Karnataka High Court
Suresh Agencies vs Commissioner Of Commercial on 13 January, 2011
Bench: N.Kumar, Ravi Malimath
IN THE men ceum op KARNATAKA AT _ DATEDT+HSTHE13"*[flMfQF3ANUAR#QQii' *V' PRESENT_ THE HOWBLE MR'.jLi_$TIf:"E-R'.i»<LJl\E«;«f§{'§{A.V':..y:,.,_V.V u THE HOWBLE'f;*I.E§':3_LJSéTI§gE§ RA 'un'.IA:"M>Ai.1fv1ATH "
BETvvfiEN: *7 Suresh )i2ge'n::iés;,_ V ~ No£+4~26a, . , Azézucfivdirz RG56, ' " "
Bunéfier, A?;4angal"c;~re...f_MfZ?5 0131. . .°=Re;:>"reséLr1i:éAd.«by its Proprietor, *$m€:.VEi<1;3~A«...R3~ic;mra, ' ~.. Aged 'a.b'0wu'tf 412$. , yea rs, \;',Ifc;--.+'Sri.£a:;'E;Q!{<:= Kumar Maganlai. .. Apgeiiant (8°y ':3f£fQ.I?;e§binatf"ian and Sri.M,thiruma§esh, Advocates Far a;pjpeEla-mi') " AMD§ % C®fTi§'§"§iSE§i{)é"E€f" of Commercéai 'E"a><:eg, Karyzataka, Vgnigya Tharige Karggaiaya, fianfihirgagar, 5% = . ~§§"'¥1C}L£E'z§w Bangaiore W 560 G03
2. mar. Deputy Commissioner Of Commercial Taxes (Assts-2) Maiden Road, Mangalore - SZFS O01.
:1 T A' (By Smtsujatha, Governme'r1t"--Aovo'Cate for tre§ojo.n_dVeo3ts)V% This STA is f§Eed under Séeticg KS"? Act, against the revision order d'"ated :t"'§.{}e_£_}9.2£}O8 V"'pa'Ssed in NO.KST/SMR/CR-O5/2%}-O:-Q8, Oi': the file Of the Commissioner of !Cort:':':éerc_iaE"~.AfTax_es, Bangafiore, hofiding that the app}:-oat'%oh*--tAdyateLi '3v€}§3.2Q02 of the assessee ther'e«ir1,'_'. fol: refL,:'nd«.V'ofj~.the'j'wrong1y coliected amount ef4_78,6f§J'f}'V8__91./'%« is._stHl.. ;':en'dii'é'g"for disposal before the DCCT,=i' Ma"ng'a"I'ore *a;;=«:;'manoer Vi"-goitfmg that the DCCT shouid ciispose-- off the 'ao'p'|aca_tioejwithin 60 days of receipt of theierderg 'it:;.Va_c;3;oArda:fiee witht law. Thi..$4'a%pp'e.aé§ for orders, this day, the NKKUMAR deEVEv-ere,.g:1'1:¥3e fostowang:
='* « "' ' ORDER '§9§§Ai5:V%'a«§;;3ee! med by the asseseee chailengmg the .oé<o_'eAr*n:a«sVSe£jiv.£"_§y the revisioeal atzthority under $e+::tEorz 22"-.A(ii.__)' ofthe Karnataka Sales Tax Act, 1957 forfeiting the safes 'Eek ease by the aeseesee to the Government and '' 'gfregettérig hie ?E£§i§E~3St for refzme of the wroegry Coilecteé
