Kerala High Court
Prodair Air Products India ... vs The Deputy Commissioner Of State ... on 6 January, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
THURSDAY, THE 6TH DAY OF JANUARY 2022 / 16TH POUSHA, 1943
WP(C) NO. 17451 OF 2021
PETITIONER:
PRODAIR AIR PRODUCTS INDIA PRIVATE LIMITED
AMBALAMEDU, ERNAKULAM,
REPRESENTED BY ITS FINANCE EXECUTIVE
MR.G.MALLIKARJUNA REDDY
BY ADVS.
SRI.P.S.SREE PRASAD
SRI.N.PRASAD
RESPONDENT:
THE DEPUTY COMMISSIONER OF STATE TAX
SPECIAL CIRCLE II, KERALA SGST DEPARTMENT,
THEVARA, ERNAKULAM-682015
ADV. THUSHARA JAMES, SR.GOVT. PLEADER
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 13.12.2021, ALONG WITH WP(C)NO.18783/2021, THE
COURT ON 06.01.2022 DELIVERED THE FOLLOWING:
W.P.(C) Nos.17451 & 18783/21
-:2:-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
THURSDAY, THE 6TH DAY OF JANUARY 2022 / 16TH POUSHA, 1943
WP(C) NO. 18783 OF 2021
PETITIONER:
PRODAIR AIR PRODUCTS INDIA PRIVATE LIMITED
AMBALAMEDU, ERNAKULAM,
REPRESENTED BY ITS FINANCE EXECUTIVE
MR.G.MALLIKARJUNA REDDY.
BY ADV P.S.SREE PRASAD
SRI.N.PRASAD
RESPONDENT:
THE DEPUTY COMMISSIONER OF STATE TAX
SPECIAL CIRCLE II, KERALA SGST DEPARTMENT,
THEVARA, ERNAKULAM - 682 015.
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 13.12.2021, ALONG WITH WP(C)NO.17451/2021, THE
COURT ON 06.01.2022 DELIVERED THE FOLLOWING:
W.P.(C) Nos.17451 & 18783/21
-:3:-
BECHU KURIAN THOMAS, J.
------------------------------------------------
W.P.(C) No.17451 & 18783 of 2021
-----------------------------------------------
Dated this the 6th day of January, 2022
JUDGMENT
Despite the existence of an alternative remedy of appeal, petitioner
has approached this Court, challenging assessment orders issued under
section 25 of the Kerala Value Added Tax Act, 2003 (for short the Act).
While W.P.(C) No.17451 of 2021 challenges the assessment orders for
three years, W.P.(C) No.18783 of 2021 challenges the rejection of claim of
input tax credit for tax paid on capital goods in terms of Rule 13 of the
Kerala Value Added Tax Rules, 2005 (for short 'the Rules'). The
assessment years involved in the former writ petition are 2015-16, 2016-
17 and 2017-18.
2. Petitioner is a company engaged in the business of manufacture
and sale of industrial gases and is a dealer registered under the Act. As
part of increasing the refining capacity of the Kochi Refineries of the
Bharat Petroleum Corporation Ltd. (for short 'BPCL), it was decided to
implement a project for constant and uninterrupted supply of industrial
gases like hydrogen, nitrogen and HP steam. Pursuant to an invitation for
tender floated by BPCL to supply industrial gases, an agreement was
W.P.(C) Nos.17451 & 18783/21
entered into on 21.08.2013 between petitioner and BPCL by virtue of
which petitioner agreed to Build, Own, Operate (BOO) and maintain a
hydrogen and nitrogen manufacturing plant and to maintain exclusive and
continuous supply of industrial gases to BPCL.
3. Petitioner further contends that as per the agreement, petitioner
was to build, own, operate and maintain the plant at the cost of the
petitioner, on the land allocated by BPCL on a lease basis and to ensure
an exclusive and continuous supply of the requisite industrial gases to
BPCL for 15 years, subject to extensions.
