Disposed

Parakottil Kerosone Agencies v. Secy. to Govt.

Kerala HC31 Oct 2016WP(C)/28968/2004

Case brief

AI extract

What is this about?

The High Court disposed of multiple writ petitions filed by kerosene wholesale dealers against recovery actions. It directed the First Respondent to constitute a committee regarding transportation charges and commission disputes, allowing set-off of recovered amounts against dues.

What did the court decide?

Direction to constitute a committee within one month; permission to recover excess commission paid by way of adjustment against commission due to petitioners; stay on new recovery actions during the p

Parakottil Kerosone Agencies Vs Secy. to Govt. — Contract and Commercial Disputes | 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 SHAJI P.CHALY

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MONDAY, THE 31ST DAY OF OCTOBER 2016/9TH KARTHIKA, 1938

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WP(C).No. 28968 of 2004 (W)

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PETITIONER(S):

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1. M/S.PARAKOTTIL KEROSENE AGENCIES, INDIAN OIL DEALERS, NILAMBUR BY K.T. AHAMED, MANAGING PARTNER.

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2. M/S.BABU AGENCIES, INDIAN OIL DEALER, KEROSENE WHOLESALE DEALER ERNADU TALUK, MALAPPURAM, REPRESENTED BY P.T. ABOOBACKER, MANAGING PARTNER.

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3. M/S.PRABHA SALES CORPORATION,

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HINDUSTHAN PETROLEUM CORPORATION DEALER, KEROSENE WHOLESALE DEALER, TIRUR, REPRESENTED BY M.K.ALAVI, MANAGING PARTNER.

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4. M/S.SREEKRISHNA KEROSENE AGENCIES, INDIAN OIL DEALERS KEROSENE WHOLESALE DEALER, TIRUR, REP. BY P.S.MOHAMED RASHEED, PARTNER.

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BY ADVS.SRI.T.S.RADHAKRISHNA PILLAI,

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SRI.T.R.RAJEEV.

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RESPONDENT(S):

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1. THE SECRETARY TO GOVERNMENT, FOOD CIVIL SUPPLIES & CONSUMER AFFAIRS DEPARTMENT, THIRUVANANTHAPURAM.

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2. THE COMMISSIONER OF CIVIL SUPPLIES, THIRUVANANTHAPURAM.

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3. THE DISTRICT COLLECTOR, MALAPPURAM.

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WP(C).No. 28968 of 2004 (W)

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4. THE DISTRICT SUPPLY OFFICER, MALAPPURAM.

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5. TALUK SUPPLY OFFICER, TIRUR, MALAPPURAM.

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6. TALUK SUPPLY OFFICER, ERNAD, MALAPPURAM.

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7. TALUK SUPPLY OFFICER, NILAMBUR, MALAPPURAM.

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BY GOVT. PLEADER SRI.S. KANNAN.

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 31-10-2016, ALONG WITH WP(C).NO.7798 OF 2008 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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rs.

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WP(C).No. 28968 of 2004 (W)

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APPENDIX

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PETITIONER'S EXHIBITS:-

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EXT.P1 COPY OF THE LETTER FROM GOVT. OF INDIA MINISTRY OF PETROLEUM & NATURAL GAS TO CHIEF SECRETARY ALL STATE GOVERNMENTS/ UTS DATED 06/11/1997.

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EXT.P2 COPY OF THE CIRCULAR NO.15 DATED 17/08/1996 ISSUED BY DIRECTOR OF CIVIL SUPPLIES, TRIVANDRUM.

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EXT.P3 COPY OF THE PRICE FIXATION STATEMENT ISSUED BY CITY RATIONING OFFICER (NORTH), KOZHIKODE DATED 02/05/2003.

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EXT.P4 COPY OF THE LETTER FROM GOVT. OF INDIA MINSTRY OF PETROLEUM & NATURAL GAS DATED 27/10/2000 TO THE SECRETARY FOOD & CIVIL SUPPLIES ALL STATE GOVERNMENTS/ UTS.

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EXT.P5 COPY OF THE LETTER/ORDER DATED 04/06/2002 GOVERNMENT OF INDIA TO SECRETARY F& C S. ALL STATE GOVTS. AND OTHERS.

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EXT.P6 COPY OF THE ORDER DATED 24/07/2002 FROM SECRETARY TO GOVT. OF KERALA.

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EXT.P7 COPY OF THE JUDGMENT IN O.P. NO.38733/02 (J) HIGH COURT OF KERALA DATED 03/02/2003.

