Ice Sellers Sannadha Sangham v State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN** **WEDNESDAY, THE 6TH DAY OF OCTOBER 2021 / 14TH ASWINA, 1943** ## **WP(C) NO. 22237 OF 2010** ## **PETITIONER:** ICE SELLERS SANNADHA SANGHAM, NEENDAKARA FISHING HARBOUR, NEENDAKARA PO, KOLLAM - 691 582, REP.BY ITS SECRETARY. BY ADVS. SRI.ALEX N.MATHEW (KOLLAM) SRI.JAMES JOSE SRI.H.RAMANAN ## **RESPONDENTS:** 1 STATE OF KERALA, REPRESENTED BY SECRETARY, DEPARTMENT OF FISHERIES, SECRETARIAT, THIRUVANANTHAPURAM. 2 ASSESSING OFFICER, OFFICE OF DY.DIRECTOR OF FISHERIES,KOLLAM. SMT.VIDYA KURIAKOSE, GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.10.2021, THE COURT ON 6.10.2021 DELIVERED THE FOLLOWING: W.P(C)No.22237 of 2010 2 ## **P.V.KUNHIKRISHNAN, J** --------------------------------------- W.P(C)No.22237 of 2010 --------------------------------------- Dated this the 6[th] day of October, 2021 ## **J U D G M E N T** The petitioner is a society set up for manufacturing ICE. Petitioner is a registered society. Ext P1 is the certificate of registration. On 15.11.2008, the 2[nd] respondent issued Ext P2 notice directing the petitioner to file a return in form No.1 of the Kerala Fishermen's and Allied Workers' Welfare Cess Act, 2007 (for short the Act 2007). The petitioner submitted Ext P3 reply. According to the petitioner, ICE seller or manufacturer is not specifically included in the purview of the Act 2007 so as to make them liable to pay the cess contemplated therein. It is the case of the petitioner that, levy of cess on the petitioner is not provided W.P(C)No.22237 of 2010 3 anywhere in the Act. Apprehending a further demand notice, the petitioner filed WP(C) No.14146 of 2009 before this Court to quash Ext P2 notice. Subsequent to the filing of this writ petition, 2[nd] respondent assessed the turnover of the petitioner as Rs.3,00,000/- and also assessed the cess at Rs.3,000/- and issued demand notices to the petitioner directing to pay cess amount of Rs.3000/- for the years 2006-2007 and 2007-2008 with a threat of revenue recovery proceedings. Ext P5 and P6 are the demand notices. Hence, the petitioner amended the writ petition No.14146 of 2009 and challenged Exts.P5 and P6 notice also. As per Ext P8 judgment, this Court relegated the petitioner to avail the alternative remedy of appeal provided under the statute. Accordingly, the petitioner filed Ext P9 appeal. Ext P9 appeal was dismissed as per Ext P10 order. Challenging Ext P10 order, the petitioner filed a revision before the Secretary, Fisheries Department, Trivandrum under Section 14 of the Act, 2007. The revisional authority confirmed the order passed by the W.P(C)No.22237 of 2010 4 appellate authority as per Ext P12 order. Aggrieved by Exts P5, P6, P10 and P12, this writ petition is filed. The prayer portion in the writ petition is extracted hereunder: On the aforementioned facts and reasons, it is respectfully prayed that this hon'ble court may be pleased to quash by a writ of certiorari:- 1)Ext.P-10 order of Director of Fisheries and Ext.P-12 order of Secretary to Government; 2) Exts.P-5 and P-6 demand notices issued by the 2nd respondent; 3) Declare that the petitioner society would not come within the fold of the Kerala Fishermen's and Allied Workers Welfare Cess Act, 2007; and. 4) pass such other orders deemed fit and necessary in the circumstances of the case. 2. Heard, the counsel for the petitioner and the Government Pleader. The counsel for the petitioner submitted that in the light of the judgment of this Court **in Seafood Exporters Association of India v State of Kerala and others (ILR 2019(1) Kerala 643),** the impugned orders in this case are unsustainable. The counsel submitted that Sections 3(1), 3(2) W.P(C)No.22237 of 2010 5 and 3(3) of Act 2007 were set aside as beyond legislative competence of the State. In such circumstances, the respondents have no authority to issue notice under Section 7 of the Act, 2007. The counsel also relied the judgment of the Apex Court in **Koluthara Exports Ltd. v State of Kerala (2002 (1) KLT 658)** . The counsel takes me through the relevant provisions in the Act 2007 and submitted that the submission of the return is only to assess cess. When Section 3 of the Act, 2007 itself is declared as unconstitutional, the respondents cannot issue a notice under Section 7 of the Act, 2007. 