Case Law Details
Cannanore County Club & Resorts Pvt Ltd Vs Deputy Commissioner (Arrear Recovery) (Kerala High Court)
Introduction: The Kerala High Court recently addressed a case involving Cannanore County Club & Resorts Pvt Ltd and the Sales Tax Department. The department had directed the withholding of liquor sales to the petitioner due to a substantial tax arrear amounting to Rs. 1,86,48,258 under the Kerala Goods and Services Tax (KGST) Act. The court’s decision in this matter highlights the department’s right to take coercive measures to recover tax arrears, even if it means withholding the sale of liquor.
Background of the Case: The case revolves around a writ petition filed by Cannanore County Club & Resorts Pvt Ltd, challenging a letter (Ext. P1(A)) issued by the Deputy Commissioner (Arrear Recovery), who directed the withholding of Indian Made Foreign Liquor sales to the petitioner. The reason behind this directive was the petitioner’s substantial tax arrears of Rs. 1,86,48,258 under the KGST Act.
Tax Arrears and Previous Writ Petition: The petitioner holds a license for selling Indian Made Foreign Liquor. However, the petitioner had not paid a significant amount of sales tax, which had accumulated to more than Rs. 1,86,48,258. In a previous writ petition (W.P.(C) No. 41287/2022), the court had granted the petitioner six installments to clear the arrears. Despite this concession, the petitioner failed to pay the arrears even within the extended timeline.
Court’s Ruling: The court noted that the petitioner’s arrears amounted to a substantial sum, and revenue recovery proceedings had already been initiated. In light of the petitioner’s failure to meet the payment obligations, the court deemed the writ petition as not maintainable. The administrative authority had the power to use coercive measures to ensure the payment of tax arrears. Withholding the supply of Foreign Liquor for further sales was one such coercive measure aimed at prompting the petitioner to settle the tax arrears.
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