M/S CLASSIC HUNDAI vs. ASSISTANT COMMISSIONER

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OP (TAX)/9/2023HC KeralaKLHC01042190202316 June 2023Bench: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR,HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.5 pages
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What did the High Court hold?

The High Court held that the Tribunal's exercise of discretion in passing a conditional order of stay, requiring a deposit of 30% of the disputed amount, was not wrong and did not warrant interference. The Court found that the Tribunal was right in passing such a conditional order, especially given the concurrent findings of the lower authorities against the petitioner and the non-compliance with a previous oral direction to deposit 30% of the tax. As a measure of indulgence, the Court directed that if the petitioner complies with the conditions in the stay order within one month from the date of the judgment, it would be treated as compliance with the conditions in the Tribunal's order dated 4.5.2023. The Court did not decide the merits of the appeal itself.

What were the facts?

The petitioner, M/s Classic Hyundai, a registered dealer under the Kerala Value Added Tax Act, 2003, is challenging a conditional order passed by the Kerala Value Added Tax/Agrl. Income Tax and Sales Tax Appellate Tribunal. The Tribunal, in its order dated 4.5.2023, granted an interim stay on the condition of depositing 30% of the disputed amount. The petitioner had filed an appeal (TA(VAT) No. 33 of 2021) against an assessment order and a penalty order for the assessment year 2016-2017. The dispute arose from the tax treatment of vehicle quotations for finance/hire purchase arrangements, where tax was paid on the actual sales value, not the quoted value. The petitioner claims to have complied with all statutory requirements and maintained proper accounts.

What were the issues?

1. Whether the Tribunal was justified in imposing a condition of depositing 30% of the disputed amount for granting an interim stay, considering the petitioner's contention of having a strong case on merits and the likelihood of the assessment and penalty orders being reversed in appeal. Assessee's contentions: The petitioner argues that they have a strong case on merits and are likely to succeed in their appeal, implying an entitlement to an unconditional stay. They also state that their books of accounts were properly maintained and they complied with the provisions of Section 42 of the Act. Revenue's contentions: The judgment does not record specific contentions from the revenue. However, the Tribunal's order, as described, indicates that the revenue's position was considered, leading to the imposition of a condition for the stay.

Which sections of the Income-tax Act were involved?

Section 42,Section 67(1),Section 22(1),Section 22(3)

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Heard together (2 matters)

OP (TAX) NO. 9 OF 2023
OP(Tax)9 of 2013

Read from the judgment's own cause title. This page is filed under one of them.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P. FRIDAY, THE 16TH DAY OF JUNE 2023 / 26TH JYAISHTA, 1945 OP (TAX) NO. 9 OF 2023 AGAINST THE ORDER OF THE KERALA VALUE ADDED TAX/AGRL. INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE IN INTP NO.39 OF 2023 DATED 4.5.2023 PETITIONER: M/S CLASSIC HUNDAI MUTTIL, WAYANAD, PIN - 673122 REPRESENTED BY ITS MANAGING PARTNER C.P.ABDULLA., BY ADVS. M.K.HAJARA C.RAMACHANDRAN HOWLATH JAHAN RESPONDENTS: 1 ASSISTANT COMMISSIONER STATE GOODS &, SERVICES TAX DEPARTMNET, KALPETTA, KERALA, ., PIN - 673121 2 JOINT COMMISSIONER (APPEALS) I ADDITIONAL CHARGE OF JOINT COMMISSIONER (APPEALS)II, STATE GOODS & SERVICES TAX DEPARTMENT, KOZHIKODE, ., PIN - 673020 3 THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH , KOZHIKODE, PIN – 673020 REPRESENTED BY ADDL.SECRETARY., 4 JOINT COMMISSIONER KGST REVENUE DEPARTMENT, WAYANAD, KALPETTA., PIN – 673121 BY SMT.M.M.JASMINE, GOVERNMENT PLEADER THIS OP TAX HAVING COME UP FOR ADMISSION ON 16.06.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