3. On the other hand, the Government Pleader submitted that the impugned orders in this case are only notice issued under Section 7 of the Act, 2007 and hence it cannot be said that this case is covered by the judgment in **Seafood Exporters Association of India’s case** (supra). W.P(C)No.22237 of 2010 6 4. I considered the contentions of the petitioner and the Government Pleader. It is an admitted fact that Section 3(1), 3(2) and 3(3) of the Act 2007 is declared as beyond the legislative competence and the same is set aside by this Court in **Seafood Exporters Association of India’s** case (supra). It will be better to extract the relevant portion of the judgment. xxxx xxxx xxxx “71. Though the levy in the present enactment is described as a 'Cess, the change in nomenclature does not make any difference. 'Cess' is a tax according to the Black's dictionary. Since the definition of dealer' does not include exporters, the case of the petitioners is that they were consciously excluded by the legislature. However, the stand of the State is that the scope of the expression 'dealer' has only been expanded to include all persons who buy, sell or process fish or bring into the State or send outside the State fish (raw or processed) or fish product or allied objects or equipments. 72. The impugned provisions in so far as they seek to extract a Cess from exporters who are not employers of the fishermen who go out into the sea to catch fish are invalid. A comparison of the wordings of the definition of “dealer" contained in Section 2(d) of the Ordinance of 2006 and the Cess Act of 2007 shows that, the words “exporting fish” (in raw or processed form) that was present in the Ordinance has been removed from the definition in the Cess Act. The words that were removed W.P(C)No.22237 of 2010 7 have been substituted by the words “bringing into the State or sending outside the State the fish (raw or processed)”. Though the above wording could be interpreted to rope in all people who deal in fish including exporters, the argument of the counsel for the petitioners that exporters have been consciously excluded by the legislature also cannot be brushed aside. However, the above uncertainty is not of much consequence since the provisions in so far as they seek to burden the exporters with contributions for augmenting the Fishermen's Welfare Fund though they are neither employers nor members of the section of the society that is benefited, cannot be sustained. For the foregoing reasons, the petitioners are entitled to succeed. It is declared that, Section 3(1), 3(2) and 3(3) of the Act are beyond the legislative competence of the State. Consequently, the said provisions are set aside. The writ petitions are allowed as above.” 5. Exts P10 and P12 are the orders of the appellate authority and revisional authority. Exts P5 and P6 are the impugned orders in those appeal and revision. I perused Exts P5 and P6. Ext P5 is a notice issued in form No.1(B). It is an assessment order invoking the powers under Section 8 of the Act, 2007 and directing to pay the cess under Section 3 of the Act, 2007. In other words, Exts P5 and P6 are issued invoking the powers W.P(C)No.22237 of 2010 8 under Section 3 and 8 of Act, 2007. In such circumstances, there cannot be any assessment of tax under Section 8 of the Act, 2007, when Section 3 of the Act 2007 itself is set aside by this Court. Consequently, there cannot be any levy and the collection of cess also. The assessment of cess will come into play only if the petitioner is liable to pay cess. It will be better to extract Section 3, Section 7 and Section 8 of Act, 2007. **3. Levy and Collection of Cess.