2. The assessee is as trader dea3Eh~g--»..u%;{iit.h"--~{ju«tAk§~a§,2.
panmasaia, being Tebacco prodmfitsk :-.£nif?:ia§nty',...ne 'saVi'e_$ ta:i was ieviabie on the said tobahtrp prn'd.a;Cts, r~.:'c3§;=.{e:x,{§3r, 'an_ *. amendment to the §<arnatake;?':'5.x§3:§e5_ TcL:3"){".,1L--:';:f:'tV.:II : S5<:heduEe, by Act No.7/1997 fr0 %nHV1.4.1987, tobacco produgts ing:§.n_,:.ri i;f:g the Eike but excludirzg iaéfs'éehVivf;iVé'd*fiiésewhere in any of the sched::!.§ 1:h:§,é II schedute Part (T) of the thhwhvate of tax prescribed was 50%. HQ_weve'a to 15% by the Notification daf:e=j.:;i--.Q5,O'§.1V§8'?f A-ccérding re Section 5(iiE)(a) which is t;hVé' <:harg'ih..g SeV§h{>'n, the tax is Eevied on the saié assessee paid tax at 15% for the aA5':3.essn1enAt~~'\f?ear 1997/'~98, .. 3}.:_Z1: is the gage cf the assessee that when he Qaéd A iéhéé-..tax,. he wag not ahaygihgi ans gecuréng tax frem itg %;m§%:Grnar $52 étg saée Ehméce, "me bsnkg hf acacazntg %_§-» maintained by him aiso do not shew any__;:'d'§'i«et;t.i._en;.Vo'fA taxes. However, the sates tax was €'3§°"E_l.j~£'¥--'!E'..:E;:E3,té'(Z3.: at prescribes rate and ternittee rlegujeriizy ueuhtiic-ft'itt;~..3 Ag,atIe consideratierz received For the aSSeSSmenit"y'ee{r_ 19'§j%?--'98 "; he has deciared the SEllt3:';§"v«._v'VvfL!_IjfiOi:i€'i* tjfutkha at Rs.57,38,6".?4/~ in his %'€'tt}E"VEA'V}VS at 15%. He has paid A3 as tax. The assessment oh 08.02.1999 accepting eiteniptien of sales tax was the before the max Court.
The ;'t§'-'~=:V§><" CVa'a.s«rf:tfi"I,t:';,.»':_t':§§"'«:'ase of !<0tha:'i Products Ltd. repgrsregi i;%"2.:joe3i'11'9 S5": 553 held that, "Cziutkha was a . 'i:Vof't;.--ét:<:i':ti*;i'i Dfetjuct the State Government did net have Vt?§eeVp0h'w.ef tje.VV'i.1m;3ese sates tax on it as additionai excise dii;-ty vf;.a:r_b.eAi%ag levied by the Centrai Government or: the eaid .'pr.c§'duct arse therefere, the said entry in the Act was Eiieié' to be unconstitutional." After the saie judgment the .. _._:%$$ee$ee fiieé 8?: appiieatiee for rectification ef the eeeesgmeht etder:
5: /' hj_.sa~.rne"to the Government and therefore the same is Eiahie %¥////' . 6 _.
should not he set aside and the amount of Rs.8,6O,8G:/M which is wrongly paid by him shouid not he forte-i't.e<:£. Thereafter the assessee appeared before him tfetaiied statement of objections afid aiso M documents which were in his custody" a'n.dA_ t:h'atH*~ the said amount Cannot be Vforfellie__d:i'-hut to refunded. in the course the Commissioner wanted' to theéhfilottviiiments pertaining to other deaiers business.
For the purpose pssessees returns he issued one to their notice those extraneons-_i*naitt'ea-§;-.:a;:rj'"ea:l'i'ing iipon the assessee to have his say in tiihéelrrflatterfl Esfenéto that the assessee filed his replyl_i&n"w.ritingf -is after considering eii these materials anti.,at*te_vr' a_n_e'nquiry the Commissioner proceeded to pass archer holding that the assessee has wrongly V . coiletitedv'-.'the"amount of Rs.8,51,8G1/~ from her customers tag: fot the assessment year 199",7~98 and remitted the ix"--mlldiscioses that the assessee has passed on the iiabiiity of -7- to be forfeited to the Government. Consequently, the application filed by the assessee for refund of wrongly Collected tax was directed to be disposed off by the Commissioner of Cdinmerciai Taxes in terms V' Aggrleved by the said order the as'sessee~'_4is_.V.hje'féi_reV Coiirt.
