Karnataka High Court
M/S Federal Mogul Goetze (India) Ltd vs The Assistant Commissioner Of ... on 2 September, 2010
Equivalent citations: 2010 (4) AIR KAR R 414
Author: Ashok B.Hinchigeri
Bench: Ashok B.Hinchigeri
OS/0 SHANKAR SU§W\R_!\iV/'\»~--';-___ '
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 02*" DAY OF SEPTEMBER 2010
BEFORE
THE HON'B1_E MR. JUSTICE ASHOKW B», »H1NCI1'IGE--R:'v .
WRIT PETITION NO. 20781 of 2)O1O-.(TéRES).T A
AND WRIT PETITION NoS.21811-121821/20iO..( -. «. "
BETWEEN:
M/S FEDERAL MOGUL GOETZE (ENDIA) l__TD_.",a_
FORMERLY KNOWN AS . ' .2
M/S GOETZE (INDIA) LTD., ._ --
DODDABALLAPUR ROAD,YELAHANKA
BANGALORE --- 550 720 -
REPRESENTED BY SRI SS S.RINI_vASA_'j,: _
DGM (FINANCE), AGED An:;O'uT.3~3 YEARS _ "
-- ' ' PETITIONER
(BY SRI G _SARAN'£3_VAr\T,--1:$EN§QR_:AD\iOCAT5E FOR SMT. VANI H)
AND: I A A A A A
1. THE ASSISTANTICOM--MISSIONER OF
COMMERCIAL TAXES. (AUE)--.I_T)FS2
SHESHADRIPURAIR _ _ '
~ Y.DIvISI'O.NA_L VAT OFF'ICE....»I'
BANGALORE -- 29
2. THE !:}.EPUTY«Y.CCMEMI.SSIONER OF
COMME,RCIAL."fTAx)Es (DM~--51)
DIVISIONAL VAT OFFICE -5, ABHAYA COMPLEX
II FLOOR, SHESHADRIPURAM
. BANGALORE'-:.20
KARNATAKA
' BYITS SECRETARY
__ "DEPARTMENT OF FINANCE
* vID.HANA SOUDHA
"~AMBED:<AR VEEDHI
BANGALORE RESPONDENTS
(BY SRI K M SHIVAYOGISWAMY, HCGP) THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226u__AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE' THE TIME LIMIT OF SIX MONTHS PROVIDED IN SECTION 35(4--)§i!. OFTHVE KVAT ACT FOR FILING THE REVISED RETURNS AS DIRECT'§;)'RY..'SQ:: FAR:
AS THE PETITIONER IS CONCERNED AND ETC.
THESE WRIT PETITIONS COMING ONVFOR t:TiLY";--~7.ijgi.c§.'§'*Iiiidej GROUP THIS DAY, THE COURT MADE THE F-'QLLOWING_g: ' "
ogafie.
The petitioner's grievance rejVe'cti'o}n of its belatedly filed revised reassessment order, dated 24.04§.~v20E1_Q-- (Ah_An<-:-g><'r,Vi.i*e-ri3AR:):T§".jfTh_e:jpetitioner has also sought a writ in declaring that time limit of six 35(4) of the Karnataka Value Addedrax 'the VAT Act') for fiiing the revised returns 2 is ~di_'rect'o I "
D Sri_v"G,:3a"ravngan, the learned Senior Counsel appearing for the petitioner submits that the original returns "filed~..':by""the petitioner contain: certain omissions and statements. It was all because of the changeover from the earlier Karnataka Sales Tax Act (KST Act) regime to the VAT I A:Ct"'reSgime. The software installed was developed only to meet T"«.Tt'he requirements of the KST Act. On noticing that the returns HEM.
already filed were not accurate from the angle and requirement of VAT regime, the petitioner filed revised returns for the period from Juiy 2005 to March 2006. Their filing took ,r,fi'a.0¢e0'on 19.08.2006.
