Since the issue involved in both these writ petitions is the same they are taken up for consideration together and disposed by this common judgment.
2. The petitioner is a dealer in cement. He had paid tax on the turnover of sales effected to the dealers. It is his case that at the end of the year he also paid incentive amounts to dealers from out of the profits earned by him after tax. It is specifically pointed out that there was no claim made for deduction from the turnover on which the tax was to be paid and that the incentive amounts paid to the dealer had already suffered tax as part of the declared turnover of the petitioner. The respondents, however, demanded tax on the incentive payments made by the petitioner to the dealers and Ext.P1 assessment order and Ext.P2 demand notice were served on the petitioner for the assessment year 2008-2009. The said assessment order and demand notice are impugned in W.P.(C). No.31981 of 2010 and the revenue recovery notices, that were subsequently issued to the petitioner in connection with the said demand, are impugned separately as Exts.P3 and P4 in W.P.(C).
No.35434 of 2010.
3. A counter affidavit has been filed by the respondents wherein it is alleged that the petitioner reported a turnover after deducting the incentive payments made to the dealer and this virtually amounted to claiming a discount that was not shown in the invoice.
4. I have heard Dr.K.B.Mohamedkutty, the learned Senior counsel for the petitioner in both the writ petitions as also the learned Government Pleader Smt.K.T.Lilly, appearing on behalf of the respondents in both cases.
5. The learned Senior counsel for the petitioner would categorically assert that, contrary to what is stated by the respondents in the counter affidavit, the incentive payments made to the dealers were all payments that were made from the profits accruing to the petitioner after payment of tax. It is the specific contention that it was after the sales turnover was subjected to tax that the incentive payments were made from out of the tax suffered turnover and, therefore, there was no question of subjecting the said incentive payments to tax once again under the guise that they represented discounts that were not shown in the tax invoice. He would also point out that, on the same issue for the assessment orders 2006-2007, 2007-2008, and 2009-2010, the First Appellate Authority had scrutinised the accounts of the petitioner and had found in favour of the petitioner .
6. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I note that this is essentially a dispute between the assessee and the Department on whether the incentive payments were made from the profits after tax of the petitioner or whether they were in the nature of payments made by way of discount before offering the turn over for tax. This is a matter that has to be verified with reference to the books of accounts and other records maintained by the petitioner. Insofar as the challenge in the writ petition is against the assessment order that has been passed for the assessment year 2008-2009, and the consequent demand notices and revenue recovery notices issued to the petitioner, I feel that the petitioner should be relegated to the alternate remedy by way of an appeal before the First Appellate Authority under the Kerala Value Added Tax Act, for a determination of the issue. I, therefore, dispose the writ petitions by relegating the petitioner to the statutory remedy of an appeal before the First Appellate Authority against Ext.P1 assessment order in W.P.(C).No.31981 of 2010. If such an appeal is preferred within a period of one month from the date of receipt of a copy of this judgment, after complying with all the necessary formalities, the First Appellate Authority namely, the Deputy Commissioner (Appeals), Commercial Taxes, Kollam, shall consider the same and pass orders on merits within a period of three months thereafter, after affording the petitioner an opportunity of being heard. The stay against recovery amounts pursuant to Ext.P2 demand notice in W.P.(C).No.31981 of 2010 and and Exts.P3 and P4 revenue recovery notices in W.P.(C).No.35434 of 2010 shall continue to be in force till such time as the First Appellate Authority passes orders in the appeal as directed above, and communicate the same to the petitioner.
With these directions, the writ petitions are disposed.
A.K.JAYASANKARAN NAMBIAR JUDGE mns/