V.J.Dharmarajan vs Assistant Commissioner (Works ...
2024 Latest Caselaw 8730 Ker

Kerala High Court

V.J.Dharmarajan vs Assistant Commissioner (Works ... on 27 March, 2024

    IN THE HIGH COURT OF KERALA AT ERNAKULAM
                      PRESENT
  THE HONOURABLE MR. JUSTICE M.A.ABDUL HAKHIM
     WEDNESDAY, THE 27TH DAY OF MARCH 2024 / 7TH
                   CHAITHRA, 1946
                WP(C) NO. 23551 OF 2016
PETITIONER:

        V.J.DHARMARAJAN
        PROPRIETOR, M/S. KITTU ELECTRICALS,
        KANGARAPPADY,VADAVUKODE P.O, COCHIN 682
        021, ERNAKULAM DISTRICT.
        BY ADV SRI.TOMSON T.EMMANUEL

RESPONDENTS:

   1    ASSISTANT COMMISSIONER (WORKS
        CONTRACT)
        COMMERCIAL TAXES, CLAS TOWER, COCHIN 682
        018.
   2    STATE OF KERALA
        REPRESENTED BY SECRETARY TO TAXES
        DEPARTMENT,SECRETARIAT,
        THIRUVANANTHAPURAM 695 001.
   3    THE MUNICIPAL SECRETARY
        KOTHAMANGALAM MUNICIPALITY,
        KOTHAMANGALAM, 686 691, ERNAKULAM
        DISTRICT.
        BY ADVS.
        GOVERNMENT PLEADER
        SRI.PEEYUS A KOTTAM, SC, KOTHAMANGALAM
        MUNICIPALITY
        SHRI.JOICE GEORGE, SC, KOTHAMANGALAM
        MUNICIPALITY
                               2
W.P.(C) No.23551 of 2016




             SRI. SAYED M. THANGAL -GP
    THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 27.03.2024, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
                                      3
W.P.(C) No.23551 of 2016




                              JUDGMENT

Dated this the 27th day of March, 2024

1. The petitioner filed this writ petition contending that he is an

Electrical Contractor registered under the Kerala Value Added Tax Act

opted to pay tax under Section 8 of the Kerala Value Added Tax Act for

the years 2010-2011 to 2013-2014 and filed quarterly e-returns under

Section 8; that in accordance with the Liability Certificates issued by the

Respondent No.1 from time to time various Government Departments

deducted value added tax at source on compound rate; that the entire

contract receipts were issued to the petitioner by the Government

Departments only after deducting tax at source; that in accordance with

the available Tax Deduction Certificates petitioner filed quarterly e-

returns, wherein as no input tax credit is applicable hence the petitioner

need not upload purchase details in e-returns for the year 2010-2011 to

2013-2014; that certain Government Departments even though deducted

tax at source did not pay over the same to the Government in time and

did not issue Form No.20F from time to time which resulted in short

reporting of contract receipts; that alleging non filing of annual returns,

audited financial statements and defective filing of quarterly returns, the

Respondent No.1 issued Ext. P3 series of Pre-Assessment Notices , to

which the petitioner submitted Ext. P4 Reply; and that the Respondent

No.1 passed Exts. P5, P5(a), P5(b) and P5(c) orders under Section 25(1)

of the KVAT Act, completing best judgment assessment and demanding

balance tax and interest from the petitioner with respect to the years

2010-2011 to 2013-2014. The petitioner challenges the impugned orders

on the grounds that no opportunity as provided under Section 22 of the

KVAT Act is given to him ;that he could not file annual return on account

of non availability of Form 20 F Certificates from the awarders which

are Government Authorities including the Respondent No.1; that the

mismatch happened in the books of accounts on account of the

generation of annual return as the petitioner could not file revised

quarterly e-return and that if the books of accounts of the petitioner were

verified properly the proceedings initiated as per Ext.P3 series of the

Pre-assessment notices could have been dropped.

2. The Respondent No.1 filed Counter Affidavit dated 28.10.2016

opposing the prayers in the Writ Petition contending, inter alia, that the

writ petition is not maintainable on account of the statutory remedies

provided under the provisions of the KVAT Act; that the proceedings as

per Ext.P3 series of Notices were issued since on verification of KV

ATIS build from others it was found that though the dealer had made

huge purchases, no purchases are declared in the quarterly returns filed;

that the suppression of purchases shows that the petitioner has

suppressed corresponding sales turnover; that it is a clear case of

escapement of turnover from self-assessment; that there is vast

difference between the undeclared purchases and deemed sales turnover

conceded; that though the petitioner contended that he had done

Government contracts using the materials which he purchased and that

the difference between purchase and contract receipts is for the reason of

non-receipt of payments in the year of doing work, no proper

explanation is given for the defects of non-filing of annual return and

profit and loss account, non-declaration of purchases including inter-

state purchase in the returns filed non-filing of closing stock inventory;

that the petitioner did not produce books of accounts even during

personal hearing and that the petitioner produced copies of certain Form

20F certificates and after verification of the same, eligible claim of TDS

is allowed.