3. The learned Senior Counsei sub_r_nits_that"the*:peti'ti»or':.er's_ 0"' bona fides cannot be disputed with any"':rate_"i0i' s0:¢es{s the revised returns involve the paynjenyt of'avddition'aitax--vaVnd3 not seeking the refund of the taxy__already...0lV3V':ai.d.=.__V
4. He bringsto my notice-thatCircuiarjjd§t.ed 07.07.2008 issued by the Conjrrriissjioner of ...C;omrtre'rcia_iVVj'Taxes. The said Circular directs thebbyoiificers. of'-th'e__Cornmercial Tax department to accept the revised vret--ur}'..s indicate any additional tax liability. V'Theureievantybclause/paragraph of the said Circular is extracte.dV0"hereinheiovw:
"(v'!'.I_'ri)V 'Anyyrevised return filed by a dealer beyond six months the end of relevant tax period is liable to Vrejected. However, if such revised return indicates" any additional tax liability, then in such a .c'asef.--'the return filed should be accepted with any payment made and reassessment proceedings FZHFL should be got initiated through the jurisdictional JC~-- DV ."
5. He submits that the legisiature itseigin eXe¥feCi__S4leVV':0l*'mitS"V. wisdom) has reserved the power of issuing instroc:tiojnsVl'anidf' ' direction to the Government and the:"C'o'n'.missio:ner"efor""the"'. administration of the VAT Act. Section:"59(.1A.) of.:the' reads as follows: . ._ i "59. Instructions to, .SubQf£'I;:i1E!l'(-3.._AUf'h'0!'7ftifi§-
(1) The Government and_the ;,j_Coin_inissioner may from time to time, issueV'l'sucii_'Vorders,' *b.1Vinstructions and directions: to «ali offilcers andlnetsons ijenvployed in the exe_cuticnV"o'if as -they may deem fit for the adrni'nistration"of-- 'At't, and all such officers and persons» shall 'V-ohs_ertve and follow such orders, A_ lnSl_'i't§iCti(5i?S and '*--=directions of the Government and V :ti7e_»VHCornrhissioner. "
6'; lea'rln'ied; Senior Counsel submits that the impugned is passed» in flagrant vioiation of ciause (iii) of the '1._'_Co_rrtrhEssio'ner's circuiar extracted hereinabove. He relied on the Court judgment in the case of COMMISSIONER or-' t-slttes TAX, u.9 v. INDRA INDUSTRIES, reported in (2001) REM.
Vo!.122 STC 100, wherein it is held that the circulars issued by the Commissioner of Sales Tax are binding on the Depiartiif.--eri.t, though not on the assessee and the Court,
7. Nextiy he would advance the conte-gn'ti.on>thyat--.:a'icitcuiar' issued by the competent authority» has tiieforce _oi'97- can even supplant the law in cases it to the assessee and has mitigatedo'i~~».rela$te'dtth.e rigour law. In support of his submissions, Kerala High Court decision in tl"ie":'At,fg'::lySe cohiitislszosfiisa OF INCOME- TAX v. Aspxniivlnliigihiiio:'=t:¢o§;'reported in (1993) voi.2o4 1Tii;"22's.l..fgr,vgy V"
8. He reéqujestsl provisions are to be construedliberaliy; the charging provisions require strict co'nstructigon\x.., yglrisupport of his submissions, he relies on the Hon'bl'e_"-l'._SiuiJ'i'e'rrie'V~l;""'Court judgment in the case of
23.k.gsvNmeT:tcs5'L'ro. v. COMMERCIAL TAXES OFFICER, l iri (1994) Vo!.94 STC 422.
9.V'§i--ie aiso brings to my notice Rule 39 of the Karnataka V>lfVa_luue Added Tax Rules, 2005 (for short 'VAT Rules'), which f3BI»f, enables the concerned officer to issue a notice to an assessee if the return is found to be incomplete or incorrect. The is extracted hereinbeiowz "39. Action on apparentgfir ii_iicQ;iiplete..: at incorrect return submitted« (1) Where anyV_~re'tur.n it submitted is apparently incollhbiete or" iricorrect,'7..;th'e~V jurisdictional Local VAT officer VAT "so-bf-officer shall issue a notice in :::Form'requirin§] "the dealer to submit a comblefe lo.-» within ten days of issue-*of_ the:~n'otice. ' 'V " it i
10. The not lprescribe any period of limitation with:i1.V..:i}ii.hicl§?jii1e:'cohncernedyflofflcer has to issue the notice. Such:VaAFiu_le' ensure that the mistakes in the returnsare co"rrected'V-.arrd' that the return becomes complete in_.~eve_ry ..l_SAimiAAlarly,--~etihe assessee should not be rendered helpiessando 're_ni:édiVl:ess in correcting the returns which he has _ d.
