IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON WEDNESDAY, THE 29TH SEPTEMBER 2010 / 7TH ASWINA 1932 WP(C).No. 16866 of 2009(C) ------------------ PETITIONER: ------------------ M.MAHESWARY, MOHAN AGENCIES, M.L.ROAD, KOTTAYAM. BY ADVS. SRI.VIJAYAN. K.U. SRI.K.N.SREEKUMAR RESPONDENT(S): ------------------------ 1. COMMERCIAL TAX OFFICER, COMMERCIAL TAX OFFICE-II CIRCLE, KOTTAYAM. 2. COMMISSIONER OF COMMERCIAL TAXES, PUBLIC OFFICE BUILDINGS, VIKAS BHAVAN, THIRUVANANTHAPURAM. 3. STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. *ADDITIONAL R4 IMPLEADED 4. INSPECTING ASSISTANT COMMISSIONER, COMMERCIAL TAXES, CIVIL STATION, KOTTAYAM. *ADDITIONAL R4 IMPLEADED AS PER ORDER DATED 23.07.2009 IN I.A. NO. 8856/09 R1 TO R4 BY GOVERNMENT PLEADER SRI. K.P. PRADEEP THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 29/09/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Mn ...2/- WP(C).No. 16866 of 2009(C) -2- APPENDIX PETITIONER'S EXHIBITS: EXT.P1 : COPIES OF THE NOTICES U/S.25(1) FOR THE YEARS 2005-06, 2006-07 & 2007-08 ISSUED BY THE 1ST RESPONDENT. EXT.P2 : COPY OF THE COMMON REPLY DATED 16-03-09 FILED BY PETITIONER BEFORE 1ST RESPONDENT. EXT.P3 : COPIES OF THE ASSESSMENT ORDERS FOR THE YEARS 2005-06, 2006-07 & 2007-08 DATED 8-6-09 ISSUED BY 1ST RESPONDENT TO PETITIONER. EXT.P3(a) : COPY OF THE ASSESSMENT ORDER DATED 19-02-09 FOR 12/08 ISSUED BY THE 1ST RESPONDENT. EXT.P4 : COPY OF THE CIRCULAR NO.10/08 ISSUED BY THE 2ND RESPONDENT. EXT.P5 : COPY OF THE CLARIFICATION NO. C3-41939/07/CT DATED 5-7-08 ISSUED BY THE 2ND RESPONDENT. EXT.P6 (IN I.A.8855/09) : COPY OF THE DEMAND NOTICE IN FORM 1 RRC NO. 47/09-10 FOR 2005-06 ISSUED BY THE 4TH RESPONDENT. EXT.P6(a) : COPY OF THE DEMAND NOTICE IN FORM 1 RRC NO. 48/09-10 FOR 2006-07 ISSUED BY THE 4TH RESPONDENT. EXT.P6(b) : COPY OF THE DEMAND NOTICE IN FORM 1 RRC NO. 49/09-10 FOR 2007-08 ISSUED BY THE 4TH RESPONDENT. EXT.P6 : COPY OF THE NOTICE DATED 18-3-09 ISSUED BY THE 1ST RESPONDENT. EXT.P7 : COPIES OF THE SAMPLE SSI CERTIFICATES ISSUED BY THE INDUSTRIES DEPARTMENT OF TAMIL NADU TO 3 MANUFACTURES OF HANDMADE SAFETY MATCHES WHO SUPPLIED THEM TO THE PETITIONER. RESPONDENT'S EXHIBITS - NIL //TRUE COPY// P.S. TO JUDGE Mn P.R. RAMACHANDRA MENON, J. .............................................................................. W.P.(C) No.16866 OF 2009 ......................................................................... Dated this the 29th September , 2010 J U D G M E N T The issue involved in this Writ petition is whether any interference is called for in respect of Exts. P3 and P3 (a) assessment orders passed under Section 25(1) of the VAT Act, after rejecting the returns furnished by the petitioner, holding that the exemption claimed in respect of alleged 'hand made safety matches' was not liable to be extended to the petitioner. 2. The petitioner, who is a registered dealer on the rolls of the first respondent under the VAT and CST Acts, purchased 'hand made safety matches' from an SSI Unit in Tamil Nadu and sold it in Kerala. It was contended that such hand made safety matches were eligible for exemption and accordingly filed the returns showing the figures, which however was sought to be rejected by the first respondent, who issued a pre-assessment W.P.(C) No.16866 OF 2009 2 notice under Section 25(1) of the VAT Act, as borne by Ext. P1 series, in response to which, the petitioner sent Ext. P2 reply explaining the facts and circumstances. However, allegedly without any regard to the contents of the reply, the first respondent chose to finalise Ext.P3, in respect of the different assessment years, viz. 2005-06, 2006-07 and 2007-08 and Ext. P3(a) in respect of December, 2008. Correctness and sustainability of the above assessment orders are under challenge in this Writ Petition. 3. Heard the learned Government Pleader as well. 4. The learned Counsel for the petitioner submits that the observation made by the first respondent in the impugned orders that the petitioner had not produced the relevant documents before the concerned authority to sustain the claim, is not at all correct or proper. With reference to the contents of the reply affidavit filed in response to the counter affidavit filed from the part of the respondents, it is stated that, pursuant to the notice dated 18.03.2009, the petitioner turned up before the said respondent on 30.03.2009, producing the requisite documents W.P.(C) No.16866 OF 2009 3 and it is without any regard to the same, that the proceedings have been finalised. 