Bangalore District Court
M/S. Piramal Enterprises vs State Of Karnataka on 23 October, 2019
IN THE COURT OF THE LXIII ADDL. CITY CIVIL AND
SESSIONS JUDGE (CCH.No.44), AT BENGALURU
PRESENT: SRI. SHUBHAVEER B., B.Com.,LL.B.
XLIII ADDL.CITY CIVIL & SESSIONS JUDGE,
BENGALURU .
DATED: THIS THE 23 RD DAY OF OCTOBER, 2019
O.S.No.2878/2017
Plaintiff- 1. M/s. Piramal Enterprises
Limited, (Formerly Nicholas
Piramal Limited)
A Company incorporated
under the Companies Act,
Having its branch office at
#60, Panthara Palya,
Mysore Road,
Bengaluru-560 039
duly represented by its
authorised representative
Sri. L.K. Lingesh Babu
(By Sri.D.C.Prakash)
-vs-
Defendants- 1. State of Karnataka
Represented by its Secretary
Finance Department
Vidhana Soudha
Bangalore-560 001.
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O.S.No. 2878/2017
2. The Deputy Commissioner
Commercial Taxes (Audit-
4.8) DVO-4, VTK-2,
Koramangala,
Bangalore-560 095.
3. The Joint Commissioner
Commercial Taxes
(Administration) DVO-4,
VTK-2, Koramangala,
Bangalore-560 095.
4. Smt. Seema D. Naik,
O/o Deputy Commissioner
Commercial Taxes (Audit-
4.8) DVO-4, VTK-2,
Koramangala,
Bangalore-560 095.
5. The Branch Manager
M/s. HDFC Bank Limited,
Corporate Division,
No.61, Richmond Town,
Bengaluru-560 025.
6. The Branch Manager,
M/s. State Bank of Mysore,
Malleshwaram Branch,
Sampige Road,
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O.S.No. 2878/2017
Malleswaram,
Bengaluru-560 003.
(D1 to D3- Sri.DGP
D4- Sri.S.K
D5-Expt.
D6-Sri.TAH)
Date of Institution of the suit : 21.04.2017
Nature of the suit : declaration and direction
Date of commencement of
recording of the evidence : -
Date on which the Judgment
was pronounced : 23.10.2019
Total Duration Years Months Days
: 02 06 02
(SHUBHAVEER B.)
XLIII Addl. City Civil & Sessions Judge ,
Bengaluru
J U D G M E N T
The above suit is filed for declaration and direction.
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O.S.No. 2878/2017
2. The brief facts of the case of the plaintiff are that the plaintiff is a company incorporated under the Indian Companies Act having its head office in the State plaintiff Maharashtra inter alia having their branch office situated at the address in the cause title. They are involved in trading of pharmaceutical drugs. Initially they were registered under the then Karnataka Sales Tax Act 1957 with the jurisdictional Registering Authority having their KST No.90700557. Subsequently, after the introduction of Karnataka Value Added Tax Act with effect from 01.04.2005, the plaintiff has switched over to the said Act and presently borne on the files of LVO-61, Bengaluru bearing Tax identification Number(TIN)- 29730051381 and has been paying upto date taxes. All the demanded taxes have been paid from time to time by the plaintiff.
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3. The plaintiff submits that the 1 st defendant is the State of Karnataka represented by the Secretary, Finance Department, Government of Karnataka. The second defendant is the one who issued the impugned notices, the 3 rd defendant is the Joint Commissioner of Commercial Taxes (Administration), Bengaluru, who has administrative control over the 2 nd defendant and since the 2 nd defendant is presided by one Smt.Seema D.Naik, at whose instance this illegal act of attachment has taken place, despite bringing it to her knowledge, that the entire payments were already made, as such she has been arrayed as forth defendant and necessary party to this proceedings. The 5 th defendant is the Bank with whom the plaintiff has maintained a Current Account, bearing No.0600310002419 and who has received the notice issued by the 2 nd defendant. The 6 th defendant is the Bank in 6 O.S.No. 2878/2017 which the cheques were deposited and who had received the credit from the 5 th defendant.
