Karnataka High Court
M/S Hira Enterprises vs The State Of Karnataka on 27 May, 2024
Author: Pradeep Singh Yerur
Bench: Pradeep Singh Yerur
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NC: 2024:KHC-D:7032
WP No. 61948 of 2012
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 27TH DAY OF MAY, 2024
BEFORE
THE HON'BLE MR JUSTICE PRADEEP SINGH YERUR
WRIT PETITION NO.61948 OF 2012 (T-RES)
BETWEEN:
M/S HIRA ENTERPRISES,
37/2, BIRBAMAL, YAMAL ROAD,
NIPANI, TQ: CHIKKODI, DIST: BELGAUM,
THROUGH ITS MANAGING PARTNER,
SRI ASLAMBHAI S/O HASHAMBHAI,
TAMBOLI, AGE: 45 YEARS, RES: NIPANI.
... PETITIONER
(BY SRI NARAYAN G. RASALKAR, ADVOCATE)
AND:
1. THE STATE OF KARNATAKA,
REP. BY ITS PRINCIPAL SECRETARY
TO GOVERNMENT OF KARNATAKA
FINANCE DEPARTMENT,
VIDHANA SOUDHA, BANGALORE-560001.
BHARATHI 2. THE COMMISSIONER OF COMMERCIAL TAXES,
HM I MAIN, GANDHINAGAR,
Digitally signed by BHARATHI
HM
Location: HIGH COURT OF
VANIJYE THERIGE BHAVAN,
KARNATAKA DHARWAD
BENCH
Date: 2024.06.05 15:30:31
+0530
BANGALORE-560009.
3. THE JOINT COMMISSIONER OF
COMMERCIAL TAXES (ENFORCEMENT),
NORTH ZONE, CLUB ROAD,
SUMOULYA SOUDHA, 4TH FLOOR, BELGAUM.
4. THE DEPUTY COMMISSIONER,
COMMERCIAL TAXES (ENFORCEMENT),
NORTH ZONE, CLUB ROAD,
SUMOULYA SOUDHA, 4TH FLOOR, BELGAUM.
... RESPONDENTS
(BY SRI SHIVAPRABHU S. HIREMATH, ADDL. GOVERNMENT
ADVOCATE.)
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NC: 2024:KHC-D:7032
WP No. 61948 of 2012
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA, PRAYING TO:
A) ISSUE A WRIT OF CERTIORARI OR WRIT IN THE
NATURE OF CERTIORARI OR ANY OTHER WRIT SETTING ASIDE THE
IMPUGNED E-ASSIGNMENT NO.992662 DATED 07.02.2012 ISSUED
BY THE JOINT COMMISSIONER OF COMMERCIAL TAXES
(ENFORCEMENT) BELGAUM, AUTHORIZING THE DEPUTY
COMMISSIONER OF COMMERCIAL TAXES (ENFORCEMENT)
BELGAUM, AS PER ANNEXURE-Q AND ALL FURTHER CONSEQUENTIAL
IMPUGNED INSPECTIONS, ORDERS, COLLECTION OF TAXES AND
COLLECTION OF COMPOUNDING FEE BY THE SAID AUTHORITY, AS
BEING CONTRARY TO THE PROVISIONS OF SECTION 52(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AND AS BEING WITHOUT
JURISDICTION AND AUTHORITY AND;
B) ISSUE A WRIT OF CERTIORARI OR WRIT IN THE
NATURE OF CERTIORARI OR ANY OTHER WRIT SETTING ASIDE THE
IMPUGNED ORDER NO.VATEYYUAA.JARI.YUVA.BE.T.11-12 DATED
09.02.2012 PASSED UNDER SECTION 82(1) OF THE KARNATAKA
VALUE ADDED TAX ACT, 2003 BY THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES (ENFORCEMENT), NORTH ZONE, BELGAUM
IMPOSING COMPOUNDING FEE OF RS. 1,05,850 ON THE PETITIONER
AS PER ANNEXURE-B AS BEING WITHOUT JURISDICTION AND
AUTHORITY AND;
C) ISSUE A WRIT OF CERTIORARI OR WRIT IN THE
NATURE OF CERTIORARI OR ANY OTHER WRIT SETTING ASIDE THE
IMPUGNED INSPECTION PROCEEDINGS INITIATED UNDER SECTION
52(1) OF THE KARNATAKA VALUE ADDED TAX ACT, 2003 BY VIRTUE
OF STATEMENT RECORDED ON 08/02/2012 VIDE ANNEXURE-D, AND
STOCK PARTICULARS STATEMENT DATED 08/02/2012 DETERMINING
THE VALUE OF THE STOCK AS PER STATEMENT OF STOCK DATED
08/02/2012 AS PER ANNEXURE-E, AND FURTHER STATEMENT OF
INSPECTION DATED 09/02/2012 AS PER ANNEXURE-F AND
DETERMINATION AND COLLECTION OF ALLEGED SUPPRESSION OF