5. It is contended that the petitioner was never told as to the requirement to substantiate the claim for 'exemption' or as to the nature of the 'safety matches'/'hand made safety matches', and it was not incorporated in the pre-assessment notice. As to the course pursued by the first respondent, it appears to be the contention that the KVAT Act is having only territorial jurisdiction and since the question, whether the particular commodity was 'hand made safety matches' or not, was not specifically adverted to, the petitioner had no need, necessity or occasion to substantiate this factual fact. 6. The learned Government Pleader submits that the idea and understanding of the petitioner as to the scope of challenge is wrong and misconceived. It is pointed out that the petitioner is having more efficacious alternative remedy by way of appeal before the appellate authority and also before the Tribunal, the matter could not have been agitated before this Court by way of Writ Petition; more so when even according to the petitioner, W.P.(C) No.16866 OF 2009 4 factual adjudication was necessary, referring to the contents of Ext. P3 impugned in the Writ Petition. 7. It is brought out that, after considering Ext.P2 reply, the petitioner was given an opportunity to produce the books of accounts as per the notice dated 18.03.2009, directing them to have been produced on 30.03.2009, despite which, the petitioner did not turn up before the concerned authority. In the said circumstance, there was no other alternative for the concerned authority but to proceed against the petitioner, which hence is well within the four walls of law and is stated as not assailable under any circumstances. The learned Government Pleader also submits that the second issue with regard to the alleged discrimination is no more germane in so far as no such act or course has been pursued by the respondents and the crucial question is whether the petitioner has substantiated her eligibility for exemption by producing the requisite proof. Reference is also made to Ext. P4 circular and P5 clarification asserting that there is no conflict between the above two proceedings and that the averment of the petitioner that the W.P.(C) No.16866 OF 2009 5 petitioner is entitled to get exemption by virtue of Ext.P5 clarification is quite wrong and unfounded. 8. It is made clear in Ext.P5 that 'exemption' is available only in respect of 'hand made safety matches' and not to safety matches from the mechanized sector. It is also settled law that, it is for the party concerned to establish the eligibility for exemption by producing the requisite materials in this regard. It is obvious from Ext. P5 that no discrimination is intended with regard to the 'hand made safety matches', whether it is manufactured within the State or brought from outside the State and the only stipulation so as to make it eligible for exemption is that, it has necessarily to be 'hand made safety matches' and nothing else. 9. Considering the issue involved in the above background, it is relevant to note from Ext. P3 and P3(a) that the assessing authority has observed in the impugned assessment orders that it was not discernible from the materials on record, as to whether they were 'hand made safety matches' or not. It is also stated in the said orders that, in spite of granting an W.P.(C) No.16866 OF 2009 6 opportunity to produce the relevant books of accounts in support of the contentions of the assessee, the latter had not turned up to avail the same. 10. The learned counsel for the petitioner submits that the petitioner is having all the relevant records to show that the purchase were made from the SSI units situated in Tamil Nadu and that the goods concerned were nothing but 'hand made safety matches', which are eligible for exemption . Taking note of the rival contentions, this Court finds that, notwithstanding the lapses on the part of the petitioner in producing the requisite materials before the assessing authority, in spite of the opportunity given to produce the same, the matter requires a 'fact adjudication'; for which an opportunity can be given to the petitioner before the concerned appellate authority; more so since the Writ Petition was admitted by this Court also granting interim stay of all further proceedings. In view of the finding that further 'fact adjudication' is necessary, this Court does not propose to examine the merits of the case. 11. In the above circumstance, the petitioner is relegated W.P.(C) No.16866 OF 2009 7 to avail the appellate remedy against Ext. P3/P3(a). If any such proceedings are filed before the concerned appellate authority within two weeks from the date of receipt of a copy of this judgment (along with necessary interlocutory applications), the appellate authority shall consider the interlocutory applications and pass appropriate orders thereon in accordance with law as expeditiously as possible, at any rate within 'one month' from the date of filing such proceedings. The interim order already granted by this Court will continue till such time. Any failure on the part of the petitioner to move the authority as above will automatically forfeit the benefit extended as above. The Writ Petition is disposed of as above. P.R. RAMACHANDRA MENON, JUDGE. lk