IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 17TH MARCH 2011 / 26TH PHALGUNA 1932 WP(C).No. 3773 of 2011(V) -------------------------------------- PETITIONER(S): ------------------------ M/S.P.P.JACOB & COMPANY, PEEDIKAYIL HOUSE, MUTTAMBALAM P.O., KOTTAYAM-686 004, REPRESENTED BY SUNITHA PHILIP, PARTNER. BY ADV. SRI.HARISANKAR V. MENON, SMT.MEERA V.MENON, SRI.MAHESH V.MENON. RESPONDENT(S): -------------------------- 1. ASST. COMMISSIONER (KVAT), COMMERCIAL TAXES SPECIAL CIRCLE, KOTTAYAM-686 001. 2. STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVT., GOVT. SECRETARIAT, THIRUVANANTHAPURAM-01. R1 & R2 BY GOVT. PLEADER MR.C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 17/03/2011,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rs C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.3773 of 2011 ------------------------------------------- Dated this the 17th day of March, 2011 J U D G M E N T ---------------------- Challenge is against Ext.P5 order of assessment and Ext.P6 order imposing penalty. For the period from 1.4.2008 to 31.3.2009 the return submitted by the petitioner was rejected and the assessment was finalised on a best judgment basis, alleging that the petitioner had suppressed the actual turnover. Penalty under Section 67(1) was also imposed to the tune of double the amount of the tax due on the suppressed turnover, on the basis of the above allegations. 2. The order of assessment as well as the order of penalty are assailed in this writ petition, without resorting to the remedy of statutory appeal, mainly on the ground that there was total non-consideration of documents produced in support of the contentions raised by the petitioner, in the reply submitted to the proposal notices. It is also contended that the orders were issued without affording an opportunity of personal hearing. It is the specific case of the petitioner that there was no suppression of sales, which fact will be revealed from Ext.P3 and P4 letters obtained and produced by the petitioner from two dealers who had conducted the actual transactions with respect to the alleged turnover. W.P.(C).3773/11 -2- 3. I am not proposing to enter upon any findings regarding merits of the matter, since the petitioner has not chosen to avail the statutory remedy. On the other hand, question whether there was any violation of the procedure prescribed under the statute while finalising the assessment, need be examined. Contention of the petitioner is that, after filing of the objections to the proposal, the authority had failed to afford any opportunity of hearing to the petitioner. As such the assessment is finalised in violation of the provisions contained in Section 25(1) of the Act as well as there is violation of principles of natural justice, is the contention. The same contentions are raised with respect to the order of penalty also. Learned counsel for petitioner placed reliance on the decision of this court in Suzion Infrastructure Service Ltd. Vs. C.T.O. (2010 (3) KHC 299) in order to canvass the above position. 4. On a perusal of Ext.P5 and P6 it is evident that the petitioner had submitted detailed objections to the proposal notices. It is also evident that those objections were considered by the authority and discarded the same as not acceptable. But nothing is discernible from the orders to the effect that only opportunity of hearing was afforded to the petitioner before finalising the assessment or before imposing penalty. 5. In a statement filed on behalf of the 1st respondent it W.P.(C).3773/11 -3- is mentioned that one Smt.Sunitha Philip, a partner of the petitioner firm, was present on 30.10.2010 and a hearing was conducted. However, such contention was refuted by the petitioner through a reply statement filed. It is pointed out that the objection to the proposal was filed only on 30.10.2010 and the authority had issued the impugned orders on the very same date. Hence the contention of the petitioner is that no such opportunity of hearing as alleged in the statement was afforded to the petitioner. Further contention of the petitioner is that Ext.P3 and P4 letters issued by the other firms were not taken note of nor they were accepted. But in the statement filed on behalf of the respondents it is specifically mentioned that only after taking Ext.P3 and P4 that the authority had finalised the proceedings. 6. However, noticing the provisions contained in Section 25(1) of the KVAT Act, as well as the requirement for compliance of principles of natural justice, I am of the view that the impugned orders are unsustainable since they are issued in violation of the procedure contemplated and in violation of natural justice. Hence I am of the view that the matter requires re-consideration at the hands of the 1st respondent. 7. Hence, the writ petition is disposed of quashing Ext.P5 and P6. The 1st respondent is directed to finalise the W.P.(C).3773/11 -4- matters afresh after affording a reasonable opportunity of hearing to the petitioner. Needless to say that the petitioner shall be provided with opportunity to produce documents if any available to substantiate their contentions. Fresh orders shall be issued as early as possible, at any rate within a period of one month from the date of receipt of a copy of this Judgment. C.K.ABDUL REHIM, JUDGE. okb