S. The learned coonsei..:Vap.peat.i'r;g_ fo.r_t'he'V':avVs'sessee assailing the impugned,order;i-c~eVnten"d.s_ thlalttheriie is no material on record to "'t.of{*tineflc:oin:c'i';.iVsi0n that the assessee has coii.ect_ed t::_he'Vta:{: f_fO'{i5i'.]Zhé coxnsumers or has passed :'io'n'VlVthé,:f, ta><'.'"vt'oVlVthe customers. When admittediy the ass'e:_sf.ee.._:h'a.:s'V..~paid the tax wrongly he is entitled to refuV_nd._e-f t'heV"saine and forfeiture of the said i--aymo-Lin't is,iinpermis's'i'b'ie. In coming to the cenclusion that passed on the tax liaeillty to the cus'ton1ers.'t'hVe'.Commissioner has relied on extraneous il'<.,"materiaisf which is improper. Assuming that such "«ex.tra.r*n_eous material was relevant and the said material 3 / ..
§// NMMl1I'3'nn----
amendment was chalienged by ether dealers and the Apex Court in the case KOTHARI PRODUCTS LINKED vs. ANDHRA PRADESM held that the said registered dealer had no dbiigatien to impose the sales tax on the as additional excise duty was being levied Government on the said product and .therefore'ta>_<uVV was not payable or liabie to be View 0:' the aforesaid 3udj:j_m--e.ht the assessee"*v--fi.i.e-d an'-' appiicatlon for l"eCtiflCatiOi'i of__l:ihe:_assessrneh:t_ order which was allowed. It is2.theAre_aft.jeif. thjveAiiiproceedings were initiated by the.Deeartmeht'iforaAfQ_ri;eitiV;j"g1ie.the said amount on thegrdund "t'h'at_::tli1e"assessee has wrohgiy paid the said tax to thei_Govern_rheh'=t,::_'as she has collected the said tax fromiiityhe custVon--'ie:;f_s_,___s::he is net entitled to refund but the to be forfeited to the Government. The ":.'Z>e'pi,iz't:yV?"C'd'mt:a.l&isieher of Cdrnmeircial Taxes accepting the Cage' of-Vsthefassessee has held in categorical terms that "ViV"':'--,:S€'Ct_§.(}l'lvH'18"AA of the Act clearly states; that if the assessee 'had"eeliez:ted the tax from the deaiers thee the excess ,5/' ,.12_ eoiiected amount can be forfeited to the Government under the Act as the assessee has not eeiiected the tax on the sates biiis the questien of forfeiture tfoes not_.._a__rise." Section 18--AA reads as under:~ 18--AA, Payment and disbursement..of_:'-».an::A.oz;ntsi"
wrongly collected by dealer as"ta'x:. '_ V _ _
1) Where any amount :7:
tax or purporting to be -by wVayyo.?°Ha,'nyvh person by any dealer in""*oontraventIonnof 'Section 18, whether knowingly dealershall pay the entire amount so to '-the assessing authority within twenty. tiayse'a'l*terA'close of the ' .-- airnount was collected, noV'fwithstano'ing%V that-- dealer is not liable to pay suCh"a{no,unt that only a part of it is due frorn h.r'n7"a..s_V'tax tinder this Act.
