IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 23RD MAY 2011 / 2ND JYAISHTA 1933 WP(C).No. 11324 of 2011(M) ------------------------ PETITIONER : --------------------- M/S.ZODIAC REGENCY, CHAMAKKADA, KOLLAM, REPRESENTED BY ITS MANAGING PARTNER, TOMY JOSEPH. BY ADVS. SRI.V.P. SUKUMAR SRI.JAIRAM V. MENON RESPONDENT(S): -------------------------- 1. THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM-01. 2. THE COMMERCIAL TAX OFFICER, IIIRD CIRCLE, KOLLAM-690 001. R1 & R2 BY GOVT. PLEADER SRI. C.K. GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23/05/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Mn C.K.ABDUL REHIM,J. ------------------------------- WP(C).NO. 11324 of 2011 --------------------------------- Dated this the 23rd day of May, 2011 JUDGMENT Petitioner is a firm running a Bar Hotel. The issue pertains to assessment of turn over tax for the year 2006-07. The petitioner had opted for compounding as provided under section 7 of the KGST Act (as amended). As per Ext.P3 a notice was issued to the petitioner proposing to finalise the assessment in accordance with the provisions of section 7, fixing the turn over at 140% of the purchase value of liquor. The petitioner submitted objections to the proposal, as evidenced form Ext.P4, contending that the Commissioner of Commercial Taxes had issued a letter (Ext.P2) informing that conduct of three years business is a condition precedent for allowing compounding for Bar Hotels. Hence it was contended that the petitioner is liable to be assessed on the basis of the actual sales turn over of IMFL for the relevant year. But through Ext.P5 the objections were rejected and the assessment was completed in accordance with the provisions contained in section 7, reckoning turn over at WP(C).11324/2011 2 140% of the purchase value of liquor. 2. Contention of the petitioner is that, in view of Ext.P2 instructions issued by the Commissioner of Commercial Taxes, the 2nd respondent assessing authority is not entitled to finalise the assessment following the procedure contemplated under section 7. It is submitted that in view of the instruction of the Commissioner which is binding on the assessing authority, the application for compounding submitted by the petitioner has become redundant. Further contention is that in Ext.P5 order the assessing authority has neither considered nor met with the contention raised in this regard, submitted through the objections. 3. On a reading of section 7 of the KGST Act (as amended) it is evident that Bar attached Hotels were permitted to make payment of turn over tax at the compounded rate, notwithstanding the normal liability for payment of tax at the rate as contemplated under section 5(2). The facility is not extended to Hotels having classification above '3 Star' level and for Heritages or Clubs. With respect to others compounding is permitted at their option. In such case the assessees are WP(C).11324/2011 3 permitted to pay TOT at the turn over calculated at 140% of the purchase value of the liquor, with respect to hotels situated within municipal area. It is pertinent to note that, under section 7(b) an alternate method for calculation of the turn over is provided for adopting 150% of the highest turn over tax conceded with respect to the previous 3 consecutive years. But when calculating the turn over under the two alternate methods whichever is hgiher need be adopted. 4. It is evident that the methods of calculation provided under section 7(a) and 7(b) are on the alternative. The authority can fix the turn over by adopting the method as provided under sub section (a) when it is not possible to adopt the method of calculation under section 7(b). 5. Contention of the petitioner is that in view of Ext.P2 the assessing authority was prevented from finalising the matter under Section 7, since the petitioner has no turn over during the previous 3 years. Such a contention is not acceptable in view of the fact that the petitioner had already opted for payment of TOT at the compounded rate. Ext.P2 letter issued by the Commissioner cannot be treated as one putting any restriction WP(C).11324/2011 4 on the operation of the statutory provisions, nor it can be considered as any clarification issued under section 59 of the KGST Act. In Ext.P5 the assessing authority had mentioned that the objections raised by the petitioner has no relevance and hence it is over ruled. Under such circumstances I do not find any ground warranting interference of this court invoking jurisdiction under Article 226. However, if any statutory remedy is available against Ext.P5, liberty of the petitioner in that regard is reserved. 6. In the result the writ petition is dismissed reserving liberty of the petitioner if any available to challenge Ext.P5 in appropriate statutory proceedings. 7. Learned counsel for the petitioner makes an appeal to order restrain on the recovery steps for a reasonable period, in order to facilitate to seek statutory remedy against Ext.P5. Eventhough interference on merits is declined, I am inclined to grant such an equitable relief. Accordingly the 2nd respondent is directed to keep in abeyance all coercive steps of recovery of the amounts covered under Ext.P5 for a period of one month from today. C.K.ABDUL REHIM,JUDGE pmn/ WP(C).11324/2011 5