'Sarangan complains of the non~application of "'*.jg_'mind.,' astkze revised returns filed for some months, which are 'weithivn...the prescribed periodjare also rejected. HRH :2. Per contra, Sri K.M.Shivayogiswamy, the learned___High Court Government Pieader appearing for the F8S§30nCiéTi'f..S:'*,LhaS raised the threshold bar to the very maintainability/"oftthe petitions. He submits that the petitionersisjlnot:'j*u'stified» in resorting to the duaiity of the recourseszfrrVTn_e"petitio'ne'r filed the appeal before the Appeliaté--s.._Authori_ty .ulrgin'§i"'rrt'ore or"? less the similar grounds raised in this--p"etiti'o.n.
13. Sri Shivayogi VAT Act is a Selflcontained C0de:--_" the it'Sel:i':has...prescribed an outer iimit of 6 montiés returns, there is no question of beyond six months from the 4. tax period. Neither the Governmer_1_t_ norithe C.o-rnrnlis'si.oner can issue any circuiar or ciavrificatitincotntrary tothestatutory provision. Swamy submits that if there is confiict or reptegnancy the Act and the circular, the Act wili prevail .the.+;ircui"ar. He has relied on this Court's decision in the DINAKAR ULLAL v. COMMISSIONER or fiyi:(iO'ME-TAX, reported in ILR 2o1o KAR 2799 to buttress his u'~.y»_4"'subrnission that no authority can issue directions/instructions in 5231!.
excess of what is stated in the statute itseif. The ref-evant paragraph of the said decision is extracted hereinbeiowzifli"V-.§"%:'--.s:"'vv.
"12. In STATE on M.P. vs. G.S. a.ttt;n~ia .
FLOUR MILLS, the Apex Court i1'e/do'tnat~icLexectitne_i"' instructions can supplement a statutesorscoyerilareas"
to which the statute does notextend but theycatjnot run contrary to statutory proyis=ions_Vor down their effect. tn Kemtg AI-'1'NANciAL CORPORATION vs. for//tmintg 'opinion of Mukhalji, 1., at oparagraph 342i :'.vBJANK or rm VANCORE ctr. 3;; that 'jihcirculars cannot detract froth held that a circularwofy _ the" ;i3o§ard..j'.'under~-Secgtion 119 cannot override or detract__vhfon?4.tfie_Act in as much as, what Section z'--11'9 has is to issue orders, instructions or directions for the 'proper adrninistration Vofsthe Act' or for such other purpose . .°specifi:edR:in such-Section (2) of that Section and that instructions or direction cannot override the j_ provisions of the Act which would be V V' . destructiye all the known principles of law as the 'same ilvould really amount to giving powers to a ":d_ele§ta_ted authority to even amend the provisions of M the law enacted by the garliament. "' Bl!
15. Sn' Shivayogi Swamy has also relied on the Kera!a..._lf-iigh Court decision in the case of J & S GRANITES C0. OF KERALA 8: OTHERS, reported in (2O09--):7 424(KER). He read out the head note, \i.r»hw%chAreed'sViase~'Ifoiiovvs:
" The power of the Comm_issioner to ciecicjie...aw dispute is a power to clarify 'to..,:resolveV"the' iciispuite as to the application of the s,tatutes iriguestion and not beyond. The provisions'-- of the Keraia General Sales Tax.i4:ct,' section 94 of the Kerala; A:ddeo'~:':TaX amount only to the authority, to clarify, " «toewyinake clear; to elucidate; _ 'explain. scope of any exercise with reference to thjoseprovisions is only to remove the confu'sio,n,V. The "power" to issue _ clarification does._.not include the authority to issue .. 'any. A"cl:ér.'fi:cation circular contradicting the and Rules framed thereunder.
