Introduction: In a recent legal development, the Kerala High Court issued a significant judgment in the case of Pyramid Architects And Engineers vs. State Tax Officer. The court allowed the petitioner to make instalment payments for the balance tax amount under the Kerala Value Added Tax (KVAT) Act, considering their financial incapacity.
Background of the Case: The case involves an Original Petition (Tax) filed by Pyramid Architects And Engineers, challenging an order passed by the Kerala Value Added Tax Appellate Tribunal. The tribunal had directed the petitioner to deposit 10% of the balance tax demanded for the assessment years 2014-15 & 2015-16 and execute a simple bond for the remaining amount to satisfy the assessing authority within one month.
Appeals and Conditional Order: The petitioner had previously filed appeals against the assessment orders for the mentioned years. However, these appeals were dismissed by the Deputy Commissioner (Appeals), leading to second appeals with petitions for condonation of delay and stay filed before the Kerala Value Added Tax Appellate Tribunal. In response, the tribunal issued the contested Ext.P6 conditional order.
Petitioner’s Argument: The petitioner, represented by Sri. S. Anilkumar, argued that Ext.P6’s conditions were onerous and cited financial incapacity to comply with them. It was emphasized that at the time of filing the first appeals, the petitioner had already deposited 20% of the demanded amount. Therefore, the petitioner sought relief from the imposed conditions.
Government’s Response: Sri. V.K. Shamsudheen, the learned Senior Government Pleader, argued that considering the petitioner’s loss in the first appeal, the tribunal’s decision to demand only 10% of the balance tax was reasonable.
Court’s Verdict and Instalment Facility: After evaluating both sides’ arguments and reviewing Ext.P6 order, the Kerala High Court decided not to interfere with the tribunal’s order. However, it granted the petitioner the facility to pay the demanded amount in three equal monthly instalments. The first instalment was to be paid by September 30, 2023, with the remaining instalments due on the corresponding date of succeeding months. The court also ordered a suspension of coercive proceedings to facilitate repayment but allowed the first respondent to proceed with recovery proceedings in case of default.
Compliance and Conclusion: To comply with the court’s judgment, the petitioner was instructed to furnish a certified copy of the judgment along with the original petition before the competent respondent. This decision by the Kerala High Court underscores the judiciary’s consideration of financial constraints and provides relief to the petitioner by allowing them to repay the tax amount in manageable instalments.
Conclusion: The Kerala High Court’s ruling in the case of Pyramid Architects And Engineers vs. State Tax Officer sets a precedent for considering financial capacity in taxation matters. By allowing the petitioner to make instalment payments for the balance tax amount under the KVAT Act, the court acknowledges the practical challenges faced by taxpayers. This judgment reflects the court’s commitment to fairness and pragmatism in tax disputes, ultimately ensuring a balanced approach to tax enforcement.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
This Original Petition (Tax) is filed by the petitioner challenging Ext.P6 conditional order passed by the third respondent – the Kerala Value Added Tax Appellate Tribunal, Additional Bench, Kozhikode – directing the petitioner to deposit 10% of the balance tax demanded for the years, 2014-15 & 2015-16, and executing simple bond for the balance amount to the satisfaction of the assessing authority, within one month from the date of receipt of that order.
2. Aggrieved by Exts.P1 and P1(a) assessment orders for the assessment years, 2014-15 & 2015-16, passed by the first respondent, the petitioner filed appeals before the second respondent – the Deputy Commissioner (Appeals). On dismissal of the above appeals, second appeals along with petitions for condonation of delay in filing the appeals and for stay, were filed before the third respondent. In the petitions for stay, the third respondent passed Ext.P6 conditional order, aggrieved by which, the petitioner has come up before this Court with the original petition.
3. Heard the learned counsel for the petitioner and the learned Senior Government Pleader.
4. The learned counsel for the petitioner, Sri. S. Anilkumar, submits that Ext.P6 conditional order now passed by the third respondent is onerous and the petitioner is financially incapacitated so as to comply with the same. It is further submitted that at the time of filing first appeals, the petitioner had deposited 20% of the amount demanded and hence, the condition now imposed may be set aside.
5. Per Contra, Sri. V.K. Shamsudheen, the learned Senior Government Pleader, submits that having lost the case in the first appeal, the Appellate Tribunal directed the petitioner to pay only 10% of the balance tax demanded, which is reasonable.
6. Having considered the rival contentions raised on both sides and on going through Ext.P6 order, we do not find any reason to interfere with Ext.P6 order. Sufficient reasons have been stated by the Appellate Tribunal while passing Ext.P6 order. However, we feel that the petitioner can be given instalment facility to pay off the amount now demanded as per Ext.P6.
Accordingly, the original petition is disposed of, as follows;
a) The petitioner is permitted to remit the amount demanded as per Ext.P6 in three equated monthly instalments.
b) The first of such instalment shall be paid on or before 30.09.2023 and the remaining instalments on or before the corresponding date of succeeding months.
c) In order to enable the petitioner to repay the amount as directed in Ext.P6, all coercive proceedings shall be kept in abeyance.
d) In the event of default of any one instalment, the first respondent shall be at liberty to proceed against the petitioner for recovery of the amount in accordance with law.
The petitioner shall produce a certified copy of this judgment along with the original petition before the competent respondent for compliance.