Abdul RafeeN N v. The Commercial Tax Officer, Kasaragod; The Asst. Commissioner (Appeals), Commercial Taxes, Kasaragod at Hosdurg; The Junior Superintendent, Taluk Office, Manjeswar

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU** **FRIDAY, THE 3RD DAY OF AUGUST 2018 / 12TH SRAVANA, 1940** **WP(C).No. 25029 of 2018** ## **PETITIONER** **ABDUL RAFEEK.N PROPRIETOR, ARE YECH TRADERS, NEERHALLI, BELA, MOODAMBAIL, MANJESWAR, KASARGOD DISTRICT, PIN-671323.** **BY ADVS.SRI.S.ANIL KUMAR (TRIVANDRUM) SRI.M.RAJAGOPAL** ## **RESPONDENTS** **1. THE COMMERCIAL TAX OFFICER** - **KASARGOD-671121.** **2. THE ASST. COMMISSIONER (APPEALS)** - **COMMERCIAL TAXES, KASARAGOD AT HOSDURG, KASARGOD DISTRICT, PIN-671312.** **3. THE JUNIOR SUPERINTENDENT,** **TALUK OFFICE, MANJESWAR, KASARGOD, PIN-671323.** **BY GOVERNMENT PLEADER DR.THUSHARA JAMES** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03-08-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **WP(C).No. 25029 of 2018 (C)** ## **APPENDIX** ## **PETITIONERS' EXHIBITS** **EXHIBIT P1 COPY OF ASSESSMENT ORDER DATED 31.03.2017 ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2015-16. EXHIBIT P1(a) COPY OF ASSESSMENT ORDER DATED 29.12.2017 ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2016-17 (APRIL TO DECEMBER, 2017) EXHIBIT P1(b) COPY OF ASSESSMENT ORDER DATED 31.07.2017 ISSUED BY THE 1ST RESPONDENT FOR THE MONTH OF JANUARY 2017. EXHIBIT P1(c) COPY OF ASSESSMENT ORDER DATED 23.05.2017 ISSUED BY THE 1ST RESPONDENT FOR THE MONTH OF FEBRUARY 2017. EXHIBIT P1(d) COPY OF ASSESSMENT ORDER DATED 30.06.2017 ISSUED BY THE 1ST RESPONDENT FOR THE MONTH OF MARCH,2017. EXHIBIT P2 COPY OF APPEAL MEMORANDUM AGAINST EXT.P1. EXHIBIT P2(a) COPY OF APPEAL MEMORANDUM AGAINST EXT.P1(a) EXHIBIT P2(b) COPY OF APPEAL MEMORANDUM AGAINST EXT.P1(b) EXHIBIT P2(c) COPY OF APPEAL MEMORANDUM AGAINST EXT.P1(c)` EXHIBIT P2(d) COPY OF APPEAL MEMORANDUM AGAINST EXT.P1(d) EXHIBIT P3 COPY OF STAY PETITION FILED IN EXT.P2 APPEAL. EXHIBIT P3(a) COPY OF STAY PETITION FILED IN EXT.P2(a) APPEAL. EXHIBIT P3(b) COPY OF STAY PETITION FILED IN EXT.P2(b)APPEAL. EXHIBIT P3(c) COPY OF STAY PETITION FILED IN EXT P2(c)APPEAL. EXHIBIT P3(d) COPY OF STAY PETITION FILED IN EXT.P2(d) APPEAL. EXHIBIT P4 COPY OF DEMAND NOTICE DATED 13.02.2018 ISSUED BY THE 3RD RESPONDENT IN RESPECT OF EXT.P1 ORDER AND ITS ENGLISH TRANSLATION. EXHIBIT P4(a) COPY OF DEMAND NOTICE DATED 12.02.2018 ISSUED BY THE 3RD RESPONDENT IN RESPECT OF EXT.P1(a) ORDER AND ITS ENGLISH TRANSLATION. EXHIBIT P4(b) COPY OF DEMAND NOTICE DATED 23.01.2018 ISSUED BY THE 3RD RESPONDENT IN RESPECT OF EXT.P1(b) ORDER AND ITS ENGLISH TRANSLATION.** **WP(C).No. 25029 of 2018 (c) -2-** **EXHIBIT P4(c) COPY OF DEMAND NOTICE DATED 17.02.2018 ISSUED BY THE 3RD RESPONDENT IN RESPECT OF EXT.P1(c) ORDER AND ITS ENGLISH TRANSLATION. EXHIBIT P4(d) COPY OF DEMAND NOTICE DATED 23.01.2018 ISSUED BY THE 3RD RESPONDENT IN RESPECT OF EXT.P1(d) ORDER. EXHIBIT P5 COPY OF ORDER DATED 21.05.2018 ISSUED BY THE 2ND RESPONDENT ON EXT.P3 PETITION. EXHIBIT P5(a) COPY OF ORDER DATED 21.05.2018 ISSUED BY THE 2ND RESPONDENT ON EXT.P3 (a) PETITION. EXHIBIT P5(b) COPY OF ORDER DATED 21.05.2018 ISSUED BY THE 2ND RESPONDENT ON EXT.P3(b) PETITION. EXHIBIT P5(c) COPY OF ORDER DATED 21.05.2018 ISSUED BY THE 2ND RESPONDENT ON EXT.P3(c) PETITION. EXHIBIT P5(d) COPY OF ORDER DATED 21.05.2018 ISSUED BY THE 2ND RESPONDENT ON EXT.P3 (d) PETITION.** ## **RESPONDENTS' EXHIBITS** ## **NIL** ## **SD** **// TRUE COPY //** **P.A. TO JUDGE** ## **DAMA SESHADRI NAIDU, J.** ================================== ## **W.P.(C)No.25029 of 2018** ====================================== **Dated this the 3[rd] day of August 2018** ## **JUDGMENT** The petitioner is a registered dealer under the KVAT Act. After suffering Exts.P1 to P1(d) assessment orders for the years 2015-2016 and 2016-2017, the petitioner filed statutory appeals: Ext.P2 to P2(d) along with Exts.P3 to P3(d) stay petitions. 2. Faced with revenue recovery proceedings, the petitioner filed W.P.(C)No.9305/2018 before this Court. This Court, through judgment dated 19.03.2018, directed the 2[nd] respondent appellate authority to dispose of the stay petitions at the earliest. In turn, the appellate authority passed the Ext.P5 series orders, holding that there shall be an interim stay of all further proceedings on the condition of the petitioner's remitting 20% of the -2- W.P.