IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 14TH SEPTEMBER 2010 / 23RD BHADRA 1932 WP(C).No. 28169 of 2010(U) -------------------------- PETITIONER(S): --------------- V.J.SEBASTIAN, PROPRIETOR, SUPER FLANNEL WORKS, PUTHENCRUZ. BY ADV. SMT.S.K.DEVI SRI.M.A.ALEX MARTIN RESPONDENT(S): --------------- 1. THE COMMERCIAL TAX OFFICER (D), DEPT. OF COMMERCIAL TAXES, II CIRCLE, PERUMBAVOOR, PIN-683 542. 2. STATE OF KERALA, REP. BY ITS FINANCE SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM, PIN-695001. GOVERMENT PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14/09/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K. ABDUL REHIM, J ------------------------------ WP(C) NO. 28169 OF 2010 ------------------------------------- Dated this the 14th day of September, 2010 JUDGMENT Ext.P1 order of assessment issued under Section 25 (1) of the Kerala Value Added Tax Act, 2003 (KVAT Act) is under challenge in this Writ Petition. The main aspect in dispute pertains to rate of tax applicable to the cloths, purchased by the petitioner interstate and sold after converting into towels for cleaning vehicles and other machineries. Question is as to whether it is a readymade garment or not. The petitioner is purchasing polishing cloth (Flannel cloth) inter state and after cutting the same into convenient pieces and stitching its sides by interlocking, the same is sold as polishing cloths. 2. The petitioner sought exemption with respect to the turnover of sales on the premise that the goods will fall within Entry 51 of the First Schedule of the Kerala Value Added Tax Act. According to the assessing authority, the goods will acquire quality of readymade garments, which is liable to be taxed at the rate of 4%, coming under item No. 105 of the Third Schedule. Before completing the assessment, a proposal was issued in this regard and the petitioner had submitted detailed reply. It is mentioned in Ext.P1 order of assessment that after receipt of reply, the assessing authority made physical verification and 2 WP(C) No. 28169/2010 found that the item dealt with by the petitioner is readymade garments. Therefore the proposal was confirmed. According to the petitioner, the issue has already been settled through a decision of the Appellate Tribunal in T.A. No. 334/2004 and 389/2004, order of which is produced as Ext.P4. It is noticed that the decision of the Tribunal is based on the dictum laid by this Court in M/s. Radha Fancy Goods Merchants Vs. State of Kerala 48 (1981) STC 361 and in D.C. Vs. Abdul Khader [1980 KLT 943]. 3. The petitioner has got an effective remedy by way of appeal against Exts.P1 to P3. Eventhough the petitioner contended that the assessing authority had issued only a cryptic order without proper application of mind and without adverting to the contentions and precedents, I am not inclined to interfere with the matter, bye-passing the statutory remedy available. But it is noticed that the petitioner had raised a further contention that the assessing authority had failed in affording an opportunity of personal hearing, before finalizing the assessment, after receipt of the explanations. 4. Going by the provisions contained in Section 25 (1) of the Kerala Value Added Tax Act and as decided in Suzion Infrastructure Services Ltd. Vs. Commercial Tax Officer [2010 (3) KHC 299] a personal hearing of the assessee before finalization of the assessment is 3 WP(C) No. 28169/2010 mandatory. Since Ext.P1 order suffers from non-compliance of such mandatory requirements, I am of the opinion that the said order is vitiated and unsustainable. 5. In the result, the Writ Petition is allowed. Exts.P1, P2 and P3 are quashed and the first respondent is directed to reconsider the matter after affording an opportunity of personal hearing to the petitioner. Fresh assessment may be finalized after taking into consideration of all the contentions raised by the petitioner, based on legal precedents. 6. Orders of fresh assessments shall be issued as early as possible, at any rate within a period of two months from the date of receipt of a copy of this judgment. C.K. ABDUL REHIM JUDGE dnc The words “Exts.P1 to P3”, occurring in line 2 of paragraph 3 and “Exts.P1, P2 and P3” occurring in line 1 of paragraph 5 of the judgment dated 14/09/2010 in WP(C) 28169/2010 are corrected and substituted as “Ext.P1” and the word “are” in line 2 of para 5 is substituted as “is” as per order dated 26/10/2010 in I.A.14524/2010/2010 in WP(C) 28169/2010. Sd/- Registrar (Judicial)