Karnataka High Court
Hmt Watches Limited vs The Deputy Commissioner Of Commercial ... on 28 June, 2010
Author: Anand Byrareddy
Bench: Anand Byrareddy
IN THE HIGH COURT 0;? KARNATAKA AT BANGA__L()RE
DATED THIS THE 28"" DAY OF JUNE 2(:m:[feej<eeee
BEFORE:
THE HON'BLE MR. JUSTICE ANAND "BY:vli'{A'i2_jEVVDI)\'
WRIT PETITION No. 19648 » I§69§'.(§F 3_2,fI.i:v{'§j'F~'Ri£:\S")'~
BETWEEN: LL % A x x
HMT Watches Limited _ _ _ _ ,
A comp-.=my i:":_e01~p()mted u:ide1:--:h'e__ A} V V
Companies Act, 1956 with iV;s_ ' 2 -- _
Registered Offiee at H.MT;_Bl1aiV'an, ' "
#56,.Beil21ry R()zj_3, _ _ 1: " u
Bangalore -- 5150 {'3_3V2"'~" .,_
And a factory zHV"I:'~;I:1iA3:i§ur '_ A
Rep:'ese1jted 11ee1'eei:v";v by7':.i4t_--s' I
Chée1"--<)f-*r?i:":z:.nc.e-.
M1'. T.V. S'1'i}":i"w}s21' i\/_Eu;*ti'ayV. ' ...PETITEONER
{By Sm K. P. Ru ¢:j;:'u~'.f sew Advoc:a1te)
.AN9?
. 4.,.......,.....j._'.
TEN: Dep iffy" Cs.)__z'r§~ 3 tone r 0 1°'
C<)nin3e:"ci;1i.Ta;xes (Recovery)
V --Si:'dR(")a§i,"* '
" ~ §i;j'~._Tmnkur. " ...RESPONDENT
e(B:y"f°3!1I..'iA. KM. Sl1iv'a1li:1ga1swamy, ___"'«I§i;_'§h Coaart Gmxernnlent Pleader) >':
g e IQ These Writ Petitions filed under Articles 226 of the Constitution of lndia pfilyillg to set~aside the impugned p1'ot:eediiigs dated ()8.()6.2()l() vide Annexure--E and etc., Th'e'3¢Writ Petition coming on for pi'elii'i1ii'i;1'i'jz t_"ni§< day, the Court made the following: --
The petition coining (iin"'~-foi' l3't"e'ltt't]iii't!_t'y'=:."i*i.t3i,|Ping is' I..-
considered for final disposal hz.1.v:i'i1g'::eeai'd"to._thei facts and circumstances.
2. The _pietiti::oi1ei'.Visi ti;_Wl1t}lly.Vt)'ui/i1e'd subsidiary of HM'? Limited and is».;1°'Ce;nti'ai _VGoiVei*:1ii{1ei1tf company engaged in the business of E}]iL1l}1tf£lCff£1.lfi€~}-tliid__iSL!l.ehf wrist WdlZ(.'i]€-S all over the country. The C-r;):it:'r.)yei_'siy..V peitaiiis to stocl< transfei' effected by the ifV'}3€i'ltl:ilii{3I'i;:$ii1Tl,ll'1}.i(Ul:il'Ei'C'f('ll"y to sl1ow--roon:1s inside and outside iKai':i:tt}:iE<:;i'foi"~the i1;.ui'pose of effectiiig retail Sales or institutional sale-S]-..4 As.-res_ia--i"ds stock ti'ansfei's to the showroorns in Karnataka, 'i"--__W'i'1etl1ei' meant for retail sales or institutional sales, there can just be if .no*- Vq1;te:sti_()ii of levying Central Sales Tax as there no move.ment f'ol"g()()ds outside the State of Karnataka. The petitioner claims 5 that it has alreatly paid the Value Added Tax in respect of such sales from the sh0w--r00ms in Karnataktt whether the sales were retz-til sales or institutional sales. As regards the stocks outside Kmnataka also the respective sl1()w~r()t)insf"l'1avvei'pt1'id,."lhe; local Value added tax to the respecti\fe"1States,1whetli<::r._reta--il.isail-es i or institutional sales. Thus in regard tt)'.__thl'c_sa1es iegffecte~d '¢'§.4l.l"~{_)\./Cl:
the country, the petitioner has (iiis'2iVhh:"ged tire 'e.ptpi.'t5pr'iate value added tax liability.
3. Despite this'-legafil and _l}T:1Ct1,1it'i.i'p.()Sl'IlOfi; the respondent has llllllilted;ii'E3£1Ss€S§if1f1€l1l€.4ipi'i(§€itf€di2'1gs; under section 9(2) of the Central Saiiesiffttxi Act';'i95$"('he1'eina1fter rel'erred to ' the CST Act' fcgr 'biieviti/_)'-» ijeagi with section 39(1) of the K£l1'n£li1'll<£i Value 2003 (hereinztfter referred to as ' the KVAT Act' fer.b'revity)i"_"_andilihiis passed orders for the assessment years 2005- *V06 t0ii'2{)(J"i3--(}9ii. levying central sales tax on all the stock tiensfei' ..fr0iriii"its Tumkur factory. Appeals were preferred against the ""'i'ezissess1rients for each of the months from April 2005 to 5 Fe.b:*uttry 2009 before the Joint Cornmissioiieif of Commercial Taxes. Howevei'. no order of stay coutd be sought b€C'&ti'St.',b of its totui inability to eoinpiy with the stattitory 1'eqt1i1'e«:tn_e_ttt"tit? deposit of 5()"/n of the disputed tax bef0:'e seek_i.t1gv_i$"ta.ei't».i;i'i:_i1iter'i:Ii stay. It is contended that the pCIiKii()D€1j...,ifliildglliilii 'by'vt'Et.en..,pnfid sa}z1i'ies to its Staff from July 2()('J9'é'tiid tiittplyt.'deijtv<)_nsti'giite$i the:
petitioner's iiitaneiat position an(_i___it'::~;_it1:tbitity' ttxpay any ttmottnt towards the disputed "tax, 21:; b--eii'ig ;E§.Eii'.tiiie--fnf.t)i'e. appareitt.
