IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH WEDNESDAY, THE 18TH FEBRUARY 2009 / 29TH MAGHA 1930 WP(C).No. 27307 of 2008(A) ------------------------------------ PETITIONER(S): ----------------------- K.M.MASILAN, K.M.TRADERS, KRISHNA BUILDINGS, BYE PASS ROAD, KODUVAYOOR, PALAKKAD DISTRICT. BY ADV. SRI.ARIKKAT VIJAYAN MENON SRI.HARISANKAR V. MENON SMT.MEERA V.MENON SRI.MAHESH V.MENON RESPONDENT(S): ------------------------ 1. COMMERCIAL TAX OFFICER, CHITTUR. 2. COMMERCIAL TAX OFFICER (AA), DEPARTMENT OF COMMERCIAL TAXES, PALAKKAD. 3. STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMEN, TAXES DEPARTMENT, KERALA GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SHRI C.K. GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18/02/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K. M. JOSEPH, J. -------------------------------------- W.P.C. NO. 27307 OF 2008 A -------------------------------------- Dated this the 18th February, 2009 JUDGMENT Petitioner has been visited with penalty under Section 67 (2) of the KVAT Act. Petitioner calls in question the said order of penalty. He further challenges Section 67(2) of the Act as beyond the powers of the State Legislature and unconstitutional. Petitioner was assessed to tax for the Return periods in the year 2007 vide Exts.P1 to P9 orders. It is while so that the petitioner has been served with an order as Ext.P10 under Section 67(2) of the KVAT Act. Section 67(2) of the KVAT Act reads as follows: “Sec.67. Imposition of penalty by authorities:- (2) Notwithstanding anything contained in sub-section (1), where on completion of an assessment in relation to a dealer under Sections 22,23,24 or 25, it is found that the tax so determined on such assessment was not paid by the dealer, the assessing authority may direct such WPC.27307/08 A 2 dealer to pay, in addition to the tax so determined, a penalty, in the case of a dealer who has made part payment, (at twice the balance amount of tax) the balance amount of tax so determined and in the case of a dealer who has not paid any amount, (twice the complete amount so assessed).” 2. Exts.P1 to P9 assessment orders have been passed under Section 24 of the Act. It is the case of the petitioner that Ext.P10 order imposing penalty is dated 2.5.2008. There is reference to a show cause notice dated 29.3.2008. It is stated that the said notice was not served on the petitioner. Learned counsel for the petitioner submits that the petitioner does not intend to proceed with the challenge to the validity of the provision. I record the said submission. He, however, submits that the impugned order has to fall to the ground in another respect. He relies on the decision in Govt. Wood Workshop v. State of Kerala (1987 (1) KLT 804) to contend for the position that not only should an assessment order be passed, but it should be issued. According to him, Section 67(3) provides that a notice must be issued providing for the show cause and hearing WPC.27307/08 A 3 to the petitioner must be carried before a penalty is imposed. According to him, the assessment orders in this case were passed on 27.3.2008. The notice, according to him, was not served on the petitioner. But, according to the learned Government Pleader, it was sent to the petitioner, but was unclaimed and it was seen issued on 29.3.2008. The assessment orders were served on him on 14.5.2008. An assessment, in the submission of Shri Harisankar V. Menon, would become effective and complete only when it is issued. Thus, it is only after the assessment is completed in the manner known to law, that the Officer could have invoked his power under Section 67 (2) of the Act, runs the contention of the learned counsel for the petitioner. Learned Government Pleader joined issue with the learned counsel for the petitioner in regard to the applicability of the said doctrine in the facts of this case. He does not dispute the fact that the assessment orders were served on the petitioner only on 14.5.2008. But, he contended that when the notice dated 29.3.2008 was issued, it means that the matter is out of the WPC.27307/08 A 4 hand of the assessing officer. It has the effect of giving finality to the assessments, in the sense that it is beyond his reach to modify it in any manner and this having been achieved when the notice was issued, it must be treated as the assessment was completed at the time when the notice was issued under Section 67(3) of the Act and, therefore, the powers under Section 67(2) were legally invoked by the Officer. However, the learned Government Pleader would submit on instructions that in the notice issued to the petitioner on 29.3.2008, actually there was no mention regarding the completion of the assessment. Therefore, apart from the fact that it may not have complied with the requirement of law regarding the manner in which an assessment has to be completed, at any rate, in the facts of this case, even the argument which the learned Government Pleader purported to advance, may not strictly be available to him. Thus, at the time when the power was purported to be invoked under Section 67(2), it was clearly without legal authority as the assessments had not been completed as contemplated under WPC.27307/08 A 5 Section 67(2). If this is the position, Ext.P10 has no legs to stand on. On this ground alone, Ext.P10 is liable to be set aside. Accordingly, I quash Ext.P10, but leaving it free to the Authority to take such action under Section 67(2) as he is advised in accordance with law. Sd/= K. M. JOSEPH, JUDGE kbk. // True Copy // PS to Judge