lvohpower conferred on the Commissioner under T the '}?~963eAct'V'or the 2003 Act, to impose tax. When 3"""i._,"statutoryZprovisions govern the field, there is no _ "tro.om""_«for any executive decision, including by the % -- issuance of statutory circulars or orders, which
-deviate from the effect of the provisions of a statute or statutory rules framed thereunder. Therefore, F2311:
any clarification, issued contradicting the legal effect_._ of the Act and the Rules, would be plainly ultra those primary and secondary legislations. " " I' h
16. He also brought to my notice,,,,the Ho'ri'b-I.e_f Court's judgment in the case of znuniuuehv-iAL.Aragiaosfisksj v. STATE or U.P & omens, repc--rted in (2oo:6}.jggt14s I5'rc 659 (SC), wherein it is held that the_l:CommissEoner_._by'issuing a circutar cannot create iiabEii'EyiT'wAh'egrej_,'t'he'r;$.,'gistpone under the statute. The relevant para-gr.aVph"--oAf,_thesaid judgment is extracted hereEnbe,io,w:3 "11. It"was,;':iheréforé,-hecessarylvéto be established 'that the .,a"-n'ianufacturer--dealer. The Commissioners not have created a liability by ah inference that the purchases _ ,.,_Afro;n'3":fa,rn7ers who have grown, cut or sawn timbers, bali-"s, will bring them within the umbrella VAV.lfv'rtianufacturer'i The view that the tax liability :;.-been prescribed at the manufacturer's '_ g 7_and ' importers points and therefore after the it"4':g:amendrnent traders who purchase the timber from unregistered dealers fall within the category of manufacturer is indefensible. There is no logic for it such a conclusion, where the statutory definition does not say so. It needs no emphasis that the 33% error on the part of the first respondent. He undertakes to have the revised returns filed for the month of February and March 2006 considered and consequentiaily have those portions'o:ffthe., impugned reassessment orders rectified.
19. Sri Sarangan's rejoinder s;"uybVm'i'ss_ion -:i's.Utihatvv"then'. appeals are filed against the reasse,.ssmen't_ orders; >o;;nt'he' oi:h'e:r"
hand the main grievance ventilated iirrtvhese writ_Vp'etitio«n.svuis only the non-acceptances of the "'r~e_vised'mretuérnsir.on the" ground of delay.
whether they: Cor_nniis.si,o'n.er's,V:'"circular is to be acted upon. Section 59(1)A"o_f"the provisions of which are extracted hereinabove,'"confers: the power on the Government anddthe"{fominiss.i,_oner"tot issue such orders, instructions, directioris_i-'VVt'o~..'jaill' officers as they deem fit for the j'V.Tad'ministra.tionV_>of_nthAe VAT Act. The next part of the said sub~ " "sect io'e,contaivn.s a mandatory or compulsive element. It states 'imthattrail, officers shall observe and follow such orders, instructions 'ainjdi.d.i.rections of the Government and the Commissioner. EB!-L
21. I do not propose to examine the hypotheticai issue of whether the officers shouid obey the Commissioner's circuia~rsi,~.Vif they are issued in contravention of any statutorifri5'V5V?'i$iTo§=i._._"T. because that question has not arisenyfliyny this:""case~,"'as"then it Commissioner's circuiar cannot be said to !:gei.in excess ofwifor 'int violation of any statutory provisionf
22. The decisions reiieifiuponii'by:*.Sifi'nSh_iAvayog'i"Swamy do not make the position of the in any way.
They have no appii§ca'tio:n case. In J & S Granites Co. and the circuiars pertain to a substantive" reoardin§_"tii'e;ievy of tax. Besides in the case of was issued under Section 59A of they _K'Vera'|a'<.GVeneVrvaIA':3_aiesV Tax Act. The provisions in the sa'Ed«.Secti:o;n Keralauiena-ctrnent are not in pari materia with the provisions" in Section 59(1) of the Karnataka VAT Act. the .sai'de'cas.e';V'i:thiifé Keraia High Court has rightly heid that the .:e_iyi'_gCom.mission~er'does not have the power to impose the tax. In fithle"iEastan't. case, clause/paragraph (iii) of the Commissioner's ' -Viy'ci._:_9c'uiar: does not impose any tax as such. In the case of Jyheunjhunwala (supra), certain clauses were brought within the HRH.
definition 'manufacturer'. Further the cases where the circulars were held to be bad are all at the instance of the assessees,:'ff"*._
23. In the case of Dinakar Ullal (supra), this has held A that the applicant's claim for the refund considered on the basis of the law as it the-n"'existec3--".l,anvtl "not: on the instructions subsequently issued.'""'l»'1V'V:h"is Coort._in'rt-Fae said case has held that the executive"~.i..nstr_uctions._ cannot override the provisions of the Act.
