Full Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P. THURSDAY, THE 8TH DAY OF JUNE 2023 / 18TH JYAISHTA, 1945 WA NO. 544 OF 2017 AGAINST THE JUDGMENT DATED 11.01.2017 IN WPC 918/2017 OF HIGH COURT OF KERALA
APPELLANTS:(RESPONDENTS IN THE WRIT PETITION) 1 THE COMMERCIAL TAX OFFICER, PATTAMBI PIN-679303 2 THE DEPUTY COMMISSIONER (APPEALS) DEPARTMENT OF COMMECIAL TAXES,PALAKKAD PIN-678001 3 THE INSPECTING ASST. COMMISSIONER DEPARTMENT OF COMMERCIAL TAXES,PALAKKAD PIN-678001 BY ADV GOVERNMENT PLEADER SMT.M.M.JASMINE RESPONDENT:(PETITIONER IN THE WRIT PETITION) MOHAMMED ABDUL RAHIMAN M/S. KMA AGENCIES, KAIPPURAM,PATTAMBI PIN-679304 BY ADV.SRI.HARISANKAR V.MENON SMT.MEERA V.MENON THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 08.06.2023, ALONG WITH WA.1202/2017, 1217/2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: :2:
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P. THURSDAY, THE 8TH DAY OF JUNE 2023 / 18TH JYAISHTA, 1945 WA NO. 1202 OF 2017 AGAINST THE JUDGMENT DATED 11.01.2017 IN WPC 922/2017 OF HIGH COURT OF KERALA APPELLANTS/RESPONDENTS IN THE WRIT PETITION: 1 THE ASSISTANT COMMISSIONER COMMERCIAL TAXES, SPECIAL CIRCLE, MATTANCHERY AT ALUVA-683101. 2 THE DEPUTY COMMISSIONER APPEALS, COMMERCIAL TAXES, THEVARA, SALES TAX COMPLEX, COCHIN-682015. 3 THE INSPECTING ASSISTANT COMMISSIONER COMMERCIAL TAXES, MATTANCHERY-682001. BY ADV GOVERNMENT PLEADER SMT.M.M JASMINE RESPONDENT/PETITIONER IN THE WRIT PETITION: M/S. BERGER PAINTS INDIA LTD, DOOR NO.III/835, 1ST FLOOR, VALIYARA CHAMBERS, K.K.ROAD, CHEMBUMUKKU, COCHIN-682021, REPRESENTED BY ITS ADMINISTRATION EXECUTIVE, SRI.BENNY SEBASTIAN BY ADV SRI.TOMSON T.EMMANUEL THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 08.06.2023, ALONG WITH WA.544/2017 AND WA.1217/2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: :3:
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P. THURSDAY, THE 8TH DAY OF JUNE 2023 / 18TH JYAISHTA, 1945 WA NO. 1217 OF 2017 AGAINST THE JUDGMENT DATED 11.01.2017 IN WPC 1084/2017 OF HIGH COURT OF KERALA APPELLANTS/RESPONDENTS 1, 2, 3, 5 AND 6 IN THE WP(C): 1 THE COMMERCIAL TAX OFFICER SECOND CIRCLE , PERUMBAVOOR 683542, 2 THE ASSISTANT COMMISSIONER (APPEALS) COMMERCIAL TAXES, ERNAKULAM-682015 3 THE INSPETING ASST.COMMISSIONER DEPARTMENT OF COMMERCIAL TAXES, MATTANCHERY, IN CHARGE OF INSPECTING ASST.COMMISSIONER, VVMUVATTUPUZHA 683572, 4 THE INSPECTING ASSISTANT COMMISSIONER MUVATTUPUZHA 683572 5 THE DISTRICT COLLECTOR ERNAKULAM DISTRICT, PIN-682030. BY ADV GOVERNMENT PLEADER SMT.M.MJASMINE RESPONDENTS/PETITIONER AND 4TH RESPONDENT IN WP(C): 1 HICONS INTERLOCK PAVERS, THIRUVANIYOOR, PAZHUKKAMATTOM, PIRAVOM-682308, REPRESENTED BY ITS PARTNER SHIBU M GEORGE :4: 2 THE FEDERAL BANK LTD., VYTILLA, REPRESENTED BY THE BRANCH MANAGER-682570 BY ADV.K.M.FIROZ THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 08.06.2023, ALONG WITH WA.544/2017 AND WA.1202/2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: :5:
JUDGMENT
A.K.Jayasankaran Nambiar, J.
