High Court of KeralaDivision Bench2019-04-02Review petitions dismissed

Pan Pacific Engineering Services Pvt. Ltd. v. State of Kerala

Case / Petition Number:RP Nos.330 & 331/2019 in OT.Rev.188/2014 and OT.Rev.200/2014

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: K. Vinod Chandran
Ashok Menon
Judgment Date: 2019-04-02
Court Decision / Holding: Dismissed
Final Disposition: Review petitions dismissed

Parties to the Case

Appellants / Petitioners

Pan Pacific Engineering Services Pvt. Ltd.

Respondents

State of Kerala

Legal Representation & Advocates

Counsels for Petitioners

• Adv. R. Muralidharan (Aroor)

Counsels for Respondents

• Sri Mohammed Rafiq, Sr. Government Pleader

Case Synopsis & Summary

This is a Kerala High Court review petition concerning the orders in OT.Rev.188/2014 and OT.Rev.200/2014 dated 9 July 2018. Pan Pacific Engineering Services Pvt. Ltd. (the petitioner) challenges the reasoning that led to those orders, arguing that the court did not apply two prior decisions—U.K.Monu Timbers v. State of Kerala (2012 (3) KHC 111 (DB)) and M/s Supreme Food Industries v. State of Kerala (O.T.R.Nos.100, 104 & 113 of 2012 and 2, 6 & 8 of 2013)—to the facts. The dispute centers on a contract awarded by MILMA, where the awarder supplied cement and steel, and the petitioner disclosed contract receipts by deducting the value of cement and steel; the remaining amount was treated as sale. The Intelligence Officer later verified the books and found discrepancies in disclosure under the KVAT Act, leading to tax liability assessments. The petitioner contends that liability certificates issued by the AO before penalties were imposed should have subdued further action by the awarder, and that the earlier decisions should govern. The respondents maintain that liability certificates do not replace post-return verification and that actual contract receipts, not estimates, determine liability. The High Court ultimately held that the cited decisions were not applicable, as there was no estimation by the Intelligence Officer; it dismissed the petitions with no costs.

Provisions of Law Cited

Kerala Value Added Tax Act, 2003 (KVAT Act)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners argue that the judgments in U.K.Monu Timbers v. State of Kerala and M/s Supreme Food Industries v. State of Kerala are not applicable to the facts of the case since there was no estimation by the Intelligence Officer. They contend that the AO had, prior to penalties, examined the returns and issued liability certificates quantifying tax payable, which the awarder should deduct, and that the contract with MILMA involved deducting cement and steel values from the total receipts; the accounts should reflect actual contract receipts, not estimates. They point to Annexures A–D showing non-liability certificates and tax payments, arguing that the documents were either previously unavailable or not properly examined, and that liability certificates cannot substitute post-return verification. They request that the review be allowed and the KVAT treatment be correctly applied to the facts.

