M/S. Asian Plywood Industries vs Assistant Commissioner, Commercial Taxes, Special Circle Mattanchery at Aluva

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE ANTONY DOMINIC** **WEDNESDAY, THE 5TH DAY OF DECEMBER 2012/14TH AGRAHAYANA 1934** **WP(C).No. 36223 of 2009 (W) ---------------------------** **PETITIONER(S):** **-------------** **M/S. ASIAN PLYWOOD INDUSTRIES, NEELEESWARAM, KOTTAMAM, KALADY-683574. REPRESENTED BY ITS MANAGING PARTNER MR. M.M.ABDUL AZEEZ.** **BY ADV. SRI.K.J.ABRAHAM** **RESPONDENT(S):** **--------------** **THE ASSISTANT COMMISSIONER, COMMERCIAL TAXES, SPECIAL CIRCLE MATTANCHERY AT ALUVA.** **BY ADV. GOVERNMENT PLEADER SRI.T.K.SHAIJRAJ** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 0512-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **WPC NO.36223/09** ## **APPENDIX** ## **PETITIONER'S EXHIBITS** **EXT.P1: TRUE COPY OF THE ANNUAL RETURN FOR THE PERIOD 2005-06 IN FORM NO.10 DT 28.4.2006.** **EXT.P1(a): TRUE COPY OF THE ANNUAL RETURN FOR THE PERIOD 2006-2007 IN FORM NO.10 DT 30.4.2007.** **EXT.P1(b): TRUE COPY OF THE ANNUAL RETURN FOR THE PERIOD 2007-2008 IN FORM NO.10 DT 30.4.2007.** **EXT.P1(c): TRUE COPY OF THE ANNUAL RETURN FOR THE PERIOD 2008-2009 IN FORM NO.10 DT 30.9.2009.** **EXT.P1(d): TRUE COPY OF MONTHLY RETURN FOR THE MONTH NOVEMBER 2009 DT 8.12.2009.** **EXT.P2: TRUE COPY OF THE STATEMENT OF THE DETAILS OF C FORMS SUBMITTED BY THE PETITIOENR FOR THE PERIOD 2005-06.** **EXT.P2(a): TRUE COPY OF THE STATEMENT OF THE DETAILS OF C FORMS SUBMITTED BY THE PETITIOENR FOR THE PERIOD 2006-07.** **EXT.P3: TRUE COPY OF THE NOTICE UNDER THE CST ACT NO.32150842942C/05-06 DT 26.08.2009 FOR THE PERIOD 20052006.** **EXT.P3(a): TRUE COPY OF THE NOTICE UNDER THE CST ACT NO.32150842942C/06-07 DT 24.08.2009 FOR THE PERIOD 20062007.** **EXT.P4: TRUE COPY OF THE REPLY LETTER DT 14.10.2009 FOR THE PERIOD 2005-06.** **EXT.P4(a): TRUE COPY OF THE REPLY LETTER DT 14.10.2009 FOR THE PERIOD 2006-07.** **EXT.P5: TRUE COPY OF THE ASSESSMENT ORDER NO.32150842942C/05-06 DT 20.10.2009.** **WP(C) No. 36223/09 -2-** **EXT.P5(a): TRUE COPY OF THE ASSESSMENT ORDER NO.32150842942C/06-07 DT 20.10.2009.** **EXT.P6: TRUE COPY OF THE REPLY NOTICE U/S.16(10) DATED 28.10.2009.** **EXT.P7: TRUE COPY OF THE REPLY NOTICE U/S.16(10) DATED 14.11.2009.** **EXT.P8: TRUE COPY OF THE REJECTION LETTER NO.32150842942/09-10 DT 19.12.2009.** ## **//True Copy//** **PA to Judge** **Rp** ## **ANTONY DOMINIC, J. ================ W.P.(C) NO. 36223 OF 2009** ## **===================** ## **Dated this the 5[th] day of December, 2012** ## **J U D G M E N T** The petitioner is a dealer under the KVAT and CST Acts. In this writ petition, what is under challenge are Exts.P5 and P5(a) assessment orders passed under the CST Act for the years 200506 and 2006-07. They are also challenging Ext.P6 notice issued under Section 16(10) of the KVAT Act proposing cancellation of KVAT registration. Exts.P3 and P3(a) are two notices issued to the petitioner under the CST Act. In Ext.P3 notice, it was alleged that for the year 2005-06, petitioner reported an interstate sales turn over of `44,66,957/- and claimed concessional rate of tax at 4%. It is stated that for the said period, they filed C form in support of sale of `17,80,125/- only and therefore for the balance turn over of `26,86,832/-, they are liable to be assessed at 12.5%. On this basis, petitioner was called upon to file their objections and he was also offered an opportunity of hearing. 2. In Ext.P3(a) notice, it was alleged that for the year 2006-07, petitioner reported an interstate sales turn over of `83,56,602.50/- and claimed concessional rate of tax at 4%. It is **WPC.No.36223/09** **:2 :** alleged that petitioner had not produced C form in the prescribed time in support of the claim and that on detailed scrutiny, it was revealed that some of the C forms produced by them were bogus. On this basis, they were informed of the proposal to disallow concessional rate and to complete the assessment levying tax at 12.5% on the entire turn over. Here also, they were called upon to file their objections and an opportunity of hearing was also afforded. 