Clubbing of Income of Husband and Wife is to be decide by Appellate Authority: Kerala HC dismisses Writ Petition [Read Order]

The Kerala High Court in a recent case held that the clubbing of income of husband and wife is to be decided by appellate authority and cannot be decided by the writ court. The Court dismissed the appeal and upheld the order of the single judge.

Kumaran K V, the appellant is running a driving school under the name 'Kumar Motor Driving School' at Kunnamkulam Municipality, Thrissur District, registered under the Central Goods and Service Tax ( CGST/SGST )Act, 2017.

The appellant filed the writ petition challenging the assessment order passed under Section 63 of the CGST/SGST Act, holding that a sum of Rs.4,13,88,040/- collected by the appellant from the customers as service fee is liable to be assessed to tax @18%. The appellant was directed to pay a total sum of ₹1,90,66,593/towards tax, penalty, and interest. The Single Judge dismissed the writ petition, relegating the appellant to the statutory remedy of appeal.

Sri. T.R. Rajagopalan, the counsel appeared for the appellant and Sri. V.K. Shamsudheen appeared for the respondent.

The appellant is the proprietor of ‘Kumar Motor Driving School’, whereas his wife is the proprietor of ‘Kumar Motors’, and both are separate and distinct entities. It was submitted that the first respondent took both proprietorship concerns as one entity, clubbed the income of both and made the assessment.

It was argued that the clubbing of turnover of ‘Kumar Motor Driving School’ and ‘Kumar Motors’ is without any factual justification and is illegal. However, the assessing authority, after analysing the evidence on record, found that 'Kumar Motor Driving School' and 'Kumar Motors' are the same entity.

 The single judge of the High Court observed that the questions of whether these proprietorship concerns are the same and whether the turnover of these concerns could be clubbed together for assessment, etc., are disputed questions of fact, which cannot be adjudicated in a writ petition. Hence, the Single Judge dismissed the petition.

Since there is no merit in the writ appeal, the division bench comprising Dr Justice A K Jayasankaran Nambiar & Dr Justice Kauser Edappagath dismissed the appeal and extended the 15 days' time granted by the Single Judge to prefer appeal for a further period of 15 days.

To Read the full text of the Order CLICK HERE

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