3. I heard the Learned Counsel for the petitioner, the Learned

Government Pleader for the Respondents Nos.1 and 2 and the Counsel

for the Respondent No.3 .

4. Though the Respondents Nos.1& 2 raised question of maintainability

of the writ petition on account of the availability of statutory remedies, I

find from the records that this writ petition is filed on 13.07.2016 and on

18.07.2016 this Court passed an interim order staying further

proceedings pursuant to Ext.P5 series. In the said order, this Court has

recorded the submission of the Respondent No.3 that VAT amount

deducted from the petitioner's bill could not be deposited on account of a

mistake which the respondent No.3 will immediately rectify and

appropriate steps will be taken in that regard. Since the matter has been

pending in this Court for the last nearly 8 years and I find from the

pleadings that the proceedings as per Ext. P3 series of notices were

initiated on account of non-production of regular books of accounts by

the petitioner and non-payment of TDS amounts collected by the

Government departments, I deem it fit to entertain this writ petition.

5. The Respondent No.3 has not filed any pleading in this matter. It is not

clear whether it has deposited the TDS amount as undertaken before this

Court in the aforesaid Interim Order dated 18.07.2016. Any way, the

petitioner cannot be blamed for the default on the part of the Respondent

No.3 in remitting the TDS collected from the contract amount of the

petitioner.

6. In view of the above facts, I find that Exts. P5, P5(a), P5(b) & P5(c)

assessment orders are liable to be set aside in order to enable the

petitioner to produce regular books of accounts and to explain the defects

of non-filing of annual return and profit and loss account and non-

declaration of purchases etc. and also to enable the Respondent No.1 to

take suitable action for recovery of the TDS amount collected by

respondent No.3 from the petitioner's Bill.

7. Accordingly, this writ petition is disposed by setting aside Exts. P5,

P5(a), P5(b) & P5(c) Assessment Orders issued by the respondent No.1.

The Respondent No.1 shall give reasonable opportunity to the petitioner

to answer Ext.P3 series of Pre-Assessment Notices and to produce

records and the Respondent No.1 shall complete the assessment

proceedings in accordance with law, at any rate, within a period of four

months from the date of the receipt of a copy of this judgment. I also

direct the respondent No.1 to take appropriate steps against respondent

No.3 to demand proof of payment of TDS collected by it/or payment of

the same and in case of refusal from the part of respondent No.3 for

furnishing proof or payment, appropriate proceedings shall be taken

against it in accordance with law.

Sd/-

M.A.ABDUL HAKHIM JUDGE SMF

APPENDIX OF WP(C) 23551/2016

PETITIONER EXHIBITS EXHIBIT P1. TRUE COPY OF REGISTRATION CERTIFICATE DATED 10.08.07 ISSUED UNDER THE KERALA VALUE ADDED TAX ACT BY IST RESPONDENT.

EXHIBIT P1(A). TRUE COPY OF A CLASS CONTRACTORS REGISTRATION CARD NO.K/EL/7/A/147 DATED 3.3.16 ISSUED TO PETITIONER BY CHIEF ELECTRICAL ENGINEER OF KERALA STATE PUBLIC WORKS DEPARTMENT.

EXHIBIT P2. TRUE COPY OF RELEVANT PAGES OF DOCUMENTS ISSUED TO PETITIONER BY DIFFERENT GOVERNMENT DEPARTMENTS FOR 2010-11, TOWARDS PROOF OF RELEASE OF CONTRACT AMOUNT TO PETITIONER AGAINST LIABILITY CERTIFICATE ISSUED BY IST RESPONDENT, AFTER DEDUCTING TAX AT COMPOUNDED RATES.

EXHIBIT P2(A). TRUE COPY OF RELEVANT PAGES OF DOCUMENTS ISSUED TO PETITIONER BY DIFFERENT GOVERNMENT DEPARTMENTS FOR 2011-12, TOWARDS PROOF OF RELEASE OF CONTRACT AMOUNT TO PETITIONER AGAINST LIABILITY CERTIFICATE ISSUED BY IST RESPONDENT, AFTER DECUCTING TAX AT COMPOUNDED RATES.

EXHIBIT P2(B). TRUE COPY OF RELEVANT PAGES OF DOCUMENTS ISSUED TO PETITIONER BY DIFFERENT GOVERNMENT DEPARTMENTS FOR 2012-13, TOWARDS

PROOF OF RELEASE OF CONTRACT AMOUNT TO PETITIONER AGAINST LIABILITY CERTIFICATE ISSUED BY IST RESPONDENT, AFTER DECUCTING TAX AT COMPOUNDED RATES.

