Karnataka High Court
M/S. Sanjay Alloys Pvt Ltd vs State Of Karnataka By on 30 June, 2022
Author: P.S. Dinesh Kumar
Bench: P.S. Dinesh Kumar
S.T.R.P No.18/2019
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 30TH DAY OF JUNE, 2022
PRESENT
THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
S.T.R.P No.18 OF 2019
BETWEEN :
M/s. SANJAY ALLOYS Pvt. Ltd.
NO.77, B, OOSMAN KHAN ROAD
BENGALURU - 560 002
REPRESENTED BY ITS DIRECTOR
SRI. JAI PRAKASH GUPTA
AGED ABOUT 74 YEARS
S/O LATE. SHRI. G.S. GUPTA ... PETITIONER
(BY SHRI. THIRUMALESH M, ADVOCATE)
AND :
STATE OF KARNATAKA BY
COMMERCIAL TAX OFFICER
(AUDIT)-3.2, DVO-3
2ND FLOOR, TTMC BUILDING
SHANTHINAGAR
BENGALURU - 560 027 ... RESPONDENT
(BY SHRI. JEEVAN J. NEERALGI, AGA)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
JUDGMENT DATED 30.05.2018 PASSED IN STA.NO.768 TO
770/2016 ON THE FILE OF THE KARNATAKA APPELLATE
TRIBUNAL AT BENGALURU, DISMISSING THE APPEALS AND
S.T.R.P No.18/2019
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UPHOLDING THE ORDER DATED 08.08.2016 PASSED IN AP
NOS.199 AND 200/15-16 (AY-2009-10 i.e., FOR THE TAX
PERIODS JANUARY AND FEBRUARY 2010) (CASE
NO.2589821562 APP), VAT AP NOS.201 TO 204/15-16 (AY
2010-11 i.e., FOR THE TAX PERIODS JULY TO OCTOBER
2010) CASE NO.296821564 APP) AND VAT AP NOS.205 TO
210/15-16 (AY 2011-12 i.e., FOR THE TAX PERIODS APRIL
TO SEPTEMBER 2011) (CAS NO.294821577 APP) ON THE
FILE OF THE JOINT COMMISSIONER OF COMMERCIAL TAXES
(APPEAL)-3 BENGALURU DISMISSING THE APPEALS AND
FILED AGAINST THE RE-ASSESSMENT ORDER DATED
16.01.2015 ON THE FILE OF THE COMMERCIAL TAX
OFFICER, (AUDIT)3-2 DVO-III, BENGALURU FOR THE TAX
PERIODS OF JANUARY AND FEBRUARY 2010, JULY TO
OCTOBER 2010 AND APRIL TO SEPTEMBER 2011.
THIS STRP, HAVING BEEN HEARD AND RESERVED FOR
ORDERS ON 15.06.2022, COMING ON FOR PRONOUNCEMENT
OF ORDERS THIS DAY, P.S.DINESH KUMAR. J,
PRONOUNCED THE FOLLOWING:-
ORDER
Assessee, feeling aggrieved by the common order dated May 30, 2018 passed by the KAT, Bengaluru in STA No.768-770/2016, has filed these revision petitions under Section 65(1) of the KVAT1 Act, 2003 by raising following questions for consideration:
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Karnataka Value Added Tax Act "KVAT Act" for short S.T.R.P No.18/2019 3 "1. Whether in the facts and circumstances of the case of the petitioner the Karnataka Appellate Tribunal was in error in having passed the impugned order in total violation of the statutory provisions of sub-sections (3) & (4) of section 10 of the Act and to have disallowed input tax deductions claimed by the petitioner for the amounts of output tax charged by the dealers M/s. Shri. Shyam Traders and others in their tax invoices and paid to them by means of account payee cheques, duly realized into their respective bank accounts?
2. Whether in the facts and circumstances of the case of the petitioner the Division Bench judgment of this Hon'ble Court in the case of State of Karnataka Vs M/s. Salem Steel Trading Co., Bengaluru reported in 2017 (89) Kar.L.J305 (HC)(DB) is applicable to render the impugned order of the Tribunal unlawful and unsustainable?
3. Whether in the facts and circumstances of the case of the petitioner, the Karnataka Appellate Tribunal as the final fact finding authority was right in having relied on unproven and unsubstantiated contentions of the authorities below that they conducted investigations and from the investigations it was established that for the sales effected by M/s.