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EXT.P8 COPY OF THE ORDER IN RP.221/04 IN WP(C).NO.4663/04 DATED 26/03/2004 HIGH COURT OF KERALA.

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EXT.P9 COPY OF THE ORDER IN WP(C).NO.22583/04 DATED 30/07/2004 HIGH COURT OF KERALA.

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EXT.P10 COPY OF THE NOTICE DATED 28/05/2004 ISSUED BY TALUK SUPPLY OFFICER, TIRUR TO ALL K.W.DS.

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RESPONDENT'S EXHIBITS:- NIL.

//TRUE COPY//

P.S. TO JUDGE

rs.

SHAJI P. CHALY, J.

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W.P.(C) Nos.28968 of 2004, 7798, 12362, 13510, 16730, 18289, 20372, 21203, 22037, 22043, 22968, 23317, 27116, 31436 of 2008, 1228 & 19785 of 2009, 1133 of 2010, 16534 & 17125 of 2012, 31725, 32686, 33229 & 34516 of 2016

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----------------------------------------------Dated this the 31st day of October, 2016

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JUDGMENT

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Captioned writ petitions are materially connected and therefore I heard them together, and propose to deliver a common judgment. I do not think that separate narration of facts is required since the question to be decided is common dependent on typical nature of facts. The facts discernible from W.P.(C) No.22043 of 2008 are narrated for the purpose of disposal of the writ petitions.

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Petitioners are wholesale dealers in kerosene having valid license under the Kerosene Control Order issued by the Government of Kerala. First petitioner is having 3 dealership depots, two in Kuttanad and one in Thiruvalla. Second petitioner is having 2 dealership depots. The distribution and sale of kerosene are governed by various regulations in addition to the Kerosene Control Order framed under the Essential Commodities Act. The transportation

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W.P.(C) No.28968 of 2004 & conn. cases 2

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charges and the commission for the dealers are all well defined and fixed by various Government Orders. There are two types of commission. One is for those dealers who have underground storage facility, and the others are those dealers like the petitioners in the writ petitions, who do not have underground storing facilities, and they are all keeping the stock in Barrels, however, they are given lesser commission. In addition to these, a part of the transportation charges are also met by the Department. The charges are revised from time to time by the Government of India. Earlier, a writ petition was filed consequent on a revision made by the Government of India, revising the dealers commission by an order dated 04.06.2002, requesting the State Governments to revise the commission taking into account the orders of the Government of India. Since no action was initiated, writ petitions were filed before this Court which were ultimately disposed of directing the State Government to hear the petitioners and dispose of the representations submitted.

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Accordingly, Government have constituted a Committee, with the Director of Civil Supplies and others, in order to study the issue relating to revision of commission to

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W.P.(C) No.28968 of 2004 & conn. cases 3

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be extended to the wholesale dealers. Accordingly, Ext.P1 recommendation was made by the Committee. Revision was effected thereafter also. Revision was suggested by the Committee. Dealer commission was fixed at Rs.204/- and Rs.161/- per Kilo Litre respectively, in the two categories made mention above. Transportation charges are also increased moderately which were revised prospectively, evident from Ext.P2. Thereafter, representations were filed to extend the benefits in accordance with the order passed by the Government of India effective from the said date i.e., 04.06.2002. In the meanwhile, the concerned Taluk Supply Officers, within whose jurisdiction the petitioners' depots are functioning, have started issuing notices to the petitioners demanding amounts alleging that, the dealers are keeping excess amount which will have to be remitted back to the Department. In the notices, it is stated, the amount to be recovered is at the rate of Rs.43/- per KL, namely the difference between the two categories. According to the petitioners, the amounts are due to the petitioners actually from June, 2002 onwards. But the same was implemented only from 2005 order. But it ought to have been with effect

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W.P.(C) No.28968 of 2004 & conn. cases 4

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from 04.06.2002 onwards i.e. the date on which the Government of India passed the order to revise the commission from the said date itself. However, no decision was taken by the Government on the issue. The transportation charges were again revised by the Central Government from 01.04.2007 for other petroleum products other than kerosene, and this benefit will have to be extended to kerosene also. According to the petitioners, the State Government may have to fix the rates without taking into account the Government revisions.

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It is also stated that petitioners are also prepared to remit the arrears demanded by the Government after adjusting the amounts due to them either to the Department or to the Oil companies. It is also stated, the amounts will have to be paid to the oil companies. That apart, it is submitted, petitioners are prepared to remit the same as ordered by this court, but they shall not be directed to pay twice the amount. However, in spite of the petitioners' representations, respondents are bent upon in enforcing the recovery without making any consideration on the demand made by the petitioners. It is in these circumstances, seeking appropriate

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W.P.(C) No.28968 of 2004 & conn. cases 5

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directions and seeking to quash Exts.P4 to P8 notices, this writ petition is filed.