(C)No.25029 of 2018 balance tax due and furnishing security for the remaining amount. Assailing the Ext.P5, the petitioner has filed this Writ Petition. 3. Shri S.Anil Kumar, the petitioner's counsel submits that the appellate authority has in fact recorded a specific finding that the petitioner has raised a prima facie case for grant of stay. According to him, there ought not to have a mechanical imposition of a pre-condition: depositing 20% of the disputed tax. To elaborate, Shri Anil Kumar has drawn my attention to the amended Section 55(4) of the KVAT Act and also to a judgment of this Court in W.P.(C)No.1028/2017. 4. The learned Government Pleader, on her part, submitted that in Ext.P3 stay petition, the petitioner has only pleaded the financial difficulty to meet any pre-condition likely to be imposed by the appellate authority. According to her, the petitioner never -3- W.P.(C)No.25029 of 2018 pleaded why the appellate authority should not impose a pre-condition to grant the stay. So Ext.P5, she continues, cannot be found fault with. 5. In reply, Shri Anil Kumar, nevertheless, contends that the very Ext.P3(a) stay petition also contains a reference to the grounds of appeal and those grounds too raise a substantial question on merits. 6. Heard the petitioner's counsel as also the Government Pleader. 7. Under similar circumstances, a learned Single Judge of this Court, through judgment, dated 11.01.2017, in _Melvin Enterprises v. Assistant Commissioner(Assmt.),_ has elaborated on the issue. The learned Single Judge, in fact, has examined Section 55(4) of the Act and has concluded thus: 5. In that context, it is pertinent that, by the introduction of the proviso, the prima facie -4- W.P.(C)No.25029 of 2018 consideration which is required, insofar as a stay application in a first appeal also assumes a slightly different colour. Earlier when an assessment order was passed on best judgment, then the first appellate authority had a discretion insofar as making directions with respect to payment of tax and offering mitigation by way of providing for payment of a percentage of tax, which could be arrived at on a consideration of the merits of the case, ranging between, providing for a blanket stay in very meritorious cases and dismissal of the interim applications in the event of totally untenable contentions. 6. However, now the statute itself provides for a blanket stay on deposit of 20% of disputed amount of tax along with collected tax. The first appellate authorities then cannot go beyond the 20% as indicated in the proviso. The consideration as noticed herein above, assumes a different colour insofar as the appellate authorities would have to consider the issue and the merits of the matter, prima facie to decide upon whether any further reduction has to be granted from the 20% of the disputed amount of tax, as has been provided in the -5- W.P.(C)No.25029 of 2018 statute. If not mitigation is warranted then, the first appellate authority would be perfectly justified in directing deposit of 20% tax demanded, failing which the assessee would be liable to be proceeded against for recovery.” 8. I reckon the appellate authority has recorded prima facie satisfaction about the petitioner's contention, as held by this Court in _Melvin Enterprises._ Unless the appellate authority volunteers to offer security, Section 55(4) cannot be invoked. In other words, there ought to be a specific reason mentioned why the appellant should meet the pre-condition of depositing any part of the disputed tax. Thus, I am constrained to conclude that the impugned Ext.P5 order does not reflect any reasoning going by _Melvin Enterprice's_ ratio. 9. Under these circumstances, I set aside the Ext.P5 and remand the matter to the appellate authority for its consideration of the stay petition, afresh. -6- W.P.(C)No.25029 of 2018 The Writ Petition stands disposed of. I may further observe that until the appellate authority decides on the stay petition, the respondent authorities will defer coercive steps. Sd/- **DAMA SESHADRI NAIDU JUDGE** sd