IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN MONDAY, THE 22ND MARCH 2010 / 1ST CHAITHRA 1932 WP(C).No. 30008 of 2007(V) ---------------------------------------- PETITIONER(S): ---------------------- 1. QUILON MERCHANT CHAMBER OF COMMERCE BEACH NORTH, NEAR STONE BRIDGE, KOLLAM-6, REPRESENTED BY ITS GENERAL SECRETARY B.RAJENDRAN 2. P. NARAYANA SWAMI, VICE PRESIDENT QUILON MERCHANT CHAMBER OF COMMERCE BEACH NORTH, NEAR STONE BRIDGE, KOLLAM-6 BY ADV. SRI.R.SATISH KUMAR RESPONDENT(S): -------------------------- 1. STATE OF KERALA REPRESENTED BY THE SECRETARY FINANCE DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. 2. THE COMMISSIONER OF COMMERCIAL TAXES OFFICE OF THE COMMISSIONER OF COMMERCIAL TAXES THIRUVANANTHAPURAM. * ADDL.R3 IMPLEADED ADDL.R3: THE DEPUTY COMMISSIONER (SALES TAX), COLLECTORATE, KOLLAM. * ADDL.R3 IS IMPLEADED AS PER ORDER DATED 01/11/2007 IN I.A.13658/2007. R1 TO ADDL.R3 BY GOVT. PLEADER MR.K.P. PRADEEP. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 22/03/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 30008/2007-V APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE CIRCULAR NO.22/2007 DATED 21/05/2007 ISSUED BY THE 2ND RESPONDENT. EXT.P2: COPY OF THE CIRCULAR NO.39/2007 DATED 24/08/2007 ISSUED BY THE 2ND RESPONDENT. RESPONDENT'S EXHIBITS: NIL //TRUE COPY// P.S. TO JUDGE rs. THOTTATHIL B.RADHAKRISHNAN, J. = = = = = = = = = = = = = = = = = = = = = = = = W.P.(C).No.30008 of 2007-V = = = = = = = = = = = = = = = = = = = = = = = = Dated this the 22nd day of March, 2010. Judgment 1.Second petitioner is the Vice President of the first petitioner Quilon Merchant Chamber of Commerce. They filed this writ petition challenging clause 10 of Ext.P2 circular issued by the Commissioner of Commercial Taxes under the provisions of the KVAT Act. The impugned clause provides that if the purchasing dealer is untraceable at the given address, then action shall be taken against the selling dealer under Sections 67 and 73 of KVAT Act. The said clause follows the earlier provisions which are intended to identify the transit of goods to ensure that there is no escape from the tax net. 2.The petitioners have a well founded apprehension that the impugned clause 10 of Ext.P2 circular could be misused even in bona fide cases and in WPC30008/07 -: 2 :- all cases, the selling dealer is likely to be put to undue harassment. It appears that this plea of the trading community has obtained the attention of the Department and accordingly, Circular No.46/07 has been issued modifying Ext.P2 circular clarifying that action shall be taken against the selling dealer in terms of clause 10 of Ext.P2 circular only where fraud and collusion between the selling dealer and the purchasing dealer in the transaction is proved. Obviously, therefore, the apprehension of the petitioners stands answered by the Department in their favour. This is recorded and it is ordered that Ext.P2 will be operated only in terms of clarifications contained in Circular No.46/07. 3.In so far as the other reliefs sought for in the writ petition are concerned, the statute requires all retail dealers in the State to be registered under the KVAT Act within a time frame fixed and that the registered retail dealers be issued with electronic identity cards. The requirement to get WPC30008/07 -: 3 :- registered is a statutory requirement. To obtain such registration being a mandate, the KVAT authorities can only fix liability for non- registration. The manner of obtaining compulsory registration is by providing teeth in the form of penalty against the non-registration of compulsorily registrable dealerships. Issuance of electronic identity cards is a matter which has to be taken up in the most expeditious manner. In so far as the request of the petitioners that circulars under the KVAT Act are to be issued in Malayalam language also is concerned, the Commissioner will look into whether there is a statute which makes mandate in that regard and if so, will take necessary action to comply with such statutory provision. The writ petition is ordered accordingly. THOTTATHIL B.RADHAKRISHNAN, JUDGE. Sha/2303