DAISY VINCENT Vs. STATE OF KERALA, REPRESENTED BY ITS SECRETARY (TAXES), GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM AND OTHERS

JUDGEMENT

(1.) The petitioner is a dealer registered as such under the Kerala Value Added Tax Act (hereinafter referred to as 'the KVAT Act') and the Central ales Tax Act (hereinafter referred to as 'the CST Act'). She is stated to be running an industrial unit for manufacturing Plastic Semi Boxes, for which granules of recycled plastic waste are the raw material. The boxes manufactured are of different sizes, and are used variously by customers as tool boxes, battery covers, containers, covers for switch boards etc. The grievance of the petitioner in the writ petition is essentially against Exts.P5 series of assessment orders issued under the CST Act, and Ext.P6 series of assessment orders under the KVAT Act. It is the case of the petitioner that, while pre-assessment notices were served on the petitioner alleging suppression, both with regard to value as well as rate of tax, the petitioner had, by way of a reply, pointed out to the respondents that she had taken up the matter with regard to rate of tax, before the State Government and required the Assessing Officer to defer the assessment till such time as a clarification was obtained from the State Government. It is stated by the learned counsel for the petitioner that, the clarification sought from the State Government was only with regard to the items that were notified for the purposes of concessional rate of tax, on the ground that, they were environmental friendly recycled products falling within Entry 145 of the 3rd Schedule to the KVAT Act. It is stated that, notwithstanding the specific request made by the petitioner to defer the assessment for a short time, the respondents proceeded to pass Exts.P5 and P6 series of assessment orders without hearing the petitioner, and without deciding the issue of classification of the product dealt with by the petitioner, and mechanically imposed a higher rate of tax on the products by assuming the goods to be electrical goods attracting tax at the rate of 14.5% solely because some customers of the petitioner had used the products for manufacturing electric switch boards.

(2.) I have heard the learned counsel appearing for the petitioner as also the learned Government Pleader appearing for the respondents.

(3.) On a consideration of the facts and circumstances of the case and the submissions made across the bar, I notice from Exts.P5 and P6 series of assessment orders that, the said orders have been passed without considering the issue projected by the petitioner on merits, and without hearing the petitioner. It is seen that the registration of the petitioner under the KVAT Act and CST Act is only in respect of plastic products and does not cover electrical items. That apart, the assessment appears to have been done ex-parte by relying on certain check post declarations, wherein, while the petitioner had declared the goods as Plastic Semi Boxes (PSB), the respondents appear to have interpreted the same as plastic switch boxes. The assessment orders do not reflect any consideration of the issue of classification of the product, by referring to the nature of the product and the form in which the goods were sold by the petitioner from her business premises. In my view, inasmuch as the petitioner is essentially aggrieved by the higher rate of tax that is adopted by completing the assessment, it would be incumbent upon the assessing authority to render a positive finding with regard to the classification of the products for the purposes of taxation. The issue of classification cannot be decided in a mechanical manner without adverting to the necessary technical literature to support the classification that is finally arrived at. Inasmuch as in the instant case, the assessment orders are passed without considering the objections of the petitioner on merits, as also without hearing the petitioner, I am of the view that, the interests of justice would be met by quashing Exts.P5 and P6 series of assessment orders, and directing the 3rd respondent to pass fresh orders of assessment in relation to the petitioner for the assessment years 2009-2010 to 2012-2013, both under the CST Act and KVAT Act. To enable the 3rd respondent to pass fresh orders as directed, I direct the petitioner to appear before the 3rd respondent at his office at 11 am on 20.06.2017. I make it clear that it will be open to the petitioner to submit formal replies, on merits, to the pre-assessment notices served on her, and place reliance on such material as fortify her contentions with regard to classification of the product, before the 3rd respondent at the time of hearing. It will also be open to the petitioner to raise other issues including that of limitation at the time of hearing before the 3rd respondent. The 3rd respondent shall, thereafter, pass fresh orders as directed within a further period of one month from the date of hearing. Taking note of Ext.P7 representation that has been filed by the petitioner before the 1st respondent, seeking a clarification as regards the includability of Plastic Semi Boxes manufactured by the petitioner in the Notification contemplated under Entry 145 of 3rd Schedule to the KVAT Act, while disposing this writ petition, I also direct the 1st respondent to consider and pass orders on Ext.P7 representation within a period of six weeks from the date of receipt of a copy of this judgment, after hearing the petitioner.