M/S Kerala Assay & Hallmarking Centre Pvt. Ltd. v. Intelligence Officer, Squad No. IV, Department of Commercial Taxes, Palakkad; State of Kerala

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** **FRIDAY, THE 14[TH] DAY OF JULY 2023 / 23RD ASHADHA, 1945** ## **WP(C) NO.29465 OF 2015** ## **- PETITIONER :** M/S.KERALA ASSAY & HALLMARKING CENTRE PVT. LTD. P V TOWER, T B ROAD, PALAKKAD, REP BY E R SUDHEESH, MANAGER. BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON ## **- RESPONDENTS :** 1 THE INTELLIGENCE OFFICER SQUAD NO.IV, DEPARTMENT OF COMMERCIAL TAXES, PALAKKAD – 678 001. 2 STATE OF KERALA REPRESENTED BY ITS SECRETARY, TAXES DEPARTMENT, GOVT.SECRETARIAT, THIRUVANANTHAPURAM – 695 001. BY ADVS. SMT.RESMITHA R CHANDRAN, GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22.6.2023, THE COURT ON 14.7.2023 DELIVERED THE FOLLOWING: WP(C) NO.29465 OF 2015 -: 2 :- ## JUDGMENT ## Dated this the 14th day of July, 2023 The petitioner is a hallmarking unit which had transported gold ornaments from Palakkad to Thrissur in 2011. The transport was detained under Section 47(2) of the Kerala Value Added Tax Act (for short, ‘the KVAT Act’) and Ext.P1 notice was issued alleging that the goods are not accompanied by any documents. The petitioner approached this Court filing W.P.(C) No.10081/ 2011 and pursuant to Ext.P2 interim order, the ornaments were released on the petitioner furnishing a bank guarantee to the tune of Rs.16,17,802/-. Later, pursuant to Ext.P2(a) judgment directing the competent authority under Sections 47(5) and (6) of the KVAT Act to finalise the enquiry after affording an opportunity of hearing to the petitioner, Ext.P3 proceedings were issued imposing a penalty of Rs.16,33,980/- being double the amount of tax attempted to be evaded and cess and the balance amount covered by the bank guarantee was released. It is submitted that thereafter, Ext.P5 notice was issued in Form 17A requiring payment of tax. The petitioner was heard on 22.7.2015 and Ext.P6 order was passed on 3.8.2015, which along with the WP(C) NO.29465 OF 2015 -: 3 :- demand raised in Form 17A are under challenge in this writ petition. 2. The learned counsel for the petitioner contends that the petitioner is only a hallmarking unit and that no sale had been effected and that there is no liability to pay any amount as tax. It is contended that since the penalty was imposed only because the transport had occurred without necessary documents accompanying the consignment and since Ext.P4 order had already been rendered with regard to the said omission on the petitioner’s part, there is no justification whatsoever in Ext.P6 proceedings being issued. It is contended that the demand for tax and cess can be made only by the jurisdictional assessing authority and the 1[st] respondent cannot assume the role of the assessing authority and demand tax and cess. It is submitted that no provision is quoted either in Ext.P5 or Ext.P6 and that the 1[st] respondent is acting only under the provisions of Sections 47(2) and (6) and that only the penalty representing double the tax due on the consignment can be collected from the petitioner. On these grounds, the petitioner seeks quashing of Exts.P5 and P6. WP(C) NO.29465 OF 2015 -: 4 :- 3. A counter affidavit has been filed on behalf of the 1[st] respondent stating that the petitioner is not a registered dealer. It is further submitted that hallmarking is an activity which requires registration as is evident from Section 15(2)(xi) of the KVAT Act and that the contention of the petitioner that only penalty is liable to be imposed against the petitioner is completely unsustainable. It is stated that the penalty proceedings against the petitioner had been finalized by Ext.P3 dated 25.4.2011. The petitioner had taken up the matter in appeal filing TA (VAT) No.331/2013 which was disposed of directing the authority to pass fresh orders. Thereafter, Ext.P4 order was passed, challenging which, an appeal has been filed before the Tribunal, which is pending consideration. It is stated that in the meanwhile, Ext.P5 notice was issued to the petitioner requiring the payment of tax and cess amounting to Rs.8,16,990/-. It is contended that since the petitioner was found to have evaded tax and since only penalty had been imposed by Ext.P3, the detecting authority had proceeded to assess the petitioner to tax which is perfectly legal and valid. 