4. According to the petitioner, pursuant to penalty orders imposed
under section 67 of the Act for the assessment year 2016-17 and 2017-18,
which is the subject matter of a writ appeal pending before this Court, the
assessing officer initiated proceedings under section 25 of the Act for the
assessment years 2015-16, 2016-17 and 2017-18 and by the impugned
orders in W.P.(C) No.17451 of 2021, produced as Ext.P21, Ext.P22 and
Ext.P23, the respondent imposed a huge liability on the petitioner running
to more than a hundred crores, as alleged tax due from the petitioner. Tax
was imposed assuming that the supply of industrial gases under Ext.P1
agreement is part of the works contract. A show cause notice under
section 25(1) of the Act for the assessment year 2014-15 has also been
challenged in this writ petition.
W.P.(C) Nos.17451 & 18783/21
5. In W.P.(C) No.18783 of 2021, petitioner challenges the rejection
of claim for input tax credit of the tax paid on capital goods, alleging that
the rejection was on a wrong assumption that the agreement under which
the petitioner supplies industrial gases to BPCL, is a works contract.
6. I have heard Sri. P.S.Sreeprasad, the learned counsel for the
petitioner as well as Dr.Thushara James, the learned Senior Government
Pleader for the respondent.
7. Adv. Sreeprasad vehemently argued that the assessment orders
were issued without jurisdiction, warranting interference under Article 226
of the Constitution of India. According to the learned counsel, the
condition precedent for levy of tax under section 6(1)(f) of the Act is
transfer of property in the execution of works contract, which is non-
existent in the instant case. The learned counsel further contended that,
the agreement never contemplated transfer of title in the plant and that the
assessing officer completely went on a wrong tangent in rejecting the
contentions raised by the petitioner. Relying upon the decisions in Deputy
Commissioner, Central Excise and Another v. Sushil and Company
[(2016) 13 SCC 223] Arun Kumar and Others v. Union of India and
Others [(2007) 1 SCC 732] and Paradip Port Trust v. Sales Tax Officer
and Others [(1998) 4 SCC 90] It was contended that, the jurisdictional fact
of transfer of property does not exist to enable fastening of liability upon
W.P.(C) Nos.17451 & 18783/21
the petitioner. It was also contended that, when a jurisdictional fact has
been erroneously decided, this Court under Article 226 of the Constitution
of India can interfere, instead of relegating the parties to the alternative
remedy of an appeal.
8. Smt.Thushara James, learned Senior Government Pleader on the
other hand contended that in the circumstances of the instant case, the
jurisdictional fact of transfer of property in the alleged works contract can
be decided only on an appreciation of disputed questions of fact. Various
factors in the impugned assessment orders were referred to justify the
contention that this Court under Article 226 cannot consider seriously
disputed questions of fact.
9. On a consideration of the rival contentions, this Court is of the
opinion that this is not a fit case for invoking the writ jurisdiction under
Article 226 of the Constitution of India. There is no dispute that if an
authority acts without jurisdiction or in excess of jurisdiction, this Court
can, in exercise of its powers under Article 226 of the Constitution of India
interfere and issue a writ of certiorari. The jurisdictional fact, as held in
Arun Kumar and Others v. Union of India and Others [(2007) 1 SCC
732] is a fact which must exist before the authority assumes jurisdiction
over a particular matter. When the existence of the jurisdictional fact can
be decided only by an appreciation of disputed questions of fact,
W.P.(C) Nos.17451 & 18783/21
necessarily the parties are to be relegated to the appellate remedy under
the statute.
10. A reading of the impugned assessment orders reveal that the
assessing officer has referred to various circumstances for arriving at the
conclusion that the work executed by the petitioner on the basis of Ext.P1
agreement to build, own, operate and supply industrial gases, exclusively
for BPCL, comes within the purview of works contract and the alleged
consideration for the work executed, amounts to works contract receipt,
taxable at 14.5% instead of 5% on supply of industrial gases.
11. The question whether Ext.P1 agreement is a composite
agreement for a works contract or whether it is purely an agreement
without any transfer of property involved in it, is a mixed question of fact
and law. Though the agreement is termed as an agreement for the supply
of Hydrogen, Nitrogen and Steam, the assessing officer has relied on
various circumstances to regard the agreement as a works contract. The
correctness or otherwise of the circumstances relied upon by the
assessing officer in the impugned assessment orders, certainly require a
detailed appreciation of facts. Merely because the amount involved in the
order of assessment is large or merely because the nomenclature used in
the agreement is as an agreement for supply, those by themselves are not
sufficient justification to invoke the jurisdiction under Article 226 of the
W.P.(C) Nos.17451 & 18783/21
Constitution of India.
