High Court of KeralaWP(C)/2266/2015disposed of

Shabu N.P. v. The Commercial Tax Officer

2015-01-29Honourable Dr. Justice A.K.Jayasankaran Nambiar6 pages

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT:

THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR THURSDAY, THE 29TH DAY OF JANUARY 2015/9TH MAGHA, 1936 WP(C).No. 2266 of 2015 (G) --------------------------- PETITIONER(S):

----------------------- SHABU N.P., NEELIYATTIL HOUSE, CHALISSERY, PALAKKAD.

BY ADVS.SRI.N.MURALEEDHARAN NAIR, SRI.V.K.SHAMUSUDHEEN.

RESPONDENT(S):

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

1. THE COMMERCIAL TAX OFFICER, PATTAMBI - 679 306.

2. INSPECTING ASSISTANT COMMISSIONER, COMMERCIAL TAXES, PALAKKAD - 678 001.

BY GOVT. PLEADER SMT.SHOBA ANNAMMA EAPEN.

THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 29-01-2015, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

rs.

WP(C).No. 2266 of 2015 (G) APPENDIX PETITIONER'S EXHIBITS:- EXT.P-1:

TRUE COPY OF THE LICENCE OF CHALISSERY GRAMA PANCHAYATH NO.189/13-14 DATED 19.12.2013 OF THE PETITIONER. EXT.P-2:

TRUE COPY OF THE LICENCE ISSUED BY THE CHALISSERY GRAMA PANCHAYATH DATED 01.04.2014.

EXT.P-3:

TRUE COPY OF THE APPLICATION FOR REGISTRATION FILED BEFORE THE 1ST RESPONDENT.

EXT.P-4:

TRUE COPY OF THE NATIONAL SAVINGS CERTIFICATE NO.33EF 079708 DATED 09.04.2014.

EXT.P-5:

TRUE COPY OF THE NATIONAL SAVINGS CERTIFICATE NO.77DD 307483 DATED 09.04.2014.

EXT.P-6:

TRUE COPY OF THE SHOP INSPECTION REPORT DATED 22/05/2014.

EXT.P-7:

TRUE COPY OF THE NOTICE ISSUED BY THE 1ST RESPONDENT DATED 01.09.2014.

RESPONDENT'S EXHIBITS:- NIL.

//TRUE COPY// P.A. TO JUDGE rs.

A.K.JAYASANKARAN NAMBIAR, J.

................................................. ............................................... Dated this the 29th day of January, 2015

JUDGMENT

The petitioner is a person, who proposes to commence business in pepper and arecanut. With a view to getting registration under the Kerala Value Added Tax Act, 2003 and Central Sales Tax Act, the petitioner had approached the respondents, through an application filed online, for registration certificates under the two enactments referred to above.

2. On a consideration of the application submitted by the petitioner, and on noticing that the estimated turnover declared by the petitioner was an amount of Rs.12,00,000/-, the respondents by Ext.P7 notice directed the petitioner to furnish fixed deposit of Rs.2,00,000/- and a security bond in Form 6 amounting to Rs.5,00,000/- with solvency, in terms of the KVAT Act, 2003, as a condition for the grant of registration.

3. The petitioner is aggrieved by the insistence of the respondents of such exorbitant amounts by way of additional security and hence approaches this Court, through the present writ petition, seeking a modification of the terms which have been stipulated as a condition for the grant of registration.

4. I have heard Sri.N.Muraleedharan Nair, Learned counsel for the

petitioner and Smt.Sobha Annamma Eappen, learned Government Pleader for the respondents.

5. On a consideration of the facts and circumstances of the case and also the submissions made across the Bar, I find that the petitioner is a person who proposes to commence business in commodities, that have been classified as evasion prone commodities within the State of Kerala. It is for the said reason that the respondents have insisted on additional security from the petitioner, as a condition for the grant of registration. No doubt, under the provisions of the KVAT Act, the respondent is empowered to insist on additional security from persons like the petitioner, who propose to commence business in evasion prone commodities. There is a necessity, however, of striking a balance between protecting the interests of the revenue, on the one hand, and the interests of the dealer, who proposes to commence business in the State.

In the instant case, the petitioner has declared that the turnover that he expects to achieve in the first year of business is Rs.12,00,000/-. The estimation that is to be done by the respondents, for the purpose of demanding additional security from a dealer proposing to do business in evasion prone commodities, must necessarily take into account the declaration given by the dealer in question as to the expected turnover in the forthcoming assessment year.

doubt, an estimation cannot be done with mathematical exactitude and hence, the respondent authorities would have to work out a reasonable formula for the demand of additional security. The amounts demanded must be a reasonable, in that it should be such that a new entrepreneur, commencing business activities, would be able to provide. In the instant case, in the notice issued to the petitioner, I do not see such an exercise having been done by the respondents. Taking into account, the declaration of the petitioner, therefore, I feel that the writ petition can be disposed with the following directions with regard to the additional security to be demanded from the petitioner :

(i) The petitioner having declared an estimated turnover of Rs.12,00,000/- for the first year of business, the additional security to be demanded from the petitioner can be quantified at 10% of the estimated turnover declared by the petitioner. This is arrived at by taking into account the fact that the rate of tax applicable to the said commodities, is presently 5% advalorem.

(ii) The petitioner shall pay an amount of Rs.1,20,000/- towards additional security demanded by the respondents as a condition for the grant of registration. This amount will be over and in addition to the security

already furnished by the petitioners and the other formalities to be complied with in connection with the grant of registration.

(iii) The petitioner shall also file an undertaking before the registering authority to the effect that he will intimate the registering authority, when his turnover crosses 90% of the limit declared by him in his declaration. This is for the purposes of enabling the registering authority to revise the additional security collected from the petitioner at that stage, if it is so required.

(iv) It is made clear that, if the petitioner commits default in any of the aforesaid conditions, he will lose the benefit of this judgment and the respondents will be free to proceed against the petitioner for demand of any amount towards the additional security in accordance with the provisions of the KVAT Act/CST Act.

The writ petition is disposed with the above directions. Sd/- A.K.JAYASANKARAN NAMBIAR JUDGE AMV/29/01/