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First respondent has filed a counter affidavit in W.P. (C) No.7798 of 2008, with a memo to adopt the said counter affidavit in all the writ petitions pending then. Among other contentions, it is stated, the Government as per G.O.(Ms.) No.17/2005 dated 02.04.2005 had re-fixed the dealers commission of kerosene at the rate of Rs.204/- and Rs.161/respectively, in the afore-specified two categories. Accordingly, directions were given to fix the dealer commission at Rs.204/- in order to make the issue price of kerosene uniform to all over the State. Dealers Commission of Rs.204/was fixed for Kerosene wholesale dealers having underground storage facility including Rs.43/- as return of equipment. Directions were also issued to the oil companies to realise Rs.43/- from wholesale dealers without underground storage facility, and to surrender it to the oil pool account maintained by the oil company. When the said oil pool account was dissolved, the Government as per Letter No.7188/D3/2005/FCS&CAD dated 07.03.2007 directed to remit the excess dealer commission earned by the dealers

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W.P.(C) No.28968 of 2004 & conn. cases 6

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without underground storage facility, in the Head of Account “0040-00-800-other receipts-98 other items”. It was accordingly the dealers without underground storage facility were directed to remit the excess profit earned by them.

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As per the Kerala Value Added Tax Act, 2003, tax is to be levied at all points of sale for the items/goods specified in the Schedule II, III and V. Kerosene oil sold through Public Distribution System is entered as item No.45 in the Third Schedule. Consequent to the introduction of VAT with effect from 01.04.2005, the price of kerosene oil has been re-fixed and VAT is realized at 3 stages. The Oil Company is bound to remit the tax, which they have collected from the dealer at the rate of 4%, to the Government. The 4% tax which the dealers are collecting from the ARDs and the ARDs from the consumer is to be remitted to the Government. Accordingly, directions were issued to the wholesale dealers without underground storage facility, to remit the excess dealer commission of Rs.43/- and the VAT amount due with effect from 01.04.2005.

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It is also stated, as per clause (8A) of the Kerala Kerosene Control Order, 1968, the wholesale selling price is fixed by the District Collectors from time to time, under orders

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W.P.(C) No.28968 of 2004 & conn. cases 7

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issued by the State Government, having regard to the provisions of Kerosene (fixation of ceiling prices) order, 1970. The wholesale selling price of kerosene is fixed by adding the sales tax, additional sales tax, if any, leakage allowance, loading and unloading charges, depreciation of containers, agency commission, transportation charges, etc. with the exinstallation price. Apart from contending so, it is stated, consequent to every revision of dealer commission, the differential commission will remain at Rs.43/- per KL. There will not be any extra benefit to the dealers. Clear directions were issued by the authorities to remit the differential commission in the head of account specified above. Clear directions to recover the undue profit earned by the dealers without underground storage facility, has no connection with the claim put in by the dealer for enhancing transportation charge. The dealers are not the beneficiaries of the amount collected from the consumers. Hence the decision to realize

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the excess dealer commission is as per the rules and the dealers are bound to remit the undue profit earned by them. It is also submitted that even though as per sub-section (3) of Sec.15 of the KVAT Act, 2003, the authorised wholesale

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W.P.(C) No.28968 of 2004 & conn. cases 8

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dealers and retail distributors dealing exclusively with rationed articles under the Kerala Rationing Order, 1966 are not liable to be registered under the KVAT Act, 2003, however, the exemption from registration under the Act does not entitle them to appropriate the VAT collected by them through the sale of kerosene, as the price is fixed by the Government. Therefore, it is contended that the petitioners are not entitled

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to get any reliefs in the writ petitions. Similar contentions are raised in the other connected writ petitions.

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Heard learned counsel for the petitioners, learned Government Pleader, and the learned Standing Counsel appearing for the Oil companies. Perused the documents on record and the pleadings put forth by the respective parties.

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Recovery action was initiated by the respondents to recover the dealers commission paid as discussed above, and it is thus seeking to quash the said proceedings, these writ petitions are filed. Such a relief is sought for on the ground that petitioners are entitled to dealers commission which is not disbursed by the respondents as per the order of the Government of India, dated 04.06.2002, with direction to enhance the commission from the date of the order.