Contentions of Respondents

The respondents contend there is no justification for applying the cited decisions; the Intelligence Officer’s verification revealed discrepancies in disclosure under KVAT. Liability certificates issued by the AO are not a substitute for post-return verification of accounts. The shift from General Sales Tax to KVAT regime necessitated proper assessment based on actual receipts and documented evidence. The Court’s consideration of the material on record was appropriate, and late or misrepresented documents cannot override the record. The decisions cited were not meant to immunize the assessee from verification or preclude reopening where material evidence indicates non-disclosure. Accordingly, the review petitions were correctly dismissed, and there is no jurisdictional or factual error warranting a different outcome.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
U.K.Monu Timbers v. State of Kerala	2012 (3) KHC 111 (DB)	Distinguished	The court held that this decision was not applicable to the facts because there was no estimation by the Intelligence Officer; the present case relied on actual contract receipts and post-record verification.
M/s.Supreme Food Industries v. State of Kerala	O.T.R.Nos.100, 104 & 113 of 2012 and 2, 6 & 8 of 2013	Distinguished	The decision was not applicable to the facts for similar reasons; the case involved different procedures and verification that did not align with the present case’s analysis.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR. JUSTICE ASHOK MENON** **TUESDAY ,THE 02ND DAY OF APRIL 2019 / 12TH CHAITHRA, 1941** **RP.No. 330 of 2019 IN OT.Rev. 188/2014** **AGAINST THE ORDER/JUDGMENT IN OT.Rev 188/2014 of HIGH COURT OF KERALA DATED 9.7.2018** ## **REVIEW PETITIONER/RESPONDENT/APPELLANT/APPELLANT/ASSESSEE:** **PAN PACIFIC ENGINEERING SERVICES PVT. LTD., MERRA 17, 'PRIYA', MENONPARAMBU ROAD, EDAPPALLY, PIN 682 024.** **BY ADV. SRI.R.MURALIDHARAN (AROOR)** ## **RESPONDENT/REVISION PETITIONER/RESPONDENT/RESPONDENT/REVENUE:** **STATE OF KERALA** **BY SRI.MOHAMMED RAFIQ, SR. GOVERNMENT PLEADER** **THIS REVIEW PETITION HAVING COME UP FOR ADMISSION ON 02.04.2019, ALONG WITH RP.331/2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** RP Nos.330 & 331/2019 -2- **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE ASHOK MENON** **TUESDAY ,THE 02ND DAY OF APRIL 2019 / 12TH CHAITHRA, 1941** **RP.No. 331 of 2019 IN OT.Rev. 200/2014** **AGAINST THE ORDER/JUDGMENT IN OT.Rev 200/2014 of HIGH COURT OF KERALA DATED 9.7.2018** ## **REVIEW PETITIONER/RESPONDENT/APPELLANT/APPELLANT/ASSESSEE:** **PAN PACIFIC ENGINEERING SERVICES PVT. LTD., MERRA 17, 'PRIYA', MENONPARAMBU ROAD, EDAPPALLY, PIN 682 024.** **BY ADV. SRI.R.MURALIDHARAN (AROOR)** ## **RESPONDENT/REVISION PETITIONER/RESPONDENT/RESPONDENT/** **REVENUE:** **STATE OF KERALA** **OTHER PRESENT:** **SRI MOHAMMED RAFIQ, SR GP** **THIS REVIEW PETITION HAVING COME UP FOR ADMISSION ON 02.04.2019, ALONG WITH RP.330/2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** RP Nos.330 & 331/2019 -3- ## **O R D E R** **[RP No.330/2019 in O.T.Rev.No.188/2014 and RP No.331/2019 in O.T.Rev.No.200/2014]** ## Vinod Chandran, J. These Review Petitions have been filed contending that there was an error occasioned in the order dated 09.07.2018, insofar as finding the decisions in _**U.K.Monu Timbers**_ v. _**State of Kerala [2012 (3) KHC 111 (DB)]**_ and _**M/s.Supreme Food Industries**_ v. _**State of Kerala [O.T.R.Nos.100, 104 & 113 of 2012 and 2, 6 & 8 of 2013]**_ to be not applicable to the facts of these cases. It is the specific contention of the assessee that even before the penalty was imposed, the Assessing Officer (AO) had looked into the returns filed by the assessee and had issued liability certificates quantifying the tax payable on the contracts, which ought to be deducted by the awarder. 