4. The }_).€{'i«LiO'l]C:' :;1ppl'():';;tCi1E;fi'~.iti3i.$ 'eiiui"t by way of at writ petition ain WP"74,3E?78r'2(i)'i»»Q S6Bi<.ili§:_ directions not to initiate any recovery i'a.t;t4i0n. i »,_'Ei"hi;~; e(.it_ii*'t«{iispt)sed of the writ petitioits by an t.>i'deij;dated 9.3;*3,()iE'()i. White deciining to grant stay, this court i:,t)'w.,teveif 'dit'eete.d the ttppetiate 'dtt{h0:'iEy to dispose of' the appeals hy 2010. The ap_pez,1is were accordingiy disposed Ipot'. As..dgi..iiniSt the initial payment of R5,] 1.56 Crore, the demand ¥_°w;1si' Stistaiited to the extent of Rs. E .89 Cmre including interest and pefirittity reiatting to stock 't1'a11si'ei"s relatabie to i_hstitL1t'i0ittti sates at 8 the ret.ail sl10w--rooms outside the State of Karnataka. The appellate authority did not give any t:onsidei'a'tio11 to tlltlri-'Eli(iI't_ii}El[ at the recipient retail s;how--room:~; from where the effected, local value added tax was c:olAlwer.':ted jandii'er3titted_7to respective States.
5. Aggmieved by thi§';, the apipeals before the K.arnatal_<a Appellate By proceedings dated 8.6.2010, that the petitioner had not paid iii/ihieh in the View of the Tl'ibUna:F'iiil1€ appeals on record. The Tribunal that the appeals could not be constr§uieda.as p1'ope_i'and niatintainable till the payment of one half of (l_li$;;:¥t£E'3ti"~.l£1X. it is in this bael<ground that the petitioner is beforethiis; Teonijtiipleatding its inability to meet the requirement of iwV_dep()sit.inig.. one half of the disputed tax and appropriate "Cdi.ifeet*i_on for disposal of the appeal on merits while waiving the reiciairetnent of making deposit ofone half of the disputed tax. @ 6
6. The learned Government Advocate would raise ieheiiieiit objections to the €n[€l'E£lii1111.Ci][ of the present petition-.i;iii.d__t'ti;'ou1d point out that this court had. inthe first iristz1.nee.,_fwlieiii such -it request was made il1SOfdl' as the p€l]:£iil]g;"'8.pp€£ii E3eifoi'e"t'h:e. éoiiit Commissioner of C()11111"t6l'Ci€lii>,F_iiii}§6S r;()n'c_ei'ried.,_ .3stout!y' rejected the writ petition Vwr.hile (i'ii"_ecti.(iii*i'to_thHe,iiziuthority to dispose of the appeai there cannot be :1 different View as the pre--deposit pursuant to and would submit that it does to contend that the nature of the pifoivisioii, haif of the disputed tax is required to be'-jiepo.sited as Vhieing onerous as this directly affects the revenue £iIiCi.,.siiI1i1L'iIf pr0.visions have been upheld by the apex Court, time afifihéigizlili; .i1Hdi'Iii16l'Ci'()1'€, there is no warrant for interierence by this court at this stage.
7. While this court was ineiined to reject the petition outright, a fervent plea has been made by the leati'.i_i{:d:'f-Seiiior Advocate to point out that the petitioner is a CCl1I~iTit1.i Goiv"ei'i'ini'eiit~. Undertaking and tliat. it is in dire f'i11:irici':1lstraits' iziiiigi since the' question involved in the present cii'cunistane_e is 2I.pj.t1*'e» t;'~ues'ti't~>.ni'ol? law, which would on the face ()t°'itV,lseem t"o._be-in flit)/t)tii" of the petitioner and the questi_()i;-.._he-ii1g--i_deg:ideali.n"i"7:tvoL11' of the petitioner would bring mucli relief to.it-he_ fietitioiier?>.co'n1pimy which is at its tether end and pity ev_erijj~s:iia.r1'es of its employees and theret'ore.,--. i.woi'iltl_'se'£-is .i_i1d._n'lg_e':ice..of_tl*iis court atleast to permit the petitit_)i1ei~t_toi'contest .t'n.eltip}5e.t;}iii' on merits while imposing reasonable terms as to the deposit '~r)t"mo:iey not to the extent of 50%, but to V' "v1.".CdL'ti1C:'[lT_1'€, Sttlllfi stihs't::~i'itiia1l§y and would offer to deposit 3. sum of ftliotigli 50% of such deposit. would exceed Rs.9O iai<h*.-._ $i_!*ice.Viit"tie petitioner does not have the funds to maike such .L.i"eoi()sit, Emit is possessed of substantial assets, which ultimately cam _ he hrticeeded against if the petitioner were to fail and at this point é