BRIGHTECH INTERIORS & EXTERIORS PVT LTD v. THE COMMERCIAL TAX OFFICER

THE COMMERCIAL TAX OFFICER COMMERCIAL TAX OFFICE, MUTHANGA. THE INTELLIGENCE OFFICER SQUAD NO.IV,COMMERCIAL TAX OFFICE,THEVARA, ERNAKULAM. THE ASSISTANT COMMISSIONER ASSESSMENT WORKS CONTRACT, ERNAKULAM 682 018. POWERICA LIMITED DTA UNIT, BOMMANAHALLIIL VILLAGE,NELAMANGALA TALUK, BANGALORE 562 123,HAVING ITS BRANCH OFFICE AT KUHALU PALACE, 3RD FLOOR, P.T.USHA ROAD, ERNAKULAM 682 011,REPRESENTED BY ITS MANAGING DIRECTOR. THE MANAGER KERALA PARCEL SERVICE,JEW STREET, ERNAKULAM 682 035. THE MANAGER THE MADRAS ROADWAYS,NO.45, MADANAYAKANAHALLIL, MADHAVARA POST,TUMKUR ROAD, NELAMANGALA, BANGALORE 562 123. SMT.THUSHARA JAMES SR. GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON

25.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 13157 OF 2016 2 JUDGMENT The petitioner was a registered dealer under the Kerala Value Added Tax Act, 2003 (hereinafter referred to as ‘the KVAT Act) and also under the Central Sales Tax Act, 1956 (hereinafter referred to as ‘the CST Act’). Petitioner is engaged in the business of executing wooden interior and exterior work. According to the petitioner, it had placed an order for purchase of one electric generator set, which was sold to the petitioner under Ext.P2 invoice dated 12.07.2013. The petitioner asserts that the generator set was being transported to the premises of the petitioner along with the invoice and supported by Form-16 (since the goods were for its own use) and the generator was delivered to the petitioner at its premises. According to the petitioner, since the purchase was not supported by Form-C, the consignor had demanded tax at the normal rates (though the invoice was issued applying the rate for sale under Form-C) and this was also promptly paid by the petitioner. It is submitted that on 30.03.2016, an inspector under the 2nd respondent came to the office of the petitioner and informed that the goods covered by Ext.P2 invoice had been detained by the 1 st respondent under the provisions of Section 47(2) of the KVAT Act on the ground of WP(C) NO. 13157 OF 2016 3 attempting evasion of tax and an amount of Rs.7,85,010/- (Rupees Seven lakhs eighty five thousand and ten only) was demanded as security deposit for its release. It was further informed to the petitioner that unless the petitioner pays the amount, it will be treated as a defaulter and further action on that basis would be taken against the petitioner.

2. Learned counsel appearing for the petitioner submits that the notice stated to have been issued in respect of the transport of the goods was never served on the petitioner and it obtained the copy of the same from the 4th respondent. It is submitted that the said notice is on record as Ext.P4. It is submitted that a reading of Ext.P4 itself suggests that the only issue pointed out was that the tax was collected only at concessional rates. It is submitted that this issue stands resolved by the petitioner by remitting the tax at normal rates together with any interest and penalty towards CST. It is submitted by the learned counsel appearing for the petitioner that the generator set covered by Ext.P2 invoice is still functioning in the premises of the petitioner and the same can, if necessary, be examined by the officials of the Tax Department.

3. Learned Senior Government pleader submits that the WP(C) NO. 13157 OF 2016 4 petitioner has to approach the competent among the respondents for adjudication of the issues referred to in Ext.P4 notice and he cannot, seek to get that issue adjudicated by this Court by filing a writ petition under Article 226 of the Constitution of India. It is submitted that, for a proper adjudication of the facts set out in Ext.P4 notice, documents and other records will have to be produced by the petitioner to show that the goods were brought for own use and there has been no evasion of tax. It is submitted that this is a matter that can be adjudicated only by the authorities and such exercise should not be attempted by this Court in a writ petition under Article 226 of the Constitution of India.

4. Having heard the learned counsel appearing for the petitioner and the learned Senior Government Pleader, I am of the opinion that the petitioner is entitled to succeed. A reading of Ext.P4 notice itself shows that the only issue that is pointed out was that the petitioner had purchased goods at concessional rates of tax, which was not applicable since the petitioner had not issued any Form-C. The petitioner asserts that, it has thereafter paid the differential tax together with interest towards CST. Ext.P3 ledger account affirms this fact. A WP(C) NO. 13157 OF 2016 5 reference to Etxt.P2 invoice would show that Engine Number and the alternator number are mentioned therein. Therefore, it is easy to ascertain as to whether the same generator set is now functioning within the premises of the petitioner. There can be no dispute regarding the identity of the goods. It is also to be seen that the impugned notice was issued only after two years of the goods being brought into State and after the generator set is installed at the premises of the petitioner. In that view of the matter, the writ petition will stand allowed and all further proceedings pursuant to Ext.P4 will stand quashed. It is made clear that the officials of the Tax Department may verify the details of the goods covered by Ext.P2 invoice within a reasonable time, if they have any case that the goods are not presently in the use of the petitioner. On inspection, if it is found that the goods are not used by the petitioner, it will be open to them to apply to this Court of reopening of the writ petition. Such inspection, obviously, will have to be done, if at all, within three months from the date of receipt of a certified copy of this judgment. Sd/- GOPINATH P., JUDGE WP(C) NO. 13157 OF 2016 6 APPENDIX OF WP(C) 13157/2016 PETITIONER EXHIBITS P1. P2. P3. P4. COPY OF THE REGISTRATION CERTIFICATE. COPY OF THE INVOICE. COPY OF THE COMMUNICATIONS AND LEDGER WITH REGARD TO PAYMENT OF DIFFERENTIAL TAX. COPY OF THE DETENTION NOTICE ISSUED BY THE IST RESPONDENT.