THE VARDHANI PLANTATIONS (P) LTD. vs. THE INSPECTING ASST. COMMISSIONER

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN MONDAY, THE 11TH DAY OF AUGUST 2014/20TH SRAVANA, 1936 WP(C).No. 27454 of 2010 (F) ---------------------------- PETITIONER: -------------------- THE VARDHANI PLANTATIONS (P) LTD. "PLANTATION HOUSE", PATTOM SIVARAMAKRISHNA, AIYAR ROAD PATTOM PALACE P.O., THIRUVANANTHAPURAM-4 REPRESENTED BY ITS DIRECTOR, MR.T.S.RAJAGOPALAN. BY ADVS.SRI.V.ABRAHAM MARKOS SRI.MATHEWS K.UTHUPPACHAN SRI.BINU MATHEW SRI.TERRY V.JAMES SRI.B.J.JOHN PRAKASH SRI.TOM THOMAS (KAKKUZHIYIL) RESPONDENTS: ------------------------ 1. THE INSPECTING ASST. COMMISSIONER COMMERCIAL TAXES, THIRUVANANTHAPURAM-695 001. 2. THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM-695 001. BY SPL. GOVERNMENT PLEADER DR.SEBASTIAN CHAMPAPPILLY

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 11-08-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).No. 27454 of 2010 (F) APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF JUDGMENT DATED 25.11.2004 OF THIS HONOURABLE COURT IN WPC 34247/2004. EXT.P2(a): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 1987-88. EXT.P2(b): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 1988-89. EXT.P2(c): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 1990-91. EXT.P2(d): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 1991-92. EXT.P2(e): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 1992-93. EXT.P2(f): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 1993-94. EXT.P2(g): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 1994-95. EXT.P2(h): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 1995-96. EXT.P2(i): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 1996-97. EXT.P2(j): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 1997-98. EXT.P2(k): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 1998-99. EXT.P2(l): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 2000-01. EXT.P2(m): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 2001-02. EXT.P2(n): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 2002-03.

WP(C).No. 27454 of 2010 (F) EXT.P2(o): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 2003-04. EXT.P2(p): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 2004-05. EXT.P2(q): COPY OF MODIFIED ASSESSMENT ORDER FOR ASSESSMENT YEAR 2005-06. EXT.P3: COPY OF COMPUTATION OF AGRICULTURAL INCOME FOR 2007-08. EXT.P4: COPY OF ASSESSMENT ORDER DATED 24.12.2008 FOR ASSESSMENT YEAR 2006-2007. EXT.P5: COPY OF ASSESSMENT ORDER DATED 24.12.2008 FOR ASSESSMENT YEAR 2007-2008. EXT.P6: COPY OF APPLICATION DATED 7.11.2009 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT UNDER SECTION 37(4) AND 37(5) FOR 2006-07. EXT.P7: COPY OF APPLICATION DATED 7.11.2009 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT UNDER SECTION 37(4) AND 37(5) FOR 2007-08. EXT.P8: COPY OF ORDER DATED 1.7.2010 OF THE 2ND RESPONDENT. RESPONDENTS' EXHIBITS: NIL /TRUE COPY/ P.A. TO JUDGE AV

K.VINOD CHANDRAN, J.

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W.P.(C)No.27454 of 2010 =-=-=-=-=-=-=-=-=-=-=-=-=-=-= Dated this the 11th day of August, 2014

JUDGMENT The petitioner is aggrieved by Ext.P8 order, passed by the Commissioner, Commercial Taxes. The petitioner invoked the powers conferred under the proviso to sub-section (4) of section 37, of the Kerala Agricultural Income Tax Act, 1991. Sub-section (4) levies simple interest at the rate of 12% per annum, for every month of delay or part thereof, on the unpaid tax. The proviso referred to above, confers the Commissioner, with a discretion to reduce or waive the interest payable, on being satisfied that there is sufficient reason for non-payment of the tax; in time immediately on demand being raised. 2. The essential contention of the petitioner is that, the petitioner's payment of tax was affected only by reason of the delay in concluding the assessment proceedings for the previous years, the assessee filed returns raising similar contentions and making identical claims; as in the earlier years. The assessment for the years from 1986-1987 to 2005-2006, with respect to the respective previous years, was pending before the Assessing Officer for long.

W.P.(C)No.27454 of 2010 2 The petitioner had also sought for carrying forward the losses in each of the said years. With respect to one of the years being 2001- 2002, the petitioner was before this Court seeking expeditious consideration of the conclusion of the assessment proceedings. The same was granted by Ext.P1 judgment delivered on 25.11.2004. Ext.P1 directed conclusion of assessment proceedings for the subject assessment year within a period of two months. The department dragged its feet and never completed the same. 3. In any event it is borne out by Ext.P2 series of assessment orders, that the earlier years' assessments were completed only on 4.10.2008. By that time, the petitioner had filed the returns for the years, which are the subject matter of the above writ petition, being 2006-2007 and 2007-2008. The very same contention with respect to the earlier years were made in the returns filed and carry forward loss also was claimed. The assessment orders for the earlier years were concluded following the very same principle in the subject years, being of 2006-2007 and 2007-2008. Hence, there was a demand for tax, as is evidenced from Exts.P4 and P5 respective assessments, concluded for the subject years. 3. The assessee hence invoked the discretionary remedy under sub-section (4) of section 37 to obtain reduction or waiver of

W.P.(C)No.27454 of 2010 3 the interest charged as per sub-section (4) of section 37 of the Kerala Agricultural Income Tax Act, 1991. The Commissioner found that the levy of interest is automatic and the disallowances made, as also the additions arrived at, by the Assessing authority, in accordance with law only discloses the petitioner having not filed a return in compliance with the statute. Hence the Commissioner disallowed the claim made under the proviso to sub-section (4) of section 37. 4. At first blush, there can be no interference of Ext.P8; especially since the Commissioner was exercising a discretionary remedy. However it is trite that, when exercising discretion the authority who is conferred with such power has to take into consideration all the relevant factors and provisions conferring such discretion; which is in mitigation of the assessee's hardship. The assessee may have filed an erroneous return. The assessee's assessments for the earlier years but were not concluded for a long period. Extending over more than two decades, the assessee had been filing returns as it had done in the earlier years; claiming carry forward losses as also deductions as it had returned in the earlier years. The assessee, if had been modified of the disallowances made and the additions admitted on an interpretation of the

W.P.(C)No.27454 of 2010 4 provisions of the Act; definitely there would be no case for exercising the discretion. 5. In the instant case, considering the fact, that the earlier assessments had been delayed for considerable periods despite the assessee having moved this Court for expeditious consideration, it is only proper that the assessee may be granted a reduction in interest though not a complete waiver. Only in such circumstances, this Court is persuaded to interfere with the refusal of the Commissioner, to exercise discretion conferred under sub-section (4) of section 37. It is also to be noticed that on the assessment order being passed, the assessee immediately paid up the tax amounts and has not challenged the orders in statutory appeals. Taking all the above circumstances into consideration, the order passed, by Ext.P8, shall be modified to the extent of granting 50% deduction of the interest levied in both the case. The assessee shall pay up the said amounts at any rate within two months from the date of receipt of a copy of this judgment and thereon, the recovery shall be kept in abeyance unless two consecutive defaults are committed. On defaults necessarily the Bank would revive the proceedings and proceed even against the properties of the petitioner.

W.P.(C)No.27454 of 2010 5 The writ petition shall stand disposed of. Sd/- K.VINOD CHANDRAN JUDGE vpv