High Court of KeralaSingle Judge2017-01-10Writ petition dismissed with directions; petiti...

M/S ARDRA ASSOCIATES v. STATE OF KERALA

Case / Petition Number:WP(C).No. 19 of 2017 (B)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: K. Vinod Chandran
Judgment Date: 2017-01-10
Court Decision / Holding: The writ petition is dismissed with the above direction.
Final Disposition: Writ petition dismissed with directions; petitioner to pay 20% of the tax demanded within three weeks, and recovery to be kept in abeyance till disposal of the appeal.

Parties to the Case

Appellants / Petitioners

M/S ARDRA ASSOCIATES

Respondents

State of Kerala represented by the Secretary to the Government, Department of Commercial Taxes, Government Secretariat, Thiruvananthapuram 695001
Assistant Commissioner (Appeals), Commercial Tax Complex, Poothole P.O, Thrissur 673 001
Commercial Tax Officer (Works Contract), Commercial Tax Complex, Poothole P.O, Thrissur 673 001

Legal Representation & Advocates

Counsels for Petitioners

• Sri Sherry Samuel Oommen
• Sri Nemish Niranjan Zaveri
• Sri Praveen K Nair

Counsels for Respondents

• Sri V.K. Shamsudheen

Case Synopsis & Summary

The petitioner, M/S ARDRA ASSOCIATES, a works contractor under the Kerala Value Added Tax Act, 2003, challenges an assessment for the year 2013-2014 made under Section 25(1) and seeks rectification (Section 66) plus relief in the form of stay of recovery pending appeal. The petition asserts that on 19-08-2016 the Assessing Authority was on leave when the petitioner appeared, and the assessment was completed by best judgment after examining the returns and Form 49, due to non-production of documents and registered sale deeds, with no proof of refund. The petitioner subsequently produced documents through Ext.P4 and filed Ext.P5 as an appeal and stay application, alleging lack of proper hearing. The court notes that two objections were filed (Exts.P2 and P3) and that the two objections do not itself claim a personal hearing but request consideration of objections, and that best judgment was reached due to the petitioner’s failure to produce substantiating documents. The petitioner relied on Suzion Infrastructure Service Ltd. v. Commercial Tax Officer (Ker) to contend that a composite notice granting an opportunity for hearing and filing objections was deprecated, but a Division Bench in 2011 held that personal hearing is an option at the objections stage. The Court held there is no ground for rectification under Section 66 as it would amount to rehearing; the petitioner must pursue the appeal. The court directs the petitioner to pay 20% of the tax demanded within three weeks, with recovery kept in abeyance till disposal of the appeal, and disposes of the writ petition accordingly.

Provisions of Law Cited

Section 25(1) of the Kerala Value Added Tax Act, 2003Section 66 of the Kerala Value Added Tax Act, 2003Proviso to Section 55(4) of the Kerala Value Added Tax Act, 2003

Legal Doctrines & Maxims

Principles of natural justice

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that Ext.P3 shows the petitioner was not heard properly because on 19-08-2016 the Assessing Officer was on leave; assessment was made on best judgment for lack of supporting documents; Ext.P4 rectification is sought to produce documents; the petition seeks a rehearing of the matter via rectification; petitioner relies on Suzion Infrastructure Service Ltd. v. Commercial Tax Officer (W.C), Ernakulam, and a Division Bench decision (Writ Appeal No. 1370/2011) to claim that personal hearing is available during objections. The two objections filed (Exts.P2 and P3) did not request a personal hearing; thus, there is no violation of natural justice as best judgment was made due to the petitioner’s default in producing substantiating documents. The court distinguishes earlier jurisprudence and finds no basis for rectification under Section 66; the remedy lies in the appeal.

