Karnataka High Court
M/S Cipla Ltd vs State Of Karnataka on 8 May, 2018
Equivalent citations: AIRONLINE 2018 KAR 2581
Author: Aravind Kumar
Bench: Aravind Kumar
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 08TH DAY OF MAY, 2018
BEFORE
THE HON'BLE MR. JUSTICE ARAVIND KUMAR
WRIT PETITION NO.18856/2018 (T-RES)
BETWEEN:
M/S CIPLA LTD
VIRGOANKAR, OLD MADRAS ROAD
BANGALORE - 560049.
REP BY MR.MANJUNATH
... PETITIONER
(BY SRI:SHIVADASS G, ADV)
AND:
1. STATE OF KARNATAKA
THROUGH ITS PRINCIPAL SECRETARY
FINANCE DEPARTMENT
VIDHANA SOUDHA
BANGALORE - 560001.
2. THE COMMISSIONER OF COMMERCIAL TAXES
"VANIJYA THERIGE KARYALAYA"
GANDHINAGAR
BANGALORE - 560009.
3. THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES (AUDIT - 5.1)
5TH FLOOR, B-BLOCK, VTK - 2
RAJENDRANAGAR, KORAMANGALA
BANGALORE - 560047.
... RESPONDENTS
(BY SRI:S V GIRI KUMAR, AGA)
2
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE IMPUGNED ORDER T NO.01/2018-19 DATED
31.03.2018 VIDE ANNEXURE-A1 AND THE IMPUGNED
ENDORSEMENT DATED 23.04.2018 VIDE ANNEXURE-A2;
DIRECT RESPONDENT-3 TO INITIATE DENOVO RE-
ASSESSMENT PROCEEDINGS FOR THE IMPUGNED PERIOD BY
CONSIDERING THE DETAILS AND DOCUMENTS FURNISHED
BY THE PETITIONER AND ETC.,
THIS WRIT PETITION COMING ON FOR PRELIMINARY
HEARING THIS DAY, THE COURT PASSED THE FOLLOWING:
ORDER
Though matter is listed for preliminary hearing, by consent of learned Counsel appearing for the parties, it is taken up for final disposal.
2. Petitioner is a public limited company registered as a dealer under the provisions of Central Sales Tax Act and Karnataka Value Added Tax Act (for short 'CST Act' and 'KVAT Act' respectively) and is engaged in the manufacture and sale of drugs/active pharmaceutical ingredients, solvents etc., For the period 2012-13, petitioner had effected inter-state stock transfer goods from its factory and depot in Karnataka and has filed the returns indicating such stock transfers effected against F-Forms. For effecting inter-state movement of 3 goods, petitioner was generating e-Sugam in respect of each consignment.
3. The respondent-authority initiated re-assessment proceedings for the period 2012-13 under Section 9(2) of CST Act and petitioner was issued with a notice dated 03.09.2016 (Annexure-B). Deputy Commissioner of Commercial Taxes (Audit 5.1) - third respondent issued a proposition notice dated 07.07.2017 - Annexure-C whereunder it was proposed to levy taxes with interest and penalty by disallowing all exemptions claimed by petitioner in respect of stock transfer turnover, inter-state sales, direct export sales etc., on the ground that petitioner had not furnished documentary evidence, including the statutory forms, in support thereof.
4. In response to the said proposition notice, petitioner submitted its reply on 18.07.2017 (Annexure-D) along with additional information as sought for in the notice for the period in question. Petitioner also submitted F-forms for the entire stock transfer turnover and 'C' Form for inter- state sales turnover, apart from submitting documentary proof in support of export sales turnover and other exemptions 4 claimed. During the course of verification, third respondent sought certain clarification from the petitioner and in response to the same, petitioner appeared before third respondent and filed a letter on 07.03.2018 (Annexure-E), which is also evidenced in the proceedings of third respondent recorded on 07.03.2018 (Annexure-F). In the letter dated 07.03.2018 (Annexure-E) filed by the petitioner before third respondent, it was clarified by the petitioner that mismatch was due to the fact that F-forms indicated the details of excise invoice while the e-Sugams indicated the details of corresponding delivery challan and this was sought to be explained by the petitioner. However, ignoring the said reply given, third respondent has proceeded to pass re-assessment order on 31.03.2018 under Section 9(2) of the CST Act accepting the documentary evidence tendered in support of export sales and inter-state sales turnover. However, the respondent-authority rejected the statutory forms submitted by the petitioner in respect of stock transfers turnover on the ground that the invoice undermentioned in F-forms and e-sugams are different and do not match with each other.
