Case Law Details

Case Name : Muhammed Kochukudiyil Ishabeevi Alias Isha Shaefi Vs State Tax Officer (Intelligence) (Kerala High Court)
Appeal Number : WP(C) No. 20468 of 2020
Date of Judgement/Order : 30/09/2020
Related Assessment Year :
Courts : All High Courts (6000) Kerala High Court (330)

Muhammed Kochukudiyil Ishabeevi Alias Isha Shaefi Vs State Tax Officer (Intelligence) (Kerala High Court)

Contention of the petitioner that she should be exempted from the requirement of paying interest and penalty while availing the option of payment of tax for the purposes of avoiding the show cause notice cannot be accepted. The scheme of making a payment of tax together with interest and 15% of the amount as penalty envisaged under Section 74 is for the purposes of enabling an assessee to avoid the show cause notice contemplated under the said provision. What is offered to the petitioner under the provision is an option of either (i) paying the tax intimated by the statutory authorities, together with interest thereon and a fixed amount towards penalty, in which event a show cause notice would not follow or (ii) denying her liability to tax, interest and penalty and contest the show cause notice that would follow. The petitioner, however, wants to get the best of both worlds by opting for the former course and simultaneously obtaining an exemption from the requirement of payment of interest and penalty amounts intimated to her by the Department. In my view, such an exercise is not permissible in terms of the Statute. When the scheme under Section 74 for avoiding a show cause notice is one that is optional to an assessee, the assessee has either to opt for it or look away from it. If she opts for the scheme, she has to comply with the terms under which the option is made available under the statute. She cannot seek a variation of the said scheme. The judgments relied upon by counsel for the petitioner also do not advance the case of the petitioner as they deal with a different issue. The prayers sought for in the writ petition cannot be granted and the writ petition is therefore dismissed.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

The petitioner, who is an assessee and registered dealer under the Kerala State Goods and Services Tax Act, 2017, is engaged in timber business. In the writ petition, she impugns Ext.P1 intimation that was issued to her in terms of Section 74(5) of the KGST Act read with Rule 142(1A) of the SGST Rules, whereby she was intimated of the tax, penalty and interest payment that she was required to make in the event of her opting to make such payment to avoid a show cause notice under Section 74(1) of the Act. In the writ petition, it is the case of the petitioner that although she has paid the tax amount intimated in Ext.P1, she ought not to be mulcted with a liability to pay interest thereon, and 15% of the penalty, in as much as the tax amount conceded by her has become payable only from the date on which the intimation was issued to her. In other words, the contention of the petitioner is essentially that she must be permitted to avail the option envisaged under Section 74 without paying the interest and penalty amounts that are stipulated as conditional payments for avoiding the show cause notice envisaged under the said provision.

2. I have heard the learned counsel for the petitioner and the learned Government Pleader for the respondents. The learned counsel for the petitioner relied on the decisions in Maruti Wire Industries Pvt.Ltd. v. S.T.O, 1st Circle, Mattancherry and others [(2001) 3 SCC 735] and J.K.Synthetics Ltd. v. Commercial Tax Officer [AIR

3. On a consideration of facts and circumstances of the case and the submissions made across the Bar, I find that the contention of the petitioner that she should be exempted from the requirement of paying interest and penalty while availing the option of payment of tax for the purposes of avoiding the show cause notice cannot be accepted. The scheme of making a payment of tax together with interest and 15% of the amount as penalty envisaged under Section 74 is for the purposes of enabling an assessee to avoid the show cause notice contemplated under the said provision. What is offered to the petitioner under the provision is an option of either (i) paying the tax intimated by the statutory authorities, together with interest thereon and a fixed amount towards penalty, in which event a show cause notice would not follow or (ii) denying her liability to tax, interest and penalty and contest the show cause notice that would follow. The petitioner, however, wants to get the best of both worlds by opting for the former course and simultaneously obtaining an exemption from the requirement of payment of interest and penalty amounts intimated to her by the Department. In my view, such an exercise is not permissible in terms of the Statute. When the scheme under Section 74 for avoiding a show cause notice is one that is optional to an assessee, the assessee has either to opt for it or look away from it. If she opts for the scheme, she has to comply with the terms under which the option is made available under the statute. She cannot seek a variation of the said scheme. The judgments relied upon by counsel for the petitioner also do not advance the case of the petitioner as they deal with a different issue. The prayers sought for in the writ petition cannot be granted and the writ petition is therefore dismissed.

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