Contentions of Respondents

The respondents contend that the assessment was completed after providing opportunity to file objections; the objections did not lead to production of documents, with submissions made in Exts.P2 and P3; personal hearing is available but not demanded; Section 66 can only rectify errors on the face of the record and cannot rehear or re-examine evidence; the petitioner should pursue the appeal; the court may allow stay of recovery under proviso to Section 55(4) upon payment of 20% of the tax.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
Suzion Infrastructure Service Ltd. v. Commercial Tax Officer (W.C), Ernakulam	(2010) 35 VST 451 (Ker)	Distinguished	The Court notes Suzion’s view was deprecated by this Court, and later authority clarifies the availability of personal hearing as an option at objections stage.
Writ Appeal No. 1370/2011	—	Positive	Division Bench interpreted Section 25 and held that personal hearing is an option available to the assessee at objections stage.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **TUESDAY, THE 10TH DAY OF JANUARY 2017/20TH POUSHA, 1938** **WP(C).No. 19 of 2017 (B)** **-------------------------** ## **PETITIONER:** ## **-----------** **M/S ARDRA ASSOCIATES,** **REPRESENTED BY MR. V. PARAMESWARAN,MANAGING PARTNER, CAPITAL TOWERS, PATTURAKKAL JUNCTION, THRICHUR- 680 022.** **BY ADVS.SRI.SHERRY SAMUEL OOMMEN SRI.NEMISH NIRANJAN ZAVERI SRI.PRAVEEN K NAIR** **RESPONDENT(S):** **--------------** **1. STATE OF KERALA,** **REPRESENTED BY THE SECRETARY TO THE GOVERNMENT, DEPARTMENT OF COMMERCIAL TAXES, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM 695001.** **2. ASSISTANT COMMISSIONER(APPEALS), COMMERCIAL TAX COMPLEX, POOTHOLE .P.O, THRISSUR 673 001.** **3. COMMERCIAL TAX OFFICER (WORKS CONTRACT), COMMERCIAL TAX COMPLEX, POOTHOLE P.O, THRISSUR 673 001.** **BY GOVERNMENT PLEADER SRI V.K.SHAMSUDHEEN** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10-01-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **K.V.** **WPC 19 OF 2017:** ## **--------------** ## **APPENDIX** **PETITIONERS EXHIBITS:** **---------------------** - **P1: COPY OF THE NOTICE U/S25(1) DATED 6.8.2016.** - **P2: COPY OF REPLIES DATED 19.8.2016 AND 6.9.2016.** - **P3: COPY OF THE ORDER OF ASSESSMENT U/S25 OF THE KVAT ACT,2003 AND ACCOMPANYING NOTICE OF DEMAND DATED 30.9.2016.** - **P4: COPY OF THE APPLICATION FOR RECTIFICATION DATED 13.12.2016 PREFERRED BY THE PETITIONER.** - **P5: COPY OF THE MEMORANDUM OF APPEAL AND APPLICATION FOR STAY OF RECOVERY DATED 31.12.2016.** - **P6: COPY OF REMINDER LETTER DATED 30.12.2016 PREFERRED BY THE PETITIONER.** ## **RESPONDENTS EXHIBITS: NIL** **--------------------** ## **/TRUE COPY/** ## **P.A.TO JUDGE** **K.V.** ## **K. VINOD CHANDRAN, J.** -----------------------------------------W.P.(C) No. 19 of 2017 (B) -----------------------------------------Dated: 10[th] January, 2017 ## **J U D G M E N T** The petitioner is aggrieved with the non consideration of Ext.P4 rectification application filed under Section 66 of the Kerala Value Added Tax Act, 2003 ('Act' for short). The petitioner has also filed an appeal from the assessment order, as is seen from Ext.P5 memorandum. The petitioner is a works contractor who opted for compounding and filed returns for the Assessment Year 2013-2014, based on which a notice was issued under Section 25(1) of the Act. An Order was also passed at Ext.P3. The petitioner is said to have filed Ext.P4 rectification application on 13.12.2016. An appeal too was filed on 31.12.2016, as is seen from Ext.P5. ## **W.P.(C) No. 19/2017** **-2-** 2. The learned Counsel for the petitioner submits that a reading of Exts.P3 and P4 would indicate that the petitioner was not heard properly and that on 19.08.2016, when the petitioner had appeared, the Assessing Authority was on leave. The Assessing Officer has made the assessment on best judgment, after scrutiny of the returns and Form No.49, for reason of the petitioner having not produced any documents or registered sale deeds, in order to prove the contentions raised in the objections. It was also noticed that the assessee has not produced any proof regarding refund of money. 3. It is submitted that the proof is now produced as per Ext.P4. Essentially, what the petitioner seeks is a rehearing of the matter. A reading of Ext.P3 would indicate that the petitioner was granted ample opportunity to file objections and produce the ## **W.P.(C) No. 19/2017** **-3-** documents in support of such objections. The petitioner, as is seen from Ext.P3, has also filed reply dated 19.08.2016 and 06.09.2016. The contention that by the rectification application the petitioner has produced the supporting documents; practically leads to an admission that there were no substantiating documents produced along with the objections. 4. The petitioner also has a contention that the petitioner was not afforded a personal hearing before assessment was finalised. The petitioner relies on **Suzion Infrastructure Service Ltd. v. Commercial Tax Officer (W.C), Ernakulam - (2010) 35 VST 451 (Ker)** to contend that a composite notice granting an opportunity for hearing and filing of objections, as seen from Exhibit P1 was deprecated by this Court. However a Division Bench, later to the afore cited judgment, in Writ Appeal No. 1370/2011 by judgment dated ## **W.P.(C) No. 19/2017** **-4-** 02.11.2011 had interpreted Section 25 and found that personal hearing was an option available to the assessee and they could very well claim for the same in the objections. In that case it was specifically found that the assessee had merely requested the Assessing Officer to consider the objection and complete the assessment as per the books of accounts. In the present case too the assessee admittedly filed two objections; Exhibit P2 dated 19.08.2016 and Exhibit P3 dated 06.09.2016. The objections did not seek for a personal hearing and merely requested consideration of objections and deletion of additions proposed as per the notice. In such circumstance, there can be no ground raised of violation of principles of natural justice, for the best judgment assessment was made only due to the default of the petitioner in having not produced the substantiating documents. ## **W.P.(C) No. 19/2017** **-5-** 5. The petitioner, essentially, seeks for production of substantiating documents and a hearing on the issue by the rectification application. This Court is not convinced that there is any ground for a rectification under Section 66 of the Act, which is only a power to rectify any error apparent on the face of the record. It does not call for a proceeding, wherein a rehearing is attempted and evidence is examined afresh. This Court is not inclined to grant the reliefs as prayed for in the writ petition. The petitioner would have to prosecute the appeal filed against the assessment order. 6. The petitioner hence, undertakes to pay 20% of the tax demanded, upon which the proviso to Section 55(4) of the Act provides for the demand to be kept in abeyance till the disposal of the appeal. The petitioner shall pay 20% of the tax demanded within a period of ## **W.P.(C) No. 19/2017** **-6-** three weeks and on such payment, the recovery proceedings shall be kept in abeyance till the appeal is disposed of. The writ petition is dismissed with the above direction. Sd/K.VINOD CHANDRAN, JUDGE jjj 10/1/17