ASHOK TRADERS Vs. STATE OF KERALA

JUDGEMENT

(1.) THIS writ petition is by nine abkari contractors, who have obtained licence to vend arrack in the year 1993 -94. They opted for payment of sales tax on their sales of arrack under section 7(14) of the Kerala General Sales Tax Act, 1963 (KGST Act) by payment of tax at the rate of 40 per cent of the total rental amount payable under the Abkari Act for the licence. In the previous year 1992 -93 the tax payable was only 20 per cent of the kist amount. The writ petition contains a challenge to the increase of the tax payable to 40 per cent in the year 1993 -94 and prayer (a) in the writ petition is to declare the amended provisions of sub -clause (14) of section 7 of the KGST Act as illegal, unconstitutional and void. According to the petitioners, they have paid the compounded amount of tax which is payable in monthly instalments, for a few months, in some cases up to and inclusive of December, 1993. The tax due for the subsequent months is in arrear. The other prayer in the writ petition is for the issue of a writ of prohibition restraining the respondents from recovering the sales tax at 40 per cent of the rental "without adjudication by an independent authority" or in the alternative to permit the petitioners to pay the tax due from them in six monthly instalments.

(2.) WHEN this writ petition came on for admission counsel for the petitioners submitted that they are not pressing the challenge to the provisions of the KGST Act and that they are confining the relief in the writ petition to the grant of instalment facility. I put to counsel for the petitioners whether the withdrawal of the challenge to the provisions of the Act was conditional on the instalment facility being granted, when counsel said that irrespective of whether the instalment facility was granted or not, the petitioners were not pressing the challenge to the provisions of the Act. The only prayer that therefore survives for consideration is that the petitioners may be permitted to pay the balance amount of tax due from them at the compounded rate in instalments. Needless to say the respondents represented by Sri T. Karunakaran Nambiar, Special Government Pleader for Taxes opposed the motion. According to counsel for the petitioners, this Court exercising jurisdiction under article 226 of the Constitution can and should grant the benefit of payment in easy instalments of whatever that may be due from the petitioners by way of tax. But, before I proceed to discuss this question I must refer briefly to the history that has gone behind this litigation.

(3.) IT is in this background that this original petition has come up before me for admission and as stated earlier though it contains a challenge to the provisions of section 7(14) as amended, that prayer is not pressed and the only relief claimed is for instalment facility. What in effect the petitioners claim is a direction to the State to recover the amount of tax from them only in instalments. I put a question whether such a plea is maintainable and under what provision of law or legal principle such a direction could be given to the State to recover amounts admittedly due to them in instalments thereby waiving the rights which they have under the provisions of KGST Act. Counsel submitted that he founds his claim for the benefit of instalment payment under the judgment in the review petitions in the writ appeals above mentioned which according to him recognises a right in the petitioners to claim instalment benefit for payment of tax admittedly due. Counsel relies on the various reasons which the Division Bench has given as those which prompted them to pass the first order of February 10, 1994 and he also lays stress on the last sentence in the judgment by which the Division Bench observed that it was open to the appellants to pray for instalment facility in the writ petition itself. According to counsel, the Division Bench has laid down the law of the land and that it has got to be followed by granting instalment facility to the petitioners. Sri. T. Karunakaran Nambiar appearing for the respondents vehemently opposes this prayer stating that the whole thing is misconceived and that the petitioners cannot claim any instalment benefit as of right. The facts are not in dispute. The petitioners have admittedly compounded the tax payable by them at 40 per cent of the kist amount under section 7(14) of the KGST Act. Sub -section (15) of the section obliges them to make payment of the compounded amount in monthly instalments after deducting the tax paid by them on the purchase of arrack for each month. Going by the provisions of the Act it is clear that the amount is payable by the petitioners in monthly instalments at the compounded rate. Non -payment of the tax on the due dates visits the defaulter with the consequences laid down in section 23(3) among others of payment of penal interest on the amount due besides exposing him to proceedings for recovery in the manner prescribed therein. When the mandate of the law is that the tax shall be paid in monthly instalments as prescribed in sub -section (15), it will not be open for this Court to direct Government to recover the amount in a manner different from that prescribed by the statute itself. The power of this Court is to keep within the bounds of law and not to issue directions contrary to law Sini Kurialose v. State of Kerala (1987) 2 KLT 425. The issue of a direction or a mandamus to the respondents postulates the existence of a legal right in the petitioner and a corresponding legal duty on the part of the respondents, which they have defaulted in performing. Petitioners have no legal right to insist that the tax shall be paid at their leisure and as suggested by them, their right being only to insist that it shall be collected in the manner prescribed, namely in monthly instalments prescribed by sub -section (15). Nor is there any legal duty on the part of the respondents to collect the amount in instalments otherwise than as provided in the statute itself. In fact it was held by this Court as early as in 1978 that there was no provision in the KGST Act which enabled even the Government, the creditor, to allow the benefit of instalment payment of tax due under the Act. (Haridas v. Assistant Commissioner, Sales Tax [1979] 44 STC 26 (Ker)), which was approved by the decisions in Sreekumar v. State of Kerala [1992] 86 STC 274 (Ker) [FB]; 1992 KLJ (Tax Cases) 202 [FB] and Abdulla v. Sales Tax Officer [1992] 86 STC 259 (Ker) [FB]; 1992 KLJ (Tax Cases) 259 [FB]. This being the legal position, on which there could be no dispute, the petitioners cannot insist that as a matter of right, they are entitled to an order from this Court for payment of the amount of tax due in instalments as suggested by them. They have already been granted the benefit of instalments under section 7(15) and it is not for this Court to direct that the amount shall be collected in a different system of instalments. Petitioners' claim as mentioned earlier is based only on the decision of the Division Bench and not on any provision of law. The decision of the Division Bench does not really conclude any issue in favour of the petitioners. The Division Bench has only stated the reasons why they passed the earlier order on February 10, 1994 granting instalments. Evidently there was no serious opposition at that stage to the order which they passed. It was only later when the Government realised the seriousness of the matter that they came up with the review petitions and the Division Bench vacated the previous order. The fact that there was no serious opposition is evident from the fact that the Division Bench does not even appear to have been apprised of the earlier ruling of Varghese Kalliath and Usha, JJ. that such a writ appeal was not maintainable. The Division Bench therefore expressed the reasons why they passed the earlier order. I am sure the Division Bench did not intend to lay down any binding principle of law applicable for all cases. The State is the creditor and it is for the State to decide what is in their best interest. May be the State may be benefited by the challenge to the amendment being withdrawn or by the direction to make payment in instalments. But ultimately it is the State that should be the best judge of what is beneficial to it. Evidently and perhaps without realising the complications, there was no serious opposition before the Division Bench when the matter came up for hearing on February 10, 1994 and the first order was passed on the writ appeals. The decision of the Division Bench in the appeals, which ultimately they held as not maintainable is not therefore one which obliges a single Judge to pass an order granting the benefit of instalments though the petitioners have very graciously conceded in the writ petition larger powers to the single Judge than the Division Bench in the following words : "A study of the said order passed by this honourable Court in the said review petitions would make out the fact that contractors have a right to get instalment facility in the original petition, but not in a writ appeal against the order refusing to stay the operation of the impugned amendment."