EXHIBIT P2(C). TRUE COPY OF RELEVANT PAGES OF DOCUMENTS ISSUED TO PETITIONER BY DIFFERENT GOVERNMENT DEPARTMENTS FOR 2013-14, TOWARDS PROOF OF RELEASE OF CONTRACT AMOUNT TO PETITIONER AGAINST LIABILITY CERTIFICATE ISSUED BY IST RESPONDENT, AFTER DECUCTING TAX AT COMPOUNDED RATES.

EXHIBIT P3. TRUE COPY OF NOTICE U/S. 25(1) OF THE KVAT ACT ISSUED TO PETITIONER BY IST RESPONDENT, PROPOSING BEST JUDGMENT ASSESSMENT FOR ON FILING OR FILING OF DEFECTIVE RETURNS FOR 2010-11 IN ASSESSING CONCEDED TURNOVER AT COMPOUNDED RATE.

EXHIBIT P3(A). TRUE COPY OF NOTICE U/S. 25(1) OF THE KVAT ACT ISSUED TO PETITIONER BY IST RESPONDENT, PROPOSING BEST JUDGMENT ASSESSMENT FOR ON FILING OR FILING OF DEFECTIVE RETURNS FOR 2011-12 IN ASSESSING CONCEDED TURNOVER AT COMPOUNDED RATE.

EXHIBIT P3(B). TRUE COPY OF NOTICE U/S. 25(1) OF THE KVAT ACT ISSUED TO PETITIONER BY IST RESPONDENT, PROPOSING BEST JUDGMENT ASSESSMENT FOR ON FILING OR FILING OF DEFECTIVE RETURNS FOR 2012-13 IN ASSESSING

CONCEDED TURNOVER AT COMPOUNDED RATE.

EXHIBIT P3(C). TRUE COPY OF NOTICE U/S. 25(1) OF THE KVAT ACT ISSUED TO PETITIONER BY IST RESPONDENT, PROPOSING BEST JUDGMENT ASSESSMENT FOR ON FILING OR FILING OF DEFECTIVE RETURNS FOR 2013-14 IN ASSESSING CONCEDED TURNOVER AT COMPOUNDED RATE.

EXHIBIT P4. TRUE COPY OF COMMON REPLY SUBMITTED BY PETITIONER AGAINST EXHIBIT P3 TO P3(C) NOTICES, BEFORE IST RESPONDENT.

EXHIBIT P5. TRUE COPY OF ORDER DATED 22.5.16 U/S. 25(1) FOR 2010-11, COMPLETED BY IST RESPONDENT, AFTER CREDITING ONLY A PORTION OF TDS.

EXHIBIT P5(A). TRUE COPY OF ORDER DATED 22.5.16 U/S. 25(1) FOR 2011-12, COMPLETED BY IST RESPONDENT, AFTER CREDITING ONLY A PORTION OF TDS.

EXHIBIT P5(B). TRUE COPY OF ORDER DATED 22.5.16 U/S. 25(1) FOR 2012-13, COMPLETED BY IST RESPONDENT, AFTER CREDITING ONLY A PORTION OF TDS.

EXHIBIT P5(C). TRUE COPY OF ORDER DATED 22.5.16 U/S. 25(1) FOR 2013-14, COMPLETED BY IST RESPONDENT, AFTER CREDITING ONLY A PORTION OF TDS.

EXHIBIT P6. TRUE COPY OF AUDIT REPORT IN FORM NO.13 AND 13A ALONG WITH AUDITED FINANCIAL STATEMENT FOR 2010-11 SUBMITTED BY PETITIONER.

EXHIBIT P6(A). TRUE COPY OF AUDIT REPORT IN

FORM NO.13 AND 13A ALONG WITH AUDITED FINANCIAL STATEMENT FOR 2011-12 SUBMITTED BY PETITIONER.

EXHIBIT P6(B). TRUE COPY OF AUDIT REPORT IN FORM NO.13 AND 13A ALONG WITH AUDITED FINANCIAL STATEMENT FOR 2012-13 SUBMITTED BY PETITIONER.

EXHIBIT P6(C). TRUE COPY OF AUDIT REPORT IN FORM NO.13 AND 13A ALONG WITH AUDITED FINANCIAL STATEMENT FOR 2013-14 SUBMITTED BY PETITIONER.

EXHIBIT P7. TRUE COPY OF CIRCULAR NO.27/2015 DATED 11.11.15 ISSUED BY COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM, INSISTING PRIOR VERIFICATION PRIOR VERIFICATION OF BOOKS OF ACCOUNTS BEFORE INITIATING BEST JUDGMENT ASSESSMENT, IN COMPLIANCE TO OBSERVATIONS OF THIS HONOURABLE COURT.