Facts of the Case

The petitioner, Nalleppilli Arumughan Jyothikumari, proprietor of Sri Amman Enterprises, was subjected to assessment proceedings under the Kerala Value Added Tax Act, 2003, resulting in demand notices for payment of tax dues. The petitioner did not dispute the legality or correctness of the assessment orders or the tax liability determined therein.

Subsequently, the Revenue Recovery Authorities initiated recovery proceedings by issuing a notice under the Revenue Recovery Act for recovery of the entire outstanding amount. Since the petitioner was unable to make immediate payment of the entire demand, the writ petition was filed seeking permission to discharge the liability through monthly instalments and for keeping the recovery proceedings in abeyance.

 

Issues Involved

  1. Whether the High Court could permit payment of undisputed tax dues under the Kerala Value Added Tax Act in instalments.
  2. Whether revenue recovery proceedings should be kept in abeyance during payment of instalments.
  3. Whether statutory interest would continue to be payable while availing the instalment facility.

 

Petitioner's Arguments

  • The petitioner accepted the tax liability determined under the assessment orders.
  • The petitioner did not challenge the validity of the assessment.
  • Due to financial constraints, immediate payment of the entire outstanding amount was not possible.
  • The petitioner requested the Court to permit payment of the outstanding tax dues in reasonable monthly instalments.
  • It was further prayed that coercive recovery proceedings be deferred during the instalment period.

 

Respondent's Arguments

  • The State Tax Authorities had already completed the assessment under the Kerala Value Added Tax Act.
  • Revenue recovery proceedings had been validly initiated under the Revenue Recovery Act for realization of the outstanding dues.
  • The respondents relied upon the statutory recovery mechanism for collection of tax arrears.

 

Court Order / Findings

The Kerala High Court observed that the petitioner had not disputed the tax liability and had sought only the benefit of instalment payment.

Considering the limited relief sought and the facts of the case, the Court directed:

  • The petitioner shall clear the entire outstanding tax liability in six equal monthly instalments.
  • The first instalment shall be paid on or before 16.01.2023.
  • The remaining instalments shall be paid on or before the 16th day of every succeeding month.
  • The petitioner shall also pay all statutory interest payable on account of payment through instalments.
  • Upon timely payment of all instalments, the revenue recovery proceedings shall remain in abeyance.
  • Failure to comply with the instalment schedule would entitle the authorities to continue recovery proceedings in accordance with law.

 

Important Clarification

  • Acceptance of tax liability does not prevent an assessee from seeking instalment relief from the High Court.
  • Grant of instalments is discretionary and depends upon the facts and circumstances of each case.
  • Grant of instalment facility does not waive statutory interest.
  • Revenue recovery proceedings may be kept in abeyance only if the assessee strictly complies with the instalment schedule.
  • The judgment does not interfere with the assessment order and only grants equitable relief regarding recovery.

Sections Involved

  • Kerala Value Added Tax Act, 2003
  • Revenue Recovery Act
  • Provisions relating to recovery of tax dues and payment of assessed liability in instalments.

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1782970946_91compressed.pdf

 

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