IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 21ST FEBRUARY 2011 / 2ND PHALGUNA 1932 WP(C).No. 2751 of 2011(T) ------------------------------------- PETITIONER: ------------------- TOWER VISION INDIA PRIVATE LIMITED, 28/3318 B1,IST FLOOR,MUSCAT TOWERS, S.A ROAD, KADAVANTHRA,COCHIN- 682 020. BY ADV. SRI.A.KUMAR. RESPONDENTS: ------------------------ 1. DEPUTY COMMISSIONER (APPEALS), DEPARTMENT OF COMMERCIAL TAXES,ERNAKULAM-16. 2. INTELLIGENCE OFFICER(IB), ERNAKULAM AT EDAPPALLY- 682 025. 3. INSPECTING ASSISTANT COMMISSIONER, COMMERCIAL TAXES,ERNAKULAM-16. R1 TO R3 BY SR. GOVERNMENT PLEADER SRI. C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21/02/2011,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: prv. C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.2751 of 2011 ------------------------------------------- Dated this the 21st day of February, 2011 J U D G M E N T ---------------------- Petitioner company is an Infrastructure Provider approved by the Department of Telecom, Government of India. As part of their business activity the petitioner is taking land on lease and erecting telecommunication towers for providing service to various cellular operators. According to the petitioner, the towers erected are permanent structures and such towers are immovable properties. With respect to providing infrastructure facilities for the cellular operators, there is no transfer of any property. It is contended that the infrastructure is not in any way transferred and the effective control of the property as well as the towers is not transferred. Since there is no parting of possession in favour of the cellular companies, there is no transfer of any right to use and as such there is no liability for payment of any tax under the Kerala Value Added Tax Act (KVAT Act), is the contention. 2. Petitioner was imposed with penalty under Ext.P5 by the 2nd respondent herein, on the basis of an allegation that the petitioner had failed to disclose turnover of the rentals received from cellular operators. Against Ext.P5, the petitioner had preferred appeal before the 1st respondent as evidenced from W.P.(C).2751/11 -2- Ext.P6. Ext.P7 is the stay petition filed along with the appeal. The 1st respondent had considered the stay petition and granted an interim order as evidenced from Ext.P8 insisting upon the petitioner for payment of 1/3rd of the amount of penalty and to furnish security for the balance amount. Ext.P8 order is under challenge in this writ petition. 3. Contention of the petitioner is that the order imposing penalty is totally unsustainable since the liability for payment of tax on the turnover of rental received from the cellular providers, is a matter under dispute. Eventhough the contentions as narrated above were raised before the appellate authority, that authority had totally failed to consider those contentions in its real perspective and the condition was stipulated in a mechanical manner without application of mind, is the contention. 4. According to the petitioner, the imposition of penalty was not sustainable since there exists a genuine dispute regarding the liability for payment of tax. As long as such dispute remains unsettled, the petitioner could not be mulcted with any liability of penalty, on the allegation of non-disclosure of the turnover. 5. On a perusal of Ext.P8 it is evident that the contentions raised by the petitioner in this regard was illustrated W.P.(C).2751/11 -3- by the 1st respondent. But without considering merits of such contentions, the appellate authority observed that the Intelligence Officer had found that consideration for right to use, received from the various cellular telephone providers, is on transfer of right to use. But the petitioner had failed to concede such turnover. The appellate authority further found that the conclusion arrived by the Intelligence Officer discarding the contentions of the petitioner that the consideration received would not come under Section 6(1)(c) of the KVAT Act, is legal and sustainable on factual aspects. 6. I am of the considered opinion that, the appellate authority had failed in considering merits of the contentions independently. However, question as to whether the receipts of rental is taxable or not, is a matter which needs elaborate consideration. It is pertinent to note that the penalty was imposed on the basis that there was non-disclosure of turnover. Further question need be examined is as to whether there was any purposeful suppression of the turnover. Since the matter is pending consideration before the appellate authority, I am not proposing to enter upon any discussion or to arrive at any findings regarding the issue. However, I am of the view that insistence for payment of 1/3rd of the amount, under the above circumstances, is not justified. On the other hand, I am of the W.P.(C).2751/11 -4- opinion that interest of justice will be served if the appellate authority is directed to consider and dispose of the appeal on an early basis, and till then the recovery is stayed subject to condition of the petitioner furnishing security. 7. In the result the writ petition is allowed. Ext.P8 is hereby quashed. The 1st respondent is directed to consider and dispose of Ext.P6 appeal at the earliest possible, at any rate within a period of two months from the date of receipt of a copy of this judgment, after affording an effective opportunity of hearing to the petitioner. 8. Till such time the appeal is disposed of as directed above, recovery of the balance amount of penalty covered under Ext.P5 order, shall be kept in abeyance, subject to condition of the petitioner furnishing Security Bond, without sureties, within two weeks from the date of receipt of a copy of this judgment. C.K.ABDUL REHIM, JUDGE. okb