IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 16TH DECEMBER 2009 / 25TH AGRAHAYANA 1931 WP(C).No. 36333 of 2009(J) -------------------------- PETITIONER(S): --------------- RAMA VARMA CLUB, CLUB ROAD, KOCHI - 682 011, REPRESENTED BY ITS SECRETARY SRI.MUKUNDAN. BY ADV. SRI.RAJU JOSEPH RESPONDENT(S): --------------- 1. THE DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, ERNAKULAM. 2. THE COMMERCIAL TAX OFFICER, KVAT CIRCLE-IV, ERNAKULAM. GOVERNMENT PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K.ABDUL REHIM, J. ------------------------------ W.P.(C).No.36333 OF 2009 ------------------------------ Dated this the 16th day of December, 2009 J U D G M E N T ---------------------- 1. Challenge in this writ petition is against Ext.P6, an interlocutory order issued by the statutory appellate authority, the 1st respondent herein. Against Ext.P2 order of assessment issued under the provisions of Section 25 of the Kerala Value Added Tax Act, 2003 (KVAT Act) and against Ext.P3 order imposing penalty under Section 67 of the Act, for the year 2007- 08, the petitioner had preferred statutory appeals before the 1st respondent. The impugned interlocutory order issued on the stay petitions filed along with the appeals. The petitioner is aggrieved by the condition for payment of 50% imposed in Ext.P6 while granting stay. 2. Original assessment with respect to the year concerned was completed under Section 21 on the basis of return filed by the petitioner. Consequently, on the basis of verification of books of accounts and audited statements, the assessment was re-opened and finalised, based on the allegation that the petitioner had suppressed turnover pertaining to cooked food and pertaining to sale of certain other items like empty W.P.(C).36333/09-J 2 bottles, cigarettes, etc:. Alleging willful concealment of sales turnover with respect to the above items, penalty was also imposed at twice the amount of tax due, calculated at 12.5% on the turnover of cooked food and at different rates for other suppressed items. 3. It is contended by the petitioner that the assessment was re-opened only on the basis of audited statement filed by the petitioner. It is further contended that the petitioner had already opted for payment of tax at the compounded rate and the authority concerned has not so far rejected the compounding applications. Therefore the rate of tax applicable is only 0.5%. It is further contended that there is no circumstance warranting imposition of penalty since there was no willful suppression. Learned counsel for the petitioner submitted that the petitioner could not make any effective objection against the proposal, since the Manager of the petitioner was under suspension pursuant to some defalcation of accounts committed by him. The liability under Ext.P2 will be reduced drastically if the rate of tax is calculated at 0.5%, is the contention. 4. Challenge against the impugned order is on the ground that the appellate authority has not adverted to such contentions and has not considered the relevant aspects of the W.P.(C).36333/09-J 3 matter. It is contended that imposition of condition for payment of 50% is done in a quite mechanical manner, without proper application of mind. 5. On a perusal of Ext.P6 it is noticed that eventhough the authority had narrated contentions of the appellant, no discussion is made with respect to merits of such contentions. The condition is imposed without assigning any particular reason, which is reflected in the order. Considering merits of the contentions raised, I am of the opinion that the matter needs elaborate examination and prima facie the petitioner could able to establish a strong case. Therefore I am inclined to interfere with Ext.P6, especially considering the fact that major portion of the amount pertains to penalty and also considering the fact that the petitioner is an organisation, which is a Club. 6. Therefore the writ petition is disposed of quashing Ext.P6. The 1st respondent is directed to consider and dispose of Ext.P5 & P6 appeals at the earliest, at any rate within a period of two months from the date of receipt of a copy of this judgment. There will be an interim stay against recovery of amounts covered under Ext.P2 & P3 until disposal of the appeals by the 1st respondent, on condition of the petitioner remitting an amount of Rs.1,00,000/- within a period of two weeks from today W.P.(C).36333/09-J 4 and on the petitioner furnishing security bond for the balance amount without sureties in the form prescribed under the KVAT Rules. It is made clear that on payment of the amounts stipulated above, the prohibitory order issued restraining Bank transaction of the petitioner, shall be released. C.K.ABDUL REHIM, JUDGE. okb