Karnataka High Court
The Commissioner Of Commercial Taxes vs M/S Agamtel India Pvt. Ltd on 5 March, 2022
Bench: S.Sujatha, Shivashankar Amarannavar
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 5TH DAY OF MARCH, 2022
PRESENT
THE HON'BLE MRS.JUSTICE S.SUJATHA
AND
THE HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR
S.T.R.P.No.56/2019
BETWEEN :
THE COMMISSIONER OF COMMERCIAL TAXES
VANIJYA THERIGE KARYALAYA,
P.KALINGA RAO ROAD,
1ST MAIN ROAD, GANDHINAGAR,
BENGALURU. ...PETITIONER
(BY SRI JEEVAN J. NEERALGI, AGA.)
AND :
M/s AGAMTEL INDIA PVT. LTD.,
# 158-35/3, III MAIN,
INDUSTRIAL TOWN, RAJAJINAGAR,
BENGALURU-560044 ...RESPONDENT
(BY SRI ATUL K. ALLUR, ADV.)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
JUDGMENT DATED 04.10.2018 PASSED IN STA.NO.682/2016
ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT
BENGALURU, ALLOWING THE APPEAL AND SETTING ASIDE
THE ORDER DATED 26.04.2016 PASSED IN VAT.AP.No60/2014-
15 ON THE FILE OF THE JOINT COMMISSIONER OF
COMMERCIAL TAXES, (APPEALS-2) BENGALURU, DISMISSING
THE APPEAL FILED AGAINST THE PENALTY ORDER AND
ENDORSEMENT BOTH DATED 19.03.2014 ISSUED BY
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COMMERCIAL TAX OFFICER, (ENFORCEMENT-46) BENGALURU
(HEREINAFTER REFERRED IN SHORT AS THE PA) UNDER
SECTION 53(12) OF THE ACT, FOR NON-PAYMENT OF PENALTY.
THIS PETITION COMING ON FOR HEARING, THIS DAY,
S. SUJATHA, J., MADE THE FOLLOWING:
ORDER
This Sales Tax Revision Petition is filed by the revenue under Section 65(1) of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as 'the Act' for short) challenging the judgment dated 04.10.2018 passed by Karnataka Appellate Tribunal, Bengaluru, in STA No.682/2016 raising the following questions of law:
1. "Whether, the Tribunal has erred in setting aside the levy of penalty, despite the admitted fact that the respondent was transporting Spectrum Analyzer without being accompanied by e-sugam as prescribed under the Notification dated 09.10.2013.
2. Whether the Tribunal has erred in holding that the Spectrum Analyzer is an It product without examining the question as to whether the said goods are -3- electronic goods or not falling within the scope of the notification dated 09.10.2013."
2. The respondent herein is a Private Limited Company engaged in business and trading in IT products like computers, printers, UPs and other materials required for the IT industries under the name and style, M/s Agmatel India Pvt. Ltd., having its registered office at No.158-35/3, 3rd Main, Industrial Town, Rajajinagar, Bengaluru, registered under the provisions of the Act.
3. The respondent having awarded with the contract by the Director General, Supplies and Disposals, Government of India, New Delhi, for supply of various IT products, the Spectrum Analyzer worth Rs.32,23,163-07 were moved from the office of the respondent on 09.03.2014 as per the invoice raised dated 08.03.2014 pursuant to the orders placed by the office of Prasara Bharati, All India Radio and Dhoor -4- Darshan, Chennai. However, no e-sugam was accompanied with the goods considering the Spectrum Analyzer as IT product. The Enforcement Officer has checked the goods vehicle and after noticing the other documents except e-sugam produced by the driver incharge of the vehicle, issued an endorsement dated 09.03.2014 levying penalty of Rs.3,36,719-00 under Section 53(12) of the Act treating the Spectrum Analyzer as electronic goods. Being aggrieved, the respondent preferred an appeal before the First Appellate Authority unsuccessfully. On further appeal before the Tribunal, the same came to be allowed, setting aside the order of the First Appellate Authority confirming the order of the Enforcement Officer. Being aggrieved, the petitioner- State has preferred this revision petition.
4. Learned AGA appearing for the petitioner- State submitted that the Tribunal has erred in misconstruing the scope of the notification dated -5- 31.03.2006 read with Entry No.53 of the III Schedule. The said notification cannot be looked, while analyzing the scope and ambit of the notification dated 09.10.2013, specifying the commodities for the purpose of issuing e-sugam. The Spectrum Analyzer cannot be classified as IT product to bring it within the purview of Entry No.53 of the III Schedule.
5. It is further argued that even assuming that Spectrum Analyzer is an IT product, still it continues to be electronic goods which necessarily requires the compliance of notification dated 09.10.2013, wherein the electronic goods of all kinds have been specified which mandates the documents to be accompanied with the goods carried in the goods vehicle i.e., e-sugam in the present case.
