IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM THURSDAY, THE 31ST DAY OF MARCH 2011/10TH CHAITHRA 1933 WP(C).No. 9852 of 2011 (F) -------------------------- PETITIONER(S): ------------- BENNY JOSEPH, AGED 50 YEARS, S/O.T.P.JOSEPH, RESIDING AT THETTAYIL HOUSE, RAINBOW CENTENARY ROAD, KALOOR, KOCHI-682 017. BY ADVS.SRI.P.CHANDRASEKHAR SRI.C.V.MANUVILSAN SRI.P.G.SURESH SMT.K.VIDYA SRI.RAJAN VISHNURAJ RESPONDENT(S): -------------- 1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY, DEPARTMENT OF COMMERCIAL TAXES GOVERNMENT OF KERALA, SECRETARIAT THIRUVANANTHAPURAM-695 001. 2. THE DISTRICT COLLECTOR, ERNAKULAM-682 030. 3. THE TAHSILDAR, KANAYANNOOR TALUK, ERNAKULAM-682 016. 4. THE VILLAGE OFFICER, ELAMKULAM VILLAGE, KANAYANNOOR TALUK, ERNAKULAM-782 016. 5. THE ASSISTANT COMMISSIONER (ASSESSMENT) COMMERCIAL TAXES, SPECIAL CIRCLE II, ERNAKULAM KOCHI-15. 6. M/S.ACME PROJECTS AND DEVELOPERS (INDIA) PVT.LTD., MARY TOWER, NH 47 UNIVERSITY JUNCTION, SOUTH KALAMASSERY COCHIN-682 033, REPRESENTED BY ITS MANAGING DIRECTOR, K.M.FIROZ KHAN. 7. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, ERNAKULAM, COCHIN-682 016. 8. THE COMMISSIONER OF COMMERCIAL TAXES, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM-695 001. BY GOVERNMENT PLEADER SRI.V.K.SHAMSUDHEEN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31-03-2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 9852 of 2011 (F) APPENDIX PETITIONER'S EXHIBITS: EXT.P1 : COPY OF THE INVITATION LETTER EVIDENCING THE INAUGURATION OF THE COMPANY ON 21.12.2006 EXT.P2: COPY OF THE RESIGNATION LETTER EXT.P3: COPY OF THE COMPLAINT DTD.15.4.2007 EXT.P4: COPY OF THE LETTER DTD.6.6.2007 EXT.P5: COPY OF THE STATEMENT OF THE PETITIONER RECORDED ON 4.1.2008 EXT.P6: COPY OF THE COMPLAINT DTD.15.4.2007 EXT.P7: COPY OF THE COMPLAINT DTD.11.3.2008 EXT.P8: COPY OF THE ASSESSMENT ORDER DTD.30.9.2009 EXT.P9: COPY OF THE ENCUMBRANCE CERTIFICATE IN RESPECT OF THE PROPERTY OF THE COMPANY. EXT.P10: COPY OF THE RR NOTICE ISSUED UNDER SECTION 7. EXT.P11: COPY OF THE RR NOTICE ISSUED UNDER SECTION 34. EXT.P12: COPY OF THE REPRESENTATION DTD.6.7.2010. EXT.P13: COPY OF THE LETTER DTD.15.9.2010. EXT.P14: COPY OF THE ORDER DTD.18.9.2010 EXT.P15: COPY OF THE APPLICATION SUBMITTED BY THE PETITIONER UNDER RIGHT TO INFORMATION ACT EXT.P16: COPY OF THE ANSWERS PROVIDED BY THE 5TH RESPONDENT UNDER RIGHT TO INFORMATION ACT. EXT.P17: COPY OF THE REPRESENATION SUBMITTED BY THE PETITIONER. RESPONDENT'S EXHIBITS: NIL //TRUE COPY// P.A TO JUDGE ab C.K.ABDUL REHIM, J --------------------------------------- W.P(C) No.9852 of 2011-F ---------------------------------------- Dated this the 31st day of March, 2011. J U D G M E N T Issue involved in this writ petition pertains to revenue recovery steps initiated for realising arrears of sales tax due from the 6th respondent Company, to which the petitioner was admittedly a Director for some period. On an earlier occasion, when the revenue recovery steps was initiated against the petitioner, he had submitted a representation to the Government, through the Hon'ble Minister for Finance. It is evident from Ext.P13 that the District Collector had conducted an enquiry through the Tahsildar and the petitioner was absolved from liability for payment of the tax amount demanded. Meanwhile, two other persons who were also the Directors of the 6th respondent Company had challenged the revenue recovery steps initiated, by filing a writ petition before this Court. In the judgment in W.P(C) No.19987/2010 this Court found that, under Section 39 of the Kerala Value Added Tax Act (KVAT Act) recovery steps can be proceeded personally against the Directors of a Company only if there is proof regarding negligence, W.P(C) No.9852 of 2011-F : 2 : mischievousness or breach of duty. However, without going into merits of the contentions raised, this Court directed the assessing authority (5th respondent herein) to adjudicate the matter. The objections submitted by those Directors were directed to be considered by the assessing authority, after giving opportunity of personal hearing. 2. Ext.P14 is an order issued by the 5th respondent in compliance with the directions contained in the judgment in W.P(C) No.19987/2010. It is evident that, consequent to the judgment the matter was considered with opportunity of personal hearing afforded to the above said two persons, who were petitioners in that writ petition. Those two persons could not prove that there was no negligence, mischievousness or breach of duty as Directors. Hence in view of provisions contained under Section 39, it was held that those persons are jointly and severally liable for arrears of tax and penalty due from the Company, for the period from 2006-07 onwards. It was also held by the 5th respondent that the petitioner herein is also jointly and severally liable for the arrears for the year 2006-07, in view of Section 30 and 39 of the Kerala Value Added Tax Act. 3. Contention of the petitioner against Ext.P14 is to the W.P(C) No.9852 of 2011-F : 3 : effect that, the order in question was issued without any notice to the petitioner. It is specifically pointed out that the petitioner was not a party in the earlier writ petition nor he was issued with any notice while finalising Ext.P14 proceedings. The petitioner has got valid contentions on the factual matrix of the issue, which according to him will clearly absolve him from the liability in question. But Ext.P14 order is issued totally in violation of principles of natural justice, casting liability upon the petitioner without proper appreciation of the factual aspects. Hence the petitioner is challenging Ext.P14. 4. Going by the facts and circumstances as narrated above, it is evident that the liability fetched on the petitioner by virtue of Ext.P14 order is not by virtue of an adjudication made with sufficient opportunity afforded to the petitioner. It is clearly evident that the petitioner was deprived of any opportunity to dispute correctness of such findings. Therefore, I am of the view that the matter need reconsideration at the hands of the 5th respondent to the extent of deciding liability of the petitioner. 5. In the result, the writ petition is disposed of quashing Ext.P14 order of the 5th respondent to the extent it cast liability W.P(C) No.9852 of 2011-F : 4 : on the petitioner for payment of the arrears of the 6th respondent company, for the year 2006-07. The 5th respondent is directed to consider the matter afresh after affording an opportunity of hearing to the petitioner and also after taking note of Ext.P17 objections and Ext.P13. Needless to say that the petitioner shall be afforded with an opportunity to produce documents in support of his contentions. 6. A fresh decision in this regard shall be taken as early as possible, at any rate, within a period of one month from the date of receipt of a copy of this judgment. It is made clear that further recovery steps if any proposed against the petitioner shall not be pursued till a decision is taken as directed above. C.K.ABDUL REHIM JUDGE ab