M/S Sudarsan Clays and Ceramics Ltd. v. State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE SMT. JUSTICE P.V.ASHA** ## **THURSDAY, THE 9TH DAY OF JUNE 2016/19TH JYAISHTA, 1938** ## **WP(C).No. 22159 of 2011 (T)** **-------------------------------------------** **PETITIONER(S) : --------------------------** **M/S.SUDARSAN CLAYS AND CERAMICS LTD., 3RD FLOOR, NORTH SQUARE, PARAMARA ROAD, KOCHI-682 018, REPRESENTED BY ITS DIRECTOR MR.T.P.MURALEEDHARAN.** **BY ADVS. SRI.E.K.NANDAKUMAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH DR.K.P.PRADEEP SRI.KURYAN THOMAS** **RESPONDENT(S) :** **-----------------------------** **1. THE STATE OF KERALA, REPRESENTED BY PRINCIPAL SECRETARY (REVENUE), GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM-695 001.** **2. THE ASSISTANT COMMISSIONER (ASSESSMENT), DEPARTMENT OF COMMERCIAL TAXES, SPECIAL CIRCLE, MATTANCHERY, ERNAKULAM-683 101.** **3. THE DISTRICT COLLECTOR, ERNAKULAM, CIVIL STATION, KAKKANAD, ERNAKULAM, PIN-682 030.** **4. SPECIAL TAHASILDAR (REVENUE RECOVERY), TALUK OFFICE, ALUVA, ERNAKULAM-683 101.** **BY SPL. GOVERNMENT PLEADER SRI. SUDHEESH KUMAR** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 09-06-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** Msd. ## **WP(C).No. 22159 of 2011 (T)** ## **-------------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS :** **EXHIBIT P1: TRUE COPY OF THE NOTICE OF DEMAND NO.R6-782/05/ST DATED 10.03.2005 ISSUED BY THE 4TN RESPONDENT TO THE PETITIONER.** - **EXHIBIT P2: TRUE COPY OF THE LETTER NO.14948/B2/2006/TD DATED 04.12.2007 ISSUED BY THE SECRETARY TO GOVERNMENT (TAXES) TO THE PETITIONER.** - **EXHIBIT P3: TRUE COPY OF THE NOTICE NO. R6-782/05/ST/ DATED 14.01.2008 ISSUED UNDER SECTION 36 OF THE RR ACT, 1968 BY THE 4TH RESPONDENT TO THE PETITIONER.** **EXHIBIT P4: TRUE COPY OF THE I.A.NO.2989 OF 2008 DATED 27.02.2008 IN WRIT PETITION (CIVIL) NO. 13093 OF 2007.** - **EXHIBIT P5: TRUE COPY OF THE ORDER DATED 29.02.2008 IN I.A.NO.2989 OF 2008 IN W.P(C).NO.13093 OF 2007 ISSUED BY THE HON'BLE COURT TO THE PETITIONER.** - **EXHIBIT P6: TRUE COPY OF THE LETTER DATED 31.07.2008 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.** - **EXHIBIT P7: TRUE COPY OF THE COMMUNICATION NO.B4/38729/98 DATED 28.03.2008 OF THE DISTRICT COLLECTOR, ERNAKULAM TO THE 4TH RESPONDENT.** - **EXHIBIT P8: TRUE COPY OF THE REQUEST DATED 25.03.2011 SUBMITTED BY THE PETITIONER TO THE FOURTH RESPONDENT.** - **EXHIBIT P9: TRUE COPY OF THE LETTER DATED 27.06.2011 SUBMITTED BY THE PETITIONER TO THE FOURTH RESPONDENT.** **RESPONDENT(S)' EXHIBITS :** **EXHIBIT R4(A): GOVERNMENT ORDER DATED 22.08.2005.** **//TRUE COPY//** **P.S.TO JUDGE.** Msd. ## **P.V.ASHA, J.** ----------------------------------------------------- ## W.P(C) No.22159 of 2011-T ---------------------------------------------------Dated this the[th] day of May, 2016 ## **JUDGMENT** The petitioner is challenging the action of the revenue recovery authorities in continuing with the proceedings for recovery of collection charges, even after revenue recovery proceedings were permitted to be withdrawn by the requisitioning authority intimating the revenue recovery authorities that the petitioner has remitted the entire amount due to them and that there is no amount outstanding. 2. As per Ext.P1 demand notice, the Special Tahsildar (R.R), Aluva, had demanded a sum of Rs.16686729/along with interest and collection charges from the petitioner on the basis of requisition from the Assistant Commissioner (Assessment Division), Special Circle, Mattanchery. The petitioner had, thereafter remitted the amount due under the notice and had approached the Government for waiving the interest. The Government by Ext.P2 letter dated 4.12.2007 rejected the same saying that, the balance sales tax due is only W.P(C) No.22159 of 2011-T 2 a sum of Rs.32,81,226/- and therefore the request for waiver of interest and penalty was liable to be rejected. 