OP(Tax)9 of 2013 2 A.K. JAYASANKARAN NAMBIAR & MOHAMMED NIAS C.P., JJ …................................................... OP(Tax)No.9 of 2023 …............................................................. Dated this the 16th day of June, 2023 JUDGMENT Mohammed Nias.C.P. J This original petition is filed against the conditional order in the stay petition in INTP No.39 of 2023 in TA(VAT) No.33 of 2021 dated 4.5.2023, by which an interim stay was granted on condition of a deposit of 30% of the amount in dispute. 2. The petitioner is a registered dealer under the Kerala Value Added Tax Act, 2003 (for short, 'the Act') and is one of the authorised dealers of the motor vehicle brand 'Hyundai.' It is stated that the entire purchase and sales were properly reflected in the books of Accounts and that they duly complied with the provisions of Section 42 of the Act by filing Form No.13 and 13A, and no notice was ever issued to them either under Section 22(1) or 22(3) r/w Rule 38 proposing best judgment, before the next assessment period. The petitioner's books of Accounts were called for with respect to the assessment year 2016-2017 by the

OP(Tax)9 of 2013 3 Intelligence Officer, Wayanad, pursuant to which a notice under Section 67(1) proposing to impose maximum penalty alleging that it has not paid tax on a turnover of Rs.1,01,95,373/- being the value of vehicle quoted before sales to the clients for arranging finance/hire purchase through nationalized bank/other financial institution, whereas, the tax was paid only on the actual value shown and disclosed at the time of sales. The penalty was imposed vide Ext.P1 order and for the same period. By Ext P2, order assessment was also completed. Though the assessment order was modified by Ext.P3 appellate order, the same was carried in appeal before the Tribunal by way of Ext.P4 appeal along with a stay petition. 3. The Tribunal considered the stay petition and found that the petitioner was not entitled to an unconditional stay stating that the oral direction in the stay petition, INTP 46 of 2021, to deposit 30% of the tax pursuant to the assessment was not complied with. Thus, finding that no payment was made, the prayer to grant an unconditional stay was refused, taking into account the fact that there were concurrent findings of the authorities against the petitioner and accordingly passed Ext P5 impugned order. 4 ) Learned counsel submits that she has a very strong case to put forth on merits, and there is every likelihood of the orders being reversed in the appeal. On going through the impugned order, we find that under

OP(Tax)9 of 2013 4 the circumstances noticed above, the exercise of discretion by the Tribunal while passing the conditional order of stay cannot be held to be wrong in any manner to warrant interference in this original petition. We further hold that the Tribunal was right in passing a conditional order of stay as it did. However, as a measure of indulgence, we direct that if the petitioner complies with the conditions in the stay order within a period of one month from today, the same will be treated as compliance with the conditions in the order passed on 4.5.2023 vide Ext.P5. The original Petition (Tax) is disposed as above Sd/- A.K. JAYASANKARAN NAMBIAR,

JUDGE

Sd/- MOHAMMED NIAS C.P. JUDGE dlk/16.6.2023

OP(Tax)9 of 2013 5 APPENDIX OF OP (TAX) 9/2023 PETITIONER'S EXHIBITS Exhibit P1 TRUE COPY OF PENALTY ORDER NO. IB-38/17- 18(16-17) DATED: 27-04-2019 Exhibit P2 TRUE COPY OF THE ASSESSMENT ORDER NO.32140247804/2016-17 DATED: 21-07-2020 Exhibit P3 TRUE COPY OF THE APPELLATE ORDER Exhibit P4 TRUE COPY OF THE APPEAL FILED DATED: 15- 03-2021 -T.A (VAT) 33/2021 Exhibit P5 A TRUE COPY OF THE STAY ORDER ISSUED BY THE APPELLATE TRIBUNAL ,ADDITIONAL BENCH - KOZHIKODE DATED: 04-05-2023 IN INTP 39/2023 IN TA (VAT) 33/2021 Exhibit P6 TRUE COPY OF THE REVENUE RECOVERY NOTICE DATED: 15-02-2023 Exhibit P7 TRUE COPY OF THE JUDGMENT IN OP (TAX) NO.21 OF 2021 DATED :21-12-2021

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