M/S. Thanikkudam Bagawati Mills Limited v. State of Kerala and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **TUESDAY, THE 17TH DAY OF MARCH 2020 / 27TH PHALGUNA, 1941** ## **WP(C).No.27044 OF 2015(E)** ## **PETITIONER:** **M/S.THANIKKUDAM BAGAWATI MILLS LIMITED THANIKKUDAM, KURICHIKKARA P O, THRISSUR 680028, REPRESENTED BY ITS MANAGING DIRECTOR MR S NAGAMANICKKAM** **BY ADVS. SRI.A.KUMAR SMT.G.MINI(1748)** ## **RESPONDENTS:** - **1 STATE OF KERALA REPRESENTED BY SECRETARY-TAXES, THIRUVANANTHAPURAM 695001** - **2 AGRICULTURAL INCOME TAX & SALES TAX APPELLATE TRIBUNAL, PALAKKAD 678001** - **3 THE FAST TRACK ASSESSMENT TEAM COMMERCIAL TAXES, THRISSUR 680001** - **4 SALES TAX OFFICER 2ND CIRLE, COMMERCIAL TAXES, THRISSUR 680001** **BY GOVERNMENT PLEADER FOR TAXES SRI. C.K. GOVINDAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 17.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C) No.27044 OF 2015(E)** **2** ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ _**Dated this the 17[th] day of March, 2020**_ Petitioner seeks to quash Exts.P7 and P9 assessment orders and to direct the 2[nd] respondent to consider Ext.P10 appeal without pre-condition of deposit of tax demanded as per Ext.P9 assessment order for hearing the appeal. 2. Briefly stated, the facts necessary to decide the issue involved in the writ petition are as follows:- The petitioner is a Public Limited Company manufacturing cotton yarn and cotton yarn waste. The petitioner is registered under the KGST Act and CST Act. Assessment for the year 2000-2001 under the CST Act was completed as per Ext.P1 order dated 21.03.2005. The tax due from the petitioner was assessed as ₹4,32,707/-. Interest to **WP(C) No.27044 OF 2015(E)** **3** the tune of ₹4,06,745/- was also demanded from the petitioner. The petitioner appealed before the Deputy Commissioner and the petitioner's appeal was allowed on 19.06.2008. Aggrieved by the appellate order, the Revenue appealed before the Kerala Agricultural Income Tax and Sales Tax Appellate Tribunal and the Tribunal, as per Ext.P2 order dated 29.03.2010, set aside the order of the first appellate authority and directed the assessing authority to redo the assessment based on the factual position with opportunity of hearing to the petitioner to raise contentions with supporting evidence. 3. The petitioner states that pursuant to the order of the Tribunal, the 4[th] respondent-Sales Tax Officer, issued a notice dated 02.11.2010 directing the petitioner to produce the books of accounts, registers, etc. The petitioner produced all the relevant records and made written submissions dated 23.12.2010. A proposal notice dated 15.03.2011 was issued to the petitioner requiring the petitioner to file objections. The petitioner filed a reply on 06.04.2011 wherein the written submissions dated 23.12.2010 were referred to. **WP(C) No.27044 OF 2015(E)** **4** 4. The petitioner further states that the petitioner was thereafter served with a notice dated 30.05.2014 purportedly under Section 6(5) of the CST (Kerala) Rules. The proceedings of the assessing authority were not referred to therein. However, the petitioner furnished reply on 10.06.2014 resisting the proposal made. The Fast Track Assessment Team, without considering any of the contentions of the petitioner, issued Ext.P9 order assessing the tax due at ₹5,68,686/- and interest due at ₹11,71,493/-. 5. The petitioner challenges Ext.P9 order on two prime grounds. Firstly, Ext.P9 does not refer to any of the objections made by the petitioner and is a totally non-speaking order which cannot stand the scrutiny of law. Secondly, the petitioner urged that an assessment is to be completed within four years under the CST Act. If an assessment is set aside and remanded for reconsideration, only the balance period is available to the assessing authority and the assessing authority does not get a fresh period of four years. Therefore, when the original assessment itself for 2000-'01 was to be **WP(C) No.27044 OF 2015(E)** **5** completed by 31.03.2005, only ten days remained to complete the assessment proceedings after remand. Therefore, Ext.P7 notice issued under Section 17D on 30.05.2014 after the said period, is _ex facie_ illegal and unsustainable. 6. The Senior Government Pleader for Taxes opposed the writ petition. According to the learned Senior Government Pleader, the Fast Track Assessment Team, which dealt with the assessment, considered all the contentions of the petitioner and the same is reflected in Ext.P9 order. A reading of Ext.P9 would make it evidently clear that all the contentions raised by the petitioner were duly taken note of by the Fast Track Assessment Team. Therefore, Ext.P9 is not liable to be interfered with for non-application of mind, contended the learned Senior Government Pleader. 