Case Law Details
Nirapara Roller Flour Mills [P] Ltd Vs State Tax Officer (Kerala High Court)
Introduction: The recent judgment by the Kerala High Court in the case of Nirapara Roller Flour Mills [P] Ltd vs State Tax Officer holds significance in the realm of tax disputes and recovery proceedings. The petitioner, a private limited company engaged in the wheat product industry, challenges penalty orders and seeks relief from recovery proceedings.
Detailed Analysis:
1. Background: The petitioner had previously approached the court in a similar matter (WP(C) No.11369/2019), challenging a penalty order for the assessment year 2009-2010. The court dismissed the writ petition, citing the availability of an alternate remedy through appeal. A subsequent writ appeal met a similar fate with dismissal by the Division Bench.
2. Current Petition: The present writ petition challenges the recovery notice (Ext.P6) dated 26.10.2023, along with penalty order Ext.P2 dated 28.2.2019. The amended Section 55 stipulates that depositing 10% of the disputed tax amount stays recovery proceedings for the remaining tax.
3. Disputed Amount: The disputed tax amounts to Rs.1,04,93,080/-, with a penalty double that amount at Rs.2,09,86,160/-. However, the petitioner remitted only 10% of the tax amount (Rs.10,49,308/-), leading to the issuance of recovery notice Ext.P6 for the remaining amount.
4. Court’s Decision: The Government Pleader argues that the petitioner must deposit 10% of the penalty amount (Rs.2,09,86,160/-). The court agrees, directing the petitioner to remit the balance within one month. If done, the recovery notice stays until the disposal of the pending appeal (Ext.P5) before the second respondent.
Conclusion: In conclusion, the Kerala High Court’s decision in the Nirapara Roller Flour Mills case establishes a crucial precedent regarding penalty deposits under the KVAT Act. The petitioner’s obligation to remit the balance 10% of the penalty amount reflects the court’s balanced approach, ensuring fair proceedings. This judgment brings clarity to the application of Section 55, providing insights into the court’s interpretation and application of tax laws in recovery matters.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The present writ petition has been filed by the petitioner, a private limited company, inter alia, engaged in the business of manufacture of wheat products and trading in wheat and wheat products, having a flour mill. Petitioner impugns penalty order, Ext.P2, and seeks stay of recovery notice, Ext.P6, and direction to the second respondent to consider and pass appropriate orders in Ext.P5 appeal and Ext.P5(a) application for stay filed along with the appeal.
2. When the petitioner approached this Court earlier by filing WP(C) No.11369/2019 impugning the penalty order, Ext.P2 herein, in respect of the assessment year 2009-2010, under Section 67(1)(b) and (d) of the Kerala Value Added Tax Act, 2003, this Court, vide Ext.P3 judgment, dismissed the said writ petition on the ground of availability of alternate remedy of appeal. Writ appeal filed by the petitioner against Ext.P3 judgment also was
dismissed by the Division Bench of this Court.
3. Now, the present writ petition has been filed against recovery notice, P6, dated 26.10.2023, as also, penalty order Ext.P2, dated 28.2.2019. The amended provision of Section 55 provides that if 10% of the disputed amount of tax is deposited, recovery proceedings for recovery of the further tax amount would remain stayed.
4. In the present case, the disputed tax comes to Rs.1,04,93,080/-, while the penalty double the amount of tax imposed comes to 2 ,09,86,160/-. However, the petitioner remitted only 10% of the tax amount, i.e. Rs.10,49,308/-, vide Exts.P7 and P7(a). Therefore, recovery notice for recovery of the remaining amount has been issued vide Ext.P6.
5. The learned Government Pleader submits that the petitioner has to deposit 10% of the penalty amount of Rs.2,09,86,160/-.
6. Considering the aforesaid submissions, this Court is of the view that the petitioner has to remit the balance 10% of the penalty amount of Rs.2,09,86,160/-. The petitioner is directed to remit the said amount (10% of the penalty amount of Rs.2,09,86,160/-) within a period of one month from today. If the petitioner deposits the balance amount as above to make 10% of the demand of Rs. 2,09,86,160/-, Ext. P6 recovery notice dated 26.11.2023 shall remain stayed till the disposal of the appeal, Ext.P5, pending before the second respondent.
With the aforesaid liberty and direction, the present writ petition stands finally disposed of. Pending interlocutory application, if any, in the writ petition stands dismissed.