3. According to the petitioner, on receipt of the notices, they filed Exts.P4 and P4(a) replies. In Ext.P4 reply filed in respect of Ext.P3 notice referred to above, petitioner says that they are not in a position to file C forms and therefore were willing to pay tax. In Ext.P4(a) filed in reply to Ext.P3(a) notice, they requested to inform the details of the C forms which are allegedly bogus in order to enable them to collect the true C form from the party. It is contended that without getting reply, assessments were completed by Exts.P5 and P5(a). It is stated that as a consequence of the assessment orders, Ext.P6 notice was issued ## **WPC.No.36223/09** **:3 :** under Section 16(10) of KVAT Act proposing to cancel registration. After filing Ext.P7 reply to Ext.P6 notice, this writ petition has been filed. 4. When the writ petition was taken up for hearing, counsel confined his arguments against Ext.P5(a) assessment order alone. In other words, no arguments were addressed challenging Ext.P5 assessment order. 5. In so far as Ext.P5(a) assessment order is concerned, counsel contended that the details sought for by the petitioner in Ext.P4(a) reply were not furnished. It was also contended that the assessing authority has no power to declare the C form bogus. According to the learned counsel, under Rule 11(10) of the CST (Kerala) Rules, this power is entirely vested with the State Government. Counsel also placed reliance on the Madras High Court judgment in Sastha Enterprises v. Appellate Authority, Commissioner (CT) II (FAC), Chennai and another ([2011] 37 VST 94) to contend that, once a C form is filed and even if it is bogus, it is for the revenue to pursue the matter with the purchasing **WPC.No.36223/09** **:4 :** dealer. 6. I have considered the submissions made. 7. In Ext.P5(a) assessment order, it is stated thus; The above proposal is communicated to the assessee vide notice cited above. The first attempt to communicate the proposal failed since the assessee refused accept the rejected notice. Hence the notice issued in the personal address of the live partners which are duly served. The assessee did not filed any objection to the proposal or not turned up to avail opportunity of being heard. 8. From the above, therefore it is evident that inspite of having received Ext.P3(a) notice, the petitioner who initially refused to accept the notice, did not even file any objection and that they did not turn up for availing the opportunity of being heard. It was in such circumstances that the assessment was completed as per Ext.P5(a). 9. It is true that petitioner relied on Ext.P4(a) which document also contains a request for the particulars of the C forms, which are allegedly bogus. However, despite the aforesaid statement in Ext.P5(a), petitioner has not chosen to produce any evidence before this Court to prove that Ext.P4(a) request was served on the 1[st] respondent. In the statement filed on behalf of **WPC.No.36223/09** **:5 :** the respondent also, it is reiterated that there was no response to Ext.P3(a) and that nobody appeared for the hearing in pursuance to the notice also. In such circumstances, I am unable to accept the case of the petitioner that assessment was completed by Ext.P5(a) without providing the petitioner the details of the C forms which were allegedly bogus. 10. In so far as the judgment relied on by the learned counsel for the petitioner is concerned, it is true that in that judgment, it is stated that without the C form filed found to be bogus, revenue is to pursue the matter with the purchasing dealer. However, the judgment also says that the principle is applicable only in a case where a seller dealer has acted in good faith upon the buyers representation. Therefore, if the petitioner had a case that the C forms they produced before the 1[st] respondent were those provided by the buyer, and that they acted in good faith and with bonafides, it was for them to have proved the same before the respondent availing of the opportunity that was provided in Ext.P3(a) notice. That was not **:6 :** ## **WPC.No.36223/09** done and therefore, the petitioner cannot take advantage of the principle laid down by the Madras High Court in the judgment relied on by them. Therefore, I do not find any infirmity with Ext.P5(a) which alone was impugned before me. 11. In so far as Ext.P6 is concerned, Ext.P6 has been issued as a consequence of Exts.P5 and P5(a). Once Ext.P5 remains unchallenged and Ext.P5(a) has been upheld by this Court, necessarily, Ext.P6 should also be upheld. 12. For these reasons, I do not find any merit in the writ petition. Writ petition fails and is dismissed. ## **ANTONY DOMINIC, JUDGE** Rp