IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 16TH NOVEMBER 2009 / 25TH KARTHIKA 1931 WP(C).No. 30933 of 2009(J) -------------------------- PETITIONER(S): --------------- M/S. RMP INFOTECH (P)LTD., DOOR NO.14/130 (2) 1ST FLOOR, PARANGATH TOWERS, KALAMANDAPM JUNCTION, PALAKKAD. BY ADV. SRI.TOMSON T.EMMANUEL RESPONDENT(S): --------------- 1. THE ASSISTANT COMMISSIONER (ASSMT) SPECIAL CIRCLE, COMMERCIAL TAXES, PALAKKAD. 2. THE COMMISSIONER OF COMMERCIAL TAXES COMMERCIAL TAXES , THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SRI. C.K. GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16/11/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: shg/ C.K. ABDUL REHIM, J. - - - - - - - - - - - - - - - - - - - - - - - W.P.(C)No. 30933 of 2009 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 16th day of November, 2009 J U D G M E N T 1. The petitioner was issued with a notice under Section 25 (1) of the Kerala Value Added Tax Act, 2003 (KVAT Act) proposing assessment of escaped turnover, with respect to the year 2008-09, and also proposing imposition of penalty under Section 67 (1) of the KVAT Act. In the proposal notice it is revealed that suppression of turnover was detected pursuant to details collected from check post regarding transportation of goods undertaken by the petitioner. The petitioner is a private limited company engaged in the sale of consumer goods by direct marketing and it is having branches at different places. According to the petitioner eventhough the branches were contacted for giving necessary details to submit proper explanation to Ext.P2 notice, the same could not be collected since internal audit is going on at the branch level. Therefore the W.P.(C)No. 30933 of 2009 -2- petitioner submitted Ext.P3 request seeking time for filing reply, till 31.12.2009. It is further stated that along with Ext.P3, the petitioner had produced Exts.P5 to P7 series of documents. But according to the petitioner the 1st respondent insisted that full text of books of accounts has to be produced. While receiving Ext.P3 request the 1st respondent noted in the “Local Delivery Book” of the petitioner that adjournment was declined. 2. The writ petition is filed on the premise that the 1st respondent is taking hasty steps to issue orders without giving reasonable opportunity to the petitioner to file detailed objections and to produce supporting documents. After filing the writ petition the petitioner had received Ext.P8 assessment order and Ext.P9 order imposing penalty. Those orders are produced through amendment petition and the same is also challenged in this writ petition. 3. On a perusal of Exts.P8 & P9 it is revealed that the proposed notice was served on the petitioner on 19.10.2009 with seven days time provided for submitting W.P.(C)No. 30933 of 2009 -3- reply and fixing the hearing date as 26.10.2009. The authorised representative of the petitioner filed Ext.P3 reply seeking adjournment. But the reply was not accepted by the 1st respondent stating the following reasons: “The reply is not entertainable for the reason that the administrative office at Palakkad has the responsibility of keeping proper books of accounts in respect of all branches and they must be aware of what is taking place in the branches. It seems that the administrative office is groping in the darkness for details and that attempts for collection of details have been commenced after receipt of a statutory notice only. It shows their total lack of control over their branches and their accounts. It is also noteworthy that the assessee chose to file an adjournment after availing permitted period of 7 days and if they were honest in seeking an adjournment, they could have done it much earlier without waiting for W.P.(C)No. 30933 of 2009 -4- expiry of time. Request for extension for one month for filing a proper reply is only a lame excuse, to drag the proceedings endlessly. Hence I am not inclined to accept the request for extension of time and therefore the request for adjournment is hereby turned down. The assessment for 2008-09 is accordingly completed to the best of judgment, as proposed u/s. 25 (1) and as shown below, on the firm conviction that the assessee has no reasonable reply to file against the proposal”. 4. In a statement filed on behalf of the 1st respondent it is contended that, the seven days time given to the petitioner for filing objections cannot be said to be too short a period and as insufficient in the transparent VAT era. It is further stated that when the petitioner is maintaining a head office that head office should know the turnover particulars and purchase details etc. in respect of all their branches and therefore the request for adjournment is W.P.(C)No. 30933 of 2009 -5- rejected. It is noticed that, the 1st respondent had arrived at a conclusion that the claim of the petitioner based on Exts.P5 to P7 documents is not genuine. 5. From the facts stated above it is clear that the 1st respondent had finalised the assessment and penalty, immediately after the date on which the matter was posted for hearing. As stated above, it is evident that the proposal notice was served only on 19.10.2009 and the hearing date was fixed on the 7th day ie. 26/10/2009. Principles of natural justice requires that, if the 1st respondent was not inclined to grant adjournment on the date of hearing, as required under Ext.P3 a further opportunity ought to have been provided to the petitioner, fixing a reasonable time for production of records if any or to file detailed objections touching merits of the matter. Even assuming that the 1st respondent was not inclined to grant a lengthy adjournment till finalisation of the audit at the branches, a total denial of opportunity to contest the proposal on merits could not have been resorted to in a hasty manner. It is evident from W.P.(C)No. 30933 of 2009 -6- the face of the record that the petitioner was denied of any reasonable opportunity to contest the matter on merits. 6. Learned counsel for the petitioner had drawn my attention to the decision of this court in C.K. Sunny Vs. Additional Sales Tax Officer (2004) 12 KTR 360 (Ker) and Razia Greens Vs. State of Kerala 2000 (8) KTR 55 (Ker). The above decisions emphasis need for reasonable opportunity to be given to the assessee, in compliance with principles of natural justice, while finalising assessments. In the case at hand it is further noticed that along with the assessment the petitioner was also issued with Ext.P9 order imposing penalty under Section 67 (1) of the KVAT Act. It is further more important that while an assessee is being proceeded with for imposing penalty, it is incumbent on the part of the authority concerned to ensure that all principles of natural justice is properly complied with, and all reasonable opportunity has been provided to the assessee to submit proper explanation against such proposal. In this case it is evident from the facts and circumstances that there is lack W.P.(C)No. 30933 of 2009 -7- of reasonable opportunity being afforded. Therefore I am of the view that the matter need be remanded to the 1st respondent for denovo finalisation, after affording reasonable opportunity to the petitioner. 7. In the above circumstances Exts.P8 & P9 are hereby quashed. The writ petition is disposed of directing the petitioner to submit detailed reply as necessary and to produce supporting documents, against Ext.P2 proposal notice, on or before 15.12.2009. The 1st respondent is directed to consider such objections, if any filed and documents if any produced, and the matter shall be finalised after affording a further opportunity of hearing to the petitioner at the earliest. C.K. ABDUL REHIM JUDGE shg/