4. It is further submitted that during the KST regime, the assessing authority was regularly receiving the monthly returns and the taxes together at their office every month. During the months of September, 2004 onwards, the procedure had been modified by the Commercial Taxes department by issuing a notification that the regular monthly returns was to be filed in the respective office of the Assessing authority and it was the responsibility of the tax payer to pay the taxes directly with the State Bank of Mysore. Accordingly the plaintiff discharged this monthly remittance of taxes vide cheque No.618268, dated 17.11.2004 for a sum of Rs.16,54,289/- and another cheque bearing No.734458, dated 16.12.2004, for a sum of Rs.44,96,181/-, both drawn on HDFC Bank, 7 O.S.No. 2878/2017 Mumbai with M/s. State Bank of Mysore, Malleswaram branch, Bengaluru. Having received these challans, the DCCT Fast Track-41, did not raise any issue and accepted the monthly returns filed and credited to the beneficiary. The proceeds were credited to the beneficiary account. The plaintiff was under the impression that the entire matter stood concluded.
5. But surprisingly, the 2 nd defendant in the year 2014, stated that the plaintiff has not discharged the admitted taxes for the months of October and November, 2004 and directed the plaintiff to pay the amount. The plaintiff made various representations by appearing before the State Bank of Mysore, Malleswaram branch, Bengaluru and produced all the proofs that infact the cheques were already cleared from account of the plaintiff and M/s. HDFC bank had already debited the cheque amount from 8 O.S.No. 2878/2017 the account of the plaintiff and had forwarded the proceeds to M/s. State Bank of Mysore, Malleswaram. Since it was the responsibility of M/s. State Bank of Mysore to give the proceeds to the Commercial Tax department, the plaintiff had no role to play in this matter. Despite furnishing the proof of all the relevant documents, the defendant No.2 did not make any effort to retrieve the amounts already paid to the Commercial Tax department.
6. The plaintiff submits that the 2 nd defendant by virtue of its notice dated 15.09.2014, issued an endorsement that the cheques, mentioned in the endorsement and drawn on State Bank of India, Malleswaram branch, Bengaluru and State Bank of Mysore, Malleswaram branch, Bengaluru, had obtained from those respective banks that the cheques were not 9 O.S.No. 2878/2017 encashed, as such directed the plaintiff to appear before it within seven days by producing the bank passbook etc., In response to the said endorsement, the plaintiff wrote letters to the respective banks stating that the cheques issued in the year 2004 were already encashed and despite acknowledgment, the 2 nd defendant was pursuing them to make the payments once again. The plaintiff by its letter dated 25.09.2014, made a representation to the 2 nd defendant and brought to its notice that the said banks have confirmed receipt fo such cheques for encashment and it has duly honoured the payment in respect of the 2 nd defendant. Despite all these representations and making the facts clear, the 2 nd defendant issued an illegal notice, u/s. 45 of the KVAT Act 2003, dated 05.04.2017 to M/s.HDFC Bank, Richmond Road Branch, Bengaluru for attachment of the bank 10 O.S.No. 2878/2017 account of the plaintiff and to recover a sum of Rs.61,64,609/-, by indicating that they were arrears of tax for the year 2004-05 under erstwhile KST Act, 1957.
7. It is further submitted that the plaintiff was never in arrears under the KVAT Act, as such the 2 nd defendant had no authority to initiate such proceedings under KVAT Act. In response to the said notice, the plaintiff got represented through its counsel before the 2 nd defendant and brought to its notice that the entire payments were already made and there was no need to initiate any recovery proceedings once again as the plaintiff was never a defaulter and all the arrears of taxes were duly discharged during those respective financial years. The second defendant was requested either to withdraw the illegal attachment notice, or return back the two cheques which were received by it, if in the event of 11 O.S.No. 2878/2017 the same was not presented for encashment according to them by the then Deputy Commissioner of Commercial Taxes, Fast Track-41, Bengaluru.
