IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 16TH FEBRUARY 2010 / 27TH MAGHA 1931 WP(C).No. 2434 of 2010(D) -------------------------------------- PETITIONER(S): ----------------------- EMPEE DISTILLERIES LTD., NEW INDUSTRIAL DEVELOPMENT AREA, MENON PARA ROAD, KANJIKODE P.O., PALAKAD 678 621, REPRESENTED BY ITS GENERAL MANAGER, G.SURENDRAN. BY MR.K.P.DANDAPANI, SENIOR ADVOCATE, ADV. MR.MILLU DANDAPANI. RESPONDENT(S): ------------------------- 1. STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPARTMENT., THIRUVANANTHAPURAM – 695 001. 2. THE ASSISTANT COMMISSIONR (ASSESSMENT) SPECIAL CIRCLE, COMMERCIAL TAXES, PALAKKAD. 3. THE INSPECTING ASSISTANT COMMISSIONR COMMERCIAL TAXES, PALAKKAD. 4. THE SALES TAX APPELLATE TRIBUNAL, PALAKKAD. 5. ANDHRA BANK, BIG BAZAR ROAD, PALAKKAD- 678 014, REPRESENTED BY ITS MANAGER. 6. KERALA STATE BEVERAGES (MFG. AND MKTG) CORPORATION LTD., P.B.2263, SASTHAKRIPA OFFICE COMPLEX, SASTHAMANGALAM, THIRUVANANTHAPURAM- 695 010, REPRESENTED BY ITS FINANCE MANAGER. R1 TO R4 BY GOVERNMENT PLEADER MR.K. VINOD CHANDRAN. R6 BY ADV. MR.ELVIN PETER P.J., MR.ABRAHAM MATHEW. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16/02/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 2434/2010-D APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE DEMAND NOTICE NO.1624/2009 DATED 31/07/2009 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER PERTAINS TO ASSESSMENT YEAR 1998-99. EXT.P1(a): COPY OF THE DEMAND NOTICE NO.1625/09 DATED 31/07/2009 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER PERTAINS TO ASSESSMENT YEAR 1999-2000. EXT.P1(b): COPY OF THE DEMAND NOTICE NO.1626/09 DATED 31/07/2009 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER PERTAINS TO ASSESSMENT YEAR 2001-2002. EXT.P1(c): COPY OF THE DEMAND NOTICE NO.1627/09 DATED 31/07/2009 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER PERTAINS TO ASSESSMENT YEAR 2001-2002. EXT.P2: COPY OF THE JUDGMENT OF THIS HONOURABLE COURT, DATED 11/08/2009 RENDERED IN WP(C) NO. 22707/2009-G. EXT.P3: COPY OF THE COMMON ORDER DATED 07/01/2010 RENDERED BY THE 4TH RESPONDENT IN INTA NOS.338, 340, 342, 344 & 346/2009 IN TA NOS.323, 324, 325, 326 AND 327 OF 2009. EXT.P4: COPY OF THE INTIMATION VIDE NO.31011131/98-99 OF THE 2ND RESPONDENT TO THE 5TH RESPONDENT, DATED 13/01/2010. EXT.P4(a): COPY OF THE INTIMATION ISSUED BY THE 5TH RESPONDENT, TO THE PETITIONER VIDE LR NO.0194/1/OCC/370 DATED 15/01/2010. EXT.P5: COPY OF THE NOTICE VIDE NO.31011131/98-99 DATED 13/01/2010 OF THE 2ND RESPONDENT TO THE 6TH RESPONDENT. EXT.P5(a): COPY OF THE INTIMATION VIDE NO.KSBC/FM/021/2009-10 DATED 15/01/2010 OF THE 6TH RESPONDENT TO THE PETITIONER. EXT.P6: COPY OF THE CERTIFICATE DATED 02/02/2010 ISSUED BY RAMACHANDRAN & RAMACHANDRAN ASSOCIATES, PALAKKAD TO THE PETITIONER. RESPONDENT'S EXHIBITS & ANNEXURES: ANNEXURE R1: COPY OF THE ORDER DATED 28/04/2006 OF THE HONOURABLE SUPREME COURT. ANNEXURE R2: COPY OF THE ORDER DATED 14/05/2009 OF THE HONOURABLE SUPREME COURT. WP(C) NO. 2434/2010-D EXT.R1(a): COPY OF THE AFFIDAVIT ALONG WITH THE PETITION FILED BEFORE THE TRIBUNAL. EXT.R1(b): COPY OF THE COMMUNICATION BEARING NO.31011131/98-99 DATED 03/02/2010. EXT.R1(c): COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE TRIBUNAL. //TRUE COPY// P.A. TO JUDGE rs. P.R RAMACHANDRA MENON, J. ------------------------- W.P (C) No.2434 of 2010 -------------------------- Dated this the 16th February, 2010 J U D G M E N T The petitioner is an assessee under the K.G.S.T Act as well as the K.V.A.T Act and the assessment in respect of various assessment years 1998 to 2003-2004 except 2002- 2003 was finalised for the turn over tax. Challenging the assessment orders, the petitioner preferred appeals bearing T.A Nos.323, 324, 325, 326 and 327 of 2009 along with interlocutory applications for stay. 2. When coercive proceedings were pursued against the petitioner during pendency of the above proceedings, the petitioner approached this Court by filing W.P (C) No.22707 of 2009 seeking for appropriate reliefs. After hearing both the sides, the said writ petition was disposed of as per Ext.P2 judgment, whereby, the appellate authority was directed to consider the appeals as well as the interlocutory applications for stay, in accordance with law, as expeditiously as possible. It was also made clear that, till such appropriate orders were passed on the petitions for stay, all further coercive W.P (C) No.2434 of 2010 2 proceedings pursuant to the impugned orders would be kept in abeyance. 