By Adv. Sri.harisankar v. Menon

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN FRIDAY, THE 11TH DECEMBER 2009 / 20TH AGRAHAYANA 1931 WA.No. 2685 of 2009() --------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.25752/2009 Dated 14/10/2009 .................... APPELLANT(S): PETITIONER ------------------------ P.B.ABDUL BASHEER, PEEYES INDUSTRIES, THOTTUPALAM, ERIMAYUR, PALAKKAD DISTRICT. BY ADV. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENT(S): RESPONDENTS: --------------------------- 1. AGRICULTURAL INCOME TAX & COMMERCIAL TAX OFFICER, ALATHUR. 2. TAHSILDAR (REVENUE RECOVERY) TALUK OFFICE, ALATHUR. BY G.P. SRI. MOHAMMED RAFIQ THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 11/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: -------------------------------------------- -------------------------------------------- Dated this the 11th day of December, 2009 JUDGMENT Ramachandran Nair, J. Writ Appeal is filed against the judgment of the learned singleJudge declining to interfere with the orders impugned in the WPC forthe reason that appellant has effective alternative remedy under thestatute. We have heard counsel appearing for the appellant andGovernment Pleader appearing for the respondent. 2. Appellant is a registered dealer under the Kerala Value AddedTax Act, hereinafter called the "Act" engaged in blasting, crushing andsale of granite chips and jelly popularly known as crushed metal.During the assessment year 2008-09, vide Ext.P1, the assessing officergranted appellant the facility to pay tax at compounded rate which wasbased on machine capacity at Rs. 1.6 lakhs. However, appellant's caseis that on account of objections from neighbours, appellant could notrun the unit and consequently he could not remit tax in terms of Ext.P1.When notice for recovery was issued vide Ext.P2 dated 19.2.2009 appellant remitted Rs. 55,000/- in three instalments. However, onaccount of continued default in payment of balance amount, appellantwas called upon to furnish additional security for retaining registration.Since the appellant failed to furnish additional security of Rs. 3 lakhs interms of demand by the officer, his registration was also cancelled.After cancelling the registration, the assessing officer made regularassessment for the very same year determining tax on estimatedturnover. For the failure to pay tax, appellant was also levied heavypenalty vide Ext.P7. WPC was filed challenging four separate ordersissued by the Officer, one against cancelling the assessment issuedunder compounding scheme, second against the assessment made onestimated turnover, third against penalty order and fourth againstcancellation of registration. Since appellant has remedy against allthese orders before the statutory authorities, the learned single Judgedeclined to consider the case on merits against which this Appeal isfiled. 3. Counsel for the appellant pointed out that the peculiarcircumstance, that is resistence from the neighbouring owners, is theground for appellant's failure to continue business and to pay arrears oftax. According to him, all the impugned orders are illegal, arbitrary 3. Counsel for the appellant pointed out that the peculiarcircumstance, that is resistence from the neighbouring owners, is theground for appellant's failure to continue business and to pay arrears oftax. According to him, all the impugned orders are illegal, arbitrary and without jurisdiction because the only default on the part of theappellant is non-payment of tax assessed under the compoundingscheme vide Ext.P1. We find force in this contention because Ext.P1 isan agreed assessment under the compounding scheme and had theappellant carried on the business, he would have certainly madepayment, continued his registration and carried on the business. We donot find any justification for the assessing officer to cancel anassessment completed under the compounding scheme merely becauseappellant has committed default in payment of tax. Of course, if tax isnot paid Officer is free to cancel registration and proceed for recovery.However, cancellation of assessment completed under thecompounding scheme and making an assessment on estimated turnoveris not justified in this case because the officer has not found anythingagainst the appellant's entitlement for payment of tax under thecompounding scheme. So much so, in our view, there is nojustification for the learned single Judge to relegate the appellant tostatutory authorities because orders are prima facie illegal and withoutjurisdiction. Further statutory proceedings will only cause undue delayand hardship and the same is not going to benefit the department aswell. In our view, a case of failure to run business of this kind should be met with orders which should help the party to restart the business atthe earliest which serves the interest of the revenue better. In thecircumstances we hold that the cancellation of Ext.P1 assessmentcompleted under the compounding scheme is illegal. Ext.P3 order istherefore quashed. So long as Ext.P1 stands, there is no justificationfor making assessment on estimated turnover. We therefore vacateExt.P7 order. The balance orders under challenge are the orderscancelling registration and penalty levied for chronic default committedby the appellant. We feel default is explained by the appellant andtherefore a token penalty will serve the ends of justice. We thereforefix the penalty at Rs. 10,000/-. Ext.P8 will therefore stand modified tothis extent. Appellant is granted one month's time to remit the entirebalance arrears of tax with interest due for the default period underSection 31(5) read with Section 31(6) of the Act. So far as cancellationof registration is concerned, we direct the Officer to recall the order andgrant fresh registration after the appellant clears the arrears as aboveand furnishes security by way of Bank guarantee for Rs. 1 lakh for theprompt payment of tax. We make it clear that registration should berenewed immediately on the appellant complying with all theformalities as above and thereafter Officer will verify the monthly returns filed by the appellant, and he is free to invoke the bankguarantee for recovery of arrears, as and when default is committed inmonthly payments and if default is chronic, registration can again becancelled without any right for renewal. While renewing registration inthe same business for the assessee, the Officer will examine the realreason for his stoppage of business and orders renewing registrationshould be consistent with the licence and other permits required forcarrying on business. Writ Appeal is allowed as above. (C.N.RAMACHANDRAN NAIR)Judge. (V.K. MOHANAN) Judge. kk