8. The 2 nd defendant without appreciating the valid representations made before it has resorted to high handedness in order to further harass this plaintiff, had issued a further notice this time under section 14 of the Karnataka Sales Tax Act 1957, dated 18.04.2017, in which the same amount of Rs.61,64,609/-, was sought to be attached from the current account bearing No.0600310002419 of the plaintiff with M/s. HDFC Bank, Richmond Road, Corporation Division branch, Bengaluru. Despite making the payment of the admitted tax for the year 2004-05, the initiation of proceedings by issuing an attachment notice u/s. 14 of KST Act 1957, is highly improper, unjust and not sustainable in the eyes of law in 12 O.S.No. 2878/2017 view of the fact that the said amount stood already discharged as on the date of the demand issued in the first instance for the year 2004-05 itself vide cheques as already stated above.
9. The plaintiff had specifically produced before the 2 nd defendant the proof received from the HDFC Bank that the cheques in favour of the Deputy Commissioner of Commercial Taxes Fast Track-41 and presented by State Bank of Mysore, Malleswaram branch, Bengaluru, were duly honoured. Without verifying all these documents, the 2 nd defendant has rushed once again to recover the entire amount through illegal means by attaching the bank account of the plaintiff who is none other than the 5 th defendant, who has been made as a formal party, in view of the fact that the 2 nd defendant has addressed the attachment notice to it. The 2 nd defendant has not made 13 O.S.No. 2878/2017 any effort to make any prudent follow up with the 6 th defendant and is illegally recovering the same amount of tax once again. In such an event, the plaintiff will suffer huge loss and damages for no fault of them.Therefore in order to prevent miscarriage of justice, it is just and essential for this Hon'ble court to quash notice issued by the 2 nd defendant, dated 18.04.2017.
10. The plaintiff has exhausted the available lawful recourse with the 2 nd defendant and thereafter has issued a notice u/s.80 of CPC, to the 1 st defendant, as per notice, dated 19.4.2017. In view of the urgency, the plaintiff is unable to wait until the expiry of the statutory 60 days. Therefore, in view of the urgency, the plaintiff has approached this court. The plaintiff is not challenging the validity of the Assessment of any tax, or of the levy of any fee, or other amount, made under the 14 O.S.No. 2878/2017 KST Act, or the liability of any person to pay any fee, or other amount so assessed, or levied. As such, this suit is not coming within the purview of Sec.32 of Karnataka Sales Tax Act, 1957. Despite repeated request to comply with the lawful demand of the plaintiff, the 2 nd defendant has not afforded any opportunity to him, to defend his case. Therefore the 2 nd defendant will not get any shelter under the provisions of Sec.33(2) of the KST Act. Hence the above suit is filed seeking the following reliefs-
(a) declare the impugned notice, dated 18.4.2017, bearing No.DCCT(Audit)/4.8/16-17, issued by the 2 nd defendant as not binding on this plaintiff,
(b) direct the 2 nd defendant to issue a revised demand notice, under Karnataka Sales Tax Act, 1957, after giving all due credits to the payments already made by the plaintiff, for the year 2004-05.15
O.S.No. 2878/2017
(c) grant any other consequential relief/s including court costs of the suit as this Hon'ble court may deem first and proper to grant in the facts and circumstances of the case, in the interest of justice and equity.
11. From the facts and circumstances of this case, the following points arise for determination-
1. Whether the suit appears from the statement made in the plaint, to be barred by any law?
2. What order?
12. Perused the entire file. Heard arguments.
13. The answers to the above points are-
Point No.1- Affirmative
Point No.2- As per the final order, for the
following-
REASONS
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14. Point No.1- First of all, the 1 st defendant is
State of Karnataka. Defendants No.2 and 3 are
Government servants. Admittedly, the above suit was
filed on 21.04.2017, whereas notice u/s.80 shown to be issued on 19.04.2017. Before the lapse of statutory period, the above suit is filed. Hence Sec.80 of CPC, is not complied with. However, I.A.I/17 is filed u/s.80 of CPC, praying to dispense with the statutory notice.
15. The suit is filed against defendant No.4, in her personal capacity, even though she is the Deputy Commissioner of Commercial Taxes. The suit ought not to have been filed against her, in her personal capacity.
