KUNNIL USUF MOIDEEN KUNHI vs. STATE TAX OFFICER I

WP(C)/3966/2022HC KeralaKLHC01008709202208 February 2022Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS6 pages

AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that the interest of justice warranted granting the petitioner more time to produce the original verification letters, especially since the petitioner claimed they were now available. The Court reasoned that if the letters were available, an opportunity should be granted, even if the circumstances did not strictly warrant such indulgence. Considering the potential impact of Covid-19 regulations on timely compliance, a lenient view was adopted to render justice without causing serious prejudice to the revenue. Consequently, the impugned order (Ext.P4) was set aside, and the petitioner was granted liberty to produce the original verification letters before the 1st respondent (State Tax Officer) on 28.02.2022 at 11 a.m. If the petitioner failed to produce the letters by that date, the 1st respondent was free to proceed in accordance with law. The ratio decidendi is that procedural strictness can be relaxed in the interest of justice, particularly when documents are available and there's a possibility of leniency due to external factors like the pandemic, to avoid an inequitable outcome for the assessee.

What were the facts?

The petitioner, Kunnil Usuf Moideen Kunhi, proprietor of M/s. Malabar Trading Company, is an assessee under the Central Sales Tax Act, 1956. For the assessment year 2015-2016, the assessing officer rejected C-Forms for not being uploaded on KVAT TINXSYS. An appeal led to an appellate order (Ext.P2) directing the petitioner to produce original verification letters from the State concerned for the assessing authority to conduct an enquiry and pass fresh orders. The petitioner received a notice (Ext.P3) for a hearing on 07.10.2021. The petitioner's representative appeared a day prior and orally requested 20 days' time to produce the letters. The assessing officer, by the impugned order (Ext.P4) dated 25.10.2021, rejected this request, granting only two days, and subsequently passed the order reviving the original assessment due to non-production.

What were the issues?

1. Whether the assessing officer erred in not granting the petitioner the requested 20 days' time to produce original verification letters, thereby leading to an inequitable assessment order? (Mixed question of law and fact, concerning principles of natural justice and procedural fairness under the Central Sales Tax Act, 1956). Assessee's contention: The assessing officer should have granted the 20 days' time sought, which would have allowed the petitioner to avoid an inequitable assessment. The petitioner claims the original verification letters are now available and can be produced. Revenue's contention: There is no record of the petitioner seeking 20 days' time. The petitioner was granted two days to produce the verification letters, and upon failure to do so, the assessing authority had no alternative but to revive the assessment order.

Which sections of the Income-tax Act were involved?

Central Sales Tax Act, 1956

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS TUESDAY, THE 8TH DAY OF FEBRUARY 2022 / 19TH MAGHA, 1943 PETITIONER: KUNNIL USUF MOIDEEN KUNHI, PROPRIETOR, M/S.MALABAR TRADING COMPANY, CHERKALA, KASARAGODE ADV.JAIKRISHNA RESPONDENT/S:

STATE TAX OFFICER I FORMERLY DESIGNATED AS ASSISTANT COMIISSIONER OF STATE TAX, STATE GOODS AND SERVICE TAX DEPARTMENT, 1ST FLOOR, NEAR CLOCK TOWER, RAILWAY STATION ROAD P.O., KASARAGOD – 671 121.

DEPUTY COMMISSIONER (APPEALS) OFFICE OF DEPUTY COMMISSIONER (APPEALS) STATE GOODS AND SERVICE TAX DEPARTMENT, ERANHIPHALAM P.O., KOZHIKODE – 673 006. SMT.JASMIN M.M., GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08.02.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

BECHU KURIAN THOMAS, J …......….................................. W.P.(C) No.3966 of 2022 ….................................. Dated this the 8 th day of February, 2022 JUDGMENT The limited prayer sought for by the petitioner in this writ petition is to quash Ext.P4 assessment order and be granted an opportunity to produce the verification letters as directed in Ext.P2 appellate order. 2. Petitioner is an assessee under the Central Sales Tax Act, 1956. For the assessment year 2015-2016, the assessing officer rejected the C-Forms on the ground that they were not uploaded on KVAT TINXSYS. Petitioner preferred an appeal against the order of assessment and Ext.P2 dated 30.06.2020, petitioner was directed to produce the original verification letters issued by the State concerned before the assessing authority and directed the assessing authority to conduct an enquiry on the genuineness of the letter and to pass fresh orders within two months from the date of receipt of the order. According to the petitioner, Ext.P3 notice of hearing

was issued directing the petitioner to appear and produce the original verification letters on 07.10.2021. Based on the said communication, the authorised representative of the petitioner appeared before the assessing officer a day prior to the date fixed for hearing and made an oral request seeking 20 days time for producing the original verification letters. However, ignoring the said request, the assessing officer by the impugned order Ext.P4 dated 25.10.2021, rejected the request and granted only two days time to produce the original verification letters. Thereafter, since the petitioner failed to produce the verification letters, the impugned order was passed, reviving the original assessment. Petitioner challenges the said order dated 25.10.2021. 3. Sri.R.Jaikrishna, the learned counsel for the petitioner submitted that the assessing officer ought to have granted the period of 20 days sought for by the petitioner and if the said request had been granted petitioner could have avoided an inequitable assessment order against him. The learned counsel further, submitted that petitioner has already handed over the original verification letters to his authorized representative

and if any day is fixed by this Court, the same can be produced for consideration by the assessing officer. 4. I have heard Smt.Jasmine M.M., the learned Government Pleader also. She pointed out that there was nothing on record to show that petitioner had sought for 20 days time, and on the other hand as is evident from Ext.P4 itself the petitioner was given two days time to produce the original verification letter. On failure to produce the letters, the assessing authority had no alternative other than to revive the assessment order. 5. I have considered the submissions made as above. I am of the view that interest of justice warrants petitioner be granted a breathing time to produce the original of the verification letters, especially since the petitioner submits that said letters are now available with him. If the original verification letters are available with the petitioner, there is no reason why an opportunity should not be granted, though stricto sensu the circumstance may not warrant such an indulgence to be shown. Since the strict adherence to time may not have been possible due to Covid-19 regulations, a lenient

view can be adopted to render justice to the assessee, without causing serious prejudice to the revenue. 6. In view of the above deliberations, I am of the opinion that Ext.P4 order dated 25.10.2021 is liable to be set aside, granting liberty to the petitioner to produce the original verification letters, directed to be produced in Ext.P2 order of the appellate authority, on 28.02.2022 at 11 a.m., before the

st respondent. 7. If the petitioner fails to produce the said verification letters on or before that day, the 1 st respondent shall be free to proceed in accordance with law. To enable such consideration as directed above, Ext.P4 shall stand set aside. The writ petition is allowed as above. Sd/- BECHU KURIAN THOMAS, JUDGE AMV/08/02//2022

APPENDIX PETITIONERS EXHIBITS : EXT.P1 COPY OF THE ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT AY 2015-2016 (CST) DATED 06.07.2019. EXT.P2 COPY OF THE APPELLATE ORDER ISSUED BY THE 2ND RESPONDENT AY 2015-2016 (CST) DATED 30.06.2020. EXT.P3 COPY OF THE NOTICE ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER DATED 24.09.2021. EXT.P4 COPY OF THE ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT DATED 25.10.2021. RESPONDENTS EXHIBITS : NIL TRUE COPY

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