4. An additional affidavit has also been placed on record stating that if the petitioner was a registered dealer, the file in WP(C) NO.29465 OF 2015 -: 5 :- which the penalty was imposed would have been transferred to the assessing authority and the tax would have been assessed and collected there. However, since the assessee had not obtained registration in spite of the mandate of Section 15(2)(xi) of the KVAT Act, the Intelligence Officer has demanded tax in his capacity as the assessing authority as the assessee is not registered elsewhere. 5. Reliance is placed by the learned Government Pleader on a decision of the Apex Court in MIG Cricket Club v. Abhinav Sahakar Education Society and others [2011 KHC 4809] to contend that the quoting of a wrong provision or the nonmentioning of a provision, by itself, will not invalidate the order if it is found that the order could validly have been passed under any provision of law. If the power actually exists, then the order cannot be held to be invalid by a reason of a wrong quoting of the provision. It is further contended that the Intelligence Officers are also notified as assessing authority and the Intelligence Officer in Exts.P5 and P6 has exercised the power to assess to the best of its judgment under Section 25(1) of the KVAT Act and the failure to quote the said provision by itself cannot be fatal. WP(C) NO.29465 OF 2015 -: 6 :- 6. I have considered the contentions advanced. Section 15(2)(xi) specifies that any hallmarking unit is liable to take registration under the KVAT Act. It is not in dispute before me that the petitioner had not obtained registration under the KVAT Act at the relevant time, that is, 2010-’11. Section 25(1) of the KVAT Act provides ample power in the assessing authority to tax any turnover which has escaped assessment to tax in any year. Since the petitioner was not a registered dealer during the year in question, the action of the Intelligence Officer in acting as the assessing authority for the purpose of Section 25(1) cannot also found fault with. 7. In the instant case, it is clear that the contention of the respondents was that an amount of Rs.8,08,901/- had escaped assessment which was detected when the transport of the gold ornaments was intercepted on 27.3.2011. The imposition of penalty by Ext.P4 is now pending in appeal. Though Ext.P6 order does not specifically refer to Section 25(1) of the KVAT Act, it is clear that the order is one passed under the said provision of law. Moreover, the ingredients necessary for the assessment of escaped turnover also appears to be satisfied in the instant case. WP(C) NO.29465 OF 2015 -: 7 :- In the above view of the matter, I am of the opinion that this writ petition is not liable to be entertained by this Court. This writ petition is, therefore, dismissed. However, in view of the fact that the petitioner had obtained an order of stay on 29.9.2015, which has been in existence till this date, there will be a direction that in case the petitioner approaches the appellate authority as against Ext.P6, treating it as an order under Section 25(1), within two weeks from the date of receipt of a copy of this judgment, the said appeal shall be taken up and considered in accordance with law. The stay petition, if any, preferred by the petitioner shall also be considered within a period of one month from the date on which the petitioner submits the appeal accompanied by the stay petition. Till orders are passed on the petition for stay, the interim order granted by this Court will remain in force. Sd/ANU SIVARAMAN JUDGE Jvt/27.6.2023 WP(C) NO.29465 OF 2015 -: 8 :- ## **APPENDIX OF WP(C) 29465/2015** PETITIONER EXHIBITS - EXT.P1 COPY OF NOTICE IN FORM NO 17A ISSUED BY INTELLIGENCE INSPECTOR, SQUAD NO IV PALAKKAD - EXT.P2 COPY OF ORDER IN WPC NO 10081/11 OF THIS HON'BLE COURT - EXT.P2(a) COPY OF JUDGMENT WPC NO 10081/11 OF THIS HON'BLE COURT - EXT.P3 COPY OF ORDER ISSUED BY THE IST RESPONDENT - EXT.P4 COPY OF ORDER ISSUED BY THE IST RESPONDENT - EXT.P5 COPY OF NOTICE ISSUED BY THE IST RESPONDENT - EXT.P6 COPY OF ORDER ISSUED BY THE IST RESPONDENT