Kerala Small Industries Development Corporation Ltd. (Marketing Division) v. Intelligence Officer (IB), Department of Commercial Taxes, Government of Kerala; Assistant Commissioner, Special Circle-II, Ernakulam

## IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU TUESDAY, THE 12TH DAY OF JULY 2016/21ST ASHADHA, 1938 W.A.No. 127 of 2015 IN WP(C).35359/2014 -------------------------------------------------------AGAINST THE JUDGMENT IN WP(C) 35359/2014 of HIGH COURT OF KERALA DATED 06-01-2015 ## APPELLANT/PETITIONER:-: KERALA SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD., (MARKETING DIV), H.O.HOUSING BOARD BUILDING, SANTHINAGAR, TRIVANDRUM AND DIVISIONAL OFFICE AT GANDHI NAGAR, ERNAKULAM, REPRESENTED BY ITS MANAGING DIRECTOR DR.SAJI BASHEER. BY ADVS.SRI.S.ANANTHAKRISHNAN SRI.N.K.SUBRAMANIAN ## RESPONDENTS/RESPONDENTS:-: 1. INTELLIGENCE OFFICER (IB), DEPARTMENT OF COMMERCIAL TAXES, GOVERNMENT OF KERALA, MINI CIVIL STATION, ALUVA - 683 523. 2. ASSISTANT COMMISSIONER, SPECIAL CIRCLE-II, ERNAKULAM - 682 031. R BY GOVERNMENT PLEADER SMT.SHOBA ANNAMMA EAPEN THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 12-07-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **'CR'** **ANTONY DOMINIC & DAMA SESHADRI NAIDU, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Writ Appeal No.127 of 2015** **- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 12[th] day of July, 2016** ## **JUDGMENT** ## **Dama Seshadri Naidu, J.** The appellant filed W.P.(C)No.35359/14 assailing Exts.P4 to P6 notices issued by the respondent authorities under Section 67(1) of the Kerala Value Added Tax Act, 2003. Later, aggrieved by the dismissal of the writ petition, the appellant has filed this intra-court appeal. 2. The appellant is a public sector Corporation selling and supplying, among other things, water beds to the Government Hospitals. In the course of time, the Intelligence Officer, the Department of Commercial Taxes, issued Exts.P4 to P6 notices under Section 67(1) of the Kerala Value Added Tax Act: that the appellant has misclassified the product and, as a result, not remitted the actual tax due to the Government. Assailing Exts.P4 to P6, the appellant filed a writ petition. Writ Appeal No.127 of 2015 : 2 : 3. A learned Single Judge of this Court dismissed the writ petition on a preliminary ground: Exts.P4 to P6 are show-cause notices and that the appellant ought to have replied to them before taking recourse to any adjudicatory process. Aggrieved, the assessee filed this intra-court appeal. 4. The learned counsel for the appellant has contended that the first respondent lacks jurisdiction to issue Exts.P4 to P6 notices. He has further contended that the authority concerned was predetermined, and any reply by the appellant to Exts.P4 to P6 notices would be an exercise in futility. According to him, as the rate of tax to be applied is only 4%, rather than 12.5%, this Court ought to have, in the first instance, interfered with Exts.P4 to P6 notices. He has rested his case on a few precedents dealing with the public law remedy vis-à-vis a show-cause notice. 5. The learned Government Pleader has, on the other hand, contended that the appellant, as a precondition, ought to have answered the claims set out in the show-cause notices. She has also Writ Appeal No.127 of 2015 : 3 : further submitted that the appellant, even thereafter, has an efficacious alternative remedy to agitate further. 6. Heard the learned counsel for the appellant and the learned Government Pleader, apart from perusing the record. 7. As has been contended by the learned counsel for the appellant, there can be no cavil that this Court, as is well established, can entertain a writ petition under Article 226 of the Constitution of India even regarding a show-cause notice. Through a profusion of precedents, this Court as well as the Hon’ble Supreme Court has affirmed that a show-cause notice can be interfered with, albeit, under certain specified circumstances. 