Bangalore District Court
M/S. Radiant Steels vs State Of Karnataka on 19 December, 2015
IN THE COURT OF XL ADDL.CITY CIVIL &
SESSIONS JUDGE (CCH-41) AT BENGALURU.
Dated this the 19th day of December 2015.
:PRESENT:
SRI.JINARALAKAR. B.L.,
B.A., LL.B. (Spl.)
XL Addl.City Civil & Sessions Judge, Bengaluru.
O.S.NO.3513/2014
PLAINTIFF: M/S. RADIANT STEELS,
No.11/1, Gangammachari Street,
Mothinagar, Bengaluru-560 002,
Duly represented by its Partner-
Sri.Imran Mohammed. R.
(By Sri.S.N.Shetty, Advocate.)
AND:
DEFENDANTS: 1. STATE OF KARNATAKA,
Represented by its Secretary-
Finance Department,
Vidhana Soudha, Bengaluru-560 001.
2. THE DEPUTY COMMISSIIONER,
COMMERCIAL TAXES,
(Audit-3.5) DVO-3,
TTMC, B Block, K.H. Road,
Bengaluru-560 027.
(D1- Exparte.)
(D2- In person.)
***
2 O.S.3513/2014
i) Date of Institution of the 30.04.2014
suit.
ii) Nature of the suit. Injunction suit.
iii) Date of the
commencement of recording 06.01.2015
of evidence.
iv) Date on which the
judgment was pronounced. 19-12-2015
v) Total Duration Years Months Days
01 07 19
***
JUDGMENT
The plaintiff has filed this suit against the defendants for injunction directing the 2nd defendant to furnish all the documents as per the representation dated 21.01.2014 and to offer reasonable opportunity to defend his case for Assessment periods of April 2001 to March 2012 and restraining the defendant No.2 from proceeding and finalizing with Audit for the Assessment periods April 2011 to March 2012 without granting the documents as per representation dated 21.01.2014, etc. .2. The averments of the plaint in brief are that: The plaintiff is a Partnership firm duly represented by one of 3 O.S.3513/2014 its partner having obtained a Registration under the Karnataka Value Added Tax Act, 2003 (hereinafter referred as KVAT Act) from the office of the Local Vat Officer-110, Chamarajpet, Bengaluru, for the purpose of carrying on business in iron and steel. During the course of business, the plaintiff was purchasing the goods locally from Registered Dealers under the KVAT Act and all such purchases effected by the plaintiff was supported by a valid sale bill and the E-Sugam, which is a mandatory requirement as per law. After purchase of goods from the Registered Dealers, the plaintiff has further sold the goods to their customers and has also raised the bill for affecting such sales. When the plaintiff purchased the goods, he has paid the applicable taxes to his sellers and after reflecting such sales in his regular books of accounts, the plaintiff has filed the monthly returns before LVO-110 AND HAS CLAIMED Input tax credit in respect of his purchases and has duly paid the difference of tax to the jurisdictional LVO in respect of all its sales. All these returns were accepted 4 O.S.3513/2014 by the LVO-110 as and when it was filed and no dispute was raised. The Input Tax Credit claimed by the plaintiff was supported by the provisions of law and was a legitimate claim in view of the fact that all purchases were from the Registered dealers.
At the time of purchasing the goods from such registered dealers, he has verified from the Official website of the Commercial Tax Department that such dealers were really in existence and they were not defaulters nor bogus. The dealers, who have sold the goods have also issued the statutory E-Sugam form along with Tax Invoice. The Commercial Tax Department has made it mandatory for every dealer who deals with Iron and Steel to issue E-Sugam Form along with the Tax Invoice.
The issue of E-Sugam form is controlled by the Local Vat Officer and the same is to be downloaded from the website of the Commercial Tax Department. In 5 O.S.3513/2014 order to download a E-Sugam, the dealer has to first log into the website of the Department and furnish identity and also furnish a password thereof. In other words, login to the website of the Department, it is protected by a password. This ID and the password is issued by the Local Vat Officer to its dealers and is kept very confidential. For having given a Login ID and Password to its dealer, the Local Vat Officer will obtain an Acknowledgment from such dealers in order to ensure safety for misuse of the same. Each Registered dealer will be allowed to download a restricted number of E- Sugam, which is controlled by the LVO. The dealer cannot exceed the number of download of E-Sugam in view of the fact that the website will not allow any download beyond the allotted numbers to each dealer. For non-payment of tax by a dealer, the facility of E- Sugam can be blocked by the LVO. At that point of time, the dealer has to approach the LVO and make a written request to enhance the number of E-Sugam or request him to un-block the facility. As such, the down loading 6 O.S.3513/2014 of the E-Sugam is under full control of the LVO who will ensure that the dealer has been paying all the taxes regularly to the Department without default. In case of a default, the LVO is capable of blacklisting the dealer prevent the downloading of E-Sugam Forms.
For the Assessment periods 2011-12, the 2nd defendant has issued a Endorsement dated 08.05.2013 calling upon the plaintiff to produce the books of accounts for the purpose of audit and the plaintiff has appeared before the said Audit Officer and filed its representation dated 20.05.2013. After verifying the books of accounts, the 2nd defendant has issued notice dated 06.01.2014 under Secs.39(1), 36, 37 and 72(2) of the KVAT Act, by making proposal to levy tax, stating that he has received a report from the Assistant Commissioner of Commercial Taxes (Enforcement)-9, dated 29.08.2012 in which he claimed that the business premises of the plaintiff was inspected and it was found that the plaintiff has effected purchases from Bogus 7 O.S.3513/2014 dealers and it was proved that such bogus dealers were involved only in Bill Trading and those dealers have merely issued tax invoices and E-Sugam without there being corresponding purchases and without any actual transaction or movement of goods. By simply relying on the report of the ACCT, the 2nd defendant proposed to disallow and reverse the input tax credit claimed by the plaintiff.