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W.P.(C) No.28968 of 2004 & conn. cases 9

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Apparently, successive revisions were made but the commission was not paid to the petitioners. Therefore, it is the contention of the petitioners, the dealers commission is to be quantified and after adjusting the excess commission paid, balance shall be paid to the petitioners. It is in this background, the relief of quashing the recovery proceedings initiated by the respondents is sought for by the petitioners.

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When these matters came up for final hearing, learned Government Pleader has produced a letter dated 03.10.2016, which reads as follows:

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“Attention is invited to the letter cited. I am to inform that the previous revision by the Government of India was implemented by the State with effect from 09.12.2015. The revision of dealer commission to Kerosene Wholesale Dealers of the State in accordance with the latest revision implemented by the Government of India with effect from 05.02.2016 and the disbursement of arrears due to revision in 2013 are under the consideration of the Government. Moreover, the Hon'ble Minister for Food & Civil Supplies convened a meeting with the representatives of the wholesale dealers on 29.09.2016 during which the grievances of the dealers including those raised in the Writ Petition were discussed. A decision is also made regarding the enhancement of transportation charges to the dealers. It has been decided to constitute a committee including

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W.P.(C) No.28968 of 2004 & conn. cases 10

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the representatives of the dealers to study and furnish proposal to Government in this regard. Accordingly, all the reasonable demands raised by the Wholesale Dealers Association during the meeting are under consideration of the Government. Other relevant details regarding collection of adjustment price may be collected from the Civil Supplies Director”.

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Therefore, on a reading of the said letter, it is categoric and clear, dealers commission in accordance with the successive revisions allegedly due to the petitioners are under consideration, and with respect to the enhancement of transportation charges to the dealers, it has been decided to constitute a committee including the representatives of the dealers, to study and furnish proposals to the Government in this regard. It is also stated, the reasonable demands raised by the dealers are under consideration of the Government.

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In that view of the matter, I think it is only appropriate that a direction is issued to the 1^st respondent to consider the issues with respect to payment of dealer commission on the basis of successive orders, and commission allegedly payable from 2/2002 and the enhancement of the transportation charges raised by the wholesale dealers under the Rationing order, and take a decision on the same in

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W.P.(C) No.28968 of 2004 & conn. cases 11

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accordance with law, after constituting a Committee as stated in the afore-specified order. This is more so since, there is no rationale, reason or purpose in recovering amounts from the petitioners, when amounts are due to the petitioners on various heads from the respondents. Under such circumstances, set off, and adjustments are the practical and viable solution to resolve the dispute in these writ petitions.

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Therefore, there will be a direction to 1^st respondent

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to constitute a Committee within one month from the date of receipt of a copy of this judgment, for the purpose of making a report to enhance the transportation charges, and to secure report at the earliest. In the meanwhile, the excess dealers commission paid to the wholesale dealers, can be realized by 1^st respondent from the commission due to the petitioners, and the balance commission shall be paid to the petitioners without any delay and within a time frame to be fixed by the 1^st respondent in respect of the same. First respondent shall not initiate any recovery action to realize the excess commission paid, if, on adjustment of the dealers commission, no amounts are due in that regard. The said direction is applicable to the respondents, till such time the issues with respect to

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W.P.(C) No.28968 of 2004 & conn. cases 12

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enhancement of transportation charges, and dealer

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commission is settled, as directed above.

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All the writ petitions are disposed of accordingly.

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Sd/-

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SHAJI P. CHALY JUDGE

//true copy//

P.S. to Judge

St/01.11.2016

In the first sentence of paragraph 13 of the common judgment dated 31.10.2016 in W.P.(C) No.28968/2004 and connected cases after the words “ transportation charges ” the words “ dealers commission ” are incorporated and in the same paragraph in the last but one sentence instead of “ excess commission paid ” the words “ adjustment price ” are substituted, as per order dated 30.11.2016 in I.A.No.19474/2016 in W.P.(C) No.33229/2016.

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Registrar (Judicial)

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W.P.(C) No.28968 of 2004 & conn. cases 13

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The words “and in the same paragraph in the last but one sentence instead of “ excess commission paid ”, the words “adjustment price” are substituted” occurring at page 13 of the judgment in the correction as per order dated 30.11.2016 in I.A.No.19474/2016 in W.P.(C) No.33229/2016 are deleted as per order dated 07.07.2017 in I.A.No.9748/2017 in W.P.(C) No.33229/2016.

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Sd/Registrar (Judicial)

Parakottil Kerosone Agencies v. Secy. to Govt.

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Parakottil Kerosone Agencies v. Secy. to Govt.

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