2)if": If defavtilthis made in payment of the amount ' "ll? with sub~seCtion(.I):--
V' the whole of the amount 'o{;3tstanding on the date of default shall
3 become immediately due and shall be a Charge on the properties of the dealer;
KW ....l4....., any such eppiication, the Commissioner shall noid such inquiry as he deems fit and if the Commissioner is satisfied that the trieim is veiid and edmissibie and that the ameurit so C/ai'mee"'-«as refund is actually paid or recovered, he sna/I-'i'efi§i{3tit.,A4 the amount or any part thereof, which V. to the person concerned (1;/W Rule 2O+B.)'e.'4_: V _
5) Where any amount ;'s'AA'£:eh'et:ted&v_ey"'of tax oi" lflurm:-rting to be contravention of Sectiori atiiia-.52.}? :imeV:'b:jm;¢VVr..5e % commencement of the"..:i<*etnateka'A_V"Safes Tex (Amendment) Act,..__1992;' --::k§¢ fittovisions bf sub~ sections (3) and such amount collected. . ' f\1ow§1e_te--.ir1 stateti that if the assessee has coiiec;ted"'tt_)e i:_a>V§:" then oniy the said amount is liab.i_e Vto~ be fo'r§e1v1;edA,and is not entitfed to refund. The .A __biHs" on which the reiiance is pieced by the Deeutxi"C'ovmtt§i'ssioner did not find a piece in Section 18~AA ofthe fact: he has virtuaily rewritten the Section. tt:.-sis in these circumstances as the said order" was ";;<>tej'e}:fieJai to the interest of the revenue, the' iii .....15__ Commissioner by virtue of the power of revision conferred under the statute issued a notice to the assessee caliing upon her to show cause as to why the said orderef the Deputy Commissioner shouid not be set aside--ijanti*i.Vjt'h'e amount of Rs.8,60,801/- which is wrongly.,itioIiVeete?:f'i forfeited to the Government. ._
8. From the inateria.I_V"'o.n reeoro it_Aiisi-._Ci'e_a"r*that in"
the sales bills raised the asse'sse'e,LAthere'--is_nVo'§ mention about the tax con1pon'e--nt.-.Ei.I_eni}in""thi_e,i:a'c(;oiints which is maintained by her__ she'V'h'as®po't-rnade separate entry showing the . goods and the tax payable.
Further she has on the totai turn over withotit €*3)((:"|.i..i('3i'if'if} from said total the tax component. Relying .t'h--i'ee undisputed inateriai on recorti it is "'i:o'ré'i:_ené:iaid-.t_hat'the Commissioner was in error in ignoring the""'--san-fie "arid in setting aside the order of the Deputy ,jC.oemn*iissioner of Commercial Taxes and in forfeiting the s._ai'ti "3i'F"iQui'ii;'. It is further argued that the Court cannot #16- draw any presumption in Eaw that the assessee has Coflected the tax from its customers. Whether collected er net is surely a question 01' fact. cieciaed from the facts and circ;m*aVst.a4hct§:s Seen from any aegie it was co::é'teh:§53'e'<J:
rhateriai on record which VsVh:_eeg_s hast"
collected the tax frohxthe cqstefffjvers-._.whefe'as_the material on record shows thats"he. the tax and therefore the et{:i'e_;r gaasseci' erroneous. the order passed by the Com:hi._ssE--:3:set;':'"'f't'je:Chvhath"i*ss'§o'her has taken paies hot onfy to consiédefé thexdeta§'Ietf::_"_.;a4l'eadiegs ef the parties but also theflfecerds by him. At: page 6 parawil it is .A stated have closely examined the decumerzts found inAV"t.thevV"r*eiaie'tf./"assessment file ef the DCCYZ One such d0ei;meh't'isV the statement af purchase and safes furnished .§;),ee..z4ff7eVV'assessee to the DCC7", found at page 43 re 4?' ea' hie. In page 43, the werth of goods scale' lecalfy is E,/ W17".
shown as Rs.57;38,674/-- and in the statement be/ew___thet, under the heading "£}etaii5 inf taxable turnm/er /iaéjfei sales tax", "!..o.::a! sales of Gurkha turnover Rs..-A4'5'§7_,{3:S,' ' tax £3} 15% fax Rs.8,60,80,Z/'~«" is .§j;::jori%1fuV' and loss account furnished by her é_!o'fig :iwi_t4l:.."»th.e dated 31.3.1998 found" at td°;G"3, and'-it turnover tax is she;/vn 35...VV:Rs,3;_,61,?6'2/as In the assessment order dated the DCCT, the turnever of Gutiihe /o¢é!"se'!es."is.':'Vshoi:i/nrés i~2s.5?,38,674/~ and tax a::.z--5'v:is_ iogt at:}2s.8.,'éVO,801/--,"
-. 'The.rj*:.;§j'te.efi'aEeV:d'n 'itecord clearly establishes that though in"'*..:_he ,acV't:<:;:.§a:€i: maintained by the assessee ii:
has?«}fiuc>t~ bifurea»-teti the vaiue of the gecads and the tax t ;§ay_abl_e,'A«.Et,§:§~--,rhe:'ati<3hed in the said acceunts that the tax gggabivve'i{3ir._thé'V..turn0ver is at Rs.8,€>G,801/~. There is no ind'.i'i:ati"eh "iii the said beaks, that wantonly the assessee i.as.4_.h(;§f eoiiected the said tax from the custemers. The $2, mlg...