In these appeals preferred by the State against the common
judgment dated 11.01.2017 of a learned Single Judge in
WP(C).Nos.918, 922, 1028 & 1084 of 2017, the only grievance projected by the revenue is with regard to the findings in paragraph six of the impugned judgment, which reads as follows:
“6. However, now the statute itself provides for a blanket stay on deposit of 20% of disputed amount of tax along with collected tax. The first appellate authorities then cannot go beyond the 20% as indicated in the proviso. The consideration as noticed herein above, assumes a different colour insofar as the appellate authorities would have to consider the issue and the merits of the matter, prima facie to decide upon whether any further reduction has to be granted from the 20% of the disputed amount of tax, as has been provided in the statute. If not mitigation is warranted then, the first appellate authority would be perfectly justified in directing deposit of 20% tax demanded, failing which the assessee would be liable to be proceeded against for recovery. “
2. The brief facts necessary for the disposal of these appeals are :6: as follows: The writ petitioners had approached the Court aggrieved by the
recovery proceedings initiated by the revenue against them at a stage when their appeals and stay petitions against assessment orders passed under the Kerala Value Added Tax Act, 2003 (hereinafter referred to as 'the KVAT Act') were pending consideration before the First Appellate Authority. In terms of Section 55(4) of the KVAT Act, as it then stood, notwithstanding the preferring of an appeal, the assessee was obliged
to pay the tax or other amounts confirmed against him under the order
against which the appeal was preferred. By a proviso to the said Section, the Appellate Authority was accorded the discretion to give such directions as it thought fit in regard to payment of the tax before the disposal of the appeal if the assessee furnished sufficient security to the satisfaction of the Appellate Authority in such form and manner as prescribed under the statutory provisions. Section 55 came to be amended through a notification dated 13.11.2016, whereby the following proviso was inserted after the existing proviso to Section 55
(4) of the KVAT Act:
“Provided further that where the appellant remits 20% of the disputed amount of tax along with collected tax, if any, further proceedings against recovery shall stand stayed till disposal of the appeal” :7:
3. The issue that was considered by the learned Single Judge was
the impact of the said proviso and specifically as to whether, after the introduction of the said proviso, the Appellate Authority had the power to insist on the assessee paying more than 20% of the disputed tax as a condition for stay of recovery of the balance amount of disputed tax pending disposal of the appeal. The learned Single Judge after finding that through the introduction of the said proviso in 2016, the statute itself provided for a blanket stay on deposit of 20% of the disputed amount of tax along with the collected tax, then went on to hold that if the assessee did not pay the 20% of the disputed amount of tax along with the collected tax and approached the appellate authority for a stay of recovery of the entire amount of tax confirmed against him by the assessing authority pending disposal of the appeal, then the appellate authority could not under any circumstance direct the assessee to pay anything more than 20% of the disputed tax as a condition for grant of stay of recovery of the balance tax amount pending disposal of the appeal. As already noted, it is against the last mentioned finding of the learned Single Judge in paragraph six of the impugned judgment that the revenue is in appeal before us.
4. We have heard Smt.M.M.Jasmine, the learned Government :8: Pleader for the State and Sri. Harisankar V. Menon, Sri.Tomson T. Emmanuel and Sri.K.M. Firoz, the learned counsel for the respondent assessee.
5. On a consideration of the facts and circumstances of the case
and submissions made across the bar, we find force in the submissions of the learned Government Pleader that while on payment of 20% of the disputed amount of tax along with the collected tax, the assessee would be entitled to a stay against recovery of the balance amount of tax confirmed against it pending disposal of the appeal by the First Appellate Authority, the legislature does not prevent the Appellate Authority from insisting on a deposit of more than 20% of the disputed tax amount as a condition for a stay of recovery of balance amount pending disposal of the appeal, from an assessee who has chosen not to pay the 20% of the disputed amount of tax along with the collected tax or at least at the time of filing the appeal before the Appellate Authority. As per the statutory provisions, while the assessee has an option of payment of 20% of the disputed tax along with the collected tax, or at the time of filing the appeal before the Appellate Authority and seeking immunity from recovery proceedings for the balance amount of tax pending disposal of the appeal, he/she virtually takes the risk of losing the benefit of the said proviso, and a stay on deposit of 20% of the disputed tax, if he/she chooses to contest the stay
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application so as to obtain better terms (payment of less than 20% of the disputed tax) for the grant of stay of the balance disputed tax pending disposal of the appeal. Put differently, unless the assessee remits 20% of the disputed amount of tax along with the collected tax or at the time of filing the appeal, he/she will not be entitled to the benefit of the proviso, and he/she runs the risk of losing the benefit of the remittance of the 20% of the disputed amount of tax as a condition for grant of stay of recovery of the balance amount pending disposal of the appeal. This would be the legal position that flows from the main statutory provision, namely, Section 55(4) of the Act, which obliges an assessee to pay the entire amount of tax confirmed against him by the assessing authority as a condition for maintaining an appeal before the First Appellate Authority subject to the discretion to be exercised by the Appellate Authority in terms of First Proviso of Section 55(4). We cannot, therefore, accept the finding of the learned single judge on the said issue.
6. Save for the above clarification with regard to the ambit of the
2nd proviso to Section 55 (4) of the Act as then stood, none of the other findings in the impugned judgment are interfered with. We also make it clear that since these appeals have been pending before this Court since 2017, and it is likely that the statutory appeals which were the subject matter of the Writ Petitions have since been finally disposed by
:10: the statutory authority, the findings in this judgment are solely for the purposes of clarifying the scope and ambit of the statutory provision and not to affect the decisions already taken by the Appellate Authorities in the individual appeals. The Writ Appeals are disposed as above. Sd/- A.K.JAYASANKARAN NAMBIAR JUDGE Sd/- MOHAMMED NIAS C.P. JUDGE mns