IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON THURSDAY, THE 19TH AUGUST 2010 / 28TH SRAVANA 1932 WP(C).No. 12440 of 2010(D) --------------------------------------- PETITIONER(S): ----------------------- M/S. H & R JOHNSON (INDIA), (A DIVISION OF PRISM CEMENT LIMITED W.E.F. 3.3.2010), 40/97-P.T., USHA ROAD, ERNAKULAM, REPRESENTED BY IT'S ASST. ACCOUNTS MANAGER, SRI.M.UNNIKRISHNAN. BY SRI.JOSEPH KODIANTHARA, SENIOR ADVOCATE BY ADV. SMT.K.LATHA RESPONDENT(S): -------------------------- 1. THE STATE OF KERALA, REPRESENTED BY CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. 2. ASSISTANT COMMISSIONER, SPECIAL CIRCLE-I, ERNAKULAM. 3. DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, ERNAKULAM. R1 TO R3 BY SR. GOVERNMENT PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22/06/2010, THE COURT ON 19/08/2010 DELIVERED THE FOLLOWING: P.R.RAMACHANDRA MENON, J -------------------------------------------- WP(C) NO. 12440 OF 2010 -------------------------------------------- Dated this the 19th day of August, 2010 JUDGMENT Ext.P6 assessment order passed by the 2nd respondent rejecting the returns and the 'audit report' filed by the petitioner is under challenge. While seeking for a direction to be given to the 2nd respondent to consider and accept the 'revised annual return' and 'revised audit report', the petitioner has also sought for issuance of a writ of mandamus directing the 3rd respondent to consider the appeal against Ext.P6 assessment order without insisting to pay the additional Court fee payable towards the Legal Benefit Fund, as prescribed. 2. The sequence of events as narrated in the Writ Petition is that, the petitioner who is a registered dealer under the KVAT and CST Act; in the rolls of the 2nd respondent, had filed Ext.P3 Annual Return for the assessment year 2005-06 declaring a taxable turnover of Rs. 9,61,06,297/- along with Ext.P3(a) Audit Report. However, the said return was sought to be rejected and assessment was proposed to be made on 'best judgment basis' as revealed from Ext.P1 pre-assessment notice dated 06.10.2009 issued under Section 25 (1) of the KVAT Act. The petitioner submitted Ext.P2 reply dated 04.11.2009, before the 2nd respondent; as borne by the entry/endorsement in Ext.P2(a). 2 WP(C) No. 12440/2010 3. The case of the petitioner is that, on realizing some mistakes crept in the annual return and audit report already filed, the petitioner chose to file 'revised return' and 'revised audit report' as borne by Ext.P4 and P4 (a); which were also stated as produced along with Ext.P2 reply. Apprehending that Ext.P2 reply submitted by the petitioner will not be considered by the 2nd respondent, the petitioner rushed to this Court by filing WP(C) 32040/2009. In the course of hearing, it was revealed that the assessment had not been finalized and it was submitted that the same would be finalized only after considering the objections stated as preferred by the petitioner. Accordingly, the Writ Petition was closed as per Ext.P5 judgment, recording the submission made from the part of the respondents as above. 4. After passing the above verdict, the 2nd respondent considered the matter and passed Ext.P6 assessment order; whereby the revised return and revised audit report [Exts.P4 and P4(a) respectively] were stated as not acceptable and they were rejected observing that, there was no provision of law to accept the 'revised audit report', in lieu of the one already filed after the expiry of the time prescribed. The petitioner is challenging the correctness and sustainability of the said order in this Writ Petition raising many a ground, legal and factual. 5. The 2nd respondent has filed counter affidavit, seeking to explain 3 WP(C) No. 12440/2010 the actual facts and circumstances and to sustain Ext.P6. Mr.Joseph Kodianthara, the learned Senior Counsel appearing for the petitioner submits that, the course pursued by the 2nd respondent by passing Ext.P6 is without considering Ext.P2 objections, the revised return and revised audit report submitted; which is stated as contrary to the undertaking given before this Court when the earlier Writ Petition was disposed of vide Ext.P5 judgment. Referring to the contents of the counter affidavit filed by the 2nd respondent and the contents of Ext.P6 impugned in the Writ Petition, the learned Senior Counsel submits that the averments do not reconcile with each other. It is pointed out that there is a statement in paragraph 3 of the counter affidavit that it was after considering the reply/objections filed by the petitioner, that the assessment was finalized; whereas it is stated in the last paragraph of Ext.P6 order passed by the 2nd respondent, that the revised annual return and revised audit report filed along with the reply cannot be considered, because there is no provision in the Act to accept the revised return and revised audit report, in lieu of the one already filed, after the expiry of the time prescribed. The learned counsel also submits that there is no statutory bar in accepting the revised return and revised audit report. Reliance is sought to be placed on the decision rendered by the Madras High Court in Bata Shoe Company Private Limited Vs. The Joint Commercial Tax Officer, Harbour Division II, Madras, and another (21 4 WP(C) No. 12440/2010 STC 135). Reference is also made to Ext.P8 judgment; whereby somewhat similar course was directed to be pursued by this Court. 