Karnataka High Court
Sri Gopalakrishna Shetty vs The Additional Commissioner Of ... on 29 September, 2010
Bench: Manjula Chellur, K.Govindarajulu
IN THE HIGH COURT OF KARNATAKA, BANGALORE
DATED THIS THE 29TH DAY OF SEPTEMBER, 2010
PRESENT
THE HoN'ELE MRS. JUSTICE MANJULA _
AND
THE HoN'BLE MR. JUSTICE E E}
SALES TAX APPEAL No.19 oF;3-"oo9%% A' ' ; N
BETWEEN H S A S S S
Sri. Gopalakrishna'S_Pi'etty--'_ 3- . " ' '
S/o Booba Shetty S V ' -.
By his L.R. Smt. Lee1.a...f}."»S;f1-etiy' S' V
W/0 Sri. Gopalakrisihna She,t1iy"_j._ ' A'
13/0 Sri. \X_iilé1ya§Jé1If1iniENiVas S
Kottésora -.ChSo\Sf§'£;i~-_»
Derebail = _ "
Manga1or_¢¥~,V57"5 APPELLANT
G. K."'J.v1\{£m'thy and Sri. P. E. Umesh,
'S S. EM",/s. fliobatl Lawino. Advocates]
The A__:1dit§~onaI Commissioner
of Commercial Taxes
---- .. Zone¥1~,. Vanijya Terige Bhavan
_Géu_1dhinagar
Bangalore» 560 009 RESPONDENT
{By Sri. T. K. Vedamurthy, HCGP) This Appeal is filed u/s 24(1) of the KST Act against the Revision Order dated 3.11.2008 passed in No.ZAC--1/MNG/SMR~19/07108, on the file of~the.__A~ddI. Commissioner of Cornmerciai Taxes, Zone--I.,«..Bjan:.gaIoi'e, revising and setting aside the appeal orderaindirevstoring--, the orders of assessment and penalty ofthe.chj:e'c1_( post' ._ authority and accordingly concluding Tthfe 'revision ' proceedings.
This Appeal coming on for.dAdmissi9on:' this; Manjula Cheilur J., deIivez'e_d"~the foilowingzvz On our dire'ctio.n."' it Government Advocate p1acc§:d._before pertaining to the year 2001--O2, 2002- 03 Ltd. [for short 'M/s.
Vivek:V'Petro'V perused. The questions of law_ raised' re as;
on the facts and ',"'ivc:i1*cumsta11ces of the case the 'V proceedings initiated against the T 'V "":AppeI1ant under Sections 28--AA of the Karnataka Sales Tax Act, 1957 are void ab initio in view of the fact that the said section is not appiicabie to the transporation of the goods in question ,t¥a by the Appellant. which had become part of the local stock of consignor, goods in the State of Karnataka, "
a registered dealer in the Stateglbeifoirel they were transportedoutsi<'ie"the..'§}tate'_j_ Whether on cirCui'nstar1oes:__of "the case;V,: the; . Respondent has"'e«o:ommittedV_ ignoring the "of the Appel1ant"that of Section 28--AA ofthe. :Kar--r1atai{a Tax Act.
'areginot the facts of ti1eVpre.sento'j'ease?_. it '-- it _ on i .. 4 facts and ~l of the case, the 4' _Respon'dent"has committed an error in not....holdin"g that the provisions of Seotio-n«i28--AA of the Karnataka Sales Act, 1957 are not applicable to the __ of the present case and therefore iv] it the entire proceedings initiated agaisnt the Appellant are Void ab initio? Whether on the facts and circumstances of the case the Respondent is right in holding that for the ..:fal(':ts-. a'n:'d.__A ' '\.i the purpose of Explanation to Section 28wAA of the Karnataka Sales Tax Act, 1957, eonsignor of the goods Cannot be considered as the "hirer" of the vehicle and the said word, applicable to only a transporter 'M obtains goods vehicle" on he does not own a v=ehitC1.e"?..' A' ~ A Whether on the-,_ 2 facts' »..and_:3 circumstances _the'W. ease the Respondent drawing a presumption'th'atifhe in question have_.been"s'o1:d: itheféttate for the at _i"'on1v'1I:;reasoI1._'tha-t---the transit pass has noi;"heen"s1iI'rentiered at the exit check 4' vppostit the fact that the a:sse.s'sing 'authority of the consignor has"ia--««his assessment order passed =.:"under the provision of the Karnataka Tax Act, 1957 given a finding that the very same goods as that involved in the present case have been transported out of the State of Karnataka 'P
2. The admitted facts in the present case are the appellant is a transporter engaged in the business of transportation of goods. In the month of July 2002, the Consignment belonging to a Company by nanie--ygM/ s Vivek Petro -- a registered dealer under Tax Act, 1957 transported Consignme_n_t_I'(,*--.f. called 'naptha' from Mangalorel. department was, the transit 4_ pass" which requilred to" , be taken by the driver or person of the vehicle at the entryi'--...(_§lteC1}tp(;;_st" 'after'~eommeneement of the tirans'it.:.§gVasllhot :ha:i'ided'_'lVoirer at the exit check post. Therefore, a under Subsection 4 of Segwion is ayaillable to hold that the consignment move the State but was sold within the