TAX AT RS.10,58,497/- VIDE E CHALLAN DATED 21/02/2012 AS PER
ANNEXURE-J AS BEING WITHOUT JURISDICTION AND AUTHORITY;
AND
D) ISSUE A WRIT OF CERTIORARI OR WRIT IN THE
NATURE OF CERTIORARI OF ANY WRIT QUASHING THE NOTICE
NO.VATEYYUAA.JARI.YUVA.BE.T.11-12 DATED 09/02/2012 ISSUED
BY THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES
(ENFORCEMENT), BELGAUM UNDER SECTION 79 OF THE KARNATAKA
VALUE ADDED TAX ACT, 2003 AS PER ANNEXURE-C DETERMINING
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NC: 2024:KHC-D:7032
WP No. 61948 of 2012
THE VALUE OF SUPPRESSED STOCK AT RS.70,56,644/- AND
DETERMINING, LEVYING AND COLLECTING TAX PURPORTED TO BE
SUPPRESSED AT RS.10,58,497/- AS PER ANNEXURE-J BEING
WITHOUT JURISDICTION AND AUTHORITY; AND
E) ISSUE A WRIT OF CERTIORARI OR A DECLARATION IN
THE NATURE OF WRIT OF DECLARATION DECLARING THAT
DETERMINING THE VALUE OF STOCK AND DIFFERENTIAL
SUPPRESSED STOCK AT RS.70,56,644/- AND DETERMINING THE
LEVY AND COLLECTION OF COMPOUNDING FEE OF RS.1,05,850 BY
VIRTUE OF ILLEGAL ORDER NO. VATEYYUAA.JARI.YUVA.BE.T.11-12
DATED 09/02/2012 PASSED UNDER SECTION 82(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 BY THE DEPUTY
COMMISSIONER OF COMMERCIAL TAXES (ENFORCEMENT), NORTH
ZONE, BELGAUM, AS PER ANNEXURE-B AS BEING WITHOUT
JURISDICTION AND AUTHORITY; AND
F) ISSUE A WRIT OF MANDAMUS OR ANY OTHER WRIT IN
THE NATURE WRIT OF MANDAMUS DIRECTING THEM THE
RESPONDENT NO.4, TO REFUND THE ILLEGALLY DETERMINED
COLLECTED TAX OF RS.10,58,497/- PAID AS PER ANNEXURE-J AND
ILLEGALLY LEVIED AND COLLECTED THE COMPOUNDING FEE OF
RS.1,05,850/- PAID AS PER ANNEXURE-H ALONG WITH INTEREST
AND EXEMPLARY COST IN THE INTEREST OF JUSTICE; AND ETC.
THIS PETITION COMING ON FOR PRELIMINARY HEARING IN 'B'
GROUP THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
Heard the learned counsel for the petitioner and the learned Addl. Government Advocate for the respondents.
2. This petition is filed by the petitioner seeking to quash the impugned order passed by the respondent for collection of the value added tax including the penalty and several orders impugned herein.
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NC: 2024:KHC-D:7032 WP No. 61948 of 2012
3. Petitioner is a partnership firm engaged in manufacturing Baba Gutkha, Hira Gutkha and Hira Pan Masala in Nipani in Belgaum district. It is not in dispute that the petitioner firm is registered under the Karnataka Value Added Tax Act, 2003 with TIN No.29530256237 and registered under the Central Sales Tax Act, 1956 and Entry Tax Act, 1979. The petitioner as stated earlier is a manufacturer of Gutkha and sells Gutkha and Pan Masala within the State, so also in the course of interstate trade, and export out of the country. For the year 2010-11, the petitioner firm had declared various sales of various brands of Gutkha at Rs.80,64,18,862/- and paid Value Added Tax of Rs.6,46,36,258/-. As per the profit and loss account, the petitioner had filed the monthly returns for the year 2011-12 and paid Entry Tax as well as Value Added Tax according to the assessing authority. The same was accepted for the year 2011-12.
