Allowed

M/S. Muthoot Mercantile Ltd. v. the Commercial Tax Officer

Kerala HC2 Nov 2016WP(C)/13535/2016

Case brief

AI extract

What is this about?

The High Court of Kerala quashed an assessment order and penalty notice issued against a money-lending company. Holding that the assessment violated turnover limits under Section 6, the Court set aside the entire procedure including the penalty notice invoking Section 68(1).

What did the court decide?

Exhibits P3 (assessment order) and P6 (penalty notice) under Sections 25(1) and 68(1) of the KVAT Act, 2003 were quashed.

M/S. Muthoot Mercantile Ltd. Vs the Commercial Tax Officer — Cheque Dishonour | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE

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WEDNESDAY, THE 2ND DAY OF NOVEMBER 2016/11TH KARTHIKA, 1938

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WP(C).No. 13535 of 2016 (N)

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PETITIONER :

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M/S. MUTHOOT MERCANTILE LTD., ATTUKAL SHOPPING COMPLEX, EAST FORT, THIRUVANANTHAPURAM, PRESENTLY AT 'MUTHOOT FLOORS', OPPOSITE W & C HOSPITAL, THYCAUD, THIRUVANANTHAPURAM-695 014, REPRESENTED BY M.MATHEW, CHAIRMAN.

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BY ADVS.SRI.JOSE JOSEPH

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SRI.AJAY V.ANAND SRI.AJAY BEN JOSE

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RESPONDENTS :

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THE COMMERCIAL TAX OFFICER, COMMERCIAL TAX OFFICE, THIRD CIRCLE, THIRUVANANTHAPURAM-695 002.

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THE INSPECTING ASSISTANT COMMISSIONER, COMMERCIAL TAXES, THIRUVANANTHAPURAM-695 002.

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R BY GOVERNMENT PLEADER SMT.M.M.JASMINE

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02-11-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No. 13535 of 2016 (N)

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APPENDIX

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PETITIONER(S)' EXHIBITS

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P1 : TRUE COPY OF ORDER NO.OR-132/14-15 OF THE INTELLIGENCE OFFICER.

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P2 : TRUE COPY OF NOTICE U/S 25(1) OF THE KVAT ACT.

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P3 : TRUE COPY OF ASSESSMENT ORDER NO.32010810851

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P4 : TRUE COPY OF THE APPLICATION TO RECTIFY THE MISTAKE IN EXT P3 ORDER.

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P5 : TRUE COPY OF NOTICE U/S 7 OF THE REVENUE RECOVERY ACT.

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P6 : TRUE COPY OF NOTICE U/S 68(1) OF THE KVAT ACT.

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RESPONDENT(S)' EXHIBITS : NIL

/TRUE COPY/

P.A TO JUDGE

A.M.SHAFFIQUE, J.

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------------------------------------ W.P.(C).No.13535 of 2016

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-----------------------------------

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Dated this the 2^nd day of November, 2016

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J U D G M E N T

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This writ petition has been filed challenging Exts.P3 and P6. Ext.P3 is an order of assessment passed by the Commercial Tax Officer calling upon the petitioner to pay tax for the escaped turnover alleging suppression. By Ext.P6, the petitioner is called upon to show cause why penalty should not be imposed for not remitting the amount covered by Ext.P3, invoking Section 68(1) of the KVAT Act, 2003.

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The short facts involved in the writ petition would disclose that the petitioner, who is a dealer registered under the provisions of the KVAT Act, 2003, is a non-banking financial company engaged in the business of money lending. It is stated that the petitioner purchased one Defender Safe (safe deposit locker) on 28.10.2011 from 'Spice Berry' for use at the Kuzhithurai Branch in Kanyakumari District. On account of administrative reasons the said branch had to be closed down w.e.f. 16.04.2014, consequent to which, the safe deposit locker had to be shifted to Pravachambalam Branch in Thiruvananthapuram on 26.04.2014.

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The goods was intercepted at the Commercial Tax Check Post at Amaravila on 27.04.2014 and they collected 42,160/- as₹ security deposit. Subsequently, proceedings were taken to impose

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W.P.(C).No.13535 of 2016

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penalty and according to the petitioner, to avoid unnecessary controversy in the matter, the penalty was remitted. Subsequent to that, the petitioner was served with a notice under Section 25(1) wherein it is contended that there is suppression of turnover and the petitioner was called upon to show cause why final orders should not be passed in the matter. The total turnover estimated in Ext.P2 is only 2,90,700/- which is double the value of the goods. The₹ petitioner filed a reply inter alia contending that the whole procedure is without jurisdiction. However, assessment order was passed as Ext.P3 by which the petitioner was called upon to remit ₹ 45,103/-. Primarily it is contended that the transportation by itself was regular as the petitioner was having the manually prepared delivery note at the time of transport. The detention was on the ground that the Departmental Delivery Note in Form No.15 is not in the statutory manner as the uploading of online delivery note had become compulsory with effect from 26.04.2014. It is evident that the goods were transported on 26.04.2014 and detained on 27.04.2014. The very fact that the online facility was provided only as per Circular dated 22.04.2014 and effective from 26.04.2014 itself would mean that there was no deliberate action on the part of the petitioner for not having complied with the online delivery system which commenced only from the said date.

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Under such circumstances, I am of the view that there is no

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W.P.(C).No.13535 of 2016

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reason to initiate proceedings under Section 25(1) of the KVAT Act, 2003. That apart, the total turnover indicated as far as the petitioner is concerned is only 2,90,700/-. As per Section 6 of the₹ KVAT Act, 2003, the liability to pay tax arises only if the dealer has a turnover of more than 10 lakhs. Section 6(1) reads as under :₹

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“6. Levy of tax on sale or purchase of goods .- (1) Every dealer whose total turnover for a year is not less that ten lakhs rupees and every importer or casual trader or agent of a non-resident dealer, or dealer in jewellery of gold, silver and platinum group metals or silver articles or contractor or any State Government, Central Government or Government of any Union Territory or any department thereof or any local authority or any autonomous body whatever be his total turnover for the year, shall be liable to pay tax on his sales or purchases of goods as provided in this Act. The liability to pay tax shall be on the taxable turnover.”

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Under such circumstances, I am of the view that the whole procedure by which proceedings had been initiated under Section 25(1) is clearly illegal and is liable to be set aside. For the same reason, Ext.P6 is also liable to be set aside.

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Hence, this writ petition is allowed. Exts.P3 and P6 are hereby quashed.

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Sd/-

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A.M.SHAFFIQUE, JUDGE.

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M/S. Muthoot Mercantile Ltd. v. the Commercial Tax Officer

Case brief

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M/S. Muthoot Mercantile Ltd. v. the Commercial Tax Officer

Case brief

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