Karnataka High Court
C.C. Venkatanarasimhaiah S/O. ... vs Asst. Commercial Tax Officer ... on 12 January, 2007
Author: D.V. Shylendra Kumar
Bench: D.V. Shylendra Kumar
ORDER D.V. Shylendra Kumar, J.
1. These two writ petitions are filed by a person who provides entertainment to his customers through what is known as cable connection to television through which is viewed the programs or who provides dish antenna facilities through which such entertainment can be received and viewed through the television sets which the customers have installed in their residences.
2. Petitioner is aggrieved by the demand notices in the two writ petitions while in W.P. No. 15521/2006 the demand dated 18.12.2001, vide Annexure-A, purporting to be under Section 4C of the Karnataka Entertainment Tax Act, 1958, is for a sum of Rs. 29,250/- for the period November 01 to November '02 and in W.P. No. 15522/2006 the demand dated 20.11.2001 vide Annexure-A, purporting to be under Section 4C of the Karnataka Entertainment Tax Act, 1958, is for a sum of Rs. 14,250/- for the period of April 01 to October'01. Under these two notices, the petitioner had been called upon to pay this amount, failing which it was intimated that proceedings will be initiated before the Court of Judicial Magistrate I Class, Chikkaballapur, for realization of the amount etc.
3. Version of the petitioner is that the petitioner is surprised by the demand notices; that the petitioner had never been given any opportunity nor communicated with any order determining the liability and petitioner is straight away served with the demand notices. Petitioner for reasons best known to him chose to ignore the demand notices and as the amounts were not remitted the Commercial Tax Officer, Chikkaballapur, promptly filed the prosecution case before the Principal Civil Judge and JMFC, Chikkaballapur, in CMC No. 42/03 and 20/02 respectively.
4. It appears these proceedings are leisurely going on before the Magistrate. It is also the development that in between these hearings petitioner offers or pays some meager amount of Rs. 400/- or Rs. 500/- and the matter gets adjourned and the recovery proceedings are on !
5. In the meanwhile, it appears the petitioner who was not made known as to on what basis he was being asked to pay the amounts in terms of the two demand notices, had requested for furnishing the certified copies of the assessment orders so that he could take remedial measures in accordance with law and statutory provisions; that having not been acceded to by the respondents, petitioner has approached this Court by filing these writ petitions seeking for issue of a writ of mandamus to direct the respondents to furnish the certified copies of the assessment orders to the petitioner.
6. Petitioner in the absence of any other communication it appears preferred an appeal as against the very demand notices. The first appellate authority, JCCT (Appeals) having rejected the appeals on the premise that the petitioner has not produced any order, the validity of which can be examined in terms of the orders at Annexure-H dated 5.9.2006 in W.P. NO. 15521/06 and Annexure -F dated 5.9.2006 in W.P. No. 15522/06, disposed of the appeals holding that the appeals are not tenable etc. Thereafter petitioner had requested the respondent to furnish him copies of the assessment order and that having not been done has approached this Court for issue of directions to the respondents to furnish copies of the assessments orders for the two periods in question.
7. Respondents were put on notice and learned AGA has appeared on behalf of the respondents.
8. I have heard Sri. Srikanth, learned Counsel for the petitioner in both the cases and Smt. Niloufer Akbar, learned AGA for the respondents.
9. In the two writ petitions the memo dated 20.12.2006 is filed which, inter alia, seeks to indicate that the petitioner who had been provided with a permit in Form VI - H in response to his application VI - G had failed to file the monthly returns for the period. It is because of such failure the assessing authority had determined the tax liability and had called upon the petitioner to pay the amount in terms of the demand notices at Annexure-A in the two writ petitions.
10. However, it is also admitted that the concerned Asst. Commercial Tax Officer, who was in-charge of the assessment for the two periods had in fact not passed any assessment orders nor had communicated the same, but had determined the tax liability and had called upon the petitioner to pay the amount.
11. It is for this reason petitions are also being conceded in terms of the memo; that the demand notices and the recovery action will be withdrawn and proper assessment orders will be passed on the petitioner and a fresh demand raised and permission is sought for from this Court for such course of action.