3.. _ln the present case, the transit pass was issued gby Kalnnur CheckPost, Kannur and the exit Checkpost Attibele near Hosur. Admittedly, the goods were to .:reach the destination outside the State of Karnataka i.e., Pondicherry. On the basis of non-receipt of transit pass (TP) at Attibele exit within the p1"€SCI'.l'b.€_:):d.l.l'EixI11€ under the above said provision, they tax but also levied penalty on.~th_e4 The contention of the appellantfeaslsessepde from the driver there was-..a'uthorised 'rep.re'se"n't'at'ive of the consignor i.e..v R/fivek«..0-Petrol"'l\(i'angAalore,V§who was incharge of the goodsldlétliie of the journey and he was the one who transit pass but was entriisted over the same at exit Checlvt-puost; owner of the vehicle was not liable tollpay veither the tax or the penalty imposed. «H's{2vever,'~ the ordelrdated 10.12.2003 by the Assessing show that the said defence was not aecep,5e'dVlAyi'.w'and they proceeded to impose tax of .0 Rs.l.G,----ét§OO/- and another Rs.10,800/ ~ as penalty. This it challenged before the appellate authority in KST *':Appeal No.2 10/03~04.
4. The appellate authority in the present case after taking into consideration that the assesvsrnentvyon the return submitted by the owner of Vivek Petro, Mangalore, concludedythatVvvltlliexfelzvas evasion of any tax. Therefore, 'lassumptior;ftaéies cannot be levied in the the assess,eé.._::bei11§ able' to establish the movement""of_:goods ootsideithe State and not sold within'mi/A':.90rding to the appellate yyyyiassessment passed under Act by the Assistant com::n1'sss1af,¢;il:l:'Ear Taxes, Mangalore, evasion of any taxes and all the goods Vivek Petro were the subject .. of ..assessrhent and all the consignments which Vllxvere Pondicherry unit belonged to the very ovqnerv Vivek Petro but did in fact reach Pondicherry vryhicha.-Lwas evident by the very endorsement of the it 'A-,_lSuplerintendent of Central Excise, Pondicherry dated
--':9.9.2003. it also refers to the release of goods, namely,
-W as naptha in favour of the consignor and also letters issued by the Deputy Commercial Tax Officer of Pondicherry. The assessing authority had come to conclusion that all the entries effected by the corisignor did move outof the State. Based on this finding, the appellate_"4au't4hor'i«ty allowed the appeal in favour of the appel1:arit_;'»:
aside the orders of the post 10.12.2003. The revisional aiitliorityyfitoovkl' matter by way of suo--motto"l're'vision ta-ndtissued a show cause notice to the 'a.ssess--ee upon him to explain the oilflthje'».VnotieeV."WVflThe assessee appeared before uthel 'rev'isional"authority and submitted the explar1atio"11._v 'Hovvever, the revisional authority found ordeiwof thlelmappellate authority as improper and I the interest of the State revenue for the fo'l.1ow_ing, reasons:
The appellant is the owner of goods vehicle has obtained transit Pass No.0055759 dated 05.04.02 for transportation of Naptha from STCP Kannur, but failed to surrender the Tl Transit pass at the Exit Check Post at Attibele within 07.04.02. On enquiry through correspondence with CTO of Attibele Check Post the CTO Kannur ascertained that the records of Check post do not show passage of goods vehicle No. KA.19A--6596 through Checks Post and the transit pass was also-friot-«._"*." surrendered and there by contrav'en.edl:_". Section 28AA(2] of KST Act 1957;" "
The FAA has wrongly. ailovvedl' Appeal in so far as levy: of_taX" and..__ penalty T concerned wl iichx is' - ..
Judgment of Ho'nV.""tSupre-me".(Eotirt of India in the case _o_f'civil._VAppeal_ No.3"/87 of 2006 K;soPALA KRISHNA SHETTY AND OTi€iER'SfvsSTATE OF " withl.llC}l\ Nos.3788~3844 of ' 2006"-.dated__2'5.'07.2007. Therefore it is " he1*eb'y..;'prcp_ose'd to set aside the said appeal orderiin so far as the provisions Section 28AA (4) 8: (5) are concerned pp and*t.Q remit the matter to the Check Vi?ost Office for fresh consideration in of above mentioned Judgment.
