KERALA STATE BEVERAGES (MANUFACTURING AND MARKETING) CORPORATION LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX,

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WP(C)/4448/2020HC KeralaKLHC01012114202017 February 2020Author: HONOURABLE MR. JUSTICE AMIT RAWAL4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the recall of the stay order by the Assistant Commissioner of Income Tax without affording an opportunity of hearing to the petitioner was a violation of the principles of natural justice. The Court found the action to be wholly fallacious. Consequently, the order recalling the stay (Ext.P7) was set aside. The writ petition was allowed, and the matter was remanded to the respondent (Assistant Commissioner of Income Tax) to decide the issue afresh after providing the petitioner an opportunity of hearing, in accordance with law. The Court directed this exercise to be completed within one month of receiving a copy of the judgment. Until then, the interim order of stay was ordered to continue.

What were the facts?

The petitioner, Kerala State Beverages (Manufacturing and Marketing) Corporation Ltd., an assessee for income tax and the sole marketer of beverages in Kerala, filed an appeal for assessment year 2017-2018 against an assessment order dated 27.12.2019. The Assessing Authority had initially granted a stay on the collection of a balance amount of Rs. 495,94,14,726/- under Section 220(6) of the Income Tax Act, 1961. However, by an order dated 11.02.2020, this stay was recalled without providing the petitioner an opportunity of being heard. The petitioner contended that this action was a significant violation of the principles of natural justice and therefore unsustainable.

What were the issues?

1. Whether the recall of the stay order by the Assistant Commissioner of Income Tax, without affording an opportunity of hearing to the assessee, is in violation of the principles of natural justice and thus unsustainable? Assessee's Contention: The assessee argued that the recall of the stay order without a hearing constitutes a grave violation of the principles of natural justice and is therefore not sustainable in law. They relied on the fundamental right to be heard before an adverse order is passed. Revenue's Contention: The judgment does not record any specific contentions made by the revenue on this issue. The court proceeded to hear the parties and peruse the documents.

Which sections of the Income-tax Act were involved?

Section 220(6)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL MONDAY, THE 17TH DAY OF FEBRUARY 2020 / 28TH MAGHA, 1941 WP(C).No.4448 OF 2020(E) PETITIONER: KERALA STATE BEVERAGES (MANUFACTURING AND MARKETING) CORPORATION LTD., BEVCO TOWER,CANTONMENT HOUSE ROAD,PALAYAM VIKAS BHAVAN P.O., THIRUVANANTHAPURAM - 695 033, REPRESENTED BY ITS COMPANY SECRETARY MR.M.JOHN JOSEPH. BY ADVS. SRI.ANIL D. NAIR SMT. ARYA ANIL SHRI.GOKULRAJ L. SMT.SRI HARINI S.P. SRI.SREEJITH R.NAIR RESPONDENTS: ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1),THIRUVANANTHAPURAM - 695 003. ADV.SRI CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 17.02.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.4448 OF 2020(E) 2 JUDGMENT Dated this the 17th day of February 2020 Petitioner, an assessee of the income tax and monopoly holder of marketing of the beverages in the State of Kerala had preferred an appeal vide Ext.P2 for the assessment year 2017-2018 against the assessment order dated 27.12.2019. The assessing Authority while exercising the power under 220(6) of the Income Tax Act, 1951 had stayed the collection of balance amount of Rs.495,94,14,726/-. However, vide Ext.P7 dated 11.2.2020 without affording an opportunity of hearing, recalled the order of stay. The learned counsel for the petitioner submits that it is great violation of the principles of natural justice and therefore not sustainable. 2. Having heard the learned counsel for the parties and perused the documents, I am of the view that the WP(C).No.4448 OF 2020(E) 3 controversy involved in this case required to be revisited at the level of the Assistant Commissioner of Income Tax, circle 1 (1), Thiruvananthapuram for recalling the order of stay already granted, as otherwise, it is wholly fallacious and in violation of principles of natural justice. Accordingly Ext.P7 is set aside. The writ petition is allowed and the matter is remanded to the respondent to decide the matter afresh, after affording an opportunity of hearing to the petitioner in accordance with law. Let this exercise be undertaken within a period of one month from the date of receipt of a copy of this judgment. Till such time, the interim order already is granted ordered to continue. Sd/- AMIT RAWAL JUDGE ACM WP(C).No.4448 OF 2020(E) 4 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1

DATED 27/12/2019. EXHIBIT P2OF THE APPEAL FILED BEFORE THE STATUTORY AUTHORITY. EXHIBIT P3OF THE OFFICE MEMORANDUM ISSUED BY CBDT DATED 29/02/2016. EXHIBIT P4OF THE OFFICE MEMORANDUM DATED 31/07/2017. EXHIBIT P5OF THE STAY PETITION FILED U/S.220(6) BEFORE THE 1ST RESPONDENT. EXHIBIT P6OF THE STAY ORDER DATED 29/01/2020. EXHIBIT P7OF THE ORDER REVOKING EXHIBIT P6 ORDER DATED 11/02/2020.

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