IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 19TH OCTOBER 2010 / 27TH ASWINA 1932 WP(C).No. 30320 of 2010(L) -------------------------------------- PETITIONER: ------------------- M/S.MUZIRIS SOFTECH (P) LTD., MUZIRIS HOUSE, KURISUPALLY ROAD, ERNAKULAM, KOCHI-15, REPRESENTED BY N.S.SARATH, DIRECTOR. BY ADVS. SRI.HARISANKAR V. MENON, SMT.MEERA V.MENON, SRI.MAHESH V.MENON. RESPONDENTS: ------------------------ 1. THE COMMERCIAL TAX OFFICER, KVAT CIRCLE IV, ERNAKULAM – 682 016. 2. INTELLIGENCE OFFICER (IB), DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM AT EDAPPALLY, PIN -682 024. 3. DEPUTY COMMISSIONER (APPEALS), DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM – 682 016. R1 TO R3 BY GOVERNMENT PLEADER SRI. C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19/10/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: prv. C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.30320 of 2010 ------------------------------------------- Dated this the 19th day of October, 2010 J U D G M E N T ---------------------- Petitioner is a company engaged in development and sale of computer software. They are also engaged in providing Information Technology and consultancy service. With respect to assessment years 2006-07 and 2007-08, proceedings were initiated against the petitioner under Section 67 of the Kerala Value Added Tax Act, 2003 (KVAT Act), alleging non-disclosure of IT consultancy charges and receipts from Annual Maintenance Contracts (AMCs). In spite of filing detailed objections, penalty was imposed as per Ext.P1 and P2 orders. Ext.P3 and P4 are the statutory appeals filed against those orders, before the 3rd respondent. Through Ext.P5 and P6 the 3rd respondent had granted interim stay on condition of the petitioner remitting 1/3rd of the amount in dispute. 2. According to the petitioner, the conditions stipulated in the interim orders were already complied with. W.P.(C).30320/10- -2- But in spite of repeated requests, the 3rd respondent is not considering and disposing of the appeals. Meanwhile the 1st respondent initiated steps under Section 25 (1) of the KVAT Act proposing to reject the returns and to complete the assessment on a best judgment basis, proposing huge additions placing reliance on the orders of penalty. Ext.P7 and P8 are the proposal notices issued in this regard. The petitioner filed Ext.P9 and P10 replies, in which it was specifically contended that statutory appeals filed against the orders imposing penalty are pending disposal. Therefore they requested for keeping in abeyance finalisation of the assessment till the disposal of the appeals. But without considering such requests the assessments were finalised as per Ext.P11 and P12 imposing huge additions on the turn over conceded. 3. Ext.P11 and P12 orders are assailed in this writ petition on various grounds. It is contended that the pre- assessment notices, Ext.P7 and P8, were not issued in a proper manner. No specific opportunity for personal hearing was afforded to the petitioners since the notices were issued in a composite manner, both calling for objections as well as for personal hearing simultaneously. It is submitted that, after filing W.P.(C).30320/10- -3- replies to the proposal notices, the petitioner was not given any effective opportunity for hearing. The petitioner heavily relies on a recent decision of this court, Suzion Infrastructure Service Ltd. Vs. C.T.O. (2010 (3) KHC 299) in support of the above contentions. 4. On a perusal of the impugned orders it is revealed that the 1st respondent had referred to all the objections raised by the petitioner, and the assessing authority had arrived at specific findings on each of the contentions. The objections were overruled on the basis of reasoning mentioned therein and the assessment as proposed was confirmed. 5. In a statement filed on behalf of the 1st respondent it is mentioned that after filing objections the petitioner requested for time till disposal of the appeals pending before the 3rd respondent. Further they demanded for a personal hearing in the matter. It is stated that on 11.8.2008 a personal hearing was afforded and the Assistant Manager of the petitioner firm, Mr.Eswaran G., who appeared on behalf of the petitioner was heard in detail. As a token of the hearing the 1st respondent had signed in the Cash Book as well as in the Bank pass books produced by the petitioner. W.P.(C).30320/10- -4- 6. However, learned counsel for the petitioner stoutly refuted the above statement. According to the petitioner no notice of personal hearing was issued after submitting the objections. It is admitted that the Assistant Manager of the petitioner had produced Books of Accounts on 11.8.2010. But no personal hearing was conducted on that day. The petitioner makes strong contentions with respect to non-consideration of request for keeping in abeyance finalisation of the proceedings till the disposal of appeals. So also the lack of opportunity for personal hearing is also highlighted. 7. It is pertinent to note that, in spite of elaborate reference made in the impugned orders about the grounds raised by the petitioner in the objections, the impugned orders are silent about any personal hearing conducted after submission of the objections. The fact that the proposal notices were issued only with composite opportunities, as well as lack of any specific posting provided for personal hearing after submission of the objections, is writ large on the face of the orders. Further, the impugned orders do not reveal any reason as to why the proceedings was not deferred till the disposal of the appeals. Under such circumstances, I am of the opinion that the matter W.P.(C).30320/10- -5- needs re-consideration at the hands of the 1st respondent. Interest of justice will be served if the 3rd respondent is directed to dispose of the appeals on an early date and finalisation of assessments is deferred till such disposal. 8. In the result the writ petition is allowed quashing Ext.P11 and P12 orders of assessments. The 3rd respondent is directed to consider and pass orders on Ext.P3 and P4 appeals after affording an opportunity of hearing to the petitioner, at the earliest possible, at any rate within a period of six weeks from the date of receipt of a copy of this judgment. The 1st respondent is directed to finalise the assessments taking note of the decision which will be issued on Ext.P3 and P4 appeals, after affording an effective opportunity of personal hearing to the petitioner, at the earliest possible, after the disposal of the appeals by the 3rd respondent, at any rate within a period of one month thereafter. C.K.ABDUL REHIM, JUDGE. okb