3. Thereafter the Special Tahsildar-the 4[th] respondent issued notice under Section 36 of the Revenue Recovery Act for attachment of the immovable property of the petitioner for realisation of the arrears due towards sales tax for the assessment years from 1986-'87 to 2002-'03 to the tune of a sum of Rs.32,81,226/-. The petitioner thereupon approached this Court challenging the same and this Court by Ext.P5 interim order directed that, the Revenue Recovery proceedings for realisation of the arrears due from the petitioner shall be withdrawn on the petitioner depositing a sum of Rs.32,81,226/-. Accordingly the petitioner remitted the amount. The petitioner has produced Ext.P6 letter dated 31.7.2008 of the requisitioning authority-the 2[nd] respondent, issued in reply to a request from the petitioner in respect of settlement of arrears under the Amnesty Scheme, by which the petitioner was informed that, the demand outstanding against him was fully paid and there was no arrears due to him. 4. The District Collector, Ernakulam, thereafter, on the W.P(C) No.22159 of 2011-T 3 basis of the interim order Ext.P5 passed by this Court in W.P(c) No.13093 of 1997, requested the 4[th] respondent Tahsildar to close the proceedings against the petitioner under the Revenue Recovery Act since the sales tax authorities had already informed that the amount was already remitted and requisition was withdrawn. But even thereafter, the petitioner submits that, the 4[th] respondent is not revoking the R.R proceedings and intimation is not given to the Sub Registry Office or the concerned Village Office revoking the proceedings. 5. In the counter affidavit, the 4[th] respondent has stated the following: On the basis of the requisition from the Assistant Commissioner, KVAT, Aluva, towards the arrears due to the tune of Rs.32,81,226/-, an extent of 8.09 Ares of land in R.S. No.177/1 of Aluva West Village was attached on 14.01.2008. It is further stated that subsequently, the requisitioning authority has instructed as per its letter dated 29.02.2008 to drop the revenue recovery proceedings. It is stated that even though there was a direction to withdraw the revenue recovery proceedings, collection charges were not remitted by the defaulter or the requisitioning authority. Therefore W.P(C) No.22159 of 2011-T 4 proceedings were issued on the basis of the direction of the District Collector, Ernakulam in the letter dated 22.03.2008 to the requisitioning authority to make arrangements to remit the collection charges. According to the respondents, collection charges at the rate of 7.5% of the amount due are liable to be remitted. 6. I heard the learned counsel for the petitioner as well as the learned Government Pleader. 7. Similar issue regarding realisation of collection charges was considered by this Court in the judgment in **Malabar Organics Ltd. v. State of Kerala** (2009 [4] KLT 328) wherein it was held that the collection charges cannot exceed 1%. This Court has observed that cost of involvement of Government machinery cannot depend on the amounts collected in the process of coercive steps taken under the Revenue Recovery Act and that the process of revenue recovery cannot be used as a source of revenue for the State. It was held that the action was beyond the legislative competence under the Constitution of India and that Item (viii) under Rules 4 and 5(1) are unreasonable and discriminatory and ultra vires the parent W.P(C) No.22159 of 2011-T 5 Act and the Constitution of India. In that case it was held that collection of 1% towards collection charges from institutions is permissible and hence the revenue recovery authorities would be entitled to realise only 1% of the amount in addition to the cost of process and other charges as permitted under Rule 4 is permissible as collection charges. The State had taken up that judgment in appeal before the Apex Court in SLP No.7241 of 2010. Learned Government Pleader submitted that the said SLP has already been disposed of remanding the matter for consideration regarding the actual expenses that would be incurred towards collection charges. 8. In this case, the respondents stated that collection charges would exceed 1% of the amount due. But they have not furnished any details for the same, so as to demand any amount in excess of 1%. On the basis of the interim order passed by this Court, the petitioner has already remitted 1% of the collection charges. In the above circumstances the proceedings for recovery of the collection charges from the petitioner shall be dropped. The petitioner will be permitted to withdraw the bond executed W.P(C) No.22159 of 2011-T 6 before the revenue authorities on the basis of the interim order. Writ Petition is allowed as above. Sd/- **(P.V.ASHA, JUDGE)** rtr/