IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 21ST JUNE 2011 / 31ST JYAISHTA 1933 WP(C).No. 36970 of 2010(U) -------------------------- PETITIONER(S): --------------- SSD OIL MILLS COMPANY LTD, 42,1149A, C.B.TOWER, K.K.PADMANABHAN ROAD, AYYAPPANKAVU - 682 018 REPRESENTED BY SRI.T.MADHAVAN PILLAI, SALES MANAGER. BY ADVS. SRI.VIJAYAN. K.U. SRI.K.N.SREEKUMAR RESPONDENT(S): --------------- 1. INTELLIGENCE OFFICER (IB), O/O THE DEPUTY COMMISSIONER (INT.), COMMERCIAL TAXES, ERNAKULAM AT EDAPPALLY - 682 024. 2. ASSISTANT COMMISSIONER, (ASSMT)., SPECIAL CIRCLE - I COMMERCIAL TAXES, ERNAKULAM - 682 015. 3. STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM PIN: 695 001. R1 TO R3 BY GOVERNMENT PLEADER SRI. V.K. SHAMSUDHEEN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21/06/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 36970/2010 APPENDIX PETIONER'S EXHIBITS: EXT.P1 : COPY OF THE APPELLATE ORDER NO.KVATA NO.1045/2008 DTD.25.11.2008 OF THE DC (APPEALS), ERNAKULAM. EXT.P2 : COPY OF THE JUDGMENT DTD. 13.09.2010 IN OT (REV), 24/2010 OF THIS HONOURABLE HIGH COURT. EXT.P3 : COPY OF THE NOTICE PROPOSING PENALTY FOR THE YEAR 2009-10 DTD.19.10.2010. EXT.P4 : COPY OF THE NOTICE PORPOSING PENALTY FOR THE YEAR 2009-10 DTD. 19.10.2010. EXT.P5 : COPY OF THE REPLY DTD. 30.10.2010 FOR THE YEAR 2008-09. EXT.P6 : COPY OF THE REPLY DTD.30.10.2010 FOR THE YEAR 2009-10. EXT.P7 : COPY OF THE PENALTY ORDER NO.IBE-V/OR-25/2010-11 (2008-09) DTD. 24.11.2010 ISSUED BY THE IO(IB) EXT.P8 : COPY OF THE PENALTY ORDER NO.IBE-V/OR-25/2010-11 (2008-09) DTD. 24.11.2010 ISSUED BY THE IO(IB) EXT.P9 : COPY OF THE MODIFIED ASSESSMENT ORDER FOR THE YEAR 2005-06 BY THE PREDECESSOR OFFICER ON 05.02.2009. EXT.P10 : COPY OF ASSESSMENT ORDER FOR THE YEARS 2006-07 & 2007-08. EXT.P11 : COPY OF THE REQUEST FOR RECTIFICATION OF MISTAKES APPARENT AS CONTEMPLATED U/S.66 OF THE KVAT ACT, 2003. EXT.P12 : COPY OF THE LETTER NO.IBE-5/IR-59/2010-11 DTD.4.1.2011 ISSUED BY THE 1ST RESPONDENT. EXT.P13 : COPY OF RR NOTICE NO. A5-2425/11 DTD.26/05/2011 AND 5-2425A/11 DTD.26.05.2011 ISSUED BY THE ADDITIONAL 4TH RESPONDENT. RESPONDENT'S EXHIBITS: NIL //TRUE COPY// smvd P.A. TO JUDGE C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.36970 of 2010 ------------------------------------------- Dated this the 21st day of June, 2011 J U D G M E N T ---------------------- Ext.P7 and P8 orders issued by the 1st respondent imposing penalty under Section 67(1) of the Kerala Value Added Tax Act, 2003 (KVAT Act), is under challenge in this writ petition. Inspite of the effective statutory remedy of appeal available, the petitioner is approaching this court raising specific contention that the impugned orders were issued in total violation of the procedure prescribed and also in violation of the principles of natural justice. 2. According to the petitioner, he had submitted detailed objections to the proposal notices issued. But the 1st respondent had unilaterally discarded those objections without affording any opportunity of personal hearing to the petitioner, which is mandatory under Section 67(3) of the KVAT Act. Even though the petitioner had raised various contentions touching merits of the orders imposing penalty, W.P.(C).36970/10 -2- I am of the opinion that it is not necessary to look into those aspects, since I am only examining sustainability of the impugned orders based on the challenge regarding violation of procedure prescribed. 3. On a perusal of Ext.P7 and P8 it is evident that the proposals for imposition of penalty were issued to the petitioner calling for objections. Ext.P3 and P4 are the notices issued in this regard. The petitioner was called upon to file objections against the proposals within 7 days of receipt of those notices. It is evident from such notices that the date for hearing were fixed as 30.9.2010 and 30.10.2010 respectively. From Ext.P5 and P6 it is evident that the objections were dated 30.10.2010. However, the 1st respondent had considered those objections by illustrating all the contentions therein. But it is evident that, in Ext.P7 and P8 orders those objections were discarded on the basis of findings arrived to the effect that the contentions deserve no merit. 4. The question to be considered is as to whether W.P.(C).36970/10 -3- there was proper compliance of the procedure contemplated under Section 67(3), which insist that no order under Section 67(1) shall be issued unless the person against whom the proposal was made, was given an opportunity of hearing. This court in Suzion Infrastructure Service Ltd. Vs. C.T.O. (2010 (3) KHC 299) held that, the opportunity of hearing contemplated under the statute is not an empty formality and any composite notice issued along with the proposal posting the matter for hearing on any date prior to submission of the objections will not suffice compliance of the requirement. It is stated that, before discarding the objections if any raised against the proposal, the petitioner should be afforded with an opportunity of personal hearing. 5. Considering the facts of the case at hand in the light of the settled legal position as mentioned above, it is evident that before passing of the orders imposing penalty, the petitioner was not afforded with any opportunity of hearing as contemplated under Section 67(3). It is further W.P.(C).36970/10 -4- evident that the 1st respondent had accepted the objections filed by the petitioner. Therefore I am of the considered opinion that Ext.P7 and P8 orders could not withstand the test of sustainability. 6. Accordingly the writ petition is allowed and Ext.P7 and P8 are hereby quashed. The 1St respondent is directed to consider the matter and to pass fresh orders, after affording an opportunity of hearing to the petitioner. Needless to say that the petitioner shall be afforded with opportunity to produce Books of Accounts in support of his contentions. Fresh orders in this regard shall be issued at the earliest, 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