IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN TUESDAY, THE 2ND DECEMBER 2008 / 11TH AGRAHAYANA 1930 OP.No. 3829 of 2003(E) ---------------------- PETITIONER(S): --------------- K.T. JOSEPH, KINATTUKARA INDUSTRIES, PINNAKKANADU, KALAKKETTY P.O., KOTTAYAM DISTRICT. BY ADV. SRI.ARIKKAT VIJAYAN MENON SMT.MEERA V.MENON RESPONDENT(S): --------------- 1. SALES TAX OFFICER-IV, PALA. 2. DEPUTY TAHSILDAR (REVENUE RECOVERY) MEENACHIL TALUK OFFICE, PALA. 3. STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, KERALA GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. GOVERNMENT PLEADERSRI. M.R. SABU FOR THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 02/12/2008, ALONG WITH WPC NO. 24266 OF 2004 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP.No. 3829 of 2003 ORDER ON C.M.P.NO.6729 OF 2003 IN O.P.NO.3829 OF 2003 DISMISSED 2.12.2008 SD/- S. SIRI JAGAN, JUDGE. APPENDIX PETITIONER'S EXHIBITS EXT.P1: COPY OF CERTIFICATE ISSUED BY THE KHADI & VILLAGE INDUSTRIES BOARD. EXT.P2: COPY OF THE CERTIFICATE ISSUED BY THE KHADI AND VILLAGE INDUSTRIES BOARD. EXT.P3: COPY OF THE CERTIFICATE ISSUED BY THE KHADI & VILLAGE INDUSTRIES BOARD. EXT.P4: COPY OF THE ASSESSMENT ORDER PASSED BY R1 AGAINST THE PETITIONER FOR 1997-98 AND 1998-99. EXT.P5: COPY OF THE ORDER STA 455 & 456/02 OF THE APPELLATE ASST. COMMISSIONER. EXT.P6: COPY OF THE APPLICATIN IN FORM 21 FILED BEFORE R1. EXT.P7: COPY OF THE APPLICATION IN FORM 21 FILED BEFORE R1. EXT.P8: COPY OF THE APPLICATION IN FORM 21 FILED BEFORE R1. EXT.P9: COPY OF THE APPLICATION IN FORM 21 FILED BEFORE R1. EXT.P10: COPY OF THE APPLCIATION IN FORM 21 FILED BEFORE R1. EXT.P11: COPY OF THE APPLICATION FOR CONDONATION OF DELAY FILED BEFORE R1. EXT.P12: COPY OF THE NOTICE IN FORM NO.1 ISSUED BY THE 2ND RESPONDENT. EXT.P13: COPY OF THE NOTICE IN FORM NO.10 ISSUED BY THE 2ND RESPONDENT. TRUE COPY PA TO JUDGE. S. SIRI JAGAN, J. ------------------------------------ O.P.No. 3829/03 & W.P.(C) No.24266 OF 2004 ---------------------------------------- Dated this the 2nd day of December, 2008 JUDGMENT The petitioner is engaged in the business of running a crusher unit. The petitioner is a dealer registered under the Kerala General Sales Tax Act. For the assessment years 1994- 1995 and 1995-1996, the petitioner opted for paying tax at compounded rates in accordance with Section 7 of the KGST Act. While so, the petitioner was given registration by the Khadi and Village Industries Board, as a result of which the petitioner became entitled to tax exemption under SRO No.1727/93 and 1090/99. For the assessment years 1997-1998 and 1998-1999, the petitioner claimed exemption under the above Government Orders as a unit registered with the Khadi and Village Industries Board. By Exts.P1 to P3 certificates in O.P.No.3829/2003, the Khadi and Village Industries Board certified his eligibility for claiming exemption. That exemption was allowed. Later the O.P.NO.3829/03 & Con.case 2 petitioner was served with a notice under Section 19 of the Act proposing to re-open the assessments for the years 1997-1998 and 1998-1999 on the ground that the petitioner’s unit not being a manufacturing unit, is not entitled to exemption under SRO Nos.1727/93 and 1090/99. Thereafter in June, 2002 the proposal to re-open the assessments was confirmed and revised assessments were passed denying exemption under the above said Government Orders. Although the petitioner does not dispute his ineligibility for exemption, he claims that in view of the particular circumstances of the case, he is entitled to submit option under Section 7, even if the same is belated. The petitioner complains that the assessing authority is not accepting Exts.P6 to P10 applications in that regard with petitions to condone delay. It is under the above circumstances, the petitioner has filed O.P.No.3829/2003 seeking the following reliefs: “(i) To declare the first respondent to permit the petitioner to exercise the option to pay tax u/s 7 of the KGST Act at compounded rates and to dispose of Exts.P6 to P11 applications filed before him by the petitioner by the issue of a writ of mandamus or such other writ or order or direction. O.P.NO.3829/03 & Con.case 3 (ii) To prohibit the respondents from proceeding further to recover the arrears of tax demanded by Exts.P12 and P13 by the issue of a writ of prohibition or such other writ or order or direction”. In W.P. (C) No.24266/2004 the issue is identical, but for a different period. The same relates to provisional assessments for the periods April 1999 – March 2000 and April 2001-March 2002, which were finalized on 31.5.2004. Anticipating denial of exemption, the petitioner had, earlier, along with the applications filed for the assessment years 1997-1998 and 1998-1999 submitted applications for payment of tax at compounded rates under Section 7 for the assessment years 1999-2000 to 2001-2002. However, the petitioner was served with Exts.P1, P3 to P26 and P27 pre-assessment notices, without reference to the option under Section 7. It is under the said circumstances, the petitioner has filed W.P.