Muhammed Kunju A. v State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON** ## **THURSDAY, THE 16TH DAY OF OCTOBER 2014/24TH ASWINA, 1936** **WP(C).No. 23156 of 2014 (T) ----------------------------------------** **PETITIONER(S): -----------------------** **MUHAMMED KUNJU.A M/S. BISMI HYPER MARKET, PATHANADU, P.O KANGAZHA, KOTTAYAM DISTRICT 686541.** **BY ADV. DR.K.P.PRADEEP** ## **RESPONDENT(S):** **-------------------------** **1. STATE OF KERALA, REPRESENTED BY ITS PRINCIPAL SECRETARY TO TAXES, CO-OPERATIVE DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM 695001.** **2. THE COMMERCIAL TAX OFFICER, 2ND CIRCLE, DEPARTMENT OF COMMERCIAL TAXES, CHANGANACHERY, KOTTAYAM.** **3. THE DEPUTY COMMISSIONER (APPEALS), DEPARTMENT OF COMMERCIAL TAXES, KOTTAYAM.** **BY SENIOR GOVERNMENT PLEADER SMT.SHOBA ANNAMMA EAPEN** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16-10-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **PJ** **WP(C).No. 23156 of 2014 (T) ---------------------------------------** ## **APPENDIX** **PETITIONER(S)' EXHIBITS -------------------------------------** **EXHIBIT P1 TRUE COPY OF THE REGISTRATION CERTIFICATE IN TIN 32051526399C DATED 23-11-2010 ISSUED BY THE 2ND RESPONDENT** **EXHIBIT P2 TRUE COPY OF THE ORDER NO 32051526399C/10-11 DATED 22-05-2014 FOR THE YEAR 2010-11 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER** **EXHIBIT P2(A) TRUE COPY OF THE ORDER NO 32051526399C/11-12 DATED 22-05-2014 FOR THE YEAR 2011-12 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER** **EXHIBIT P2(B)TRUE COPY OF THE ORDER NO 32051526399C/12-13 DATED 22-05-2014 FOR THE YEAR 2012-13 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER** **EXHIBIT P2(C) TRUE COPY OF THE ORDER NO 32051526399C/13-14 DATED 22-05-2014 FOR THE YEAR 2013-14 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER** **EEXHIBIT P3 TRUE COPY OF THE SALES STATEMENT FOR THE MONTH OF SEPTEMBER 2010 UPLOADED BY THE SELLER M/S NEXT RETAILS INDIA LTD WITH TIN 32071326682 ALONG WITH THEIR RETURN** **EXHIBIT P4 TRUE COPY OF THE DEMAND NOTICE NO 32051526399/10-11 DATED 22-05-2014 ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2010-11** **EXHIBIT P4(A)TRUE COPY OF THE DEMAND NOTICE NO 32051526399/11-12 DATED 22-05-2014 ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2011-12 EXHIBIT P4(B)TRUE COPY OF THE DEMAND NOTICE NO 32051526399/12-13 DATED 22-05-2014 ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2012-13 EXHIBIT P4(C) TRUE COPY OF THE DEMAND NOTICE NO 32051526399/APRIL 13-14 DATED 22-05-2014 ISSUED BY THE 2ND RESPONDENT FOR APRIL 2013** **EXHIBIT P4(D) TRUE COPY OF THE DEMAND NOTICE NO 32051526399/MAY 13-14 DATED 22-05-2014 ISSUED BY THE 2ND RESPONDENT FOR MAY 2013** **EXHIBIT P4(E) TRUE COPY OF THE DEMAND NOTICE NO 32051526399/JUNE 13-14 DATED 22-05-2014 ISSUED BY THE 2ND RESPONDENT FOR JUNE 2013 EXHIBIT P4(F) TRUE COPY OF THE DEMAND NOTICE NO 32051526399/JULY 13-14 DATED 22-05-2014 ISSUED BY THE 2ND RESPONDENT FOR JULY 2013** **EXHIBIT P5 TRUE COPY OF THE MEMORANDUM OF APPEAL NO KVATA 2409/14 DATED 31-07-2014 FOR THE YEAR 2010-11 FILED AND PENDING BEFORE THE 3RD RESPONDENT** **PJ** **....2/-** **WP(C).No. 23156 of 2014 (T)** **---------------------------------------** **..2..** **EXHIBIT P5(A) TRUE COPY OF THE MEMORANDUM OF APPEAL NO KVATA 2410/14 DATED 31-07-2014 FOR THE YEAR 2011-12 FILED AND PENDING BEFORE THE 3RD RESPONDENT** **EXHIBIT P5(B) TRUE COPY OF THE MEMORANDUM OF APPEAL NO KVATA 2411/14 DATED 31-07-2014 FOR THE YEAR 2012-13 FILED AND PENDING BEFORE THE 3RD RESPONDENT** **EXHIBIT P5(C) TRUE COPY OF THE MEMORANDUM OF APPEAL NO KVATA 2409/14 DATED 31-07-2014 FOR THE YEAR 2013-14 FILED AND PENDING BEFORE THE 3RD RESPONDENT** **EXHIBIT P6 TRUE COPY OF THE STAY APPLICATION DATED 31-07-2014 FOR THE YEAR 2010-11 FILED BEFORE THE 3RD RESPONDENT** **EXHIBIT P6(A) TRUE COPY OF THE STAY APPLICATION DATED 31-07-2014 FOR THE YEAR 2011-12 FILED BEFORE THE 3RD RESPONDENT** - **EXHIBIT P6(B) TRUE COPY OF THE STAY APPLICATION DATED 31-07-2014 FOR THE YEAR 2012-13 FILED BEFORE THE 3RD RESPONDENT** - **EXHIBIT P6(C) TRUE COPY OF THE STAY APPLICATION