24. As held_ in the case of Fertilizer Corp_orati~~on'-- the machinery provisions are ._ -'interpreted "liberally and generously, so 'long as the"p,rinlci'jplll4eV.'.object of the provision is not frustrated."_;"W'ith thls' at the back of my mind, let me refer tointheiistatenfleni:.iof._,objects and reasons of the VAT Act. Its objectl"i\lo;~l\1fVI%l ls4:'to,lV_ptorr§ote - _ ".'_,'l/oluntary. compliance by providing for acceptance of "returns filed by the dealers on selflassessment basis ;and"fo}* scrutiny of books of account only in selected 8854.
25. Rule 39 of VAT Rules provides for taking action by the concerned officer on an apparently incomplete and "i.n'co"rre'ct return submitted. The rationale behind Section VAT Act and Rule 39 of the VAT Rules»AA»is..,onlyHj'iess.en--'.ithe--»A it imperfections. The errors cannot be left Li_nc7orrected_ returns cannot be left in the incolnp'i'ete state. V this A' perspective, the Commissioner's oAr.d.elr"-is'--»laudab'ie;.. the order cannot be held to be illegal or"incons_i_s3tevntfl"w'i_th:the provisions of the VAT Act or the Rul_e's__frame'd were illegal, it would have been by:
26. Yet which cannot be lost sight of is returns, the petitioner has come forw3',".-ito nt.l'le.,a~ddivt'ion"ai tax. It is not that it has filed the"'re.turn$gto seek Arefund"'o'i' the tax already paid. If the belated returns valret,t'l;..§{4re.fore"entertained and the additional tax is .5g'a_ccepteci,A as%«directe.c'ti:by the Commissioner, it does not affect the __interes_t of th-ehrevenue adversely in any way. Filing of the b_eia_ted" revised returns and their acceptance by the concerned wg-yuid not put the exchequer to any prejudice.
498%.
27. Considering ali these aspects of the matter, this Court has no hesitation in holding that the respondent No.1'4.has:_:'riot considered the petitioner's belated revised submitted with additional tax in accordance with"ti*.eijfcigrcuIar v question.
28. For yet another reaso'nirg:'"'too, the'--Co'mr'nVis'si'oner's"
circular is absoluteiy sustairiahle.,<"Tii.e';su'dden 'in'i:--rod'uction of VAT regime has created an To soften the rigors of change--o\/fer' regime, a weli thought out fiorrimissioner may have issued the ciircuiiargitio soiiie theiteethinigioroblems.
29. As bythe in the case of Commissioner of Saies_;T'a><t, ..:('supra),. the Commissioner's orders are :d~c.-zfiniiterlyf the officers of the Department. The Kerala High"Co-Curt,"in't,he~AV.C'ca'se of Commissioner of Income--Tax (supra) has heid"'--~tha-if a-circuiar of the Centrai Board of Direct Taxes has "'t.he_uforce ofiafiw and can even suppiant the law in cases where it isebienieiicial to the assessee and has mitigated or reiaxed the it of the law.
£811
30. The respondent No.1 ought not to have passed the impugned order in defiance of the Commissioner's _.cir_cul_a..r. There is not even a cursory reference to the circular.Ȥ..The=order.._g" . thus suffers from the non--consideration ofthe relev'ar'et:'material.vi.' i"
31. Not entertaining the revised returns for of February and March 2006) even were within the prescribed period of Iin*iitatioVi/=i,.i'"s«-- reiiecjtive'~.of.,it'he non--application of mind on the part of the resp.o.n:de.nt'V._hlog.1.';i":7
32. For aii the impugned reassessment~o-rdeVr:~~a.nd'*Ithe demand notice. The matter is rerri-anded' "*'1f_'.~'5f3.'ondent for considering the petitioner's revisxedxretuirnisiiivniigeeping with the Commissioner's ciremaar, It is made ciear that no opinion whatsoegverw isv.expressed on the petitioner's tax iiability.
33.»At v_ti'risvtA4i'.=juncture, the petitioner's learned advocate "'u'ndertaAAkes "to: withdraw the appeais wherein the same A "rea's_sessment orders are impugned.
REH.
E8
32. These petitions are afiowed to the extent indicated hereinabove. No order as to costs.
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