IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON THURSDAY, THE 2ND SEPTEMBER 2010 / 11TH BHADRA 1932 WP(C).No. 22538 of 2005(G) -------------------------- PETITIONER: ------------------- C.P.DIVAKARAN, P.W.D.CONTRACTOR, CHATHOTH HOUSE, P.O.KEEZHALLOOR, KANNUR-670 612. BY ADV. SRI.RAJESH NAMBIAR RESPONDENTS: ----------------------- 1. THE SALES TAX OFFICER (WORKS CONTRACT & LUXURY TAX), IST CIRCLE, KANNUR. 2. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, KANNUR. BY GOVERNMENT PLEADER SRI.K.P.PRADEEP THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02/09/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 22538 of 2005(G) APPENDIX PETITIONER'S EXHIBITS EXHIBIT P1 SERIES: TRUE COPIES OF THE ASSESSMENT ORDERS FOR THE YEARS 1993-94 TO 1997-98 DATED 20.11.1999. “ P2 : TRUE COPY OF THE NOTICE DATED 11.07.2001 U/S.35 OF THE ACT “ P3 : TRUE COPY OF THE REPLY TO EXT.P2 NOTICE. “ P4 : TRUE COPY OF THE ORDER OF THE DEPUTY COMMISSIONER DATED 24.01.2003. EXHIBIT P5 SERIES : TRUE COPY OF THE REVISED ASSESSMENT ORDERS FOR THE ASSESSMENT YEARS 1993-94 TO 1997-98 DATED 29.04.2005. EXHIBIT P6. : TRUE COPY OF THE DEMAND DRAFT DATED 21.07.2005 ALONG WITH THE COVERING LETTER SENT BY THE PETITIONER TO THE 1ST RESPONDENT. RESPONDENTS' EXHIBIT : NIL P.S. TO JUDGE /TRUE COPY/ VK P.R.RAMACHANDRA MENON, J. --------------------------- W.P.(C) No. 22538 OF 2005 -------------------------- Dated this the 2nd day of September, 2010 J U D G M E N T The petitioner has approached this Court seeking to set aside Ext.P5 series of assessment orders passed, pursuant to Ext.P4 order of remand, invoking the provisions under Section 35 of the KGST Act. The specific point projected by the learned counsel for the petitioner is that the provisions both under Section 23(3) as well as 23(3A) are not attracted to the case in hand; the former, for the fact that the petitioner had already effected the payment as clearly shown in the return filed and as such it is not an amount due when the amount has been refunded to the petitioner pursuant to the assessment. In the case of the latter, the contention is that, the provision under Sub section 3A of Section 23 came into the statute book only with effect from 1.4.1998; whereas the case of the petitioner is pertaining to the assessement years 1993-94 to 1997-98, that is, prior to 1.4.1998. It is also brought to the notice of this Court that, though an interim stay was granted by this Court at the time of admitting the writ petition and the same was extended by one month on 22.8.2005, it was never extended thereafter. The petitioner during the pendency of the above proceedings has already satisfied the entire liability towards interest. 2. With regard to the sequence of events as described in the WPC. No.22538/05 2 writ petition, it is seen that the assessment in the case of the petitioner for the different assessment years 1993-94 to 1997-98 was finalised as per Ext.P1 series orders made on 20.11.1999, accepting the claim put forward by the petitioner that the petitioner was entitled to have exemption under different heads. On finalizing the assessment as above, it was found that there was some excess payment, which was accordingly refunded to the petitioner in December 1999. 3. While so, nearly after two years, the petitioner was served with Ext.P2 notice dated 11.7.2001 issued by the second respondent under Section 35, proposing to proceed with the matter holding that the exemption granted by the assessing authority was not in conformity with the statutory prescription; particularly under Section 5(c). On receipt of Ext.P2, the petitioner preferred Ext.P3 reply dated 22.8.2001. After considering the same, Ext.P4 order was passed by the second respondent on 24.1.2003 observing that the exemption claimed for by the petitioner and given by the assessing authority was not in order and accordingly the matter was remanded for fresh assessment. This, in turn, led to Ext.P5 modified assessment orders, casting the liability upon the petitioner by way of tax, surcharge and interest. The petitioner satisfied the tax and surcharge portion, as borne by Ext.P6, while the liability by way of 'interest' was sought to be disputed by filing this writ petition. WPC. No.22538/05 3 4. Learned counsel for the petitioner submits that there is absolutely no provision in the statute to have mulcted with the liability of 'interest' on the petitioner, in the particular circumstance. Reference is also made to the date of incorporation of Section 23(3A) i.e., with effect from 1.4.1998. Since the assessment years in question are prior to the said date, the said provision is not liable to be pressed into service under any circumstances. Reference is also made to the decision of the Division Bench of this Court in Ali Haji v. Board of Revenue (2007 (1) KLT S.N.26 Case No.32) and also the decision rendered by the Full Bench of this Court in State of Kerala v. Western India Cosmetics and Health Products Ltd.(2010(1) KLT 786). 5. The learned Government Pleader appearing for the respondents fairly concedes that the realisation of interest is not with respect to any reference to Sub section 3A of Section 23 and is only by virtue of applicability of Section 23(3). As such, the pleadings and arguments raised from either side stand confined to Section 23(3). 