IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN MONDAY, THE 14TH DECEMBER 2009 / 23RD AGRAHAYANA 1931 WA.No. 2759 of 2009() --------------------- AGAINST THE JUDGEMENT IN WPC.29895/2009 Dated 22/10/2009 .................... APPELLANT(S): PETITIONER ------------------------ M.B.JAYARAM, SREE MURUKA FUELS, PULLUT, KODNGALLOOR, THRISSUR DISTRICT. BY ADV. SRI.VIJAYAN. K.U. SRI.K.N.SREEKUMARAN RESPONDENT(S): --------------- 1. COMMERCIAL TAX OFFICER, KODUNGALLOOR. 2. INSPECTING ASSISTANT COMMISSIONER COMMERCIAL TAXES IRINJALAKKUDA. 3. STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. BY G.P. SRI.MOHAMMED RAFIQ THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 14/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ. .................................................................... Writ Appeal No.2759 of 2009 .................................................................... Dated this the 14th day of December, 2009. JUDGMENT Ramachandran Nair, J. Writ Appeal is filed against judgment of the learned Single Judge declining to interfere with assessment completed for 2007-2008, but leaving freedom to the appellant to file statutory appeal. We have heard counsel appearing for the appellant and Government Pleader for the respondent. 2. After hearing both sides and after going through Ext.P10 assessment order issued for the assessment year 2007-2008 under the KGST Act, we feel interference is called for by this court because order is prima facie arbitrary and unsustainable. In the first place, strangely appellant was allowed to carry on business in petroleum products without taking registration under the KGST Act. The supplier company is a Government of India undertaking and they allowed the appellant to commence and continue business in petroleum products without taking registration under the KGST Act which is a fundamental 2 requirement for a dealer to carry on business in the State. In fact, action should have been taken against the supplier company for violation and for abetment of evasion of tax, if any. Even while granting registration under the Kerala Value Added Tax Act, the officer has not granted registration to the appellant under the KGST Act. We fail to understand how a dealer who is granted registration under the KVAT Act is disentitled for registration under the KGST Act. Further, before making the assessment, the officer has not chosen to identify the supplier companies and issue notice to them to find out whether supplies were made by them. On the whole, appellant's lapses are outweighed by indifferent behaviour on the part of the Assessing Officer and the Sales Tax Officers in charge of the file. In the circumstances, we allow the Writ Appeal in the following lines: i) The Assessing Officer will permit the appellant to compound the offence of carrying on business without taking registration until 31.12.2009 by collecting a compounding fee of Rs.1,00,000/- (Rupees One Lakh) in addition to compounding fee, if any already collected. ii) The Assessing Officer will process the application for 3 registration and on appellant complying with the formalities, grant registration under the KGST Act with effect from 1.1.2010. If appellant is not entitled to registration for any valid reason, the same should be communicated to the appellant for the appellant to challenge the same. We make it clear that since the appellant is granted registration under the KVAT Act, prima facie there is eligibility for registration under the KGST Act itself and therefore, rejection if any should be done on proper and valid reasons. iii) On payment of Rs.1 lakh as compounding fee, the assessment and demand notice for the year 2007-2008 will stand cancelled. The assessment of the appellant for 2007-2008 and 2008-2009 under the KGST Act will be completed after verifying the purchase bills and other records to be produced by the appellant, failing which officer will conduct enquiry and based on data gathered only turnover will be estimated. Since Government Pleader submitted that there are other sources of petroleum, it is for the officer to conduct enquiry and find out whether appellant has dealt with product sourced from any other party. 4 3. The appellant will pay the compounding fee within two weeks from today for the officer to do the follow-up action as above. The Writ Appeal is allowed vacating the judgment of the learned Single Judge and by allowing the W.P.(C) by vacating the impugned orders subject to above conditions. C.N.RAMACHANDRAN NAIR Judge V.K.MOHANAN Judge pms