State of Kerala v. M.K. Varghese Morning Mist

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: S.V. Bhatti
Basant Balaji
Judgment Date: 2021-11-11
Court Decision / Holding: Petitions dismissed; OP (Tax) Nos. 13 & 14/2020 stand dismissed.
Final Disposition: Petitions dismissed; OP (Tax) Nos. 13 & 14/2020 stand dismissed after considering limitation and factual record.

Parties to the Case

Appellants / Petitioners

State of Kerala represented by the Joint Commissioner of State Tax (Law), State GST Department, Ernakulam-682011

Respondents

M.K. Varghese Morning Mist, MaliyeKKAL House, Thathampally P.O., Alappuzha-688013

Legal Representation & Advocates

Counsels for Petitioners

• Shamsudheen V.K. (Senior Government Pleader)

Counsels for Respondents

• A. Krishnan
• R. Umasankar

Case Synopsis & Summary

This is a division-bench Kerala High Court decision arising from two OP Tax petitions (Nos. 13 and 14 of 2020) filed by the State of Kerala challenging orders under the Kerala Tax on Luxuries Act, 1976 (KTL Act) relating to two assessment years, 2004-05 and 2005-06, against M.K. Varghese Morning Mist, a houseboat operator. The Commercial Tax Officer at Alappuzha assessed luxury tax of Rs. 18,000 and interest of Rs. 15,120 for non-compliance with KTL Act. The Deputy Commissioner (Appeals) Kollam and the Kerala VAT/AGRICULTURAL INCOME TAX & SALES TAX APPELLATE TRIBUNAL (KVATA/AI T & ST AT) dealt with appeals via TA Nos. 12/2014 and 13/2014, with the Tribunal holding that the assessments for 2004-05 and 2005-06 were barred by limitation and that the proper course would be best-judgment assessments for subsequent years. The State petitioned the High Court. The Tribunal’s approach was noted as reflecting the view in previous years (including 2006-07 and 2007-08), and the High Court observed that the Revenue record and the respondent’s demonstration that an application under the KTL Act was filed within time are significant. The court clarified that its remarks do not interpret 2011 amendments to the KTL Act and ultimately dismissed the petitions, indicating no interference with the Tribunal’s findings.

Provisions of Law Cited

Kerala Tax on Luxuries Act, 1976 (KTL Act)

Submissions & Arguments

Contentions of Appellants / Petitioners

The State contends that the assessment for 2004-05 and 2005-06 was rightly framed under the Kerala Tax on Luxuries Act, and the Tribunal’s finding of limitation was not correct. It asserts that the Revenue record demonstrates timely initiation and that the 2011 amendment to the KTL Act should be interpreted in the context of the facts of the case; the relief sought is to sustain or reinstate the assessments and challenge the Tribunal’s conclusions.

Contentions of Respondents

The respondents contend that the Tribunal correctly held the limitation issues and that the assessments were barred by time in respect of 2004-05 and 2005-06, relying on the record with the Revenue. They emphasize that the Tribunal’s findings should guide the proper course for best-judgment assessments and caution that the 2011 amendments to the KTL Act are not to be interpreted in a manner that defeats statutory limitations.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Hakeem K. v. Deputy Commissioner, Commercial Taxes, Palakkad	W.P.(C) No.11049/2012	Mentioned Only	Cited in a footnote to reference related jurisprudence; used to frame the Tribunal’s approach but not applied as binding authority or expressly distinguished/overruled.