V A 'jg lThe FAA has misread the provision of ' ~. «-'Section 28(6) of KST Act while allowing the appeal as the said provisions relate to conclusion of provisional assessment order by the inspecting authority which is independent of provisions of section 28AA(4}. The proceedings 11 / s 28(6) and 28AA {4} are independent and the u/s V28AA{4)':_ & 'v_-?.8AA~.(5}:."'--~lv' again_st.j <...the.= H} powers are confirmed with the inspecting authority and the CFO, respectively. On the basis of or_der's_ passed u/s 28(6) by the ACCT (1.ns},Ii5j; Mangalore the FAA should not linked this provisional orderV__Wi-th'-.the quantification of taxeszriéadel (4) made by CPO. Therefore,*on_ count also, the appeal order pa_ssed_ FAA suffers fronréillegality andyhable to";
be quashed. " - " . x "
Ultimateiy the orders of pVtl1c«.lia-pp-ellatellauthority were revised and set--aside: -assessment and penalty of the-~ restored.
5. l£ai=nataka Sales Tax Act reads as under. - 7;.
l l_ by road through the State, issue of transit pass-
["1}Where a vehicle is Carrying goods afltaxalolelurider this Act-
' [a] from any place outside the State and bound for any place outside the State and passes through this State;
or [b] and which goods are imported into the State from any place outside the country and such goods being carried to outside the State, the driver or any other pers0I1--in~ch'arg'eV'of_fsti'::hV' vehieie shail furnish the n.1eeessary'~jittzforfriation and obtain a transit' pass in d11p1iC:»a'te .e_or1taining's. such particulars as pi'iesCri"bedv,: from the offiCer--in--charge_of the' firstfzheeltposttor barrier after his entrytinto movement has commencedrirom the case may be, ors_'frofm-H'theofficer for the purposes of 4suT.b-seet.ion'=fj:hi3)». 'Section 28--A, upon tiviiriitveroebttilonrrof-thetgoodsitehicle after its entry into V':ti'1e'Styatef-ore _after~--..movement has commenced as the case 'may ' hei'---. S' J .T'dri'ver: or the person--in~Charge of the ;y:eii.ie1e stha-11-«deliver within the stipulated time a
--v.eop'»y_At"of_ the transit pass obtained under sub- to the officer-in--charge at the last trieetkpost or barrier before his exit from the State. " (3) If for any reason, the goods carried in a goods vehicle are, after entry into the State {or after commencement of movement, as the case may be) not moved out of the State within the time stipulated in the transit pass, the owner of the goods Vehicle shall furnish to t.he officer empowered in this behalf the reason for.___ such delay and other particulars, if any, thcreoffand such officer shall after due enquiry;'_'l'e>§terrd'f.
time of exist by suitably amendin:'g~--...the:'~ pass:
Provided that where :"the7..'_'golodfs-- Vehicle are, after their__ entry linto'»«S.tate, (0-re' after commencement lvflofvinovement; as; the case may be) trans:porte_dWoutsiggle._the 'State by any other Vehicle or onus of proving that thefgoodislll out of the state ._V_b.eWorx. ¢,x5}1;er""ef the Vehicle who the 'goods into the State.
if/llllf any other person--in--charge of the vehieledoes not comply with sub--section (2), it presumed that the goods carried thereby been sold within the State by the owner of theiill-Vehicle and shall, notwithstanding anything l ., llleontained in sub--section (5) of section 5, be 'assessed to tax by the officer empowered in this behalf in the prescribed manner. \ [5)If the owner of the vehicie (having obtained the transit pass as provided under sub--section (1) fails to deliver the same as providedQV..:Vt_ii»d:ei;'sub- section(2), he shall be liable to lJ_3*.V:'i7€ayV'l'l_'of"
penalty a sum not exceeding..doubleltheV ' . tax ieviable on the goods :tra1*;i'sported.'~.l (6)The amount of__tax and lj';le.Vied', under this Sectionl"'slial1 be'*.re'coveredin the prescribed manner. l _ I [7)VVhere vehicle who is assessedto tavxt-under-. g;;bé'se¢em1 (4), is carrying after ;suCf;h-H'ass«essrrient',e::any-.goods taxable under thi:ié.4Act.ii*1"agooodskreliicie from any place outside va.the_AStalté1.:;{:pr Inov/eirle-nt...from Within the State, as bound for any other place otitsitdel is passing through the . _ State,v_:the..pre'scfibed authority may demand from ovirrier---eri amount equivalent to two times the .,VAtax'e:le=.ri_able on such goods under this Act as .Vl'[~8l)lThe prescribed authority after being " satisfied that the goods carried in the goods vehicle in respect of which the security amount under sub--sectior1[7) was collected, has passed through the State, shall refund such security amount to the owner.
