st respondent is per-se wrong and unjustified. 2. The grievance projected by petitioner in the writ petition as to the course pursued by first respondent, finalysing assessment as per Ext.P3, is more involving a question of law, rather than a question of fact. It is also stated that, by virtue of the course pursued by first respondent, a total liability of Rs.15,06,31,421/- has been thrust upon the petitioner, after ignoring the 'C forms' produced by petitioner, observing that the WPC. No.19179/2010 2 'C forms' produced were not in time. 3. The case of the petitioner is that petitioner is a registered dealer under the KVAT and CST Act in the rolls of first respondent and is engaged in the manufacture and sale of 'newsprint'. In the course of business, the petitioner manufactured and transported the commodity to various places outside the State and was filing necessary returns, effecting payment of tax, as prescribed. During the assessment year 2005-06, there was no requirement to have procured 'C forms' by the petitioner, which liability was to be satisfied by purchasers themselves and the proceedings have undergone a drastic change ever since 2005-06. Purchasers were also not aware of the change in the provision of law and as a natural consequence, there occurred some delay in the matter of obtaining the 'C' forms and hence the petitioner could not produce the same on time. It was in the said circumstance, Ext.P1 notice of assessment was issued to the petitioner in respect of the said assessment year 2005-06. 4. On receipt of Ext.P1 notice, the petitioner submitted Ext.P2 reply stating as follows: “Our's is a Public Sector undertaking and the total turnover for a particular year is nearly 250-300 WPC. No.19179/2010 3 crores. We are paying considerable amount of tax to the department in time without delay. Due to the introduction of new provisions in the CST Act and Rules in respect of the submission of C Form within the next quarter following the quarter ended 30th September, 31st December and 31st March, some of our customers were not aware of the new provisions and hence they were not in a position to issue the C Form in time. Moreover the required C Forms were not available with their respective Commercial Tax Departments in some customer's case. However, we had managed to collect the C Forms due to our repeated requests to the customers. The fact of delay in collection of C Forms is not our intentional mistake but beyond our control. This fact was reported to your good office in time. Considering the above facts, we request you to kindly accept the C Forms and allow us to produce the balance C Forms and request your good self to drop he proposal to impose huge tax and interest for 2005-06.” After considering the said reply, the first respondent finalised the assessment passing Ext.P3 order on 30.3.2010 holding that turn over to an extent of Rs.3,24,56,693/- was not covered by 'C Forms' and that the 'C forms' actually produced by petitioner WPC. No.19179/2010 4 were much belated and not acceptable for the purpose of assessment. It has been observed in Ext.P3, that by virtue of Sec.9(2) of CST Act, read with Rule 12 (7) of the CST (Registration and Turn over) Rules, a declaration in C Form shall be furnished within three months after the end of the period to which the declaration relates. Hence the balance turnover in respect of which, C Forms were not produced and the turnover for which the 'C Forms' were produced belatedly (coming to a total Rs.152,26,61,437) were held as liable to be fixed at the higher rate of 10%, fixing the total tax liability of Rs.15,06, 39,421/- as per Ext.P3, which is impugned in the writ petition. 5. Leaned counsel for the petitioner submits that the course pursued by the 1st respondent issuing Ext.P3 is not correct or sustainable and much contrary to the statutory provision, without any regard to the power to condone delay as to the submission of 'C forms'. The petitioner has extracted the provision under Rule 12(7) as it existed prior to the amendment and the position after the amendment, as given in paragraph 7, which is reproduced below: WPC. No.19179/2010 5 Rule12(7) of the CST (R&T) Rules (before amendment) Rule 12(7) of the CST (R& T) Rules (after amendment) Rule 12(7). The declaration on Form C or Form 'F' or the certificate in Form É-I' or Form 'F-II' shall be furnished to the prescribed authority up to the time of assessment by the first assessing authority. Rule 12(7). The declaration on Form 'C' or Form 'F' or he certificate in Form 'E-I' or Form 'E-II' shall be furnished to the prescribed authority within three months after the end of the period, to which the declaration or the certificate relates. Provided that if the prescribed authority is satisfied that the person concerned was prevented by sufficient cause from furnishing such declaration or certificate within the aforesaid time, authority may allow such declaration or Certificate to be furnished within such further time as that authority may permit. Provided that if the prescribed authority is satisfied that the person concerned was prevented by sufficient cause from furnishing such declaration or certificate within the aforesaid time, authority may