12. Similarly, the issue involved in W.P.(C) No.18783 of 2021 also
requires appreciation of disputed facts. The rejection of input tax credit of
tax paid on capital goods has been rejected for the reason that petitioner
had executed the works contract for BPCL. The finding is intrinsically
connected with the question involved in W.P.(C) No.17451 of 2021 and
hence in the said case also, petitioner must be relegated to the statutory
remedy of appeal.
13. As held in the decisions in Union of India and Another v.
Guwahati Carbon Limited [(2012) 11 SCC 651] and Assistant
Commissioner of State Tax and Others v. Commercial Steel Limited
[(2021) SCC Online 884] existence of alternative remedy is a factor to be
considered by the writ court before exercising its jurisdiction. The remedy
of an assessee against an assessment order is to prefer a statutory
appeal and pursue remedies available under law and not to invoke the
jurisdiction under Article 226 under the guise of a proclaimed jurisdictional
question. On a consideration of the circumstances, this Court does not
find any reason to exercise the writ jurisdiction under Article 226 of the
Constitution of India.
14. In this context, it is relevant to observe that the impugned
assessment orders were issued on 15.07.2021 and W.P.(C) No.17451 of
W.P.(C) Nos.17451 & 18783/21
2021 was filed on 13.08.2021 while W.P.(C) No.18783 of 2021 was filed
on 03.09.2021. Both these writ petitions were pending consideration
before this Court at the admission stage itself, from the aforesaid date till
today. Since this Court has expressed its disinclination to entertain these
two writ petitions, the period spent by the petitioner before this Court, in
these two writ petitions, must be permitted to be excluded while calculating
the limitation period for filing the appeals as directed. Hence, It is declared
that petitioner will be entitled to seek exclusion of time for the period spent
by the petitioner pursuing these two writ petitions while pursuing the
statutory remedy of appeals.
15. With the above observations, I find no reason to interfere with
the impugned orders in the exercise of jurisdiction under Article 226 of the
Constitution of India. However, the liberty of the petitioner to pursue the
statutory remedy of appeal stands reserved, and the petitioner will be
entitled to seek exclusion of time as directed while preferring the appeals.
The writ petitions are dismissed.
Sd/-
BECHU KURIAN THOMAS
JUDGE
vps
W.P.(C) Nos.17451 & 18783/21
APPENDIX OF WP(C) 17451/2021
PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE AGREEMENT DATED
21.08.2013 WITH M/S. BHARATH PETROLEUM
CORPORATION LIMITED (BPCL)
EXHIBIT P2 TRUE COPY OF THE PENALTY ORDER FOR THE
ASSESSMENT YEAR 20916-17 DATED
06.07.2020
EXHIBIT P3 TRUE COPY OF THE JUDGMENT DATED
23.10.2020 OF THIS HON'BLE COURT IN WPC
NO.18443 OF 2020
EXHIBIT P4 TRUE COPY OF THE ORDER OF THIS HON'BLE
