Decided on November 22,2017

Drisya Advertising Appellant
Authority For Clarification Respondents


A. K. Jayasankaran Nambiar, J. - (1.) The petitioner and the additional 4th respondent are persons engaged in the installation of hoardings and providing the services of putting up advertisements on the said hoardings. In the writ petition, the petitioner is aggrieved by Ext.P5 order passed by the 1st respondent, authority for clarification under Section 94 of the Kerala Value Added Tax Act, 2003 (for short the KVAT Act), to the extent it withdraws Ext.P4 - an earlier order of clarification issued by the same authority on the same subject matter. The facts in the writ petition would indicate that Ext.P4 order dated 09.11.2015, was issued by the 1st respondent clarifying that no taxable event under the head of "transfer of right to use goods" would arise in respect of rent received for mounting flex boards of advertisements on the hoardings erected by the applicant. It would appear that the said clarification was issued by the 1st respondent without noticing Ext.P6 judgment of the Division Bench of this Court, which had taken a contrary view, and opined that the activity similar to that carried on by the petitioner would attract the levy of tax as applicable to transfer of right to use goods. It was under those circumstances that, when a subsequent clarification was sought for from the 1st respondent, the 1st respondent proceeded to pass Ext.P5 order, taking note of the Division Bench judgment of this Court referred above and holding that, in view of the Division Bench judgment, the clarification sought for by the petitioner had been answered against the petitioner, and then proceeded to withdraw its earlier clarification (Ext.P4). The correctness of Ext.P6 judgment of the Division Bench of this Court was doubted by another Division Bench, while considering Writ Petition 7891 of 2017, wherein by an interim order dated 06.04.2017, the latter Division Bench, prima facie, found force in the contention of the assessee that in the case of hoardings, the immovable nature of the property would have to be considered while examining the issue as to whether a tax liability under the head of "transfer of right to use goods" would be attracted. The writ petition was therefore, posted along with connected writ petitions and the interim stay against further proceedings issued by the Intelligence Wing of the Commercial Tax Department was continued till the next date of posting. In the meanwhile, however, when writ petitions filed by assessees, impugning notices proposing to levy penalty under Section 67 of the KVAT Act, came up before another Division Bench, the said Division Bench took note of Ext.P5 order passed by the 1st respondent, withdrawing the earlier clarification (Ext.P4), and found that, in view of the earlier clarification having been withdrawn, Ext.P6 judgment of the Division Bench of this Court would govern the issue regarding imposition of penalty. The said Division Bench, therefore, dismissed the writ petitions. In the present writ petition, learned counsel for the petitioner would limit his contentions to the legality of the 1st respondent withdrawing the earlier clarification (Ext.P4) in the subsequent proceedings under Section 94 of the KVAT Act. It is pointed out that the power to cancel or modify an order passed by the authority for clarification under Section 94 is conferred only on the Commissioner under Section 94(7) of the KVAT Act. Although Section 94(8) of the Act enables an authority for clarification to declare an earlier clarification to be void ab initio, the said power can be exercised only on a finding that there was a fraud or misrepresentation of facts by the assessee while obtaining the earlier order of clarification in his favour. In the instant case, since Section 94(8) is not attracted, I find that the action of the 1st respondent in withdrawing his earlier clarification (Ext.P4) cannot be legally sustained, since the power of review is one, that has to be specifically conferred under a Statute on the authority seeking to exercise it, and in the instant case, it is not in dispute that the authority for clarification does not have the power to review its own earlier order.
(2.) In this connection, I must also note the submission of the learned Government Pleader that, in terms of Section 94(4) of the Act, where any question arises from any order already passed or any proceedings recorded under this Act or any earlier law, no such question shall be entertained under Sub Section 1 by the authority for clarification. The contention, in other words, is that in the light of Ext.P6 judgment that already existed at the time of issuing Ext.P4 order of clarification, it is evident that Ext.P4 order of clarification itself could not have been passed by the 1st respondent and consequently, there was no illegality in the 1st respondent withdrawing Ext.P4 order through Ext.P5 order. It is also contended that the non disclosure of Ext.P6 judgment would, at any rate, have vitiated Ext.P4 order as contemplated in Section 94(8) of the KVAT Act. Attractive though the contentions may appear at first blush, I am of the view that, even if the irregularities pointed out by the learned Government Pleader did exist, it was incumbent upon the respondents to have brought the anomaly to the notice of a judicial forum for the purposes of setting aside Ext.P4 order of clarification, which, according to them, was illegal. The said course of action not having been adopted by the respondents, permitting the 1st respondent to withdraw an earlier order passed by him, would tantamount to blessing an illegality that is committed by the 1st respondent, in that it would amount to permitting the 1st respondent to exercise a power to review, which is not conferred under the Statute. Thus, I quash Ext.P5 order, to the limited extent that it withdraws Ext.P4 earlier order of clarification.
(3.) The writ petition is allowed as above.;

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