IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON MONDAY, THE 1ST MARCH 2010 / 10TH PHALGUNA 1931 WP(C).No. 3888 of 2010(I) -------------------------------------- PETITIONER(S): ------------------------- M/S.MALABAR AGENCIES, DOOR NO.VP III/841-842, KUTTIPURAM ROAD, VALANCHERY, REPRESENTED BY IT'S MANAGING PARTNER, MR.JAYA PRAKASH. BY ADV. SMT.K.LATHA RESPONDENT(S): --------------------------- 1. THE STATE OF KERALA, REPRESENTED BY CHIEF SECRETARY, SECRETARIATE, THIRUVANANTHAPURAM. 2. DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, ERNAKULAM. 3. COMMERCIAL TAX OFFICER, KOTTAKKAL. 4. INSPECTING ASSISTANT COMMISSIONER, DEPARTMENT OF COMMERCIAL TAXES, MALAPPURAM, MANJERI. R1 TO R4 BY GOVERNMENT PLEADER MR. C.K. GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01/03/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss P.R.RAMACHANDRA MENON, J --------------------------- W.P(C) No.3888 of 2010-I ---------------------------- Dated this the 1st day of March, 2010. J U D G M E N T The petitioner is aggrieved of the condition imposed by the second respondent directing to satisfy 40% of the disputed liability, to enjoy the benefit of interim stay granted, during the pendency of the appeal. 2. The sequence of events shows that Ext.P1 assessment order was passed by the third respondent fixing the liability of more than Rs.26 lakhs upon the shoulders of the petitioner, which in turn has been subjected to challenge by filing Ext.P2 appeal, along with necessary interlocutory application for stay. After considering the case put forth by the petitioner, the appellate authority, as per Ext.P4, observed that the petitioner had a prima facie case for conditional stay and it was accordingly, that the petitioner was directed to deposit 40% for availing the benefit of interim stay. 3. Heard the learned Government Pleader as well, who submits that there is a clear finding by the appellate authority that the petitioner is effecting local purchase and sale of goods in W.P(C) No.3888 of 2010-I 2 connection with the distribution of cable net work. The case of the petitioner is that the transaction involved is only a 'branch transfer' by the particular service provider and that the petitioner is acting only an 'agent' to provide necessary connection to the prospective customers. 4. The learned counsel for the petitioner submits that the contents of the agreement as well as other materials brought on record reveal that the petitioner is an agent of M/s.Sun Direct T.V Pvt. Ltd, on whose behalf, the installation work of Satellite receiver equipments like Dish Antenna, Set Top Box etc. are provided 'free of cost' to the perspective customers and that the goods as above are brought from outside the State. The petitioner's unit is only one such agency where the said materials are stored, being one of the 35 units as shown in Ext.P9. 5. It is also the case of the petitioner that the petitioner is only collecting the 'activation charges' and that the petitioner does not have any income beyond the taxable limit. The amount disclosed is only the value of the various devices, which still remain to be the property of the service provider and the ownership right is never sold either to the petitioner or to the prospective customers. W.P(C) No.3888 of 2010-I 3 6. It also relevant to note that the instance of sale presumed is not discernible either from the assessment order or from Ext.P4 interim order passed by the appellate authority or even from the statement filed by the second respondent in this case. In the opening para of the statement filed before this Court, it is that the work is in the nature of a works contract by the company and “if” the materials are purchased and the work is done by the petitioner, it is to be assessed to tax. Whether the materials are actually 'purchased' by the petitioner or whether the contention raised by the petitioner as to the actual position is devoid of any merit is not discussed anywhere in the statement or in the impugned proceedings. 7. In the above facts and circumstances, this Court holds that the condition imposed by the appellate authority directing the petitioner to satisfy 40% of the liability of more than Rs.26 lakhs is without any proper application of mind. Accordingly, the said condition is set aside and the appellate authority is directed to consider Ext.P2 appeal and pass appropriate orders, in accordance with law, of course after giving an opportunity of hearing to the petitioner, at any rate within one month from the date of receipt of a W.P(C) No.3888 of 2010-I 4 copy of this judgment. Till such finalisation, the petitioner is entitled to have the benefit of interim order passed by the appellate authority vide Ext.P4. It is also made clear that, this will not bar the rights and interest of the respondents to proceed against the original 'service provider' in accordance with law, if any incriminating circumstances are noted in respect of the transaction being pursued. This Court has not expressed any view with regard to the merits involved and the appellate authority shall finalise the proceedings untrammeled by any of the observations contained in this judgment. The Writ Petition is disposed of. Sd/- P.R.RAMACHANDRA MENON JUDGE //True Copy// P.A to Judge ab W.P(C) No.3888 of 2010-I 5