allow such declaration or Certificate to be furnished within such further time as that authority may permit. The substantial change that has been brought by the amendment is that the time limit for filing the 'C Form' has been restricted to 'three months' after the end of the period to which the declaration or the certificate relates. The 'proviso' to the unamended rule, enabling the concerned authority to condone the delay, if satisfied over the reasons to be stated, stands rather unaltered; by virtue of which, if sufficient cause is shown for the delay, the authority can accept the C forms after condoning the delay. This power has not been exercised by the 1st respondent, considering the explanation offered from part of the petitioner vide Ext.P2, while finalising the assessment and hence is under WPC. No.19179/2010 6 challenge. Learned counsel also places reliance on the decision rendered by Apex court, State of Andhra Pradesh Vs. Hydrabad Asbestos Cement Production Ltd. [94 STC 410] (at page 421), the decision rendered by a Division Bench of this Court in Deputy Commissioner of Sales Tax Vs. Abdul Salam [69 STC 144] and also the decision rendered by the Karnataka High Court in A.S. Nasiruddin Vs. Commissioner of Commercial Taxes in Karnataka, Bangalore [94 STC 399] contending that the power is very much vested with the authority and the delay can be condoned by the same authority, if the reason is satisfactory. 6. Learned Government Pleader appearing for the respondents submits that Ext.P3 is a reasoned order and that the factual position, that the petitioner did not file any application to condone the delay within prescribed period stands rather conceded. It was after considering the explanation offered by Ext.P2, that the 1st respondent passed Ext.P3, which is supported with reasons and hence is not liable to be treated as a non- speaking order. It is also pointed out that petitioner, if at all aggrieved, has an alternate remedy by way of appeal and that interference to this Court is not unwarranted. 7. This Court has already observed that there is no much WPC. No.19179/2010 7 factual dispute in the case in hand and that the issue is only with regard to the interpretation of the relevant provisions of law and as to the exercise of power for condoning the delay in filing the 'C forms' by virtue of the 'proviso' to Rule 12(7). With regard to the disputed turnover of Rs.3,24,56,695/-, the learned counsel for petitioner submits that the petitioner has already procured necessary 'C forms', which fact has been adverted to by the 1st respondent in the impugned order itself and the only reason stated for rejecting the 'C forms', is that they were produced belatedly. 8. The question to be considered is whether the reason offered by the first respondent for rejecting the 'C forms' as belated, is correct or sustainable. The only reason in Ext.P3 is that on verification of the assessment records, it was revealed that there was no application filed by assessee “during corresponding quarter” requesting time for filing 'C form'. Whether the explanation offered by petitioner for the delay vide Ext.P2 was correct, sustainable or satisfactory to the assessing authority is not seen discussed anywhere in Ext.P3. Similarly, there is no reference as to the power vested with the authority to have condoned the delay, by virtue of the 'proviso' to Rule 12(7) WPC. No.19179/2010 8 of the 'Rules'. 9. It is relevant to note that, when a substantive provision was changed by causing amendment to Rule 12(7), limiting the period for submission of C form, to 'three months', the law- makers left the 'proviso' as it was, without any change. This shows that, it is a conscious action of the legislators intending to have the proviso for condonation of delay to be retained as it originally existed. The scope and extent of power in respect of condoning the delay, under the 'unamended' provision, has already been considered by different Courts and also by this Court in the decisions cited already, explaining the fact that, it is rather a beneficial provision and the purpose of legislation is not denial of the benefit. Applying the very same logic and reasoning, it cannot be said that the dictum is not applicable to post-amendment scenario. More so, since the 'proviso' has not undergone any change, even after the amendment. 10. As observed hereinbefore, there is no discussion at all in Ext.P3 order, as to the power of the assessing authority to condone the delay by virtue of the 'proviso' to 'Rule 12(7)' and as such the rejection of the 'C forms' furnished by petitioner holding that they are belated is not correct or proper. The matter WPC. No.19179/2010 9 requires to be reconsidered by the first respondent, with reference to the relevant provisions of law, in the light of the different judicial precedents and the observations made hereinbefore. Accordingly, Ext.P3 is set aside and the matter is remitted to the first respondent to consider the matter afresh and to pass appropriate orders, after hearing petitioner, which exercise shall be finalised within two months from the date of receipt of copy of this judgment. The Writ Petition is allowed. No costs. P.R. RAMACHANDRA MENON, JUDGE. Sou.