3. Pursuant to Ext.P2 judgment , the petitions for stay were considered by the appellate authority, who passed Ext.P3 order, whereby the said petitions were dismissed, observing that the petitioner/appellant failed to make out a prima facie case. However, the appeals preferred by the petitioner are kept pending. Sri. K.P. Dandapani, the learned Senior Counsel for the petitioner submits that appeals were also heard subsequently on 22.1.2010 and the final verdict is yet to be passed. It is in the meanwhile, that is, immediately after the passing Ext.P3 order declining interim stay that Exts. P4 and P5 coercive steps were taken by way of 'garnishee proceedings' and in the said circumstances. the petitioner is constrained to approach this Court by filing this writ petition, seeking to direct the 3rd respondent to refrain from any action pursuant to Exts.P4 and P5 pending finalisation of the appeals. 4. The matter was heard at length on 1.2.2010 and this Court passed an interim order directing Exts P4 and W.P (C) No.2434 of 2010 3 P5 proceedings to be kept in abeyance, on condition that the petitioner deposited 1/3rd of the amount due as shown in Exts.P4 and P5 within one week. 5. It is the case of the petitioner that, even though the petitioner sought to tender the amount due towards the tax liability as shown in Exts.P4 and P5, the same was not accepted by the concerned authorities, insisting that the petitioner had to remit 1/3rd of the amount calculated on the 'total figures' as given in Exts.P4 and P5, which made the petitioner to approach this Court by filing I.A No.1580 of 2010 seeking to modify the interim order permitting the petitioner to remit 1/3rd of the 'tax amount' of Rs.4,51,49,025 i.e, by remitting 1,50,49,675/- pending disposal of the writ petition. 6. The respondents have already filed a statement in support of the stand being pursued by them and also a counter affidavit in I.A 1580/2010 producing copies of the relevant documents Exts.R1 (a) to R1 (c); simultaneously filing I.A No. 1684 of 2010 seeking to vacate the interim order already passed by this Court. W.P (C) No.2434 of 2010 4 7. Mr.Vinod Chandran, the learned Special Government Pleader (Taxes) brought to the notice of this Court that the proceedings by way of Exts.P4 and P5, pertain to not only the appeals preferred before the appellate authority, but also the amount due towards the 'penalty' as well as 'interest on penalty' which form the subject matter of revision petitions pending before the Commissioner. This being the position, it is contended that the amounts contained in Exts.P4 and P5, in so far as it relates to the revision petition in respect of the penalty orders, which however, do not form the subject matter of the pending appeals or this writ petition, cannot be clubbed together by the petitioner, which clearly stands on a different footing. Besides referring to the sequence of events, it is also stated that there is absolutely no merit in the appeals preferred by the petitioner and that the position brought to the notice of the Tribunal has already been accepted in this regard and it was accordingly, that the interlocutory applications for stay were dismissed as per Ext.P3, holding that the petitioner failed even to project a prima facie case. W.P (C) No.2434 of 2010 5 8. Sri.K.P.Dandapani, the learned Senior Counsel appearing for the petitioner confined the arguments with regard to the 'sustainability' of the course and conduct pursued by the 4th respondent Tribunal, particularly keeping the appeal proceedings pending without pronouncing the final verdict, although the final hearing was held on 22.1.2010 and the interlocutory applications for stay were rejected holding that no prima facie case was made out. It is stated that by virtue of the exercise as above, simultaneously proceeding with coercive steps under the Revenue Recovery Act, the petitioner is virtually prevented from availing any further remedy. 9. The learned Special Government Pleader (Taxes) submits that the basic issue is whether the 'excise duty component' satisfied by the KSBC could be reckoned as part of the turnover of the petitioner or not. The law in this regard has been made clear by a Constitution Bench of the Hon'ble Supreme Court as per the decision in State of Kerala & Others Vs. Maharashtra Distilleries and Others [141 STC 358]. It is contended that the petitioner was also a party to the proceedings before the Apex Court (Case W.P (C) No.2434 of 2010 6 No.6122 as referred to at page 360] and as it stands so, by virtue of the inter-party judgment, it is no more open for the petitioner to contend anything contrary. 