** -(1) There shall be levied and collected a cess for the purpose of the Kerala Fishermen Welfare Fund Act, 1985 and the scheme thereunder, at one per cent of the total sale proceeds of a dealer in a financial year. (2) The cess levied under sub-section (1) shall be collected from every dealer in such manner and at such time, as may be prescribed. (3) The cess levied under sub-section (1) shall be in addition to any cess, duty or tax leviable on fish under any law for the time being in force. (4) The proceeds of the cess collected under sub-section (2) shall be credited initially to the Consolidated Fund of the State in the manner, as may be prescribed. (5) The amount of cess collected shall be paid to the Fund of the Board by the Government after deducting the cost of collection of such cess not exceeding one per cent of the amount collected every year, before 30th June, in the manner as may be prescribed. xxx xxx xxx **7. Furnishing of Return by the dealer** . (1) Every dealer shall furnish to the Assessing Officer of the area a return showing W.P(C)No.22237 of 2010 9 the sale proceeds of the previous financial year in the manner as may be prescribed. (2) If any dealer fails to furnish the return under sub-section (1), the Assessing Officer shall give notice requiring such dealer to furnish such return before such date as may be specified in the notice. **8. Assessment of Cess-** (1) On receipt of the return under section 7, the Assessing Officer shall, after making or causing to be made, such enquiry as he thinks fit and after satisfying himself that the particulars furnished in the return are correct, by order, assess the amount of cess payable by the dealer. (2) If the dealer has not furnished the return to the Assessing Officer or the particulars furnished in the return are found incorrect, the Assessing Officer shall, after making or causing to be made such enquiry, as he thinks fit, by order, assess the amount of cess payable by the dealer. (3) An order of assessment made under sub-section (1) or sub-section (2) shall specify the amount of cess and the date within which the cess shall be paid by the dealer. (4) The officer conducting the enquiry under sub-section (1) or subsection (2), for the purpose of such enquiry, shall have the same powers as are vested in a civil court while trying a suit under the Code of Civil Procedure, 1908 (Central Act 5 of 1908) in respect of the following matters, namely: (a) enforcing the attendance of any person or examining him on oath or affirmation; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavits; and (d) issuing commissions for the examination of witnesses. (5) Any enquiry under this section shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of W.P(C)No.22237 of 2010 10 the Indian Penal Code (Central Act 45 of 1860) and for the purpose of section 196 of the said Code. 6. From the above Sections, it is clear that only if there is power to levy cess, there can be an assessment of cess. It is an admitted fact that Section 3 of Act, 2007 is set aside by this Court. Hence Ext P5 and P6 will not stand and consequently Exts P10 and P12 orders also. Therefore, this Writ petition is allowed. Exts P5, P6, P10 and P12 are set aside. Sd/- **P.V.KUNHIKRISHNAN,** **JUDGE** cms W.P(C)No.22237 of 2010 11 ## **APPENDIX OF WP(C) 22237/2010** PETITIONER EXHIBITS EXHIBIT P1 CERTIFICATE OF REGISTRATION OF THE EPTITIENR SOCIETY (TRUE COPY) EXHIBIT P2 NOTICE OF 2ND RESPONDENT (TRUE COPY) EXHIBIT P3 REPLY NOTICE OF PETITIONER (TRUE COPY) EXHIBIT P4 MEMORANDUM OF WRIT PETITION FILED BY THE PETITIONER (TRUE COPY) - EXHIBIT P5 DEMAND NOTICE (TRUE COPY) EXHIBIT P6 DEMAND NOTICE (TRUE COPY) EXHIBIT P7 AMENDMENT PETITION IA 6352/09 IN WPC NO.14146/09-K (TRUE COPY) - EXHIBIT P8 JUDGMENT IN EXT.P4 WRIT PETITION (TRUE COPY) - EXHIBIT P9 APPEAL BEFORE THE DIRECTOR OF FISHERIES, THIRUVANANTHAPURAM (TRUE COPY) - EXHIBIT P10 ORDER DISMISSING EXT.P9 APPEAL (TRUE COPY) EXHIBIT P11 REVISION PETITION BEFORE THE SECRETARY, FISHERIES DEPT., THIRUVANANTHAPURAM (TRUE COPY) EXHIBIT P12 ORDER DISMISSING EXT.P11 REVISION PETITION (TRUE COPY) ## RESPONDENTS EXTS NIL /TRUE COPY/ cms