second materiai on which reliance was piaced by the Commissioner is at har'a»22 which reads as under:~ "Whiie deciding slrniiar requests for refund. wrongly coilected tax on Gutkha, it has the notice of this office that in the sai:*j::"yealst:s"; the sachet of Pan Parag Gjdtkha co'nt'aihjed"'i:a".V printed statement that the p'¥fice:_i(iias all taxes. So, a consumer'lt__wh.i_iAe pti'r'chA'avsi"iigV'=-atA' it Gutkha from the retaiier_V:_'i2i:.o_aidAiiaye_ou,tc'i'ias'e'd it consciously and weil kET}..T:)2'7t'.,§:E'}g.,\that.:.'théwprifie is inciusive of aii ta'x:e'si."
"iT'hi's- 'that the""'assessee not being a rhanufa'r;tuif_er' has sold the sachet which contains anexvpress statement that the price was inclusive of va'i~i.,ta_§<es. "lherefere, the purchaser has paid the price pin-s_VtheV 'ta>c ""If__whiie raising the biii the tax component is "halt"nieVVntio';f:--eci::hariay he the books aiso did not contain this 'V ioaiftit"cati"oéVn.'yorebabiy as the said amendment was 'A V' V' ..ciiai-fancied in the Apex Court the
-- Aassiessee wanted to take a chance. Though she could eat __3_9.....
have avoided the payment of tax she has prompthrpaid the tax. There wag no prohibition for her to coEiee:ft't:h'e_:ta4x tram the custamers. She coiiected the tax statement which was in the saichettAarifi"'th'téreftiréj.ths: it customers have paid the price plunérthlétéx.1"Ii;' 'r§ntvby the sales bilis and withoiuf'~.;:)ropé'rEy theft accounts, new relyingtin th¢r.3«zVVtijj'g_me§}t §'f"tt'v.e. A.v;:)§ex Court an attempt is E'l"IaciV§~.A_/'t'At)_= _they have not collected the in this context the in observing that "As th;3_.layi{"sr:t5t3§;:i not exempt from sales tax. :'§3o,--. irery well aware that she is liable tot tax on Gurkha sold by her.
Sh¢9._§}lv}3s:. also Véwizire that sales tax is levied at the point of lsale ar_icl_rhér<efor@ she was required to collect it from her "'t2'_£,:V'§1t"'V£'3=l'I'V?1€,':';_':$".v».__ Wfien that is so, a Questian arises as ta what pré'.i>'ena*e§:2"'i"}er fmm collecting the 553/93 tax from her i custgnéérs and Show/'mg the sales tax amount separately in ééle bills. Having a legal obligatzbrl and night is mliect 2/
-25,"
the seies tax in the safe bifis and then an o!3!:'get:'on te remit the same to the Government, the eesessee purportedly remitted the same out of her gross profit.
11. This finding is based on the aferesa.i--Ad;V'--rnateitieii recerd. It is not a mere assump.ti»o~n._e'r 2 Commissioner. The Commissione':Vd:i.d'i aise wanted to make sure i':«;:§e.aiiy that thee'aA'i'd"fi'nwt§'i;ng ssh correct. Therefore, he sect:-r-ed""lvthe..eaies§'bii.Etis_.end safes particulars of ether deiaiiiers with the very same productsfbefore'eetiniig documents. He issuedone rr{ei"e..AAniet§ee:"'t--o'the assessee bringing to her notice thVe.__aiQre'seiidr.material and caiiing upon her to show categev as to viiriaz the said materiai shoiiid not be taken into i:eensisjverati§ri,t__ The said materiai compared with the the assessee cieeriy demonstrate that the en'€edre'tAVc'o'i.iected by the essessee is mere than what they "had ceiiected inciusive of tax and therefore he was of the 'iii-fkieiéiz that izheugh ie the eeiee biil and eecdunt beak this tax % ti'-re'a'ssessn'ient. The facts are net in diseute, The oniy __21.....