6. Learned counsel appearing for the respondent-assessee justifying the impugned order submitted that in view of the notification dated -6- 31.03.2006 issued by the Government of Karnataka wherein, it has been specified that Spectrum Analyzer would come under Sl.No.22 - heading and sub-heading No.9030 of the Central Excise Tariff Act, 1985, as Information Technology (IT Products), non-carrying of e-sugam along with the goods, that too in the inter-state movement of goods was not in violation of the provision of Section 53(2) of the Act to attract any penalty.
7. Learned counsel further submitted that indeed e-sugam was raised and was produced along with the reply before the Enforcement Officer. Thus, the Tribunal having analyzed these material aspects, has allowed the appeal filed by the respondent-assessee which requires to be confirmed by this Court answering the questions of law against the revenue and in favour of the assessee.
8. We have given our anxious consideration to the arguments advanced by the learned counsel -7- appearing for the parties and perused the material on record.
9. The questions of law raised in this revision petition revolves around the interpretation of the notification No.FD 116 CSI 2006 (9) dated 31.03.2006 vis-a-vis the notification dated 09.10.2013 issued by the office of the Commissioner of Commercial Taxes (Karnataka) specifying the documents necessarily required to accompany the goods moving in the goods vehicle, which have to be produced at the time of checking of such vehicle. It is trite to refer the relevant portion of the notification No.FD 116 CSI 2006 (9) dated 31.03.2006 and the same reads as under:
"NOTIFICATION No.FD116 CSL 2006 (9), Bangalore dated 31.03.2006.
In exercise of the powers conferred by clause (a) of sub-section (1) of the Section 4 read with Entry 53 of the -8- Third Schedule to the Karnataka Value Added Tax Act, 2003 (Karnataka Act 32 of 2004) and in supersession of Notification No.FD 197 CSL 2005 (7), dated 30th April, 2005 (See Sl.No.231) the Government of Karnataka hereby specifies with effect from the first day of April, 2006, the goods specified in column (3) of the table below with heading and sub-heading numbers under the Central Excise Tariff Act, 1985 (Central Act 5 of 1986), as IT (Information Technology) products, namely.
TABLE Heading and sub-
Sl.No. Description
heading No.
Cathode ray oscilloscopes,
spectrum analysers, cross talk
meters, gain measuring
22 9030 instruments, distortion factor
meters, psophometers, network
and logic analysers and signal
analysers.
10. Similarly, it is beneficial to quote the
notification dated 09.10.2013, the relevant portion of which reads thus:
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"PREAMBLE Whereas, sub-section (2) of Section 53 of the Karnataka Value Added Tax Act, 2003 (Karnataka Act No.32 of 2004) specifies that certain documents shall accompany a goods vehicle which has to be produced at the time of checking of such vehicle and Whereas Clause (b) of Sub-Section (2) of Section 53 of the Karnataka Value Added Tax Act, 2003 (Karnataka Act No.32 of 2004) authorizes the Commissioner to notify the documents which should accompany the goods carried in the goods vehicle and Whereas such production and verification of the documents consume time and may also lead to avoidable delays at the time of check and Whereas it is expedient in the public interest to have a system where all transactions recorded in such documents are properly accounted for by the dealers and.
NOTIFICATION PART - A FOR DESPATCHES BY REGISTERED DEALERS AS A RESULT OF SALE
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1. Every dealer registered under the Act who dispatches any of the following goods:
13. Electronic goods of all kinds"
11. The Entry No.53 of the III Schedule of the Act, reads thus:
"53. IT products including telecommunication equipments as may be notified."
12. Indisputably, by virtue of the notification dated 31.03.2006, the Spectrum Analyzer is classified under Entry No.53 of the III schedule to the Act. IT products do not find a place in the notification dated 09.10.2013. However, an endeavor has been made by the department to bring this Spectrum Analyzer under the category of 'electronic goods of all kinds' to levy penalty under Section 53(12) of the Act for non compliance of accompanying the e-sugam along with the goods carried in the goods vehicle. This exercise of the Revenue certainly runs counter to the FD
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notification dated 31.03.2006. The Spectrum Analyzer having classified as IT product in terms of the said notification ought not to have been brought under the Entry 13 - 'electronic goods of all kinds' as per the notification dated 09.10.2013 by the Revenue to levy penalty under Section 53(12). Even otherwise, it is not in dispute that the assessee has subsequently raised e- sugam and produced the same along with the reply. It is also not in dispute that the goods were moving to Chennai Office of Prasara Bharati, All India Radio and Dhoor Darshan, pursuant to the orders placed for supply of the Spectrum Analyzer to their Chennai Office. In this background, the Tribunal has rightly analyzed the matzerial facts and arrived at a conclusion that the Spectrum Analyzer being an IT product, included under the notification dated 31.03.2006, the department ought not to have insisted for e-sugam to be accompanied with the goods moving in the goods vehicle.
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13. For the aforesaid reasons, no irregularity or perversity being found with the order impugned, the same deserves to be confirmed. Hence, we answer the questions of law against the revenue and in favour of the assessee.
Resultantly, Sales Tax Revision Petition stands dismissed.
Sd/-
JUDGE Sd/-
JUDGE KTY