The petitioner was assessed to sales tax under the Kerala Value Added Tax Act (hereinafter referred to as 'the KVAT Act') for the Assessment year 2005-2006. Ext.P2 is the assessment order dated 06.02.2008, that was completed against the petitioner on best judgment basis. In completing the assessment, the Assessing Officer treated the excess stock of goods found at the time of shop inspection, as also the details available from recoveries that were effected at the time of shop inspection, and treated the same as unaccounted transactions. Consequently, a demand of Rs.17,90,582/- towards tax, and Rs.3,93,928/- towards interest, was demanded from the petitioner by Ext.P3 demand notice. This was followed by Ext.P1 notice, issued under the Revenue Recovery Act, for recovery of the said amount from the petitioner. In the writ petition, the petitioner impugns Ext.P2 assessment order, Ext.P3 demand notice, as well as Ext.P1 notice issued under the Kerala Revenue Recovery Act, inter alia on the ground that the assessment was done on the erroneous assumption that he was conducting business in the premisses in question whereas in fact he was not conducting any business during the relevant period.
2. A statement, as well as an additional statement, have been filed on behalf of the 1st respondent, wherein it is stated that the petitioner was in fact carrying on business during the relevant period and that thereafter, for sometime the business of the petitioner was managed by one Sri.T.K.Khaleel, who is stated to be a close relative of the petitioner. It is pointed out that for the assessment years in question, a protective assessment has also been done on Sri.T.K.Khaleel and the said assessment order has been produced as Ext.P9 in the writ petition. It is the case of the respondents that, insofar as Ext.P2 assessment order is an appealable one, the remedy of the petitioner against the said assessment order is to prefer an appeal under the KVAT Act before the appellate authority under the said Act.
3. On a consideration of the facts and circumstance of the case as also the submissions made across the Bar, I find that this is a case where the petitioner challenges Exts.P2 assessment order and P3 demand notice primarily on the basis that he was not heard before passing the said assessment order and, further, that the assessment itself was done on an erroneous assumption that the petitioner was doing business during the relevant assessment year.
The perusal of Ext.P2 assessment order would indicate that the order has been passed on best judgment basis, by treating the excess stock, and details available from the recovery effected at the time of shop inspection, as unaccounted transactions. It is apparent, therefore, that there was no effective representation on behalf of the petitioner at the stage of completion of the assessment proceedings. Be that as it may, the fact remains that during the pendency of the writ petition, the petitioner was called upon to effect payment of Rs.1,00,000/- , as a condition for the grant of stay against recovery proceedings. It is understood that the said amount has since been paid by the petitioner, since the appeal preferred by him against the interim order directing such payment was also dismissed by the Division Bench of this Court. Under these circumstances, I feel that the interests of justice would be served by relegating the petitioner to the alternate remedy of an appeal under the KVAT Act. The writ petition is therefore disposed with the following directions:
1. If the petitioner prefers a proper appeal, in terms of the KVAT Act, against Ext.P2 assessment order, within a period of one month from the date of receipt of a copy of this judgment, the same shall be considered on merits by the appellate authority within a further period of two months thereafter.
2. The appellate authority shall supply copies of the documents, relied upon by the Assessing Officer while passing Ext.P1 assessment order, to the petitioner so as to enable him to offer his comments on the said documents. The appellate authority shall also provide the petitioner with an opportunity to produce documents to substantiate his contentions on merits.
3. The appellate authority shall thereafter proceed to pass orders in the appeal after affording the petitioner an opportunity of being heard.
4. The Revenue Recovery proceedings initiated against the petitioner through Ext.P1 notice shall be kept in abeyance till such time as the appellate authority passes orders as directed, in the appeal to be preferred by the petitioner, and communicates the same to him or for a period of six months from today whichever is earlier.
A.K.JAYASANKARAN NAMBIAR JUDGE mns