4. Respondent No.4, Deputy Commissioner of Commercial Taxes (Enforcement), Belgaum, visited the petitioner firm, place of business on 08.02.2012 and after -5- NC: 2024:KHC-D:7032 WP No. 61948 of 2012 verification of the stocks found out that there was disparity in the value of stocks and the payment of tax. That is why the respondent issued notice under section 79 of the Karnataka Value Added Tax Act, 2003, on 09.02.2012 to the petitioner directing the petitioner either to pay the amount or submit the consent letter for compounding of the offence.
5. It is the case of the petitioner that the petitioner had maintained all accounts and paid up to date tax, and not committed any fault or fraud or evasion of payment of Value Added Tax or the Entry Tax. It is contended by learned counsel for the petitioner that the assessment of tax, evasion by the petitioner, the inspection proceedings conducted by the respondents and with regard to suppression of tax and the consent letter obtained are all under duress and force and coercion. It is also contended by him that the impugned levy of Compounding Fee of Rs.1,05,580/-, collection of the same are arbitrary, mala fide exercise of powers of the State. It is not only illegal and arbitrary, but it was deliberate, unconscionable and it is unconstitutional. -6-
NC: 2024:KHC-D:7032 WP No. 61948 of 2012
6. Learned counsel further contends that there is no jurisdiction or authority to the respondent to initiate proceedings against the petitioner as no assessment order was made and no notice was issued and he was not given a fair opportunity of hearing and as a matter of fact, it only relates to Entry Tax and does not relates to Value Added Tax, so also he has paid the Entry Tax as required under law. Therefore, it is contended by learned counsel for the petitioner that the entire process of assessment made by the respondent authority with regard to evasion of tax and compounding of tax which is said to be agreed or compounded is false, frivolous and a coercive method, which is used by the respondents and the petitioner has not agreed for compounding of fee or either Entry Tax or the Value Added Tax. Under these circumstances he contends that there being no jurisdiction to the respondents to levy of tax, the entire process is vitiated and against the principles of natural justice and same requires to be quashed.
7. Per contra, learned counsel representing the respondents contends that on verification of the purchase -7- NC: 2024:KHC-D:7032 WP No. 61948 of 2012 records and purchase invoices pertaining to the purchase made by the petitioner of "Quimam", it was noticed that the petitioner has paid the Entry Tax at 1% for the year 2010-11 and 2011-12 treating the "Quimam" as raw material. Whereas, the "Quimam" being the scheduled goods under Sl.No.96 of Schedule-1 to the Karnataka Entry Tax Act, 1979 is liable to tax at 2% for the said period. It is also contended that the dealer has not included the freight paid on the purchases of the said goods. Therefore, it is contended that the total value liable to Entry Tax at 2% comes to Rs.1,59,67,518/- and the tax liability comes to Rs.3,19,350/-, as against which the petitioner has paid Entry Tax of Rs.1,45,994/- only and thereby avoided tax liability under KTEG Act is of Rs.1,73,356/-. On such inspection and discovery made by the respondents, the same was intimated to the petitioner through a notice issued under section 79 of the KVAT Act, providing the petitioner an opportunity of 7 days for compounding the said offence as contemplated in law in lieu of prosecution by filing a charge sheet in the Court of law. It is further contended by learned counsel that -8- NC: 2024:KHC-D:7032 WP No. 61948 of 2012 the petitioner was given sufficient opportunity and time to put forth his case and explore the legal opportunities available to him under law or to compound the offence.
8. This being the state of affairs, the petitioner in his statement made on 09.02.2012, agreed the VAT liability on account of sales effected without a proper document and undertook to pay the evaded tax liability by e-payment to the office of the LVO-400, Nippani. Further, he has given a letter of admission also dated 09.02.2012 admitting the tax liabilities and willing to compound the offence departmentally in a sum of equivalent to 10% of the VAT liability and accordingly requested to drop the further proceedings. On the statement made by the petitioner, the process of compounding took place and he has compounded the offence departmentally and paid the CF amount of Rs.1,05,850/- by way of cheque dated 09.02.2012, so also discharged and paid the VAT liability of Rs.10,58,497/- by way of e-payment to the office of the LVO-400, Nippani, on 21.02.2012. Along with it he had discharged the Entry Tax liability of Rs.1,73,356/- by issuing a cheque bearing No.217979 dated -9- NC: 2024:KHC-D:7032 WP No. 61948 of 2012 09.02.2012 in favour of LVO-400 Nippani. These documents which are forthcoming in the writ papers produced by the petitioner himself show that these amounts have been paid by compounding the offence.