component is not mentiened the arheuht which is received as sates consideratien was ihciusive of tax CG~i§'i'§3tCiQ€*§}t. Frem the aforesaid rnateriai we are setisfiee finding recorded by the Coeie2iss»iener 'iii'n,4_'_ii_egi-said evieencef in accordance with iev\}'='arii--.if_ii'dV0 interference. " V i_ " V
12. It was nextiy"*,ccntend'ed Vt-hatyi if the Commissioner wanteciifl-to i;'éike'VAi"rig:iie'~-.of this extraneous materiai he shouid hax{_e'iset and remitted the matter;_'' éi'sse'ssiin.£;.V5 officer for fresh consideretien V"Vrgj~,zAing»4"th'e._ 'assessee an opportunity to controve"i't.__4ti§"iose_e'xtraneous materiai. In which event if the};ass'esseeV"was aggrieved by the order of the assessing r jofrigerivlhad4VA:a~~.right of first appeai second appeai and then . ~ife\:.iisici'n' t"e._tr'i;is$Coiirt and such a iegai remedy is now taken awev iéy the Commissioner. We do not see any substance 2 "in».i;.he said contention, It is not a case ef assessment or i beers on which he eouid have eerrre to the said "Q2- question is though the assessee has paid the tax wrongly has she coiiected the tax from the cesteme:js?:'j'«-._:T3je Commissioner is vested with the power to .%}*£terfer*e"--with' the order passed by the Deeuty Corrzrnerciai taxes if it is prejuditiiei revenue and that is precisei',r_V.'w.hat he Vhe»s_ done_§"'~Q.n--te he» ' records a firiding whieh is :c.e.nt're_ry_._to .th'e:._esV$essee the statute provides forear'.e.oj3eeiEV:iito."'this:Court. It is weii settied that ho:io.n'e he's"'a It is a statutory €ri'g§ht__.' to be worked out within,.the_i"o.t_:£'r the law provides for a statutory order of the Commissioner it is not o'p'er_'1.m_ to contend that he shouid have a.rjght~ of fireeaopeai, second appeal or revisiorr as » ;oroyic§Ved.% :a.vig}13:.inst the assessment order and therefore we *-do-.riot'ee'e_.er§y'V merit in the said contention. 2 Z 'in so far as the contention that if the extraneous 2 iirrzatgeriei whieh has been included there is no material on 4", ,/ //I
-23....
conciusiori. in this regard aiso we do not see any substance tn the said contention. Even if the extraneous meteriai is exeieded, es etated abeve the niatenai en recorti is sufficient to hoici that the asseesee has--g"ee:iE'e§:ted the tax from the Customers and therefore any substance in the said contentE0n.»--._ it
13. Fer the aforesaiicé-feewsonsg weide ~n0't.._:s'ee any merits in this appeai. ,.-itccordiin-§;ii;--}. it-is dEstnis.se.r!'i Furtheij,..::ifv.._ it ' 'that a sum of Rs.S}i?,..A38'--,.€>7<i;"é.'fetish 'total saies turnover and Rs.8,60,'8Q1i/5 iS the= payabie thereon. If a sum of Rs337?,3~8,67éi'f"~~-..Vin_<:Euties the tax eomponent then the tax » V:Vpayeh»Vie«.%wt3u,id net be Rs.8,60,801/»~. Now, this finding H Cemmissiener in which event admittediy the .a:'"e'Va::sL1hVi: of Rs.8,6{3,8O1/M paid is excessive, To the i'e:=<.t_:.enVt" of tax paid in excess is to be refunded to the 2'-Zaiéeeesee. To that extent the assessee wouie be entitiee te
-24..
the refund and the autherities would be justified ii} forfeiting the rest of the amsunt. Grdered acc:0r'dingIy._ '~.. ~.._ =--_ sax-s V% if ;_ ~ v , :§ ;, "k§UD$E Rsk/- f' Efl 1, g';:'%fiF Tulm3