Shri Shyam Traders and other dealers to the petitioner the goods were not actually delivered S.T.R.P No.18/2019 4 to the petitioner, in preference to the material evidences produced by the petitioner proving the contrary?
4. Whether in the facts and circumstances of the case of the petitioner, the Karnataka Appellate Tribunal was right in not having issued directions for recovery of tax levied in the reassessment order passed in the cases of M/s. Shri Shyam Traders and other in accordance with law and to recover the amounts of output tax charged by them in the tax invoices raised on the petitioner and paid by the petitioner to them by means of account payee cheques, in safeguarding the interest of Government Revenue?"
2. Shri. Tirumalesh, learned Advocate for the assessee submitted that the assessee is a Private Limited Company and a dealer registered under the KVAT Act. Assessee is in the business of manufacture and sale of steel ingots. It has purchased scrap, from the local dealers. The Assistant Commissioner of Commercial tax conducted inspection of assessee's premises on September 27, 2011 and observed that S.T.R.P No.18/2019 5 assessee had purchased scrap from M/s. Shri. Shyam Traders. According to the Revenue, M/s. Shri. Shyam Trader is a bogus dealer/bill Trader. Notices for re-assessment were issued for the period 2009 to 2011. The Assessing Officer held that the dealers from whom assessee had purchased scrap, were bogus dealers, assessee had obtained Invoices without actual movement of goods and claimed input tax credit based on those tax Invoices. He also held that since scrap sellers had not paid any tax to the Government, assessee was not eligible for input tax credit. Best judgment assessment orders were passed under Section 39(1) of the KVAT Act. Assessee challenged the order passed by the Assessing Authority before the KAT2 by filing appeals registered as STA No. 786- 770/2016 and the same have been dismissed 2 Karnataka Appellate Tribunal S.T.R.P No.18/2019 6 holding that assessee had failed to prove that the transactions with four dealers were genuine.
3. Shri. Tirumalesh submitted that the assessee has purchased the scrap from the scrap vendors. If the scrap vendors do not pay tax, assessee cannot be denied the input credit. All scrap sellers have been assessed to tax. The Department has not been able to establish that there was any collusion between the assessee and the scrap traders. Both authorities below have failed to notice that the assessee is a bonafide purchaser and manufacturer of Steel ingots. The authorities have been prejudiced by the Intelligence Report. Assessee was not provided with a copy of the Intelligence Report. Assessee's prayer for remanding the matter to the Assessing Authority for re-evaluation of facts has been rejected by the KAT without appreciating the fact that the assessee was not given the Intelligence Report.S.T.R.P No.18/2019
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4. Shri. Jeevan Neeralagi, for the Revenue, submitted that assessee claims to have purchased the scrap from bogus scrap dealers/bill traders. Adverting to para No.14(xiii) of the Tribunal's order, Shri. Neeralagi submitted that M/s. Shri. Shyam Traders, M/s. Sri Sai Steel Suppliers and M/s. Sai Ram Associates have got themselves de-registered.
5. Shri. Neeralagi further submitted that the Tribunal has recorded in para No.14(ii) that the assessee has paid the wrongly claimed input tax.
6. With regard to non-furnishing of investigation report, Shri. Neeralagi submitted that the KAT has recorded in para No.14(xii) that the said document was produced by the assessee himself at page 91 to 94 of the spiral bounded volume. With these submissions, he prayed for dismissal of these review petitions. S.T.R.P No.18/2019 8
7. We have carefully considered rival contentions and perused the records.
8. Petitioner's case is, it has purchased the scrap from registered dealer and therefore, entitled for input tax credit. Revenue's case is, that assessee has only produced bills from bill traders to take the benefit of input credit.
9. The main contention of Shri. Tirumalesh is, the Investigation Report was not made available to the petitioner. As rightly argued by Shri. Neeralagi, the KAT has recorded a finding of fact in para 14(xii) of the impugned order that the said Report was available at pages No.91 to 94 of the spiral bounded volume produced by the petitioner itself.
10. The Tribunal has also recorded yet another finding of fact that M/s. Shyam Traders, S.T.R.P No.18/2019 9 M/s. Shri Sai Steel Suppliers and M/s. Sri Sai Ram Associates got themselves de-registered.