7. As regards the contentions of the petitioner on the period of limitation, the learned Senior Government Pleader submitted that the issue is found in favour of the Revenue and against the assessee in the judgment in _**Parisons Foods (P) Ltd., Kozhikode v. State of Kerala and another** [2017 (3)_ **WP(C) No.27044 OF 2015(E)** **6** _KLT 1]_ . For this reason also, no interference is called for by this Court, in Ext.P9 proceedings impugned by the petitioner. 8. I have considered the arguments raised by the petitioner as also those of the respondents. 9. The original assessment in respect of the petitioner was subjected to challenge before the Kerala Agricultural Income Tax and Sales Tax Appellate Tribunal, Additional Bench, Palakkad. The Tribunal, after considering the records relating to assessment, passed Ext.P2 order dated 29.03.2010, wherein the Tribunal found that both, the contentions raised by the assessee and the arguments put forth by the Revenue, have not been considered by the authorities below. The findings of the Tribunal in this regard in paragraph 5 of Ext.P2, are as follows:- _“We have considered the rival contentions advanced by both parties. It is to be noted that the Hon'ble High Court of Kerala in TRC No.200 and 206 of 2008 dated 22[nd] May, 2009 in respect of the same assessee for the previous years 1998-99 and 1999-2000 has restored the_ **WP(C) No.27044 OF 2015(E)** **7** _assessment order by reversing the orders of the first appellate authority and the Tribunal. The contention of the assessee is that the factual position in 2000-01 is entirely different from the previous years 1998-99 and 1999-2000 and hence the above court decision is not applicable to the year 2000-2001. It is a fact that the contentions raised by the assessee as well as the arguments put forth by the revenue have not been considered by the authorities below. We, therefore, set aside the first appellate order and the assessing authority is directed to redo the assessment based on the factual position as per the records. The assessee may be given an opportunity to raise their contentions with supporting evidences, if any, in this matter before the assessing authority.”_ The Tribunal therefore remanded the matter solely for the purpose of giving the assessee and the Revenue an opportunity to reiterate their contentions with supporting evidences and to enable the assessing authority to pass a speaking order considering all the aspects. **WP(C) No.27044 OF 2015(E)** **8** 10. However, a reading of Ext.P9 would show that the Fast Track Assessment Team, after narrating the factual sequences, only recorded the contentions of the assessee. After so recording the contentions, without adverting to such contentions and without making any findings as to the legality or sustainability of such contentions, the Fast Track Assessment Team simply held that “ _We have verified the reply in detail. There is no valid reason to deviate from the above proposal dated 30.05.2014. Hence, the proposal is confirmed_ .” 11. The manner in which the Fast Track Assessment Team has passed Ext.P9 order is not justifiable. The remand as per Ext.P2 order by the Tribunal was for the sole requirement to consider and meet the objections raised by the petitioner. While the fact being so, the 3[rd] respondent-Fast Track Assessment Team could not have passed an order in the nature of Ext.P9, without answering the contentions raised by the petitioner. In such circumstances, Ext.P9 order is liable to be set aside. **WP(C) No.27044 OF 2015(E)** **9** 12. As regards the arguments of the petitioner relating to the limitation for assessment based on the judgments of this Court in _**Hindusthan Petroleum Corporation Ltd. v. Assistant Commissioner, Commercial Taxes, Ernakulam and others** [2009 (4) KHC 819]_ and _**Parisons Foods (P) Ltd., Kozhikode v. State of Kerala and another** [2017 (3) KLT 1]_ , I do not deem it necessary to adjudicate upon the said issue as the entire issues will have to be reconsidered by the authorities. In such circumstances, Ext.P9 order is set aside. The case is remitted to the 3[rd] respondent for reconsideration. The issue of limitation urged by the petitioner is left open. Sd/- **N. NAGARESH, JUDGE** aks/17.03.2020 **WP(C) No.27044 OF 2015(E)** **10** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DTD 21/3/2005 EXHIBIT P2 TRUE COPY OF THE TRIBUNAL ORDER DTD 29/3/2009** **EXHIBIT P3 TRUE COPY OF THE SAID NOTICE DTD 2/11/2010** **EXHIBIT P4 COPY OF WRITTEN SUBMISSIONS FILED BY THE PETITIONER DTD 23/12/2010** **EXHIBIT P5 TRUE COPY OF THE PROPOSAL NOTICE DTD 15/3/2011** **EXHIBIT P6 TRUE COPY OF THE REPLY DTD 6/4/2011 EXHIBIT P7 TRUE COPY OF THE NOTICE DTD 30/5/2014 EXHIBIT P8 TRUE COPY OF THE REPLY DTD 10/6/2014 EXHIBIT P9 TRUE COPY OF THE ORDER DTD 13/6/2014 EXHIBIT P10 A COPY OF THE APPEAL DTD 6/5/2015 EXHIBIT P11 A COPY OF THE ORDER PASSED BY BIFR DTD 29/9/2011**