6. The learned Government Pleader appearing for the respondents submits that the idea and understanding of the petitioner as to the legal provision and the sanctity of the audit report is quite wrong and misconceived. So is the position with regard to the reliance sought to be placed on the judicial precedents as mentioned hereinbefore; which are stated as not attracted to the case in hand. Referring to the course and events, it was stated that, pursuant to the filing of Ext.P3 return supported with Ext.P3 audit report, the books of accounts of the petitioner were called for and verified, which revealed several discrepancies, leading to issuance of Ext.P1 notice under Section 25 of the KVAT Act. Yet another notice was also issued to the petitioner under Section 6(5) of the CST (Kerala Rules) and both the notices were served on 12.10.2009. In spite of granting of 15 days’ time to file objections, the petitioner did not appear or file any objection. Subsequently, on 04.11.2009, the petitioner filed Ext.P2 objections along with Ext.P4 revised returns and Ext.P4(a) revised audit report. It was after considering Ext.P2 reply that the assessment proceedings were finalized as borne by Ext.P6; which is stated as correct and sustainable, being in conformity with the statutory provisions and based on the actual facts and figures. 5 WP(C) No. 12440/2010 7. It is brought to the notice of this Court that the petitioner failed to maintain interstate stock register as provided under Rule 58(1) (vi) of the KVAT Rules. Further, the petitioner filed closing stock without mentioning its value and only showing the quantity details, which was not in accordance with law. By virtue of the statutory prescription, the form No. 13 and 13 (A) under Section 42 of the KVAT Act had to be preferred on or before 31st December every year (Rule 60). In the case of the assessment year 2005- 06, the time for filing such forms was extended upto 30.06.2007. It was accordingly that the petitioner filed Ext.P3 and P3(a) on 10.03.2007, which were scrutinized and on coming across the discrepancies, Ext.P1 notice was issued under Section 25(1). It was thereafter, i.e., on confronting with the grave discrepancies, that the petitioner chose to file a 'revised return' and 'revised audit report' as borne by Ext.P4/P4(a); in spite of the fact that there is no provision to file any such revised audit report, that too beyond the stipulated time. It was in the said circumstance, that the objection raised by the petitioner vide Ext.P2 was considered and the 'revised return' and 'revised audit report' filed by the petitioner were held as not acceptable as clearly given in Ext.P6. This being the position, there is no violation of the undertaking given before this Court while passing Ext.P5 judgment. This Court finds that the undertaking given from the part of the respondents represented by the learned Government Pleader while considering the WP 6 WP(C) No. 12440/2010 (C) 32040/2009 leading to Ext.P5 judgment was to have the objections preferred by the petitioner considered and it was not with regard to any willingness to accept the revised return/revised audit report and as such, the explanation offered appears to be correct and sustainable. 8. With regard to the acceptability of the revised return/revised audit report, no specific enabling provision was referred to, for accepting the same beyond the stipulated time. It was contended from the part of the petitioner, that in the absence of any prohibition, such course is not forbidden. It was in the said circumstance, reliance was sought to be placed on the decision rendered in Bata Shoe Company’s case. The factual position as it existed in Bata Shoe Company’s case and the one stated as prevailing in the present case were held as not analogus and hence was not accepted by the assessing authority, though reference is made to the said decision in Ext.P6 order itself. With regard to the reliance placed on Ext.P8 judgment, it is very much relevant to note that the direction contained in the said case was based on the concession extended from the part of the respondents, that there was no objection to consider and finalise the matter on the basis of the revised audit report. Whether such revised audit report was filed within the time stipulated as per the relevant provision or whether such filing of the revised audit report was on confronting the assessee with the discrepancies as to the figures in the returns and the books of accounts 7 WP(C) No. 12440/2010 by issuing pre assessment notice under Section 25(1) proposing 'best judgment' etc. are not discernible therefrom as it was rather an agreed judgment, which did not require much reference to the facts and events. As such, Ext.P8 cannot have any binding or persuasive value. 