The Kerala High Court has held that Joint Commissioner has the jurisdiction to initiate proceedings under Section 56 of the Kerala Value Added Tax Act, 2003 against the assessment order that was passed pursuant to the remand.

The Court was considering a Revision Petition against an order of the Commissioner of State Tax SGST Department.

The division bench of Justice A.K. Jayasankaran Nambiar and Justice Easwaran S. observed, "On a consideration of the findings of the Commissioner, we are inclined to agree with the same since, although the contention was raised before us, we find it difficult to sustain the contention regarding absence of jurisdiction in the Joint Commissioner to initiate proceedings under Section 56 against the assessment order that was passed pursuant to the remand. In our view, the First Appellate Authority had set aside the original assessment order and directed a fresh assessment order to be passed by the Assessing Authority."

The Petitioner was represented by Advocate Meera V. Menon while the Respondent was represented by Senior Government Pleader VK Shamsudheen.

Facts of the Case

The Petitioner, a registered dealer on the rolls of STO, Kayamkulam was engaged in the manufacture of unbranded food products. The place of business of the Petitioner was inspected by the Intelligence Squad of the State GST Department an a penalty was imposed on the petitioner under Section 67 of the Kerala Value Added Tax Act, 2003. The said order of penalty was challenged by the Petitioner via an appeal and was accordingly modified. Resultantly, a consequential order was passed by the Assessing Authority reducing the penalty. The penalty was the basis for completion of the assessment for the assessment year 2016-17 by the Sales Tax Officer under Section 25(1) of the KVAT Act. Aggrieved by the assessment order, the Petitioner preferred an Appeal before the First Appellate Authority, who allowed the appeal by setting aside the assessment order and directing the Assessing Authority to a pass a fresh order after verifying the relevant records as discussed in the Appellate order.

Pursuant to the remand by the First Appellate Authority, a fresh assessment order was passed by the Assessing Authority substantially reducing the tax liability of the Petitioner for the said assessment year. Finding the fresh assessment order to be erroneous and prejudicial to the interest of the Revenue, the Joint Commissioner issued a Notice under Section 56(1) of the KVAT Act to the Petitioner asking him to show cause as to why the order of the Assessing Authority should not be revised. Although the Petitioner replied to the Notice, he did not choose to appear before the Joint Commissioner in the revision proceedings. As a consequence, an order was passed by the Joint Commissioner confirming the proposals in the Notice issued to the Petitioner and enhancing the demand of tax for the assessment year 2016-17. Aggrieved by the order of the Joint Commissioner, the Petitioner preferred a revision petition before the Commissioner of State Goods and Service Tax, who passed the impugned order.

Counsel for the Petitioner contended that it was not open to the Joint Commissioner to initiate proceedings under Section 56 in respect of the assessment order passed by the Assessing Authority pursuant to the remand by the First Appellate Authority, without separately impugning the First Appellate Authority's order that remanded the matter to the Assessing Authority.

Reasoning By Court

The Court rejected the contention of the Counsel for the Petitioner that the Joint Commissioner lacked jurisdiction to act.

"There was no finding in the order of the first appellate authority that resulted in a continued validity of the original order of assessment, since the Assessing Authority was directed by the First Appellate Authority to pass a fresh order of assessment. When the fresh assessment order was passed consequence to the remand, the original assessment order ceased to exist in law and thereafter the only assessment order that survived for the purposes of exercise of the power of revisions under Section 56 was the subsequent order passed by the Assessing Authority. Thus we don’t see any reason to interfere with the order passed by the Commissioner that is impugned before us," the Court observed.

The Petition was accordingly dismissed.

Cause Title: Sajeer A. vs. The State Of Kerala (2025:KER:20728)

Appearances:

Petitioner- Advocate Meera V. Menon, Advocate R. Sreejith, Advocate K. Krishna, Advocate Parvathy Menon

Respondent- Senior Government Pleader VK Shamsudheen

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Kerala High CourtJustice AK Jayasankaran NambiarJustice Easwaran S.

Sheetal Joon