[9}The prescribed authority may by an order adjust the whole or any security amount towards any amountfofl or penalty payable under this such owner}. V A it l EXplanation--~ In Case owned by a person .
transportation of by" ~sorne other person, the hirer' of .the"vehieIe shall"'for the purposes of this to be the Owner Ofthe V€1.fi.C1_é--}.A_ , .
ur1de'r~sub-seetion [4] of sec. 28-- AA olf<tl1"e_Aet is a rebuttable presumption. Rebuttablel presurnptien would mean the person against v.f1_riorr;..i.:tl1.e irnpug-ned order came to be passed by the V ..officer must be able to satisfy the authorities 'vvas no evasion of payment of tax. If the interi.t_i_on of the legislature were to be that irrespective of «payment of tax on the goods in question, rebuttable glpresumption was available to the assessee, then whether those goods were subjected to payment of tax or not would be irrelevant. In View of the4..fa~e'ti~.that rebuttable evidence was allowed to be by the party in question, it would be_-'o'p'en.'_':foi*: liirralto' » establish that in fact TP was hiandediv post or that the goods indqnuestion "of the State. Therefore, presumption._of_,sale' withing the State would not be availahleidltho _
7. In _ of the appellant 't'o::'tl1e_ 'eifeet that along with the thVe'Vowner of the goods also travelled and the consignee were one. and saii1et"'- Therefore, the entire formalities at = _ gtli--e{'ch'eck post were looked after by the representative of V".r~.yI:r£ence, the driver who normally would be ill-iterate- not know the details. Apparently in this xc;ase.,the goods had to move from Mangalore to S *;:'Pon'édicherry which is outside the State. Sub--sec. [2] of
-"section 28--AA contemplates that the goods imported by E6 the owner if moved out of the State, he has to obtain transit pass, i.e. the driver or the person in charge of the vehicle. The presumption under s1,1b--secl.rl»._:_(l'Lrl.-)V' as already stated is a rebuttable presump't.i§:on"«déin:dit. V appellant relies upon the orderof the the . consignor or the consignee of the goods.
8. It is also not dispnted tlie_revlen_'ue...that mi View of the notice sentp___.l5y..'thve ch'eck¢p,o§st officer pertaining to M / s. investigation was made with regard etc) flqe :_'accoo.11tls~i,4:'0f'M/sflvivek Petro and even of revenue also made a thorolugh'-- li11ves_tigatio'n. both at Mangalore and Pondicheri so hvfarl'-as" the business of M / s. Vivek Petro. it = 1fiate'rial placed before the assessing officer nagt final order of assessment indicates ivhatev'Ver:§goods that were imported, i.e. a product called .. 'Vnaptha' was in fact sent to Pondhicherry and was lK_la"c,c'ounted at Pondicherry. It was even certified by "Central Excise Department at Pondicherry. It is also noted that whatever duty that was payable "to the Central Excise Department was also paid and_.'th:'ese.Vare the findings of the assessing authority. assessing authority who took» up process as a part of the investigati*o:n"into. / or non--aeeounting of TPs.__laty exit" cheek 'pos,t';"'so'V'far as M/s, Vivek Petro is;---eoncerried; it"-was sa'tisfi'ed that all the goods that were meant to be sent to and not even a single? -revenue was able to soldyhwiythin the State. He was justiiliedl «the assessee i.e. M/ s. Vivek Petra had"'aeeo-uiited the goods that were imported by 'l V. A th-e'mi'andnothinglweseaped from the tax. In that view of "thei';r1fatter;e~ when once by way of rebuttal evidence, the ap_pe1}a11t.1'relies upon the assessment order pertaining to _ M/s.."R;fivek Petro, in the absence of the Department lkpestablising that the consignment in question did not 'rmove outside the State, revisional authority was not .~.\ ' «"'a.
justified in setting aside the orders of the appellate authority. As a matter of fact, the revisiona1_.vatithority did not even refer to what was the rebuttagbliefl relied upon by the owner of the, vehiclej ' . order of the assessing authority not.
9. On the other Qtivemment Advocate is fair notice that the order of assets: "Vivek Petro was the VVretrVVision under section 2}, the said order of officer. When once the order of assvesstneritfoff M/s. Vivek Petro has reached '' if «finality, i't..Would"riot be open to the Department to say that under sub--sec. (4) of Sec. 28--AA is still a_fJai1a--bie and the same is not rebutted. In View of the above discussion and reasoning, we are of the ' 'opinion, the appeal deserves to be allowed. 19 Accordingly. the appeai is allowed setting aside the order of the revisional authority dated 03.11.2008. If any amount has been recovered from the afipetlant either towards tax or penalty, the {be refunded within three months from the _d a copy of the order. j;
at ._