Empee Distilleries Ltd v. State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE P.SOMARAJAN THURSDAY, THE 13TH DAY OF JULY 2017/22ND ASHADHA, 1939 WA.No. 1381 of 2017 IN WP(C).19957/2010 -------------------------------------------AGAINST THE JUDGMENT IN WP(C) 19957/2010 of HIGH COURT OF KERALA DATED 06-04-2017 -------- ## APPELLANT/PETITIONER : ---------------------------- EMPEE DISTILLERIES LTD NEW INDUSTRIAL DEVELOPMENT AREA, MENON PARA ROAD, KANJIKODE P.O., PALAKKAD-678621 REPRESENTED BY ITS SENIOR MANAGER (OPERATIONS), A.K.MURALI. BY ADVS.SRI.K.P.DANDAPANI (SR.) SRI.MILLU DANDAPANI RESPONDENTS/RESPONDENTS : ------------------------------------ 1. STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, THIRUVANANTHAPURAM-695001. 2. THE COMMISSIONER OF COMMERCIAL TAXES, PUBLIC OFFICE BUILDINGS, OPP:MUSEUM, THIRUVANANTHAPURAM-695001. 3. THE ASSISTANT COMMISSIONER (ASSESSMENT), SPECIAL CIRCLE, COMMERCIAL TAXES, PALAKKAD-678001. 4. THE SECRETARY, - KERALA STATE BEVERAGES (MANUFACTURING AND MARKETING) CORPORATION LTD., P.B.NO.226B, SASTHAMANGALAM, THIRUVANANTHAPURAM-695010. R4 BY ADV. SRI.NAVEEN.T., SC, KERALA STATE BEV.CO. M. AND M. BY Sr. GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 13-07-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **ANTONY DOMINIC, & P. SOMARAJAN, JJ.** -----------------------------------------------W. A. No.1381 of 2017 -----------------------------------------------Dated this the 13[th ] day of July, 2017 ## **JUDGMENT** ## **Antony Dominic, J.** 1. aThis appeal is filed by the petitioner in W.P.(C) No.19957 of 2010. The writ petition was filed seeking mainly to challenge Ext.P4, an order issued by the respondents allowing Ext.P3 application made by the appellant seeking the benefit of an Amnesty Scheme for settling its liability under the KGST Act. 2. The case of the appellant was that in compliance with Ext.P1 judgment of this Court, the appellant had deposited an amount of `4 crores on 02.03.2010. According to the appellant, while determining the amount due from it for settlement of its liability under the Amnesty Scheme, the amount remitted by it ought to have been given credit, and W. A. No.1381 of 2017 -2- that the respondents have illegally appropriated `4 crores towards interest due, in the purported exercise of their powers under Section 55C of the KGST Act. The learned single Judge declined to accept the contention of the appellant and dismissed the writ petition. It is this judgment which is under challenge before us. 3. We heard the learned Senior Counsel appearing for the appellant and the learned Government Pleader appearing for the respondents. 4. On facts, it is only relevant to note that the appellant was in default of its dues under the KGST Act for the Assessment years 1998-99 to 2003-04 except 2002-03. That liability was the subject matter of various litigations which at one stage has reached the Apex Court also. Finally, when the matter was again pending in revision, on the initiation of Garnishee Proceedings for realisation of the dues, appellant filed W.P.(C) No.2434 of 2010. The said writ petition was disposed of by Ext.P1 judgment dated W. A. No.1381 of 2017 -3- ## 16.02.2010 where this Court ordered thus in paragraph 14: “14. Considering the facts and circumstances, this Court finds that the interest of justice would be met, if the appellate authority is directed to consider and pass appropriate orders on the appeals bearing T.A. Nos.323, 324, 325, 326 and 327 of 2009, the final hearing of which has admittedly been completed on 22.01.2010. Accordingly, the 4[th] respondent is directed to pass final orders in the said appeals in accordance with law, as expeditiously as possible, at any rate, within one month from the date of receipt of a copy of this judgment. The coercive proceedings pursuant to Exts.P4 and P5 shall be kept in abeyance with regard to the 'tax component' and 'interest' in respect thereof, on condition that the petitioner deposits a sum of 'Rs.4 crores' within one week.” 5. In compliance with the aforesaid direction, the appellant deposited `4 crores on 02.03.2010. Subsequently, on 31.03.2010, an Amnesty Scheme was announced by the Government of Kerala giving an opportunity to defaulters like the appellant to settle their liabilities as on 01.04.2010 subject to the conditions mentioned therein. Although the appellant had time up to 30.06.2010 to apply for the benefit of the scheme, the appellant submitted Ext.P3 application W. A. No.1381 of 2017 -4- for the benefit of the scheme on 01.04.2010 which was acknowledged by the department on 03.04.2010. The application was considered and the appellant was issued Ext.P4 communication indicating the amount payable by it. Finding that `4 crores remitted by it on 02.03.2010 in compliance with the directions in Ext.P1 was appropriated by the respondents towards interest due from the appellant in the purported exercise of their power under Section 55C of the Act and that it was thereafter that its liability was determined in terms of the Amnesty Scheme, appellant objected to Ext.P4 by submitting Exts.P5 and P6. This attempt of the appellant did not yield any result and therefore, the writ petition was filed. The writ petition having been dismissed by the learned single Judge, this appeal. 6. The contention that was reiterated by the learned Senior Counsel for the appellant was that `4 crores having been deposited by the appellant in compliance with the W. A. No.1381 of 2017 -5- directions of this Court as contained in Ext.P1 judgment, could not have been appropriated by the respondents in the purported exercise of their powers under Section 55C of the KGST Act. In support of this plea, the learned counsel also placed reliance on the judgments of this Court, apart from the judgment of Karnataka High Court and Delhi High Court, the details of which would be dealt with in the course of this judgment. 