6. Learned counsel for the petitioner submits that by virtue of the law declared by the Apex Court in Maruti Wire Industries (P) Ltd. v. Sales Tax Officer (2001 (3) SCC 735), the course pursued by the respondents fixing the liability in respect of 'interest' is not correct or sustainable. The scope and applicability of the decision rendered by the WPC. No.22538/05 4 Apex Court in Maruti Wires case (supra) has been explained by the Division Bench of this Court as per the decision reported in Chandramani Traders v. State of Kerala (16 VST 294) and also by an unreported decision in MFA No.331 of 2000 dated 30.1.2008. Obviously the period involved in Maruti Wires case (supra) was prior to 1.4.1998; that too, in a case where no return was filed by the concerned assessee. The period involved in the present case is much after the amendment of the statute and also involving a case where returns have been filed by the petitioner. This being the position, this Court finds it difficult to accept the proposition made by the learned counsel for the petitioner as to the applicability of the decision rendered in Maruti Wires case (supra) which does not come to the rescue of the petitioner. 7. With regard to the contention of the petitioner that there was absolutely no fault on the part of the petitioner, who had actually satisfied the entire liability and the position was well incorporated in the returns filed, which lead to Ext.P1 series of assessment orders passed by the assessing authority, who allowed the exemption claimed and ordered 'refund' of the excess amount. It was thereafter, that Ext.P2 notice was issued under Section 35 and final orders were passed as per Ext.P4; pursuant to which, Ext.P5 series of fresh assessment orders were passed on 29.4.2005 for which the petitioner is not answerable, submits the learned counsel. WPC. No.22538/05 5 8. The learned Government Pleader appearing for the respondents submits that the averments and allegations raised by the petitioner are quite wrong and misconceived. With reference to the mandate under Section 17(8) of the KGST Act, the learned Government Pleader submits that the purpose of enactment stipulation a period of 'four years' is with a specific intent and if the action pursued by the respondents is well within the said period, the natural consequences are to follow and the petitioner cannot make any complaint in this regard. In this case, there is no case for the petitioner that it is beyond the period of 'four years' and hence, it is well within time. 9. With regard to the course pursued by the assessing authority (while passing Ext.P1 series of assessment orders), it is pointed out that the exemption was granted, totally alien to the scheme of the statute; which in turn was taken note of by the second respondent, who initiated 'suo motu' proceedings issuing Ext.P2 notice under Section 35 culminating in Ext.P4 order of remand and Ext.P5 series of revised assessment orders, setting the position in the proper track. It is very much evident to note that the specific heads under which exemption could be granted are clearly stipulated under Section 5C(1)(c) of the KGST Act, while the exemption allowed by the assessing authority while passing Ext.P1 series of assessment order, is not in tune with Section 5C(1)(c). There is no WPC. No.22538/05 6 challenge for the petitioner in this regard, who accordingly has satisfied the tax liability with surcharge, pursuant to Ext.P5 revised assessments, as borne by Ext.P6. The only dispute is with regard to the liability to satisfy 'interest', contending that it was never because of the fault of the petitioner, but because of the mistake committed by the assessing authority who issued Ext.P1 assessment orders and subsequently ordered refund. 10. With regard to the said contention, it is very much relevant to note that the course pursued by the assessing authority, as revealed from Ext.P1 series of assessment orders, was pursuant to the specific claim of exemption put forth from the part of the petitioner, wrongly claiming that the petitioner was entitled to get exemption in respect of the relevant heads; which in turn was acted upon by the assessing authority extending the benefit thereunder, though by way of mistake, which has been subsequently corrected because of the intervention made by the second respondent in the proceedings under Section 35 leading to Ext.P5 series of revised assessment orders which have not been subjected to challenge with regard to the extent of tax and surcharge payable. In other words, the course pursued by the assessing authority was made to be resulted by virtue of a' conscious act' on the part of the petitioner, mooting a proposition that the petitioner was eligible for exemption, which led to the wrong order as borne by Ext.P1 series of assessment orders, which have WPC. No.22538/05 7 been corrected later by revised assessment orders as borne by Ext.P5, pursuant to the steps taken by the second respondent under Section 35. The question is whether the petitioner can be given any 'premium' in respect of the 'misdeeds' committed by the petitioner or whether the revenue should be made to suffer the loss in this regard. 11. Considering the facts, circumstances and the provisions of law, the above question can be answered only against the petitioner and of course in favour of the revenue. The law cannot be interpreted in favour of the wrongdoer. If the action pursued by the assessing authority is pursuant to a wrong committed by the petitioner by way of misclassification of the item, it is none other than the petitioner who is to be enshouldered with the liability as well. In the above circumstances, none of the grounds raised in the writ petition serves its purpose. The writ petition fails. No interference is warranted. It is dismissed accordingly. P.R.RAMACHANDRA MENON, (JUDGE) vps WPC. No.22538/05 8 WPC. No.22538/05 9