11. We have perused the Assessment orders for the A.Y. 2009-10, 2010-11, 2011-12. In the Assessment order for A.Y. 2009-10, it is recorded thus:
"The assessee while accepting the above has agreed for the input tax claimed on purchases from M/s. Shri Shyam Traders to be reversed. The assessee has himself paid such wrongly claimed input tax of Rs. 77,315/- vide cheque No. 556188 dated: 28.02.2014 to this office which was forwarded to LVO-110 vide this office letter No.CTO(Audit)-3.2/T.678/2013-14 dated:11.03.2014."
12. In the order for the A.Y. 2010-11, it is recorded thus:
"The assessee while accepting the above orally has agreed for the input tax claimed on purchases for M/s. Shri Shyam Traders to be reversed. The assessee has himself paid such wrongly claimed input tax of Rs.4,16,749/- vide cheque No.556189 dated:28-02-2014 to this S.T.R.P No.18/2019 10 office which was forwarded to LVO-110 vide this office letter No.CTO(Audit)-3.2/T.678/2013-14 dated:11-03-2014."
13. In the order for the A.Y. 2011-12, it is recorded thus:
"The assessee after being convinced about the bogus dealer purchase has himself paid Rs. 2,77,227-00 vide Cheque No. 556190 dated 28/02/2014 drawn on Corporation Bank, S C Road, Bengaluru."
14. Another major contention urged by Shri. Neeralagi is, there is no physical movement of goods. On this aspect, in para 14(vii) of the impugned order, KAT has recorded that M/s. Shyam Traders has raised e-sugam from Hoskote to Bengaluru and petitioner, has raised another e-sugam from Bengaluru to Palamner, where petitioner's manufacturing facility is situated. The e-sugam is in respect of the same vehicle which, according to the petitioner had carried goods from Hoskote to Bengaluru. It is relevant to note that to S.T.R.P No.18/2019 11 travel to Palamner from Bengaluru, the vehicle will have to again pass through Hoskote. The KAT has rightly recorded that no prudent business man would first get the goods from Hoskote to Bengaluru and take it back to Palamner via Hoskote.
15. Shri. Tirumalesh has relied upon the following authorities:
• On Quest Merchandising India Pvt. Ltd Vs. Government of NCT of Delhi and Others (and Other cases)3 • State of Karnataka Vs. Rajesh Jain4. and contended that the purchaser cannot be denied the input tax credit. This Court, in para 9 in Rajesh Jain has held that once the purchaser satisfactorily demonstrates that he has paid the amount of VAT to the seller, the matter should end so far as his entitlement to claim input credit tax. But in contra 3 (2018) 56 GSTR 177 (Del) - (para 39) 4 STRP 171/2016 and connected cases decided on 07.12.2016 S.T.R.P No.18/2019 12 distinction, assessee has admitted that input tax credit was wrongly claimed and agreed for its reversal and paid the tax. Therefore, the said authority does not lend any support to assessee's case.
16. Shri. Neeralagi has placed reliance on Bagadia Brothers Vs. Additional Commissioner of Commercial Taxes, Zone-II, Gandhinagar, Bengaluru5 and urged that purchaser should prove and establish actual movement of goods. In this case, e-sugams have been raised in the manner described supra which prima facie show that the transactions were not genuine. Further, the scrap dealers have got themselves deregistered.
17. In view of the facts recorded hereinabove, this writ petition does not merit consideration for more than one reason. Firstly 5 S.T.A No.4/2018 decided on 29.01.2020 (para-8) S.T.R.P No.18/2019 13 because, petitioner's main grievance with regard to non-furnishing of investigation report, has failed because petitioner himself has produced the same before the KAT. Secondly because, petitioner has accepted before the Assessing Officer the Revenue's claim and paid back the wrongly claimed input tax. Thirdly, because, e-sugam have been raised by the scrap dealer between Hoskote and Bengaluru and for the movement of very same vehicle, petitioner has raised e-sugam from Bengaluru to Palamner via Hoskote. Fourthly, because petitioner had sufficient opportunity before the Assessing Officer and First Appellate Authority to produce the documents which it sought to produce before the KAT.
18. Though it was prayed by Shri. Tirumalesh to remit the case to the Assessing Officer, in the light of admitted facts, the said prayer is not tenable.
S.T.R.P No.18/201914
19. In view of the above, this petition must fail and it is a accordingly dismissed.
No costs.
Sd/-
JUDGE Sd/-
JUDGE SPS