7. As we have already seen from the facts, Ext.P1 judgment was rendered by this Court on 16.02.2010. That writ petition was filed at a time when during the pendency of the revision petitions filed by the appellant, Garnishee Proceedings were initiated by the respondents for realisation of their dues for the assessment years mentioned above. It was to avoid such coercive action that the appellant sought protective orders from this Court and it was considering that prayer of the appellant, that in Ext.P1 judgment, this Court directed that coercive action be kept in abeyance pending W. A. No.1381 of 2017 -6- disposal of the revision petitions subject to the appellant depositing an amount of `4 crores within one week. In compliance with the said direction, the deposit was made by the appellant on 02.03.2010. 8. It was far subsequent to the deposit of the amount that on 31.03.2010, the very Amnesty Scheme was announced by the Government. It was to avail the benefit of the said scheme that the appellant submitted Ext.P3 application on 01.04.2010. This, therefore, shows that the amount was remitted by the appellant much before the very scheme came into existence and therefore, the deposit was not towards the amount due under the scheme. Once such a deposit was made, necessarily, the appropriation of the said amount will be governed by Section 55C of the KGST Act which entitled the respondents to appropriate the amount first towards interest accrued on such tax due from the assessee and the balance available towards principal outstanding. If that be so, the respondents were entitled to W. A. No.1381 of 2017 -7- appropriate the amount in terms of Section 55C. This is all the more so because, there was no additional protective directions issued by this Court in Ext.P1 granting any immunity to the deposit made by the appellant from the operation of Section 55C. If that be so, when Ext.P4 order was passed by the respondents granting the appellant the benefit of Amnesty Scheme, they were not liable to give credit to the deposit made by the appellant on 02.03.2010. 9. Insofar as the judgments that are relied on by the learned Senior Counsel for the appellant are concerned, the judgment of Full Bench of this Court in **M/s Ideal Trading Company v. Sales Tax Officer and Another [2009 (3) KHC 786(FB)]** , was a case where this Court has ordered refund of the tax paid by the assessee. A reading of the judgment would show that the said relief was granted by this Court on the finding that the assessee was entitled to exemption from tax under Section 5(3) of the CST Act. 10. Similarly, the judgment in **State of Kerala v.** W. A. No.1381 of 2017 -8- **W.I.C. & H. P. Ltd. [2010 (1) KLT 786 (F.B.)]** , rendered by the Full Bench shows that, that was the case where the assessee had an order favourable to it from the Tribunal which was reversed by the Full Bench. Taking note of that factual aspect, this Court held that, if the order by the Tribunal was adverse, the assessee could have availed the benefit of Amnesty Scheme. On that basis, this Court ordered that the assessee be given an opportunity to avail the benefit of Amnesty Scheme. These judgments were rendered on a totally different factual situation and therefore, we are not satisfied that the assessee is entitled to draw any support from the conclusions contained in these judgments. 11. Yet another judgment of this Court that was relied on by the learned Senior Counsel for the appellant is the judgment of the learned single Judge in **M/s Alwaye Sugar Agency v. CTO [2010 (3) KHC 871]** . A reading of paragraph 1 of the judgment shows that the issue involved W. A. No.1381 of 2017 -9- in that case was whether the payment effected by the assessee towards arrears of tax liability after the declaration of the proposed Amnesty Scheme with effect from 01.04.2010 with specific request to have it set off against the principal tax and surcharge, could have been unilaterally appropriated by the Revenue against interest placing reliance on Section 55C of the KGST Act contending that as on the date of payment, scheme had actually not come into force. It was taking note of the aforesaid factual situation, this Court ordered that the amnesty scheme stands on a pedestal higher than Section 55C and on that basis relief was granted to the assessee. This case also does not come to the rescue of the assessee for the reason that the payment made therein was at least in contemplation of the Amnesty Scheme and that too, with a direction by the assessee himself to appropriate the amount, only towards tax and surcharge. 12. The judgment in **Mangilal S. Jain v. CIT & Anr.** W. A. No.1381 of 2017 -10- **[(2002) 257 ITR 0031]** was rendered by a Division Bench of Karnata High Court in the context of KVS scheme of the Government under the Income Tax Act. A reading of the judgment would show that interpreting the provision of Sections 87 and 88 of the Income Tax Act, the High Court upheld the quantification of the amount payable by the assessee. According to us, the whole judgments turns on the language of the aforesaid statutory provisions which having no relevance insofar as this case is concerned. 13. The other judgment of the Delhi High Court that was relied on by the assessee is in Civil Writ No.4401/1998. A reading of the judgment shows that it was rendered in a case dealing with the claim of an assessee under the Central Excise Act for refund of the amount deposited by him towards pre-deposit consequent on the order of the Tribunal, allowing his appeal and remanding the matter for fresh consideration. 14. All these judgments were rendered on a totally -11- W. A. No.1381 of 2017 different factual background and cannot be of assistance to the appellant herein. 15. Having considered the submissions made and in the light of the statutory provisions contained in Section 55C of the KGST Act, we are not satisfied that the appellant has made out a case for interference with the judgment under appeal. Appeal fails and is dismissed accordingly. Sd/- **ANTONY DOMINIC JUDGE** Sd/- **P. SOMARAJAN JUDGE** kns/- //TRUE COPY// P.S. TO JUDGE W. A. No.1381 of 2017 -12-