DATED 31-07-2014 FOR THE YEAR 2013-14 FILED BEFORE THE 3RD RESPONDENT** - **EXHIBIT P7 TRUE COPY OF THE COMMON ORDER DATED 20-08-2014 IN KVATA NOS 2409/14 2410/14/2411/14 AND 2412/14 ISSUED BY THE 3RD RESPONDENT** **EXHIBIT P8 TRUE COPY OF THE APPLICATION DATED 31-07-2014 FOR EARLY HEARING OF EXT P5 APPEAL FOR THE YEAR 2010-11 PENDING BEFORE THE 3RD RESPONDENT** - **EXHIBIT P8(A) TRUE COPY OF THE APPLICATION DATED 31-07-2014 FOR EARLY HEARING OF EXT P5(A) APPEAL FOR THE YEAR 2011-12 PENDING BEFORE THE 3RD RESPONDENT** - **EXHIBIT P8(B) TRUE COPY OF THE APPLICATION DATED 31-07-2014 FOR EARLY HEARING OF EXT P5(B) APPEAL FOR THE YEAR 2012-13 PENDING BEFORE THE 3RD RESPONDENT** - **EXHIBIT P8(C) TRUE COPY OF THE APPLICATION DATED 31-07-2014 FOR EARLY HEARING OF EXT P5(C) APPEAL FOR THE YEAR 2013-14 PENDING BEFORE THE 3RD RESPONDENT** **EXHIBIT P9 TRUE COPY OF THE CERTIFICATE NO. NIL DATED 20/8/10 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER** **RESPONDENT(S)' EXHIBITS** **--------------------------------------- NIL.** **/ TRUE COPY /** **P.S. TO JUDGE** **PJ** ## **P.R. RAMACHANDRA MENON, J.** .............................................................................. **W.P.(C)No.23156 OF 2014** ......................................................................... **Dated this the 16[th] October, 2014** ## **J U D G M E N T** Petitioner is challenging the correctness and sustainability of the condition imposed by the appellate authority/Deputy Commissioner (Appeals) vide Ext.P7 order dated 20.08.2014, so as to avail the benefit of interim stay during the pendency of the appeal. . The prayers are in the following terms: _“i) to call for the records leading to pass Ext.P7 common order in Ext.P6 series of stay applications and issue a writ of certiorari, or any other writ or order or to quash Ext.P7 order._ _ii) issue a writ of mandamus, or any other writ or order or direction to the 3[rd] respondent 1[st] appellate authority to consider Ext.P8 series of applications at the earliest and dispose of Ext.P5 series of appeals, expeditiously or within a time frame fixed by this Hon'ble Court._ _Iii) issue a writ of mandamus, or any other writ or order or direction to the 2[nd] respondent to keep in abeyance all further proceedings to recover the balance tax amount assessed and demanded in Ext.P2 series of orders, and demanded in Ext.P4 series of demand notices, during the pendency of Ext.P5 series of appeals._ **2** ## **W.P.(C)No.23156 OF 2014** _iv) Direct the respondents to pay cost of this proceedings._ _v. Grant any other relief, in the interest of justice, which this Hon'ble Court deems fit in the facts and circumstances of the case.”_ 2. Heard the learned Counsel for the petitioner and the learned Government Pleader in detail. 3. The main case of the petitioner is that the petitioner has been denied the benefit of _input tax credit_ to a substantial extent mainly referring to suppression of purchases and such other irregularities with reference to the provisions of KVAT Act, 2003. Exts.P2 series are the assessment orders passed by the second respondent/Commercial Tax Officer after evaluating the facts and circumstances, which in turn are under challenge by way of Exts.P5 series appeals. It was after considering Exs.P6 series interlocutory applications for stay, that Ext.P7 common order came to be passed directing the petitioner to satisfy 30% of the disputed amount so as to avail the benefit of interim stay during the pendency of the appeals. This made the petitioner to approach this Court by filing this writ petition. 4. During the course of proceedings, the petitioner filed **3** ## **W.P.(C)No.23156 OF 2014** I.A.No.12427 of 2014, also producing a copy of Ext.P9 certificate issued by the second respondent/Commercial Tax Officer to the effect that there was no basis for doubting identity of the petitioner, who was doing business earlier under the name and style as _**Bismi Stores.