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5. For rectifying this alleged mistake, petitioner filed a rectification application under Section 69 of KVAT Act vide Annexure-G on 23.04.2018 before third respondent which came to be rejected on the same day by assigning the reason that proceedings under Section 9(2) of the Act is already concluded and petitioner had been offered an opportunity earlier and authorized representative of the petitioner had also appeared and contested the matter. It is also stated that there is no mistake apparent on record.
6. Questioning the order of re-assessment and the consequential demand notices dated 31.03.2018 (Annexure- A1) and 23.04.2018 (Annexure-A2) and the order of rejection of rectification application, petitioner has presented this writ petition. I have heard the learned Advocates appearing for parties.
6. It is the contention of Sri.G Shivadass, learned Counsel appearing for petitioner that order rejecting the rectification application filed by petitioner under Section 69 of the KVAT Act (Annexure-G) is in violation of principles of natural justice and there has been total non-application of 6 mind by third respondent. Without delving upon the contentions with regard to re-assessment proceedings to be set aside or not, contention of petitioner's counsel with regard to rejection of rectification application being violative of natural justice deserves to be accepted for the simple reason that even without dwelling upon the contention raised in the rectification application filed by the petitioner under Section 69 of the KVAT Act, third respondent-authority, in the very same application has endorsed to the following effect:
"Endorsement dated:23.04.2018 Ref:1) Order u/s 9(2) of the CST Act, 1956 dtd.31.03.2018
2) Your letter dated 23.04.2018
----
M/s Cipla Limited, Bengaluru are hereby informed that, the re-assessment proceedings u/s 9(2) of CST Act, 1956 were initiated on 07.07.2017 and after providing sufficient time and opportunity to the authorized representative Sri.Rajendra G, CA appeared and also after verifying the details submitted, re-assessment order concluded on 31.03.2018.
Now, after completion of the proceedings, you have filed an application through other 7 authorized representative requesting for rectification along with set of documents.
Since, the re-assessment has already been concluded and there is no mistake apparent on records, your request for rectification at this stage cannot be considered. The set of documents submitted with this letter is returned to you."
7. A bare reading of the above endorsement would clearly indicate that contentions raised and documents relied upon by petitioner not only in the rectification application, but also which had been filed along with communication dated 07.03.2018, which had been filed by the petitioner, which is evidenced from the proceedings recorded by the third respondent as per Annexure-F has been ignored by third respondent and the only irresistible conclusion which has to be drawn is that said rejection has been in violation of principles of natural justice.
8. Though learned Government Advocate would vehemently oppose contending that there is no error committed by the third respondent, in the light of aforesaid facts and discussions made herein above, it has to be 8 necessarily held that endorsement issued to the petitioner on the rectification application Annexure-G dated 23.04.2018 is in gross violation of principles of natural justice since, it was incumbent upon third respondent to have examined as to whether error had crept in while passing the order under Section 9(2) of the CST Act or whether it had traveled beyond the allegations or averments made in the proposition notice, in as much as, the proposition notice or show cause notice being the foundation and the case of revenue rests on it, as held in the case of CCE, Bangalore Vs Brindavan Beverages (P) Ltd., reported in 2007 (213) ELT 487 (SC). In the absence of such exercise being undertaken, order of rejection of rectification application cannot be sustained.
9. However, it is made clear that no opinion is expressed on merits and it will be open to third respondent- authority to examine the rectification application filed by the petitioner under Section 69 of the KVAT Act and dispose of the same on merits in accordance with law as expeditiously as possible and at any rate within three months from today and till such time, respondent-authority shall not take any coercive steps as proposed under the impugned demand notices 9 (Annexures-A1 and A2). In the event of respondent-authority were to pass order adverse to petitioner, petitioner will be at liberty to challenge the same under the provisions of KVAT Act by filing an appeal and respondent shall not enforce such order during the appeal period. Petitioner shall appear before the third respondent-authority without waiting for any further notice on 31.05.2018 at 11.00 a.m. Accordingly, writ petition stands disposed of. Learned Government Advocate is permitted to file memo of appearance within four weeks.
Sd/-
JUDGE *bgn/-