16. The above suit is filed praying to declare the impugned notice, dated 18.4.2017, bearing No.DCCT(Audit)/4.8/16-17, issued by 2 nd defendant/ 17 O.S.No. 2878/2017 Deputy Commissioner of Commercial Taxes, as not binding on the plaintiff.
17. Sec.20 of Karnataka Sales Tax Act, 1957, states-
Sec.20 - Appeals.- [1] Any person objecting to an order affecting him passed under the provisions of this Act by-
(i) a Commercial Tax Officer, may appeal to the Deputy Commissioner; and
(ii) an Assistant Commissioner of Commercial Taxes, or a Deputy Commissioner, may appeal to the Joint Commissioner.
Provided that any appeal preferred against the orders of the Commercial Tax Officer and pending before the date of commencement of this Act, shall stand transferred to the Deputy Commissioner.]
2) --------------------------------------------"
18. As per the ruling reported in AIR 1983 SC 6703 (ILR 94 KAR Special page 2978), "it is now well recognised that where a right, or liability, is created by a 18 O.S.No. 2878/2017 statute, which gives a specific remedy for enforcing it, the remedy provided by that statute only must be availed of."
19. Since the said notice has been issued by the Deputy Commissioner of Commercial Taxes, there is a provision to prefer an appeal against the said notice to the Joint Commissioner of Commercial Taxes. To show that the plaintiff has preferred the said appeal, no material is produced. Hence as per the above said ruling, the plaintiff is required to exhaust his remedy under the said Act.
20. Sec.33 of the Karnataka Sales Tax Act, 1957, states-
"33. Bar of certain proceedings,- (1) No suit, prosecution, or other proceeding shall lie against any officer, or servant of the State Government, for any act done, or purporting to be done under this Act, without the previous sanction of the State Government.19
O.S.No. 2878/2017 (2) No officer, or servant of the State Government shall be liable in respect of any such act in any civil, or criminal proceeding, if the act was done in good faith in the course of the execution of duties, or the discharge of the functions imposed by, or under the Act."
21. It is an undisputed fact that the Officers of Commercial Tax office have done, or issued the notice under the said Act, i.e., Karnataka Sales Tax Act . In that event, before filing of this suit, previous sanction, in writing, from the State Government, should have been obtained by the plaintiff. Since no such previous sanction of the Government is obtained, or produced, there is a bar to file the suit against the Commercial Tax Officers.
22. Further the 2 nd relief is sought to credit the payment already made by the plaintiff to the plaintiff, without paying any court fee. The said relief is sought in 20 O.S.No. 2878/2017 such a way that without paying the court fee, the plaintiff can recover the amount.
23. On perusal of the entire allegations in the plaint, no relief is sought against defendant No.5/HDFC Bank and defendant No.6/ State Bank of Mysore.
24. Sec.9 of CPC, states-
"9. Courts to try all civil suits unless barred.- The Courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly, or impliedly barred."
25. Since the jurisdiction of Civil Court, in the present set of facts, is expressly barred, it appears from the statement in the plaint that the suit is barred by law. Hence the plaint is to be rejected. Hence point No.1 is answered accordingly.
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26. Point No.2- In view of answer to point No.1, the following-
ORDER The plaint is rejected, since the plaint is barred by law.
No order as to costs.
Draw decree accordingly.
(Dictated to the Judgment Writer, transcript thereof corrected, signed and then pronounced by me, in open Court, on this the 23 rd day of October , 2019) (SHUBHAVEER B.) XLIII Addl. City Civil & Sessions Judge, Bengaluru 22 O.S.No. 2878/2017 (Judgment pronounced in open court) ORDER The plaint is rejected, since the plaint is barred by law.
No order as to costs.
Draw decree accordingly.
Digitally signed by SHUBHAVEER JAIN B
SHUBHAVEER DN: cn=SHUBHAVEER JAIN
B,ou=GOVERNMENT OF
JAIN B KARNATAKA,o=HIGH COURT OF
KARNATAKA,st=Karnataka,c=IN
Date: 2019.10.24 12:36:16 IST