Extracted Judgment Text

Exact text extracted from official judgment records.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI THURSDAY, THE 11[TH] DAY OF NOVEMBER 2021 / 20TH KARTHIKA, 1943 ## OP (TAX) NO. 13 OF 2020 AGAINST THE ORDER IN TA 12/2014 OF AGRL.INCOME TAX ADDITIONAL BENCH,KOTTAYAM, KOTTAYAM ## PETITIONER/S: STATE OF KERALA REPRESENTED BY THE JOINT COMMISSIONER OF STATE TAX (LAW), STATE G S T DEPARTMENT, ERNAKULAM-682011. BY SR GP SHAMSUDHEEN V.K. ## RESPONDENT/S: M.K.VARGHESE MORNING MIST, MALIYEKKAL HOUSE, THATHAMPALLY P O, ALAPPUZHA-688013. BY ADV SRI.A.KRISHNAN ## OTHER PRESENT: THIS OP TAX HAVING COME UP FOR HEARING ON 11.11.2021, ALONG WITH OP (TAX).14/2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **O.P.(Tax) Nos. 13 & 14/2020** **-2-** IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI THURSDAY, THE 11[TH] DAY OF NOVEMBER 2021 / 20TH KARTHIKA, 1943 ## OP (TAX) NO. 14 OF 2020 AGAINST THE ORDER IN TA 13/2014 OF AGRL.INCOME TAX ADDITIONAL BENCH,KOTTAYAM, KOTTAYAM ## PETITIONER/S: STATE OF KERALA REP. BY THE JOINT COMMISSIONER OF STATE TAX (LAW), STATE G.S.T. DEPARTMENT, ERNAKULAM-682 011 BY SR GP SHAMSUDHEEN V.K. ## RESPONDENT/S: SRI. M.K. VARGHESE, MORNING MIST, MALIYEKKAL HOUSE, THATHAMPALLY P.O, ALAPPUZHA-688 013 BY ADVS. SRI.A.KRISHNAN SHRI.R.UMASANKAR THIS OP TAX HAVING COME UP FOR HEARING ON 11.11.2021, ALONG WITH OP (TAX).13/2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **-3-** ## **O.P.(Tax) Nos. 13 & 14/2020** **==> picture [103 x 15] intentionally omitted <==** [OP (TAX) Nos.13/2020, 14/2020] ## S.V. Bhatti, J. Heard Mr V K Shamsudheen, learned Senior Government Pleader and Mr A Krishnan, learned counsel for the respondent. 2. The issues in the petitions arise under the Kerala Tax on Luxuries Act, 1976 (for short 'KTL Act'). In these two petitions we are concerned with the order of assessment made by the Assessing Officer for the Assessment Years 2004-05 and 2005-06. The details of the orders leading up to the filing of the petitions are stated thus: **-4-** ## **O.P.(Tax) Nos. 13 & 14/2020** |Sl. No.|No., Year and Date of Order of Commercial Tax Officer|Order of Deputy Commissioner (Appeals)|KVAT/AIT & ST Appellate Tribunal|OP (Tax) No.| |---|---|---|---|---| |1|LT.32/HB /2004-05; dtd.23.03.2012|KVATA (ALPY) 1329/12 dt.15.06.2012|TA No.12/2014 dt.25.04.2019|13/2020| |2|LT.32/HB /2005-06; dtd.23.03.2012|KVATA (ALPY) 1330/12 dt.15.06.2012|TA No.13/2014 dt.25.04.2019|14/2020| The circumstances stated and referred in O.P.(Tax) No.13/2020 are treated as representative for disposing of both the cases. 3. The respondent, it is stated, was operating a house boat in the name 'Morning Mist'. The Commercial Tax Officer, Alappuzha noted that the operation of houseboat by the respondent is not compliant with the requirements of KTL Act and that the respondent avoided payment of luxuries tax. Through the order in Ext.P1 dated 23.03.2012, rejecting the reply given by the respondent, the Assessing Officer determined the luxury tax payable by the respondent as Rs.18,000/- and ## **O.P.(Tax) Nos. 13 & 14/2020** **-5-** levied interest amounting to Rs.15,120/- on the respondent. The respondent unsuccessfully challenged the order in Ext.P1 before the Deputy Commissioner (Appeal) Kollam and the order dated 30.10.2012 of the appellate authority is filed as Ext.P2. The respondent aggrieved by Ext.P2, filed appeal before the KVAT/AIT & ST Appellate Tribunal, Kottayam and the Tribunal through common order dated 25.04.2019 allowed the appeal filed in respect of the subject Assessment Years. Hence, the Original Petition at the instance of the State. 