IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 22ND OCTOBER 2009 / 30TH ASWINA 1931 WP(C).No. 29895 of 2009(F) -------------------------- PETITIONER(S): --------------- M.B.JAYARAM, SREE MURUKA FUELS, PULLUT, KODNGALLOOR, THRISSUR DISTRICT. BY ADV. SRI.VIJAYAN. K.U. SRI.K.N.SREEKUMAR RESPONDENT(S): --------------- 1. COMMERCIAL TAX OFFICER, KODUNGALLOOR. 2. INSPECTING ASSISTANT COMMISSIONER, COMMERCIAL TAXES, IRINJALAKKUDA. 3. STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. GOVERNMENT PLEADER SRI.V.K.SHAMSUDHEEN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22/10/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K.ABDUL REHIM, J. ------------------------------ W.P.(C).No.29895 OF 2009 ------------------------------ Dated this the 22nd day of October, 2009 J U D G M E N T ---------------------- 1. Petitioner is challenging Ext.P10 order of assessment without filing any statutory appeal against the same. The petitioner is conducting a retail outlet of Petroleum products of the Hindustan Petroleum Corporation Limited (HPCL). Petitioner commenced business with effect from 1.4.2007. But he has not taken registration under the provisions of the KGST Act and KVAT Act according to him because, there occurred delay in getting building number from the Muncipality. The 1st respondent called for production of Books of Accounts pertaining to the year 2007-08, which the petitioner had failed to produce. Consequently when penalty was proposed alleging non- maintenance of Books of Accounts, for offence punishable under Section 67 of the KVAT Act, it was compounded by the petitioner on payment of departmental compounding fee. Thereafter the Assessing Authority called for production of Books of Accounts as evident from Ext.P10 on 4.11.2008. The petitioner appeared and promised to produce Books of Accounts within two weeks. But he failed to produce the same. Thereafter on 15.3.2009 also W.P.(C).29895/09-F 2 the petitioner was directed to produce the Books of Accounts, but he has not complied with such direction. Therefore proposal was issued under Section 17(3) of the KGST Act for finalising assessment on best judgment basis. The petitioner filed objection to such proposal. According to the 1st respondent the petitioner failed to file any return or to produce any Books of Accounts and therefore the best judgment assessment was finalised as per Ext.P10. 2. The petitioner had produced statements of monthly purchases and sales as evidenced from Ext.P4 to P9. According to the petitioner he had produced all these statements before the 1st respondent. It is contended that there was no purposeful omission or suppression on the part of the petitioner in not taking registration or in not filing the returns within the time stipulated. However, it is contended that the entire purchase of petroleum products is only from the HPCL and the goods dealt with by the petitioner had already suffered tax, at the point of first sale. Therefore there is absolutely no liability for the petitioner with respect to the second sale of the product, is the contention. According to the petitioner the 1st respondent Assessing Authority had totally failed to conduct any enquiry as contemplated under Section 17(3) or to take note of relevant materials concerned with respect to the business transactions. W.P.(C).29895/09-F 3 Since there is no sales undertaken by the petitioner which attracts tax liability, the best judgment assessment made under Ext.P10 is totally erroneous and unreasonable, is the contention. Therefore the petitioner is seeking interference of this court in order to quash the assessment order, and according to him resort to the statutory remedy by way of appeal is not necessary since Ext.P10 order of assessment is per se illegal. 3. Heard learned counsel appearing for the petitioner and the Government Pleader appearing for respondents. The learned Government Pleader contended that there is clear failure on the part of the petitioner in not taking registration and in not filing monthly returns as required. Further the petitioner had failed to produce Books of Accounts and to file returns inspite of repeated notices issued. Merely because the petitioner is a retail dealer of HPCL, it cannot be presumed that the petitioner is not dealing goods purchased from any other source. Unless the petitioner proves the transaction by producing proper Books of Accounts and by filing proper returns, the assessing authority cannot arrive at any conclusion that the entire dealings of the petitioner are liable for exemption from payment of tax. Hence it is contended that the question regarding correctness of Ext.P10 assessment can be evaluated only in a properly constituted statutory appeal. W.P.(C).29895/09-F 4 4. Having considered the rival contentions I am of the opinion that the matter need examination on the basis of Books of Accounts and other documents relating to transactions of the petitioner. Eventhough it is a matter of common knowledge that the petitioner will be normally dealing in items which are not taxable, it cannot be presumed and decided as such without there being perusal to the Books of Accounts. Further it is a mandatory requirement to be complied with, with respect to keeping of proper Books of Accounts and filing of monthly returns within the time stipulated under the statute. However, considering the contentions raised with respect to the unsustainability of the assessment, I am of the opinion that it is a matter to be looked into by the statutory appellate authority before whom the petitioner can produce all relevant documents in support of his claim. 5. Therefore I am of the opinion that the petitioner can be relegated to remedy by way of appeal, before the appropriate authority under the statute. However, considering the contentions raised I am of the opinion that, if the petitioner is instituting any appeal before the appellate authority, the same can be directed to be disposed of within a time frame and realisation of the amount covered under the assessment can be deferred till then. W.P.(C).29895/09-F 5 6. In the result the writ petition is disposed of directing the petitioner to file appeal against Ext.P10 order before the appropriate statutory appellate authority, within a period of six weeks from today. If any such validly constituted appeal is filed before the appellate authority, the same shall be considered and disposed of untrammeled by any of the observations made herein, as early as possible, after affording reasonable opportunity of hearing to the petitioner, at any rate within a period of two months from the date of receipt of such appeal. 7. The petitioner will be free to produce all relevant documents in support of his contentions before such appellate authority. The 1st respondent is directed to keep in abeyance realisation of the amount covered under Ext.P10, if any validly constituted appeal is instituted within the time stipulated as above, till such appeal is disposed of by the competent appellate authority. It is further directed that the petitioner shall co- operate with the appellate authority for an early disposal of the appeal. C.K.ABDUL REHIM, JUDGE. okb