Challenge based on factual dispute against KVAT Act is not approachable under writ jurisdiction: Kerala HC [Read Order]

In a recent case, the Kerala High Court observed that a challenge based on factual dispute against Section 25(1) of the Kerala Value Added Tax Act ( 'the KVAT Act'), 2003 is not approachable under writ jurisdiction.

Majusha Sanjith , the appellant writ petitioner had approached the Court through the Writ Petition aforementioned impugning order issued under Section 25(1) of the Kerala Value Added Tax Act ( 'the KVAT Act'). The main contention of the appellant in his challenge against order was that the Assessing Authority under the KVAT Act had, while completing the assessment against the appellant, relied on the data available in the KVATIS that suggested that there were considerable purchases effected by the appellant from M/s.Blue Metals, which had not been recorded in the books of accounts maintained by the appellant, and to that extent had been suppressed by the appellant.

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Although the appellant had taken a stand before the Assessing Authority that the said purchases were not effected by the appellant, and that the alleged supplier, namely, M/s.Blue Metals had since clarified to the appellant that the sales effected by it to various retail consumers had inadvertently been shown as effected to the appellant in the returns submitted by the said M/s.Blue Metals, the Assessing Authority proceeded to view the said turnover as suppressed purchase turnover of the appellant and complete the assessment against the appellant on that basis. It was the said order of assessment that was impugned by the appellant in the Writ Petition aforementioned.

The Single Judge found that the factual dispute raised by the appellant could not be appreciated in proceedings under Article 226 of the Constitution of India and hence relegated the appellant to his statutory remedy of filing an appeal before the First Appellate Authority. The Judge also took note of the period spent by the appellant in pursuing the Writ Petition and directed that the said period would stand excluded while calculating the period of limitation for filing the statutory appeal before the First Appellate Authority.

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A division bench of Dr. Justice A.K. Jayasankaran Nambiar and Justice P.M. Manoj agreed with the Single Judge that factual disputes of the nature described above cannot be gone into in proceedings under Article 226 of the Constitution of India.

Since the case of the appellant is essentially that there were no sales effected by M/s.Blue Metals to it during the period aforementioned, and the said contention is premised on the subsequent letter issued by M/s.Blue Metals to the appellant as produced in the appeal, this is an aspect that would have to be enquired into by the First Appellate Authority in an appeal preferred by the appellant before the said authority.

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The First Appellate Authority shall take note of the said letter issued by the supplier, M/s.Blue Metals and verify with the Assessing Authority of the said M/s.Blue Metals as to whether there is any substance in the stand taken by M/s.Blue Metals that they had not effected any sale to the appellant herein.

It was directed that if the appellant files the statutory appeal within two weeks from today, then the Appellate Authority shall consider the appeal as one filed within time and proceed to adjudicate the matter on merits, taking note of the directions issued above.

To Read the full text of the Order CLICK HERE

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