IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 13TH JANUARY 2010 / 23TH POUSHA 1931 WP(C).No. 27532 of 2009(J) --------------------------------------- PETITIONER(S): ----------------------- M.K. ASHRAF, PROP. M/S. MATTAPPILLIYIL TRADERS, MUVATTUPUZHA. BY ADV. MR.E.P.GOVINDAN RESPONDENT(S): ------------------------- 1. THE COMMERCIAL TAX OFFICER, COMMERCIAL TAXES, MUVATTUPUZHA. 2. THE DEPUTY TAHSILDAR (RR) MUVATTUPUZHA. 3. THE STATE OF KERALA, REP. BY THE SECRETARY, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, TRIVANDRUM. R1 TO R3 BY GOVERNMENT PLEADER MR.C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22/12/2009, THE COURT ON 13/01/2010 DELIVERED THE FOLLOWING: rs. C.K.ABDUL REHIM, J. ------------------------------ W.P.(C).No.27532 OF 2009 ------------------------------ Dated this the 13th day of January, 2010 J U D G M E N T ---------------------- 1. Assessment of the petitioner with respect to the year 2002-03 was finalized originally as per Ext.P2 order dt:31.2.2004. Exemption claimed on the turnover of the sale curry powder, sold under the brand name, “M/s.Tamar Curry Powder”, on the premise that it is second sale of Chilly powder, Coriander powder, etc:, was not accepted. While estimating turnover of the branded goods 50% of the conceded turnover was added creating an additional demand of Rs.1,54,126/-. In Ext.P3 order the first appellate authority had remanded the matter with directions to the assessing authority to modify the assessment based on the turnover of goods sold under brand name as per the accounts maintained by the petitioner, without any addition. But Ext.P3 appellate order was not given effect by the 1st respondent assessing authority. 2. In the meanwhile, on the basis of the allegation that, Intelligence Officer had detected suppression of turnover pertaining to brand name sale and also tax liability under Section 5(2) of the KGST Act, and in view of the fact that the petitioner had compounded such offences detected, Ext.P4 order of W.P.(C).27532/09-J 2 escaped assessment under Section 19 of the KGST Act was issued on the petitioner. The assessment under Ext.P4 was made on 22.2.2007. According to the petitioner Ext.P4 order issued under Section 19 of the KGST Act is not sustainable, because there was no suppression detected during the time of inspection. The offence alleged on the basis of the inspection was only with respect to non-declaration of brand name sale of curry powder, which was liable for payment of tax under Section 5(2) of the Act. It is contended that the non-inclusion of turnover with respect to the brand name sale as taxable, was only due to a bonafide impression that sale of such items, which are purchased on payment of tax, is exempted, especially because the brand name was not registered. However, the petitioner had already remitted the differential amount of tax, and the compounding fee. Therefore there is no escapement of assessment and Ext.P4 was totally unwarranted, is the contention. The petitioner had produced copy of the order permitting to compounding of the offence, as Ext.P5. 3. It is noticed that while making Ext.P4 order, remand of the original assessment as evidenced from Ext.P3 was not taken for consideration by the 1st respondent. Subsequently the original order of assessment was modified in compliance with the directions contained in Ext.P3, on issuing Ext.P6 order on W.P.(C).27532/09-J 3 13.1.2009. It is contended by the petitioner that while issuing Ext.P6, the directions of the appellate authority as contained in Ext.P3, was not followed in strict sense. So also, existence of Ext.P4 order of escaped assessment was also not taken note of while issuing Ext.P6 order. According to the petitioner by virtue of Ext.P4 and P6 contradictory demands exist with respect to the same year of assessment. As evidenced from Ext.P5 the petitioner had paid a sum of Rs.1,18,038/- by way of tax due on the turnover of brand sale. But payment of the said amount was not taken into consideration by the 1st respondent while passing Ext.P6 revised order. At any rate there cannot be two assessments with contradictory demands pertaining to the very same assessment year, is the contention. At present the petitioner is aggrieved by Ext.P1 notice of revenue recovery in which tax amount is demanded even without giving credit to the amounts paid to the Intelligence Officer. 4. Contention of the petitioner is that there was no circumstances which necessitated invoking of Section 19 of the KGST Act for assessment of any escaped turnover, in view of the fact that consequent to the inspection the petitioner had remitted the differential amount of tax, as well as an equal amount of compounding fee. It is further contended that the original order of assessment was not in existence at the time W.P.(C).27532/09-J 4 when the assessment under Section 19 was completed, because the same stood merged with Ext.P3 appellate order, in which the assessing authority was directed to finalise afresh. However, it is contended that subsequently when the assessing authority had given effect to the directions contained in the appellate order, he should have taken note of the assessment issued under Section 19, with respect to the very same assessment year. Existence of two distinct and contradictory assessments could have been avoided in such case, is the contention. 5. Learned Government Pleader appearing on behalf of the respondents contended that there is no infirmity with respect to Ext.P4 order, because the 1st respondent is entitled to issue proceedings under Section 19 at any time, if it is found that any turnover had escaped assessment. It is further contended that Ext.P6 is issued with a view to give effect to Ext.P3 appellate order, and therefore Ext.P6 also does not suffer from any illegality or irregularity. 6. However, on evaluating facts and circumstances it is evident that there exist two distinct assessment orders with respect to the very same year, which are contradictory to a great extent in the matter of fixation of turnover and in the matter of calculating liability outstanding. Therefore I am of the opinion that the matter requires fresh consideration and passing of a W.P.(C).27532/09-J 5 consolidated order taking note of the directions contained in Ext.P3 order of the first appellate authority and also taking note of Ext.P5 order by which the petitioner was permitted compounding on the basis of payment of differential amount of tax. 7. Therefore the writ petition is disposed of quashing Ext.P4 and P6. The 1st respondent is directed to re-consider the matter and to pass fresh orders taking note of the observations contained in Ext.P3 appellate order and also taking note of Ext.P5 order issued by the Intelligence Officer. Needless to say that recovery steps initiated pursuant to Ext.P1 shall be kept in abeyance till the matter is finalized by the 1st respondent. 8. The 1st respondent is directed to pass fresh orders after affording an opportunity of hearing to the petitioner, as early as possible, at any rate within a period of two months from the date of receipt of a copy of this judgment. C.K.ABDUL REHIM, JUDGE. okb