K. SIVADASAN v. STATE OF KERALA. — 1995 DIGILAW 381 (KER)

JUDGMENT V. V. KAMAT, J. It is not possible to exercise extraordinary powers under article 226 of the Constitution of India, when the factual matrix is taken into consideration. 2. The petitioner is a jeweller and an assessee for sales tax and file is with respondent No. 2. Initially an order, exhibit P1, is passed by the department. However the appellate authority modified the said order by exhibit P2. On perusal of the said order it is seen that on the basis of contents of para 4 thereof certain concessions were made. 3. On the basis of the appellate order, the petitioner by exhibit P3 dated November 7, 1994, prayed for a refund of Rs. 45,634 in view of the fact that the order was received on August 1, 1994. 4. With regard to the entitlement of a refund of Rs. 45,634 reliance is placed on the provisions of section 44(1) of the Kerala General Sales Tax Act, 1963, providing that the dealer would be entitled to interest at 6 per cent on the amount due to him from 90 days of the date of receipt of the order in appeal. The legal right to entitlement of refund is based on the above provision. 5. However it appears that on receipt of the proceedings, the department considered the question of refund by exhibit P6. It is found out that the dealer is in arrears of Rs. 27,845 with regard to the year 1993-94. On the basis of the said amount of arrears, by the order (exhibit P6) deducting the said amount due to the department, the order of refund of Rs. 17,790 is passed for the refund of the assessee. When the assessee is in arrears with regard to the subsequent years, in my judgment deduction cannot be stated to be unjustified and the provisions of section 44(1) would have to be understood and read in the context. It appears that with regard to the year 1993-94 there is an interim order granting stay to the extent of an amount of Rs. 13,000. Taking into consideration all these aspects and even the provisions of section 44(1) of the Kerala General Sales Tax Act referred to above, there is no injustice so that this Court can consider exercise of extraordinary jurisdiction. Petition stands dismissed at the stage of admission. Advocates Appeared : K. C. Balagangadharan, for the appellant. 13,000. Taking into consideration all these aspects and even the provisions of section 44(1) of the Kerala General Sales Tax Act referred to above, there is no injustice so that this Court can consider exercise of extraordinary jurisdiction. Petition stands dismissed at the stage of admission. Advocates Appeared : K. C. Balagangadharan, for the appellant. T. Karunakaran Nambiar, Addl. A.G. (Taxes), for the respondents. JUDGMENT The judgment of the Court was delivered by K. K. USHA, J. - Petitioner in O.P. No. 9737 of 1995 is the appellant. He is an assessee under the Kerala General Sales Tax Act, 1963 (for short, "the Act"). For the assessment year 1988-89, exhibit P4 assessment order was issued on December 6, 1994, after carrying out the modification issued by the Tribunal. As per the above assessment order, the appellant was entitled to refund of an amount of Rs. 45,635 paid in excess of the sales tax due. The complaint of the appellant is that along with exhibit P4, no refund voucher was issued by the sales tax authorities. He therefore came to this Court filing O.P. No. 9737 of 1995 seeking a writ of mandamus to the second respondent to issue the refund forthwith and also to pay statutory interest at 6 per cent from October 30, 1994 till the date of actual refund. 2. The original petition was filed on June 20, 1995. During the pendency of the original petition, exhibit P6 order dated July 4, 1995 was issued adjusting an amount of Rs. 27,845 out of the excess amount of Rs. 45,635 paid for the year 1988-89, towards dues for the year 1993-94. Thus the amount refundable to the assessee was reduced to Rs. 17,790. 3. The assessment for the year 1993-94 was under appeal before the Tribunal during the relevant period and by exhibit P7 order dated July 12, 1995, the Tribunal granted a stay of collection of Rs. 13,000 till the disposal of the appeal on condition that the assessee furnishing adequate security for Rs. 13,000 to the satisfaction of the assessing authority and paying the balance demanded over and above Rs. 13,000 within four weeks from the date of the order. The assessee complied with the above condition within the time granted as is evident from annexure I dated August 1, 1995 produced along with the memorandum of appeal. 13,000 to the satisfaction of the assessing authority and paying the balance demanded over and above Rs. 13,000 within four weeks from the date of the order. The assessee complied with the above condition within the time granted as is evident from annexure I dated August 1, 1995 produced along with the memorandum of appeal. Annexure I is a communication addressed by the assessee to the Additional Sales Tax Officer-II, First Circle, Palakkad, enclosing there with a crossed cheque for Rs. 14,845 dated August 1, 1995 drawn on Andhra Bank, Palakkad branch and also a bank guarantee issued by Andhra Bank for the amount of Rs. 13,000. Even though the department accepted the bank guarantee and the cheque, which would completely wipe out the liability for tax for the for the year 1993-94, in view of the order passed by the Tribunal, it did not take any steps to refund the entire amount found due to the petitioner under exhibit P4. 