4. The Tribunal framed the following questions for consideration in respect of the subject Assessment Years. “1) Whether the assessments for the years 2004-05 and 200506 are barred by limitation? 2) Whether assessing authority is justified in completing assessment under best judgment for the year 2004-05 to 200708?” 4.1 The Tribunal by taking note of the circumstances of the case and the judgment of this Court in _Hakeem K v. Deputy_ ## **O.P.(Tax) Nos. 13 & 14/2020** **-6-** _Commissioner, Commercial Taxes, Palakkad_[1] answered the issue in favour of the respondent herein and against the Revenue. On issue nos. 2 and 3, as a matter of fact, it has been recorded in the order of Tribunal that the assessment has been completed without considering the materials available with the Assessing Officer. As regards Assessment Years 2004-05 and 2005-06, the assessment is barred by the period of limitation. The reasons stated by the Tribunal while appreciating the order of the Assessing Officer for the Assessment Years 2006-07 and 2007-08, to some extent, are applicable for appreciating the issue of limitation for the Assessment Years 2004-05 and 2005-06 _viz_ . whether the assessment is barred by limitation or not. 5. In the peculiar circumstances of this case and also the manner in which the initial burden is discharged by the respondent by duly demonstrating that application was filed by 1 Judgment dated 27.11.2015 in W.P.(C) No.11049/2012 **-7-** ## **O.P.(Tax) Nos. 13 & 14/2020** him under the KTL Act, we are convinced to notice the finding that the record is with the Revenue, and the proceedings should have been initiated within the time. The view taken by the Tribunal shall be confined to the facts and circumstances of this case and shall not be understood as a view expressed on the interpretation of amendment introduced to KTL Act in 2011. The question is left open for consideration in an appropriate case. We are convinced no ground is made out warranting interference both in fact and law. Accordingly the petitions fail and O.P.(Tax) Nos.13 & 14 stand dismissed. Sd/- S.V.BHATTI JUDGE Sd/- BASANT BALAJI JUDGE jjj **-8-** ## **O.P.(Tax) Nos. 13 & 14/2020** ## **APPENDIX OF OP (TAX) 14/2020** PETITIONER EXHIBITS EXHIBIT P1 A TRUE COPY OF THE ORDER OF THE COMMERCIAL TAX OFFICER (LT)ALAPPUZHA, DATED 23.03.2012 EXHIBIT P2 A TRUE COPY OF THE COMMON APPELLATE ORDER IN KVATA(ALPY) NO. 1330/2012 AND CONNECTED CASES DATED 30.10.2012 OF THE DEPUTY COMMISSIONER (APPEALS) II,COMMERCIAL TAXES, KOLLAM. EXHIBIT P3 A TRUE COPY OF THE COMMON ORDER PASSED BY THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL,ADDL.BENCH, KOTTAYAM IN T.A. NO.13/2014 AND CONNECTED CASES. **-9-** ## **O.P.(Tax) Nos. 13 & 14/2020** ## **APPENDIX OF OP (TAX) 13/2020** PETITIONER EXHIBITS EXHIBIT P1 A TRUE COPY OF THE ORDER OF THE COMMERCIAL TAX OFFICER (LT) ALAPUZHA DATED 23.03.2012. EXHIBIT P2 A TRUE COPY OF THE COMMON APPELLATE ORDER IN KVATA (ALPY) NO.1329/2012 AND CONNECTED CASES DATED 30.10.2012 OF THE DEPUTY COMMISSIONER (APPEALS)-II COMMERCIAL TAXES, KOLLAM. EXHIBIT P3 A TRUE COPY OF THE COMMON ORDER PASSED BY THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDL.BENCH, KOTTAYAM IN TA NO.12/2014 AND CONNECTED CASES.