2. The entire controversy revolved around the disclosure of a contract entered into by the assessee with MILMA. Admittedly, the contract was awarded by MILMA and there was a fixed amount for execution of the contract. The cement and steel were, however, supplied by the awarder and hence, in disclosing the contract RP Nos.330 & 331/2019 -4- amounts, the assessee deducted the value of cement and steel as supplied by the awarder from the total contract receipts. This value of cement and steel was shown with Gross Profit, as a sale simpliciter, on accretion of the goods in the contract. The Intelligence Officer, who verified the books of accounts found that the exercise is not in accordance with the Kerala Value Added Tax Act, 2003, ('KVAT Act', for brevity) especially since the entire contract amount was taxable @ 12.5%, since there was no compounding opted for this particular contract. This was the specific question urged before this Court. 3. This Court found that there is no application of the aforesaid decisions, since there was no estimation carried out by the Intelligence Officer. What was computed is the actual contract receipts from the books of accounts of the assessee. The mere fact that there were liability certificates issued by the AO, based on the returns, would not absolve the assessee from the liability. It is pertinent that in the order sought to be reviewed itself, we had noticed the difference insofar as the assessments under the General Sales Tax regime and the Value Added Tax regime. Under the General Sales Tax regime, there was a procedure for assessment on a return RP Nos.330 & 331/2019 -5- being filed. Under the Value Added Tax regime, when a return is filed, there is a concluded assessment and the AO could only proceed for re-assessment. The AO, obviously, on the strength of the returns issued the liability certificates which would not absolve the assessee from verification of the books of accounts by the Intelligence Officer, which was conducted subsequently. On verification of the books of accounts, the above discrepancy was found insofar as the contract receipts having not been fully disclosed and tax paid, in accordance with the rate as imposed by the schedule to the KVAT Act. 4. Then we notice that the documents now relied on being Annexures A to D were issued far earlier to the disposal of the O.T.Revisions and there is nothing stated as to why they were not produced and relied on when the matter was argued. There is also nothing stated as to the said documents being not available with the assessee or why after exercise of due diligence it could not be procured. Further even the assessee in their reply to the Intelligence Officer, as extracted in the original order, refers to the awarder of the contract, which gave rise to the controversy, as MILMA. The documents produced show a different awarder. Admittedly, the RP Nos.330 & 331/2019 -6- assessee had several contracts, which were compounded, except that with MILMA. The review, hence, cannot be entertained at all. For all the above reasons, we do not find any reason to review the order. Hence, we dismiss these Review Petitions. No costs. **Sd/-** **K.VINOD CHANDRAN** **JUDGE** ## **Sd/-** **ASHOK MENON** **JUDGE** jg RP Nos.330 & 331/2019 -7- ## **APPENDIX IN RP NO.330/2019** ## **PETITIONER'S EXHIBITS** **ANNEXURE-A COPY OF THE NON LIABILITY CERTIFICATE ISSUED IN RESPECT OF WORK ORDER NO.UHEP/PM/FIA/0809/000 DATED 02.07.2008, WITH WORKING SHEET ANNEXURE-B COPY OF THE CHALLAN FOR PAYMENT OF TAX DATED 21.10.2009 ANNEXURE-C COPY OF THE NON LIABILITY CERTIFICATE ISSUED IN RESPECT OF WORK ORDER NO.UHEP/PM/FIA/0809/0016 DATED 30.12.2008, WITH WORKING SHEET. ANNEXURE-D COPY OF THE CHALLAN FOR PAYMENT OF TAX DATED 21.10.2009.** RP Nos.330 & 331/2019 -8- ## **APPENDIX IN RP NO.331/2019** ## **PETITIONER'S EXHIBITS** |**ANNEXURE-A**|**COPY OF THE APPLICATION SUBMITTED FOR NON-**| |---|---| ||**LIABILITY CERTIFICATE DATED 14.10.2009**| |**ANNEXURE-B**|**COPY OF THE APPLICATION SUBMITTED FOR NON-**| ||**LIABILITY CERTIFICATE DATED 21.10.2009**| |**ANNEXURE-C**|**COPY OF THE NON LIABILITY CERTIFICATE ISSUED**| ||**IN RESPECT OF WORK ORDER NO.UHEP/PM/FIA/08-**| ||**09/000 DATED 02.07.2008, WITH WORKING SHEET**| ||**AND CHALAN FOR PAYMENT.**| |**ANNEXURE-D**|**COPY OF THE NON LIABILITY CERTIFICATE ISSUED**| ||**IN RESPECT OF WORK ORDER NO.UHEP/PM/FIA/08-**| ||**09/0016 DATED 30.12.2008, WITH WORKING SHEET**| ||**AND CHALAN FOR PAYMENT.**|