8. Of the decisions cited by the appellant, in **M/s. Reckitt Bensicker (India) Ltd.,** v. **Intelligence Officer (IB)**[1] , a learned Division Bench of this Court has felt that the notice imposing penalty did not disclose any contumacious conduct on the assessee’s part. It has, therefore, set aside the notice and directed the authorities to > 1 (2007) 15 KTR 468 (Ker) Writ Appeal No.127 of 2015 : 4 : issue a fresh notice and an opportunity of hearing. **Khadeeja Makkar** v. **State of Kerala**[2] the learned Division Bench did not deal with the justiciability of a show-cause notice; nor does **Haleel Rahiman** v. **Commercial Tax Officer** ,[3] a decision by another learned Division Bench. 9. In Secretary, **Aruvikkara Grama Panchayat** v. **Anandakumar**[4] this Court, per one of us (Dama Seshadri Naidu, J), has summarized the precedential position on the adjudicability of a show-cause notice: “16. There is no invariable principle that a show cause notice should not be a subject matter of judicial adjudication under any circumstance. Courts have held time and again that when the notice (1) suffers from the vice of ultra vires; (2) is a fait accompli or premeditated; or (3) is a product of malice or mala fides, it is justiciable without the party going through the procedural rigmarole.” ## 10. In **Siemens Ltd.** v. **State of Maharashtra**[5] , the Hon'ble Supreme Court has held that ordinarily a Writ Court may not exercise 2 (2014) 22 KTR 558 (Ker) 3 ILR 2014 (2) (Ker) 1010 4 [2015 (1) KHC 720] 5 2006 (12) SCC 33 Writ Appeal No.127 of 2015 : 5 : its discretionary jurisdiction to entertain a writ petition questioning a notice to show-cause, unless the notice appears to have been without jurisdiction. Siemens Ltd., draws support from **State of U.P.** v. **Brahm Datt Sharma**[6] , **Special Director** v. **Mohd. Ghulam Ghouse**[7] , and **Union of India** v. **Kunisetty Satyanarayana** .[8] 11. First, it cannot be said that the intelligence officer lacks jurisdiction to issue Exhibit P4 to P6 notices; he does have the power. But the issue raised by the appellant on merits is that the rate of tax ought to be at 4% but not 12.5%. Jurisdiction differs from justification. 12. Viewed from another perspective, we need to address another issue: whether the notices are premeditated—a facet of bias. If they are, what is the fallout? In such an event, even if the Court directs the statutory authority to hear the matter afresh, ordinarily such hearing would serve no fruitful purpose. (see **K.I.Shephard** v. > 6 AIR 1987 SC 943 > 7 2004 (3) SCC 440 > 8 2006 (12) SCC 28 Writ Appeal No.127 of 2015 : 6 : **Union of India**[9] ). The principle of futility can be found reiterated by the Apex Court in **M/S Siemens Ltd.** v. **State of Maharashtra and Others**[10] . 13. Without piling up the precedents, we may observe that, in the present instance, a perusal of Exts.P4 to P6 amply demonstrates that the authority concerned has issued a show-cause notice calling upon the appellant to submit its explanation. But the appellant, without giving an explanation, has rushed to the Court. The view taken by the learned Single Judge that the parties have an efficacious alternative remedy, we reckon, is unexceptionable. We, therefore, dismiss the writ appeal as meritless, expressing no opinion on the merits for it might affect the further adjudicatory process. 14. As has been pleaded by the learned counsel for the appellant, this Court, however, preserves the appellant’s right to submit an explanation to Exts.P4 to P6 show-cause notices. We further clarify that the appellant can approach the authority > 9 AIR 1988 SC 686 > 10 [2007 KHC 3379] Writ Appeal No.127 of 2015 : 7 : concerned seeking redressal of his grievance, if any, in the manner appellant deems it appropriate, subject to its legal sustainability. Writ appeal is dismissed accordingly. SD/- **ANTONY DOMINIC JUDGE** SD/- **DAMA SESHADRI NAIDU JUDGE** jes