IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 8TH SEPTEMBER 2010 / 17TH BHADRA 1932 WP(C).No. 27794 of 2010(Y) -------------------------- PETITIONER(S): --------------- M/S.CALCUTTA TARPAULIN.CO., BAZAR ROAD,KOCHI-2,REPRESENTED BY ITS MANAGER, PRAKASH GUPTA. BY ADV. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON SRI.MAHESH V.MENON RESPONDENT(S): --------------- 1. THE COMMERCIAL TAX OFFICER, IST CIRCLE,MATTANCHERRY. 2. FAST TRACK TEAM NO.V,DEPARTMENT OF COMMERCIAL TAXES,MATTANCHERRY. 3. STATE OF KERALA,REPRESENTED BY ITS SECRETARY,TAXES DEPARTMENT,GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. BY GOVT. PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08/09/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K.ABDUL REHIM, J --------------------------- W.P(C) No. 27794 of 2010-Y ---------------------------- Dated this the 8th day of September, 2010. J U D G M E N T Petitioner is engaged in trading of High Density Poly Ethyline and other packing materials. According to the petitioner, the packing materials dealt with by the petitioner is an item taxable at the rate of 4% under entry 102 of the 1st schedule of KGST Act, read with SRO No.1095/99 issued under Section 10 of the said Act. According to the petitioner, they were collecting and remitting tax only at 4%. It is stated that with respect of assessment years 2001- 02 and 2002-03, the assessing authority had completed assessment imposing tax liability at 12% treating the commodity as plastic sheets. The said assessments were challenged in appeals and the appellate authority had allowed those appeals observing that the HDPE sheets were produced for verification and they were plastic tubings, which is a material coming within the description of Sl.No.13 in SRO 1095/99, and hence tax at the rate of 4% alone is applicable. Accordingly, those assessments were directed to be modified. It is stated that the consequential orders modifying the W.P(C) No. 27794 of 2010-Y 2 assessment was also issued. 2. The assessments for the subsequent years, 2003-04 and 2004-05, were completed invoking provisions under Section 17D of the KGST Act, imposing tax liability at 4%. But subsequently the assessing authority issued Ext.P4 notice, proposing to re-open the assessment under Section 17D(2), alleging that the commodity is used for roofing purpose in Autorickshaws and Jeeps etc. and it will fall under entry 113 of the 1st schedule leviable at 12%. The petitioner submitted objections to the proposal notice as evidenced from Exts.P5 and P6. The objections were filed in November 2009 and there was no further action from the respondent. But another proposal notice was further issued as per Ext.P7 calling for objections against finalising the assessment imposing tax liability at 12%. 3. Ext.P7 was challenged before this Court in W.P(C) No.20625 of 2010. In Ext.P8 judgment, this Court observed that Ext.P7 is unsustainable to the extent that the assessing authority is not competent to reopen an assessment completed under Section 17D by the Fast Track Team. However, it is made clear that quashing of Ext.P7 will not stand in the way of initiating fresh W.P(C) No. 27794 of 2010-Y 3 proceedings by the competent authority, the Fast Track Team. Subsequent to Ext.P8 judgment, the petitioner was issued with a fresh notice, Ext.P9. The same proposal is reiterated for imposing tax liability at 12% on the basis that the commodity is tarpaulin used for covering Authorickshaws and Jeeps and it is not packing material. 4. Petitioner is challenging Ext.P9 on two grounds, first one being the question of jurisdiction for re-opening of the assessment completed under Section 17D. Attention was drawn to the provisions contained Section 17D(2)(d), which enables a re-opening, only if there is receipt of any fresh materials evidencing tax evasion or only in a case where permission of the Commissioner is obtained for re-opening the assessment. According to the petitioner there is no such contingency existed in this case which will enables the second respondent to re-open the assessment. Further contention is that the commodity in question was verified physically by the Deputy Commissioner while deciding the appeals pertaining to the previous years and it was categorically observed that the commodity dealt with by the petitioner is only packing materials, coming within the purview of SRO 1095/99. Therefore the contention of the W.P(C) No. 27794 of 2010-Y 4 petitioner is that Ext.P9 notice itself is per se illegal and unsustainable. 5. Learned Government Pleader appearing for the respondents contended that Ext.P9 is only a proposal notice and that the petitioner is at liberty to file objections before the second respondent itself. Considering the rival submissions, I am of the opinion that interference to quash Ext.P9, which is only a proposal notice is not at all warranted in a proceedings under Article 226. The main contention regarding the proposal is pertaining to classification of the commodity dealt with by the petitioner. It is true that verification was made with respect to previous assessments and it was found that the commodity is only packing materials. I am of the opinion that with respect to the assessments, which are now sought to be re-opened, it need verification as to whether the very same commodity has been dealt with by the petitioner during the subsequent year also. 6. However, it is for the petitioner to convince the second respondent through materials that it is the very same commodity, which is being dealt with and that the findings arrived in the appellate order with respect to previous assessments is applicable in W.P(C) No. 27794 of 2010-Y 5 this case also. The petitioner is at liberty to dispute sustainability of the proposal for re-opening also on the legal grounds urged as above. It is for the petitioner to file objection to Ext.P9 and to convince the second respondent about veracity of such contentions. I find no reason to suspect that if any valid contentions are raised in this regards, the second respondent will not look into such contentions. It is made clear that if the petitioner files objections against Ext.P9, the second respondent shall look into all the contentions and shall take a decision with proper advertance to the materials, if necessary after conducting physical verification of the commodity in question. Under the above circumstances the writ petition is disposed of reserving liberty to the petitioner to file objections against Ext.P9 notice within a period of two weeks from today and also directing the second respondent to dispose of the matter with proper advertance to all contentions and taking note of the observations contained herein. Sd/- C.K.ABDUL REHIM JUDGE ab //True Copy//