NAVIN CHERIAN v. THE COMMERCIAL TAX OFFICER SECOND CIRCLE, PERUMBAVOOR, ERNAKULAM-683542

SRI. SAYED M. THANGAL -SPL.GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 15.07.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 36482 OF 2017 :-2-: SHOBA ANNAMMA EAPEN,J -------------------------------------- W.P(C) NO.36482 OF 2017 ------------------------------------- Dated this the 15th day of July, 2024 J U D G M E N T Petitioner has approached this Court seeking the following prayers:- “i) To issue a writ in the nature of certiorari and such other appropriate writ or order or direction quashing Exts.P8 and P9 penalty orders passed by 1st respondent under Section 67(1) of the KVAT Act; ii) To issue a writ in the nature of certiorari or any other appropriate writ or order declaring demand of collection charges @ 7.5% on the amount of tax arrears stated in Exts.P6 and P7 RR notices as illegal and unsustainable; iii) To declare levy of penalty u/s.67(1) of the KVAT Act based on the directions of the Comptroller of Audit General u/s 25A of the KVAT Act contrary to the statutory provision as illegal and unsustainable; iv) To declare that Exts.P8 and P9 penalty orders created an additional tax liability on the shoulders of the petitioner, this is violative of Article 14 of the Constitution of India;

Brief facts leading to the case are as follows:- The petitioner is a registered dealer under the Kerala Value Added Tax Act, 2003 and the Central Sales Tax Act, 1956 on the rolls of the first respondent. He has a metal crusher unit and was paying tax under Section 8(b) of the Kerala Value Added Tax Act, 2003. While so, Exts.P3 and P4 assessment orders were passed under Section 25A on WP(C) NO. 36482 OF 2017 :-3-: the basis of the audit objection for the assessment years 2012-13 and 2013-14. The petitioner challenged Exts.P3 and P4 assessment orders before this Court by filing W.P(C) No.7271 of 2017 wherein this Court set aside Exts.P3 and P4 assessment orders, by Ext.P5 judgment, According to the petitioner, while filing W.P(C) No.7271/2017 against Exts.P3 and P4 assessment orders, Exts.P8 and P9 penalty orders for the years 2012- 13 and 2013-14 under Section 67(1) have been omitted to be challenged. The respondents have passed Exts.P8 and P9 penalty orders solely relying upon Exts.P3 and P4 assessment orders. Aggrieved by the same, the petitioner has approached this Court with the above writ petition.

The first respondent has filed a counter affidavit contending that Exts.P8 and P9 penalty orders were passed on the basis of assessment orders which were issued on an audit objection of the Comptroller of Audit General. It is also stated that since assessment orders were passed against the petitioner, penalty notices were also issued. In the counter affidavit, it is further stated that the audit party raised an objection based on the evidence available with the Kerala State Pollution Control Board and noticed that as per the consent letter, consent was issued to operate one primary crusher with 100 HP motor and two WP(C) NO. 36482 OF 2017 :-4-: secondary crushers with 90 HP and 40 HP motors respectively. Also, as per the Mining and Geology Department, a secondary crusher with more than 30 HP would fall under Size III as stipulated in Section 8(b)(iii) of the Act. From the returns filed during the years 2012-13 and 2013-14, it is seen that both the crushers installed had motors of more than 30 HP and would come under Size III category, for which they have returned one of the crushers as Size II. While so, the secondary crusher with more than 30 HP will fall under Size III as stipulated in Section 8(b)(iii) of the Act. It is also stated that the first respondent has issued the proceedings as provided under the statute and passed the order of penalty after issuing notice to the petitioner as well as giving an opportunity of hearing also.

Heard the learned counsel for the petitioner as well as the learned Government Pleader for the respondents.

Learned counsel for the petitioner submits that Exts.P8 and P9 penalty orders are solely on the basis of Exts.P3 and P4 assessment orders. On a perusal of Exts.P8 and P9 orders, it is seen that reference is made to Exts.P3 and P4 assessment orders and also the issue raised is the same. However, as per Ext.P5, this Court has set aside the assessment orders for the assessment years 2012-13 and 2013 -14 on WP(C) NO. 36482 OF 2017 :-5-: the ground that they proceed to confirm a differential demand on the petitioner based on criteria that are not specified in the statute and were held unsustainable in law. Since Exts.P3 and P4 assessment orders for the years 2012-13 and 2013-14 were found to be illegal and were set aside by this Court, the issuance of Exts.P8 and P9 penalty orders, which were issued relying on Ext.P3 and P4 assessment orders, is not legally sustainable. Accordingly, the writ petition is allowed. Exts.P8 and P9 penalty orders are set aside. sd/- SHOBA ANNAMMA EAPEN, JUDGE MBS/ WP(C) NO. 36482 OF 2017 :-6-: APPENDIX OF WP(C) 36482/2017 PETITIONER'S EXHIBITS:- EXHIBIT P1 EXHIBIT P2 EXHIBIT P3 EXHIBIT P4 EXHIBIT P5 EXHIBIT P6 EXHIBIT P7 EXHIBIT P8 EXHIBIT P9 TRUE COPY OF FORM 10D ANNUAL RETURN DATED 04.06.13 FOR THE YEAR 2012-13 E-FILED BY PETITIONER IN KVATIS BEFORE 1ST RESPONDENT. TRUE COPY OF FORM 10D ANNUAL RETURN DATED 31.05.14 FOR THE YEAR 2013-14 E-FILED BY PETITIONER IN KVATIS BEFORE 1ST RESPONDENT. TRUE COPY OF ASSESSMENT ORDER PASSED ON 20.12.16 FOR THE YEAR 12-13 BY 1ST RESPONDENT U/S 25A OF THE KVAT ACT. TRUE COPY OF ASSESSMENT ORDER PASSED ON 20.12.16 FOR THE YEAR 13-14 BY 1ST RESPONDENT U/S 25A OF THE KVAT ACT. TRUE COPIES OF THE JUDGMENT PASSED IN WP(C) NO.7271 OF 2017 DATED 03.10.17. TRUE COPY OF RR NOTICE DATED 22.02.17 ISSUED BY 3RD RESPONDENT U/S 7 OF THE RR ACT TO THE PETITIONER DEMANDING TAX, PENALTY & INTEREST FOR THE YEAR 2012-13. TRUE COPY OF THE RR NOTICE DATED 22.02.17 ISSUED BY RESPONDENT U/S 7 OF THE RR ACT TO THE PETITIONER DEMANDING TAX, PENALTY & INTEREST FOR THE YEAR 2013-14. TRUE COPY OF THE PENALTY ORDER DATED 20.12.16 PASSED U/S 67(1) OF THE KVAT ACT FOR THE YEAR 12-13 BY 1ST RESPONDENT. TRUE COPY OF PENALTY ORDER DATED 20.12.16 PASSED U/S 67(1) OF THE KVAT ACT FOR THE YEAR 13-14 BY 1ST RESPONDENT.