10. Referring to Ext. R1 final order and Ext.R2 interim order passed by the Apex Court, the learned Special Government Pleader submits that the assessee has to satisfy the tax liability in respect of the 'excise duty component' as well and that, with regard to the payment of 'interest', the assessee has to furnish a 'Bank Guarantee' as prescribed therein. With regard to the question of penalty and the interest thereon, it is stated in paragraph 2 of the counter affidavit filed in I.A No.1580 of 2010 that the orders imposing penalty were admittedly challenged by the petitioner by filing R.P Nos.60, 61, and 62 of 2006, which however were dismissed by the Deputy Commissioner, Palakkad; whereupon, the petitioner moved further revision before the Commissioner, before whom the said proceedings (numbered as R1-12355, 12355A, 12355B of 2007) are still pending. 11. Even though the merits involved in the appeal have been chosen to be highlighted with reference to the W.P (C) No.2434 of 2010 7 activities being pursued by the petitioner and also with reference to the relevant provisions of law and the binding judicial precedents, this Court does not propose to go into the said aspects as the interference sought for in this writ petition is only with regard to the sustainability of the course and conduct being pursued by the Tribunal in keeping the appeals in cold storage after the final hearing held on 22.1.2010 and that too after dismissing the interlocutory applications for stay vide Ext.P3, enabling the respondents to proceed with the recovery proceedings. In view of the direction given by this Court already in Ext.P2 judgment, to have the appeals also to be considered and finalised, there is no point in keeping the said proceedings pending indefinitely. But then the question is ,to what extent interference is possible with regard to the coercive steps stated as being pursued against the petitioner. 12. As mentioned hereinbefore, Exts.P4 and P5 pertain to four different components; that is the 'tax' liability, 'interest' thereon, 'penalty' and 'interest on penalty'. The quantum of penalty as well as interest thereon and the sustainability of imposing the same are W.P (C) No.2434 of 2010 8 admittedly pending consideration before the Commissioner in revision, stated as filed by the petitioner. There is no case for the petitioner that the revisional authority has passed any interim order of stay in respect of the above proceedings. In any view of the matter, that does not form the subject matter of the appeals or the writ petition now being considered by this Court. As it stands so, no interference is warranted in respect of the amounts stated in Exts.P4 and P5 with regard to the 'penalty' as well as 'interest on penalty'. 13. With regard to the liability to pay tax as well as 'interest on tax', it is the case of the respondents that the petitioner has not chosen even to satisfy the admitted liability. The relevant facts and figures given by the respondents in Ext.R1 (b) show that a total sum about Rs.5,48, 41,026/- is due towards the tax component, even as per the returns filed by the petitioner . 'Interest' over the said amount by itself will come to about Rs.1.5 crores, while the amount satisfied by the petitioner is only to the tune of Rs.77,66,949/- The factual particulars in this regard as given from the part of the petitioner vide Ext.P4 W.P (C) No.2434 of 2010 9 almost reconcile with the figures projected from the part of the respondents. However, this Court does not find it necessary to enter into a 'fact adjudication' exercise, to arrive at the actual amount payable, for the time being, as the appeals have been finally heard and the verdict is awaited. 14. Considering the facts and circumstances, this Court finds that the interest of justice would be met, if the appellate authority is directed to consider and pass appropriate orders on the appeals bearing T.A Nos. 323, 324, 325, 326 and 327 of 2009, the final hearing of which has admittedly been completed on 22.1.2010. Accordingly, the 4th respondent is directed to pass final orders in the said appeals in accordance with law, as expeditiously as possible, at any rate, within one month from the date of receipt of a copy of this judgment. The coercive proceedings pursuant to Exts.P4 and P5 shall be kept in abeyance with regard to the 'tax component' and 'interest' in respect thereof, on condition that the petitioner deposits a sum of 'Rs.4 crores' within one week. W.P (C) No.2434 of 2010 10 15. It is made clear that interference is not made with regard to the steps regarding 'penalty' as well as 'interest on penalty' as shown in Exts.P4 and P5, which however form the subject matter of the revisions pending before the Commissioner and the petitioner is at liberty to approach the Revisional Authority for appropriate reliefs, if so advised. It is also made clear that this Court has not expressed anything regarding the merits of the case or as to the apportionment of the payment stated as effected by the petitioner. The Writ Petition is disposed of as above. P.R RAMACHANDRA MENON JUDGE ma W.P (C) No.2434 of 2010 11 W.P (C) No.2434 of 2010 12