In response to the notice, the plaintiff vide his representation dated 21.01.2014 has filed its objections and stated that all his purchases were effected from the Registered Dealers, who have issued the valid Tax Invoice and the E-Sugam, which was legitimately issued by the LVO and requested the 2nd defendant to grant the copies of the report as well as details and the evidences obtained from the enforcement authorities in the case of the alleged bogus dealers. The plaintiff specifically requested the 2nd defendant that he should be given all the documents and information in respect of those 8 O.S.3513/2014 dealers who have been termed as bogus dealers and also requested to summon those dealers for the purpose of cross-examination, not to proceed further with the Assessment unless granted the information and details as requested in the representation. Despite several follow up and requests, the 2nd defendant has not furnished any documents and he is likely to proceed to pass the Assessment order by creating unnecessary huge liability without giving an opportunity to properly defend the case. In such an event, the plaintiff will suffer huge loss and damages for no fault of his. Hence, has filed the present suit.
.3. The defendant No.1 did not appear before the Court in spite of service of summons and placed exparte. In pursuance of suit summons, the defendant No.2 appeared in person, but has not filed written statement. The case proceeded with the plaintiff's evidence. 9 O.S.3513/2014 .4. In support of the case, the partner of plaintiff firm examined as PW.1, got marked documents at Ex.P.1 to Ex.P.5 and closed his side. The defendant No.2 has not adduced evidence .5. Heard arguments.
.6. The Points that arise for my consideration are:
1. Whether the plaintiff is entitled for the reliefs as prayed?
2. What Order or Decree?
.7. My findings on the above points are:
Point No.1 - In the negative Point No.2 - As per final order for the following:
REASONS .8. POINT NO.1: The plaintiff has filed this suit against the defendants for injunction directing the 2nd defendant to furnish all the documents as per the representation dated 21.01.2014 and to offer reasonable 10 O.S.3513/2014 opportunity to defend his case for Assessment periods of April 2001 to March 2012 and restraining the defendant No.2 from proceeding and finalizing with Audit for the Assessment periods April 2011 to March 2012 without granting the documents as per representation dated 21.01.2014, etc. .9. In support of the case, the partner of the plaintiff firm examined as PW.1 who in his affidavit evidence stated regarding Registration of the plaintiff firm under KVAT Act, for the purpose of carrying business in Iron and Steel, purchasing goods from registered dealers, thereafter, selling the goods to the customers, paying applicable taxes, reflecting sales in regular books of accounts, filing monthly returns and claiming Input Tax Credit, issuance of Endorsement dated 08.05.2013 by the 2nd defendant, filing representation dated 20.05.2013, issuance of notice dated 06.01.2014 by the 2bnd defendant, making representation dated 21.01.2014, requesting 2nd defendant to grant copies of 11 O.S.3513/2014 report, documents as per the request dated 21.01.2014, non-compliance by the 2nd defendant and likely to proceeding to pass Assessment order, etc., by reiterating the averments of the plaint and got marked documents at Ex.P.1 to Ex.P.5.
.10. The plaintiff has produced Notice dated 06.01.2014 at Ex.P.2, which shows issuance of notice by the 2nd defendant to the plaintiff under Secs.39(1), 36, 37 and 72(2) of the KVAT Act. The plaintiff sought the relief restraining the defendants from passing the order under the said Act and 2nd defendant cannot be prevented from discharging his official duty. If at all, the 2nd defendant passes any order, the plaintiff may have remedy to approach the competent forum challenging the same. Hence, the plaintiff is not entitled for the reliefs sought and accordingly I answered Point No.1 in the negative.
12 O.S.3513/2014.11. POINT NO.2: In view of my findings on the above Point, I proceed to pass the following:
ORDER Suit of the plaintiff is hereby dismissed.
No order as to costs.
Draw decree accordingly.
(Dictated to the Judgment Writer, computerized by her and corrected, revised, signed and then pronounced by me in the open Court on this the 19th day of December 2015.) (JINARALAKAR B.L.) XL Addl. City Civil & Sessions judge, Bengaluru.
ANNEXURE
WITNESSES EXAMINED ON BEHALF OF
PLAINTIFF:
PW.1 - Imran Mohammed R. S/o. Md.Rahamathullah.
DOCUMENTS PRODUCED ON BEHALF OF PLAINTIFF: Ex.P.1 : Postal Receipt. Ex.P.2 : Notice dated 06.01.2014. Ex.P.3 : Reply dated 21.01.2014 through Advocate. Ex.P.4 : Value Added Tax Registration Certificate. Ex.P.5 : Office copy of Legal Notice. 13 O.S.3513/2014 WITNESSES EXAMINED ON BEHALF OF DEFENDANTS: -NIL- DOCUMENTS PRODUCED ON BEHALF OF DEFENDANTS: -NIL- (JINARALAKAR B.L.) XL Addl. City Civil & Sessions judge, Bengaluru. 14 O.S.3513/2014