9. It is also contended by the learned counsel for respondent department that the contention taken by the petitioner that the proceedings is not maintainable for want of jurisdiction is without any proper basis for the reason that the entire process has been initiated by issuance of notice, opportunity was provided, he has participated by filing statement, has agreed for making payment and compounding the offence, made the payment of Entry Tax, the CF amount, so also the VAT liability and compounded the same by issuing letters which are annexed along with the writ papers. It is further contended that if at all the petitioner is aggrieved by any such order wherein it has violated any of his rights, it is always open to him to challenge the same as the appeal remedy is provided under section 62 of the KVAT Act, 2003.
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10. It is also contended by the learned counsel for respondent with regard to argument as to no jurisdiction and authorization available to the respondent, he contends that the Karnataka Act No.5 of 2008, the provisions of sub section (1) of section 52 of the Value Added Tax 2003 have been amended, whereby in sub-section (1) of section 52 of the Act after the words "authorized by the Commissioner", the words "to exercise all or powers specified below either generally or specifically" have been inserted with retrospective effect from 01.04.2005 and the Commissioner of Commercial Taxes from time to time has been issuing notification delegating the powers to the various officers of the Commercial Tax Department to conduct any further process of delegation. He further contends that in the instant case, the assignment note for conducting inspection by the Deputy Commissioner of Commercial Taxes (Enforcement), North Zone, Belgaum, is generated by the Central Processing Unit situated in the office of the Commissioner of Commercial Tax, Bengaluru. Therefore, respondent No.4 is properly authorized by the Commissioner to conduct inspection of the
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NC: 2024:KHC-D:7032 WP No. 61948 of 2012 business premises of the petitioner as per the assignment issued. Hence, the question of there being no jurisdiction or unauthorization by the competent authority is uncalled for and would not hold water.
11. It is also further contended by learned counsel for respondent that nothing material has been placed before the Court to show that there is apparent inherent violation of any fundamental right or violation of principles of natural justice, which would attract the filing of the present writ petition for interference by this Court under Article 226 of the Constitution of India when there is an alternative efficacious remedy available under the Act. Therefore, he contends that when the petitioner himself has accepted the notice, issued a statement in which he has agreed to make good the payment of the Entry Tax, the CF amount, the Value Added Tax, which are enclosed along with the writ papers and has agreed to compound and compounded the offence and made good the amount, he cannot now turn around and blow hot and cold at the same time by saying that the respondent does not have the jurisdiction and authority to initiate the
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NC: 2024:KHC-D:7032 WP No. 61948 of 2012 process after making good the payment which is sought for by the respondent, including the Entry Tax as well as the Value Added Tax along with CF amount.
12. Under these circumstances and on careful perusal of the records, though the learned counsel for the petitioner has relied on several judgments in support of his case to show that the assessment order has not been done and neither is the reassessment been done. The same would not apply to the petitioner in the present case for the reason that the petitioner had not approached this Court to show that the assessment order is not done or reassessment has not been done after subjecting himself to the statement agreeing to pay the penalty amount, CF amount, the Entry Tax amount as well as the VAT amount, by subjecting himself to the compounding of the offence under section 82 of the Act, which deals with compounding of the offence and pursuant to such compounding of the offence, the entire case is closed and nothing survives in view of the fact that the petitioner has compounded the offence which is forthcoming by the records produced by him, which nowhere depicts that he had
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NC: 2024:KHC-D:7032 WP No. 61948 of 2012 paid such amount by way of any protest or taken any defence anywhere stating that it was under duress.
13. The contention urged by learned counsel for the petitioner cannot be accepted that the entire process initiated by the respondent was in duress, or that he had protested at any point of time. Under the circumstances, petition would not merit consideration. The petition is liable to be dismissed. Accordingly I proceed to pass the following:
ORDER The writ petition is dismissed.
Sd/-
JUDGE MRK CT:BCK LIST NO.: 1 SL NO.: 27