**_ 5. Pursuant to the direction given by this Court, a statement has been filed on behalf of the second respondent / Commercial Tax Officer, the crux of which as contained in paragraphs 2,3 and 4 are relevant, which are extracted below: _“2. It is submitted that assessment was passed against the petitioner, Bismi Hyper Market, carrying TIN 32051526399 for the year 2010-11 to 2012-13 and 4/13 to 7/13. The petitioner switched over from PIN to TIN on 17.07.2010. The petitioner cannot claim input tax credit as a matter of right. As per Rule 12(7) of KVAT Rules, the petitioner has to file application in Form No.25(A) in order to claim IPT at the time of change over to TIN. But the petitioner has not filed application in form No.25(A). Even after 17.07.2010 the petitioner effected purchases by using invoice bearing the name Bismi Stores PIN 32592590515. After change over to TIN , the petitioner should not use their_ **4** ## **W.P.(C)No.23156 OF 2014** _PIN Number. Purchases using PIN Number dis-entitle the petitioner input tax credit during the TIN period. This mode of purchases were continued during the year 2013-2014._ _3. The assessment was completed on the basis of Audit Visit and it is only the findings that the petitioner has suppressed purchases and claimed IPT credit without any supporting documents. The petitioner did not file any reply to the pre-assessment notices issued by the respondent During the year 2010-11, the petitioner has availed of irregular input tax credit of Rs.966545/- on purchase invoices without any name of the petitioner as required under Section 11(5)(m) of KVAT Act._ _4. During the year 2011-12 the petitioner has availed of irregular IPT on purchase made on invoices in form No.8B and purchase effected by using PIN 32592590515. Further the petitioner has availed of input tax credit on purchase invoices even without the name of the dealer or TIN. Hence irregular IPT of Rs.907753/ was disallowed. During the period 4/13 to 7/13 the assessee has availed of irregular input “tax credit of Rs.165020 showing PIN number and in certain purchases the_ ## **W.P.(C)No.23156 OF 2014** **5** _purchase bills were from he petitioner himself._ 6. It is conceded by the learned Counsel for the petitioner that the petitioner did not file any statement of objection in response to the pre-assessment notice; however adding that he had produced the relevant Books of accounts. The facts and figures have been discussed in detail by the assessing authority, who had no other alternative but to have the proceedings finalised on the basis of the available materials. The correctness of the version of the petitioner is to be examined by the appellate authority before whom, Exts.P5 series appeals are pending. It was after considering the case of the Revenue and also the case of the petitioner that the appellate authority, on finding that the appellant had established a prima facie case, chose to pass Ext.P7 order granting an interim stay subject to satisfaction of **30%** of the disputed liability. Though the learned Counsel for the petitioner places reliance on the decision rendered in _**Archana Agencies vs. Commercial Tax Officer**_ **(2014 (2) KLT 715** ), this Court finds that the order passed by the appellate authority very much discloses the reasons, in view ## **W.P.(C)No.23156 OF 2014** **6** of the available materials on record before whom the assessment orders passed by the authorities were available; and more so, admittedly when no objection was preferred by the petitioner to the pre-assessment notice. As such, the order passed by the appellate authority in exercise of the discretionary jurisdiction during the pendency of the appeal, is not liable to be branded as an arbitrary or a mechanical order. This Court does not find it as a fit case to call for interference. No opinion is being expressed by this Court with regard to the merit of the rival contentions. However, taking note of the fact that the time stipulated in Ext.P7 order is already over and also considering the persuasive submission made by the learned counsel for the petitioner, the petitioner is permitted to satisfy **15%** of the disputed tax **within 'two weeks'** and the remaining **15% within two weeks thereafter.** ## **P.R.RAMACHANDRA MENON JUDGE** _lk_