COURT IN REVISION PETITION NO.1015/202
IN WPC NO.18443/2020 DATED 11.02.2021
EXHIBIT P5 TRUE COPY OF THE MEMORANDUM OF WRIT
APPEAL FILED BEFORE THIS HON'BLE COURT
IN WA NO.374/2021
EXHIBIT P6 TRUE COPY OF THE ORDER DATED 23.02.2021
OF THIS HON'BLE IN WA NO.374/2021
EXHIBIT P7 TRUE COPY OF THE NOTICE UNDER SECTION
25(1) OF THE KVAT ACT, 2003 DATED
01.10.2020
EXHIBIT P8 TRUE COPY OF THE NOTICE UNDER SECTION
25(1) OF THE KVAT ACT, 2003 DATED
01.12.2020
EXHIBIT P9 TRUE COPY OF THE NOTICE UNDER SECTION
25(1) OF THE KVAT ACT, 2003 DATED
25.11.2020
EXHIBIT P10 TRUE REPLY OF PETITIONER DATED
15.01.2021
EXHIBIT P11 TRUE REPLY OF PETITIONER DATED
29.01.2021
W.P.(C) Nos.17451 & 18783/21
EXHIBIT P12 TRUE COPY OF THE REPLY DATED 03.02.2021
FILED FOR THE ASSESSMENT YEAR 2016-17
EXHIBIT P13 TRUE COPY OF THE REPLY DATED 03.02.2021
FILED BY THE PETITIONER FOR THE
ASSESSMENT YEAR 2017-18
EXHIBIT P14 TRUE COPY OF THE REVISED NOTICE, ISSUED
BY THE RESPONDENT DATED 22.03.2021 FOR
THE ASSESSMENT YEAR 2015-16
EXHIBIT P15 TRUE COPY OF THE REVISED NOTICE, ISSUED
BY THE RESPONDENT DATED 19.03.2021 FOR
THE ASSESSMENT YEAR 2016-17
EXHIBIT P16 TRUE COPY OF THE REVISED NOTICE, ISSUED
BY THE RESPONDENT DATED 19.03.2021 FOR
THE ASSESSMENT YEAR 2017-18
EXHIBIT P17 TRUE COPY OF THE REPLY FOR 2015-16 DATED
21.04.2021
EXHIBIT P18 TRUE COPY OF THE REPLY FOR 2016-17 DATED
21.04.2021
EXHIBIT P19 TRUE COPY OF THE REPLY FOR 2017-18 DATED
21.04.2021
EXHIBIT P20 TRUE COPY OF THE ADDITIONAL GROUNDS
DATED 14.07.2021 FILED BY THE PETITIONER
EXHIBIT P21 TRUE COPY OF ASSESSMENT ORDER DATED
15.07.2021 FOR THE ASSESSMENT YEAR 2015-
EXHIBIT P22 TRUE COPY OF ASSESSMENT ORDER DATED
15.07.2021 FOR THE ASSESSMENT YEAR 2016-
EXHIBIT P23 TRUE COPY OF ASSESSMENT ORDER DATED
15.07.2021 FOR THE ASSESSMENT YEAR 2017-
EXHIBIT P24 TRUE COPY OF SHOW CAUSE NOTICE DATED
16.07.2021 FOR THE ASSESSMENT YEAR 2014-
W.P.(C) Nos.17451 & 18783/21
APPENDIX OF WP(C) 18783/2021
PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE AGREEMENT WITH BPCL
DATED 21/08/2013.
EXHIBIT P2 TRUE COPY OF THE PENALTY ORDER FOR THE
ASSESSMENT YEAR 2016-17 DATED
06/07/2020.
EXHIBIT P3 TRUE COPY OF JUDGMENT DATED 23/10/2020
OF THIS HON'BLE COURT IN WP(C) NO.18443
OF 2020.
EXHIBIT P4 TRUE COPY OF THE ORDER DATED 11/02/2021
OF THIS HON'BLE COURT IN
R.P.NO.1015/2020 IN WP(C) NO.18443/2020.
EXHIBIT P5 TRUE COPY OF THE MEMORANDUM OF WRIT
APPEAL FILED BEFORE THIS HON'BLE COURT
IN WA 374/2021.
EXHIBIT P6 TRUE COPY OF THE ORDER DATED 23/02/2021
PASSED BY THIS HON'BLE IN WA
NO.374/2021.
EXHIBIT P7 TRUE COPY OF ASSESSMENT ORDER DATED
15/07/2021 FOR THE ASSESSMENT YEAR 2017-
EXHIBIT P8 TRUE COPY OF APPLICATIONS DATED
12/04/2017 FOR GRANT OF INPUT TAX CREDIT
OF CAPITAL GOODS AMOUNTING TO
RS.57,63,764/-.
EXHIBIT P9 TRUE COPY OF APPLICATION DATED
19;/06/2017 FOR GRANT OF ITC OF CAPITAL
GOODS AMOUNTING TO RS.12,17,637/-.
EXHIBIT P10 TRUE COPY OF IMPUGNED ASSESSMENT ORDER
DATED 16/07/2021.
