Associated Agencies Malikayil Buildings vs State of Kerala and Commercial Tax Officer 1st Circle, Kottayam

P.R. Ramachandra Menon, J.—The challenge is against Ext. P5 order dated 18.06.2012 passed by the second respondent, whereby the returns filed by the petitioner have been rejected and the assessment has been completed u/s 25 (1) of the KVAT Act. The case of the petitioner is that, on receipt of Exts. P1 and P2 notices dated 24.04.2012 and 28.05.2012 respectively, the petitioner submitted Exts. P3 and P4 replies, pointing out that, there was absolutely no reason to proceed with further steps against the petitioner, thus seeking to sustain the action pursued by the petitioner. However, without any regard to the same, the second respondent passed Ext. P5 order, finalizing the assessment u/s 25(1) on 18.06.2012, followed by Ext. P6 demand notice, which in turn are under challenge in this writ petition.

With regard to the merits of the case, the basic issue is as to the actual rate of tax, which could be applied to the commodity - Dettol Antiseptic liquid (Dettol). According to the petitioner, the said issue is pending before the Apex Court. The Learned Counsel further submits that by virtue of amendment to the Statute, incorporating Sub Section (2A) to Section 94, once the tax is satisfied by the manufacture or first seller on the MRP, no further liability can be passed on to the persons like the petitioner. The full satisfaction of the tax by the manufacturing company on the MRP is certified vide Ext. P7. This being the position, the petitioner ought not have been called upon to pay further tax, submits the Learned Counsel for the petitioner.

The learned Government Pleader appearing on behalf of the respondents submits that the issue with regard to the liability to pay tax in respect of the commodity like ''Dettol'' and some other issues are pending consideration before the Apex Court.

The question is whether, the petitioner has been given an opportunity of hearing before passing Ext. P5 order. Going by the pleadings and proceedings, it is seen that the petitioner was never heard before passing Ext. P5 order. The necessity to grant an opportunity of hearing before passing the orders u/s 25 (1) KVAT Act stands declared by this Court as per the decision reported in Suzion Infrastructure Services Ltd. Vs. Commercial Tax Officer (VC) (2010 (3) KHC 299) and also as per the decision reported in W.A. No. 1370 of 2011. In the above circumstances, Ext. P5 order is set aside and the second respondent is directed to pass fresh orders, after giving an opportunity of hearing to the petitioner, as expeditiously as possible, at any rate, within one month from the date of receipt of a copy of this judgment.

The Writ Petition is disposed of.

The petitioner shall produce a copy of the judgment along with copy of the writ petition before the second respondent for further steps.