9. The learned Government Pleader for the respondents submits that the petitioner has approached this Court without exhausting the alternate remedy by way of appeal. Obviously, there is a prayer (prayer No. IV) to direct the 3rd respondent to consider the appeal against Ext.P6 assessment order, however with a 'rider' that such course might be ordered without insisting to pay 0.5% towards the Legal Benefit Fund. There is no averment in the Writ Petition that any such appeal has been preferred by the petitioner. On the other hand, it is stated in paragraph 9 of the Writ Petition that, in this case filing the statutory appeal against Ext.P6 assessment order after remitting 0.5% towards the Legal Benefit Fund is not a sufficient remedy and hence the petitioner has approached this Court stating that there is 'no alternate remedy'. It is obvious that the petitioner has sought to pursue such course, to avoid payment of additional court fee at the rate of 0.5% towards the Legal Benefit Fund, if to maintain such appeal. Prescription of such additional court fee and the validity of the relevant provision had come up for consideration before this Court earlier and it has already been held that the stipulation in this regard is very much legal, valid 8 WP(C) No. 12440/2010 and never ultra vires to the Constitution of India. 10. In the instant case, there is a clear observation that there is violation of Rule 58(1) in so far as the inter-state stock register is not maintained and made available for verification; that there is many a discrepancy in the accounts and that the figures given in the return and those reflected from the books of accounts did not reconcile; which made the 2nd respondent to reject Ext.P3/P3(a) returns/audit report proposing to conduct assessment on 'best judgment' basis issuing Ext.P1 under Section 25. The un-sustainability of Ext.P3 return/P3(a) audit report stands rather conceded by the petitioner and it was accordingly, that the petitioner after receipt of Ext.P1 notice under Section 25, chose to file Ext.P4 'revised return' along with Ext.P4(a) 'revised audit report' conceding additional taxable turnover of more than 6 crores. The actual facts and figures have necessarily to be examined in this case apart from the questions of law, if at all any, which cannot be pursued in a Writ Petition under Article 226 of the Constitution of India. Since the statute itself takes care of the situation by providing effective alternate remedy by way of appeal, the petitioner, if aggrieved in any manner, can challenge the proceedings by resorting to such appellate remedy. The liability to satisfy 0.5% of the disputed amount as 'additional court fee' is only incidental and the validity of such statutory prescription, having been upheld by this Court, it is not correct or proper for 9 WP(C) No. 12440/2010 the petitioner to avoid such course and seek to have it adjudicated through a Writ Petition. 11. In the above circumstances, this Court finds that no interference is warranted in the Writ Petition and the petitioner is relegated to avail the statutory remedy by way of appeal. Considering the fact that the Writ Petition was filed before this Court in the first week of April, 2010 and several postings were there till date, this Court makes it clear that, if the petitioner files a proper appeal with interlocutory applications for appropriate reliefs, satisfying the statutory requirements, within two weeks from the date of receipt of a copy of this judgment, the I.A.s as aforesaid shall be considered and appropriate orders shall be passed in accordance with law, as expeditiously as possible, at any rate, within one month from the date of filing such proceedings. So as to enable the petitioner to pursue such exercise, the recovery proceedings, if any shall be kept in abeyance for one month. 12. It is made clear that this Court has not expressed anything as to the merits of the rival contentions, which is to be considered and decided by the appellate authority, if at all any appeal is filed by the petitioner. The Writ Petition is disposed of as above. P.R.RAMACHANDRA MENON JUDGE dnc