2015 (4) TMI 36 - HC - VAT and Sales Tax

High Court upholds prospective operation of notification S.R.O.7/2002 affecting eligibility for tax exemptions under Kerala GST Act.

The High Court upheld the prospective operation of notification S.R.O.7/2002, leading to a reevaluation of a Private Limited Company's eligibility for ... Availability of an exemption to hatcheries and poultry farms, within the State - Exemption to the turnover of sale of poultry and chicks hatched and reared within the State with the exemption in respect of hatcheries being for the sale of poultry chicks and meat hatched and reared within the State and the exemption for poultry farmers being for the sale of poultry and meat reared in own farms within the State - Held that:- Exts.P7 and P8, being notices issued by the respondents in terms of the KGST Act, cannot be interfered with by this Court in proceedings under Article 226 of the Constitution of India except, in exceptional circumstances such as when it is established that the notices have been issued by authorities acting without any jurisdiction or in excess of their jurisdiction. Admittedly, in the instant case, the petitioner does not have a contention that the notices are vitiated by any jurisdictional error. Apprehension of the petitioner is only with regard to a possible delay, that may result from a prolonged agitation of the dispute, which, according to the petitioner, has already been resolved in his favour in the previous assessment years. This, in my view cannot be a justification for the petitioner to by-pass the statutory remedies available to him under the Act. I am of the view, therefore, that it would be in the interests of justice to relegate the assessment proceedings pursuant to Ext.P7 notice to the 1st respondent Assessing Authority for completing the same in accordance with the provisions of Section 17(3) of the KGST Act. This is notwithstanding that the notice contemplates a summary procedure of assessment in terms of Section 17D of the KGST Act. The 1st respondent shall, therefore, complete the assessment proceedings pursuant to Ext.P7 notice, under Section 17(3) of the KGST Act, within a period of three months from the date of receipt of a copy of this judgment, after considering the materials produced by the petitioner to substantiate his claims. - Appeal disposed of. Issues involved:1. Validity of Ext.P7 notice issued under Section 17D of the Kerala General Sales Tax Act, 1963 for finalizing assessment for the year 2001-02.2. Validity of Ext.P8 notice issued under Section 45A of the KGST Act proposing a penalty for the assessment year 2001-02.3. Interpretation of notifications S.R.O.291/2000, S.R.O.877/2000, and S.R.O.7/2002 regarding exemptions for hatcheries and poultry farms.4. Challenge of S.R.O.7/2002 for retrospective operation affecting exemption benefits.5. Jurisdictional validity of the notices issued by the authorities.6. Justifiability of the petitioner's contentions against the notices and penalty proposal.7. Discretionary power of the High Court under Article 226 of the Constitution of India.Analysis:The case involves a petitioner, a Private Limited Company registered under the KGST Act and KVAT Act, aggrieved by Ext.P7 and Ext.P8 notices issued for assessment and penalty imposition for the year 2001-02. The core issue revolves around the availability of exemptions to hatcheries and poultry farms within Kerala based on notifications S.R.O.291/2000, S.R.O.877/2000, and S.R.O.7/2002. The petitioner challenged the retrospective effect of S.R.O.7/2002 in a previous case. The High Court upheld only the prospective operation of the notification, leading to a reevaluation of the petitioner's eligibility for exemptions for the relevant period. The authorities contended that the petitioner engaged in contract farming, not entitled to exemptions, while the petitioner argued against the notices as an abuse of process and lacking jurisdiction.The respondents justified the notices citing newly discovered facts, emphasizing the procedural nature of the notices and the need for a response before invoking the High Court's jurisdiction under Article 226. During the hearing, the petitioner's counsel argued against the repeated notices, penalty proposal, and lack of jurisdictional errors in the notices. The counsel highlighted the absence of mens rea and the disclosure of turnover in the filed return, questioning the legal basis for rejecting the exemption and proposing a penalty. The counsel urged the court to halt the proceedings due to their futility and injustice.The judgment emphasized that the notices were valid statutory actions and could only be challenged in exceptional circumstances of jurisdictional error. The court noted the absence of such errors but acknowledged the petitioner's concerns about the repeated notices and penalty proposal. However, the court held that the resolution of factual disputes for exemptions falls under the authorities' purview, not the High Court's Article 226 jurisdiction. The court directed the Assessing Authority to complete the assessment and penalty proceedings within three months, considering the petitioner's submissions and providing a hearing opportunity. The court disposed of the writ petition, emphasizing the statutory remedies available to the petitioner under the Act for dispute resolution.