(C) No.24266/04 seeking the following relief: “(i) To quash Ext.P1, P3 to P26 and P27 notices issued by the first respondent by the issue of a writ of certiorari or such other writ or order or direction” 2. The petitioner’s contention is that the petitioner having been bona fide prosecuting the claim for exemption O.P.NO.3829/03 & Con.case 4 under SRO Nos. 1727/93 and 1090/99, he is entitled to a fresh opportunity to opt for payment of tax under Section 7 in so far as it was not because of any of his fault that he could not apply in time as provided under Rule 30 of the Kerala General Sales Tax Rules. The petitioner would contend that the prevailing law on the subject at the relevant time was that crushing of metal into specified size amounts to manufacturing. The petitioner refers to the decision of COMMERCIAL TAXES OFFICER V. PRAKASH UDHYOG [(2002) 10 KTR 511(Raj.)] in this regard. The petitioner points out that the Assessing Authority also accepted that position of law by originally granting exemption to the petitioner from payment of tax under the above said notifications. In fact, the law changed only when the Supreme Court in the decision of STATE OF MAHARASHTRA V. MAHALAXMI STORES [2003(129) STC 79] held that crushing of big sized stones into small sizes does not result in manufacture because no new commercial commodity comes into existence thereby. Therefore, according to the petitioner, the situation was not on account of any fault of his, but because of peculiar circumstances prevailing at the O.P.NO.3829/03 & Con.case 5 relevant time. The petitioner would submit that he could opt for assessment under Section 7, only after the Assessing Authority decided to re-open the assessment under Section 19 which happened only in June 2002 and the petitioner filed the applications for paying tax at compounded rates in January 2003. According to the petitioner, Section 7 itself provides for condonation of delay in opting for facility under Section 7. 3. This is stoutly opposed by the learned Government Pleader appearing for the respondents. He points out that under the Rules, the option has to be submitted before the Assessing Authority concerned in the form prescribed on or before the first day of May of the year to which the option relates. He further points out that under Sub-rule 5 also the dealer has to file an annual return in the prescribed from on or before the 1st day of May along with the proof of payment of tax or other amount due under the Act. If the petitioner is now permitted to avail of facility under Section 7, the petitioner would not be able to comply with the requirements of the Rule. He also points out that notice for re-opening assessment under Section 19 was issued as early as in January O.P.NO.3829/03 & Con.case 6 2002 and the petitioner submitted option under Section 7 only in January 2003, one year later. Therefore, according to the learned Government Pleader, the petitioner should not be given the opportunity to opt for assessment under Section 7 at this late stage. He also points out that as early as in 2000, the Supreme Court, in the decision of Commissioner of Sales Tax V. Lal Kunwa Stone Crushter (P) Ltd. [2000 (118) STC 287(SC)] had finally decided that crushing of metal into small pieces does not involve manufacturing activity. 4. I have considered the rival contentions in detail. 5. I am of opinion that a person should not be denied a remedy when he has a genuine grievance. In these cases, the petitioner bona fide believed that the petitioner is entitled to benefit all exemption under SROs mentioned above. Until the proceedings under Section 19 were completed in June 2002, the petitioner had no occasion to opt for benefit under Section 7 because he was exempted from paying tax. In fact, the Assessing Authority was also under the impression that the petitioner was eligible for exemption, which was granted to the petitioner. When the petitioner has wholly exempted from O.P.NO.3829/03 & Con.case 7 payment of tax, one cannot expect the petitioner to submit an option under Section 7 in time anticipating that in future the exemption already granted may be withdrawn. I do not think that the objections raised by the learned Government Pleader would stand in the way of giving the petitioner that opportunity now. The decision relied on by the learned Government Pleader would not change the situation in so far as the petitioner was made aware of the denial of exemption to him only in June 2003. Of course, after that there was some delay in filing the application in January 2003. But in the peculiar circumstances of the case, I am of opinion that, that delay also can be condoned for which provision is available in the Rules. As I have already stated, a person, who has a genuine grievance, should not be denied remedies on technical grounds. In the above circumstances, I direct the Assessing Authority to accept Exts.P6 to P11 in O.P.No.3829/2003 which applies to the period covered by W.P.(C) No.24266/2004 also, and process the same in accordance with Section 7 of the Act and Rule 30 of the Rules as if the same have been submitted in O.P.NO.3829/03 & Con.case 8 time. The assessments of the petitioner under the KGST Act for the relevant assessment years shall be completed accordingly, notwithstanding Exts.P1, P3 to P26 and P27 notices impugned in W.P.(C) No.24266/04. The original petition and the writ petition are disposed of as above. S. SIRI JAGAN, JUDGE Acd O.P.NO.3829/03 & Con.case 9