4. It is contended by the petitioner-appellant that before exhibit P6 order was issued, notice should have been given to the assessee as exhibit P6 should be treated to have been issued invoking the power under section 43 of the Act. In the absence of such a notice, the appellant would submit that exhibit P6 should be set aside as having been issued in violation of the provisions contained in section 43 of the Act regarding notice to the assessee as also in violation of the principles of natural justice. Learned counsel appearing on behalf of the appellant further contended that even if exhibit P6 is to be treated as an order coming under section 44(3) of the Act, in the absence of a notice to the assessee, it is bad in law, having been issued in violation of the principles of natural justice, as no notice was given before exhibit P6 order was issued. Learned counsel points out that in the statement filed by the second respondent on October 4, 1995, there is not even a reference about the cheque paid by the appellant as per annexure I and in the second statement dated October 16, 1995, it is admitted that the cheque was sent for collection with an explanation that it was done inadvertently. In any view of the matter, according to the learned counsel for the appellant, the appellant is entitled to the interest as provided under sub-section (4) of section 44 of the Act on the entire amount refundable to him as per exhibit P4 from October 30, 1994. But, the learned counsel fairly submitted that after passing exhibit P6 on July 4, 1995, the department had offered Rs. 17,790 to the appellant which the appellant refused to accept in view of the pendency of the case before this Court. 5. Sri T. Karunakaran Nambiar, Additional Advocate-General (Taxes) contended that exhibit P6 is not an order passed under section 43 of the Act. But, it is only an order passed invoking the power under sub-section (3) of section 44 of the Act. If that be so, he would submit that no prior notice to the assessee is necessary. In view of the statement by the second respondent on October 16, 1995, he would further submit that as at present there are no arrears due from the assessee for the year 1993-94, as he had complied with the order passed by the Tribunal and therefore, the amount of Rs. 27,845 adjusted for the year 1993-94 has to be refunded to the appellant. 6. As mentioned earlier, exhibit P4 is an assessment order issued after modifying the original assessment order as per the directions given by the Tribunal. In the above assessment order, it was found that the total sales tax due from the assessee for the year 1988-89 would come to Rs. 22,186 whereas he had paid an amount of Rs. 68,133 towards sales tax for the relevant year. Under these circumstances, the appellant was found eligible for refund of an amount of Rs. 45,635 as excess tax paid. Under section 44(3) of the Act, the assessing authority has been given the power to adjust the amount due to be refunded under sub-section (1) or sub-section (2), towards the recovery of any amount due, on the date of adjustment for the dealer. It is in exercise of the above power, exhibit P6 has been issued. Under section 44(3) of the Act, the assessing authority has been given the power to adjust the amount due to be refunded under sub-section (1) or sub-section (2), towards the recovery of any amount due, on the date of adjustment for the dealer. It is in exercise of the above power, exhibit P6 has been issued. We do not think it possible to accept the contention taken by the appellant that exhibit P6 can be issued only by invoking the power under section 43, which is a power given to the assessing authority, appellate authority or the revisional authority, to rectify any error apparent on the face of the record. Exhibit P6 cannot be treated as an order rectifying any error in the assessment order exhibit P4. It is not the case of the respondents that the appellant is not entitled to refund of an amount of Rs. 45,635 for the assessment year 1988-89. But, the definite case is when the assessee is entitled to refund to the extent of Rs. 45,635 certain amounts are due from him towards sales tax for the year 1993-94 and invoking the provision contained is sub-section (3) of section 44, a portion of the amount to be refunded has been adjusted towards the tax for the year 1993-94. We therefore hold that exhibit P6 is an order passed under section 44(3) of the Act and it is also not necessary to modify the assessment order by invoking the power under section 43 in order to issue an order under section 44(3) of the Act. 7. The next question to be considered is whether the assessee is entitled to notice before an order is issued under section 44(3) of the Act. There is no statutory provision for giving such notice. In the nature of the proceedings, we are of the view that before passing an order under section 44(3), the assessee is not entitled to a prior notice. In the light of the above view, we find no illegality in exhibit P6 order which was issued on July 4, 1995 at a time when the Tribunal had not issued exhibit P7 order of stay. Therefore, we decline the prayer made by the appellant to quash exhibit P6. 8. In the light of the above view, we find no illegality in exhibit P6 order which was issued on July 4, 1995 at a time when the Tribunal had not issued exhibit P7 order of stay. Therefore, we decline the prayer made by the appellant to quash exhibit P6. 8. Regarding the question of interest payable to the appellant, the contention that the period provided under sub-section (4) of section 44 expired on October 30, 1994 is not denied by the respondents. If that be so, the appellant is entitled to interest at 6 per cent on the total amount of Rs. 45,635 from October 30, 1994 to July 4, 1995, i.e., the date of exhibit P6 order. As mentioned earlier, the appellant had admitted that after exhibit P6 order was issued, an amount of Rs. 17,790 was offered, which he did not accept in view of the pendency of the proceedings. Under these circumstances, the department cannot be made liable to pay interest on this amount from July 4, 1995. But, thereafter on August 1, 1995, the appellant had sent a cheque for Rs. 14,845 a given a bank guarantee for Rs. 13,000 towards the tax liability for the year 1993-94 as per the directions contained in exhibit P7 order dated July 12, 1995. In the statement given by the second respondent, it is admitted that the cheque had been sent for collection by the department. Since the appellant had complied with the directions of the Tribunal on August 1, 1995, from that date onwards, it cannot be taken that there were any arrears due for the year 1993-94. We find no jurisdiction on the department to retain the amount of Rs. 27,845 which was adjusted for the year 1993-94 under exhibit P6. We therefore direct the respondents to refund the entire amount of Rs. 45,635 to the appellant forthwith. We held that the appellant will be entitled to 6 per cent interest on the entire amount from August 1, 1995 till the date of payment also. The appeal stands allowed to the above extent. Appeal allowed.