12. It is also indicated in the memo that though the respondents had raised the demand notices under Rule 41 of the Rules, the petitioner having not tiled any objection, the authorities had resorted to recovery proceedings, but as it is also realized that before such recovery the enquiry in terms of Rule 41F(5) of the Karnataka Entertainment Tax Rules, 1959, and the assessment order in terms of Section 6A(3) had not been concluded and therefore, the recovery may not be sustainable and it is for such reason the respondents under took to withdraw the recovery proceedings including the proceedings before the Magistrate and the demand notices etc., in challenge in these writ petitions
13. The contents of the memo reveals a rather shocking state of affairs prevalent in the Department of the respondents, which is that the Assessing Officers do not have the basic knowledge that they could raise a demand notice only after passing the assessment order but could not raise a demand by merely computing in their records. It shows an elementary lack of knowledge of the manner in which the assessment has to be done by the assessing officers.
14. Section 6A of the Act provides for filing of returns and the manner in which the assessing officer can process the returns and pass assessment orders either accepting the returns or by varying if the particulars furnished in the returns is either incomplete or incorrect and also enables the assessing officer to pass a best judgment/assessment order in the event of non-co-operation or improper information in the returns also. There is also a provision for re-opening of tax that escaped assessment or has resulted in under assessment. The Act has provided for an elaborate procedure.
15. It is not open to the respondents to raise a demand in an arbitrary manner and without any opportunity to the petitioner. The most arbitrary manner in which the respondent assessing officers have conducted and have also followed by launching prosecution and criminal proceedings before the Magistrate only indicates that there is something radically wrong in the Commercial Taxes Department of the State. It is only when the petitioner has approached this Court for a direction to the respondents to furnish a copy of the assessment orders they are now coming out with the true facts that no assessment order had ever been passed for the relevant period !
16. Taking provisions are all statutory provisions, which are not necessarily relished by the citizens. No citizen welcomes liability for any tax. But for an element of compulsion, perhaps not many will be enthusiastic to pay any tax. The rhetorics of an abiding citizen that by paying tax, "I derive the maximum pleasure or happiness in paying the tax" are all saying of a bygone era. It is the duty of the officials administering the taxing provision to be vigilant, to be careful and to ensure that the revenue reaches the State in a proper manner. But at the same time, while so doing, the officials are also required to adhere to the statutory provisions and the procedure prescribed and also the need for observing the safe guards which are to be complied with. The assessing officer or the recovery officer or even the Inspecting officer cannot be an authority to himself or act in an arbitrary manner. They are always required to act in the manner provided under the statutory provisions and also to act in a manner befitting the nature of governance; that we have i.e., a democratic republic State and that the citizens should be respected and the provisions of the statute should not be abused or mis-used either to harass the tax payer or to extract illegal gratification from a tax payer. Such an opportunity and the temptation may be quite often in taxing provisions, but it is the duty of the enforcing officer to adhere to the provisions and to maintain their dignity, integrity and efficiency.
17. Unfortunately I find in the present two writ petitions and in the issue of the demand notices and the recovery action taken, the concerned officers have miserably failed in either adhering to the statutory provisions or in resorting to any bona fide recovery action.
18. I must place on record the good assistance received from Smt. Niloufer Akbar, learned AGA in placing the correct and true version before the Court. Object of law itself is to have an orderly and workable conduct in society. Citizens to have interaction in a methodical manner and to protect the weak and the disabled. It is essential to hold the scales of justice even handed and to ensure that uniform treatment is meted out to all citizens.
19. With the increase in the activities of the State the scope towards expenditure also increase and the State inevitably looks up to more and more revenues and may try to tap new sources. With the increase of activities, particularly technical scientific and commercial activities more fiscal provisions may come into existence. But it does not mean that the officers manning such taxing statutes, such revenue raisins statutes can act in an arbitrary or whimsical manner. They are always required to adhere to the laws and the procedures.
20. The demands at Annexure-A in the two writ petitions are to say the least not merely illegal but are most arbitrary demands and they cannot be sustained. The launching of criminal proceedings against the petitioner for realization of the demand is heaping more misery on the petitioner and subjecting the petitioner to harassment. It is not that the petitioner may not be liable at all to pay any tax under the provisions of the Act, but that liability also has to be determined, quantified in accordance with the provisions of the Act and in the manner provided for in the Act and also enforced or realized in consonance with the statutory provisions. Not only the demands under Annexure-A in the two writ petitions, but also the proceedings in CMC 20/2002 before the MFC and CMC 42/2003 are quashed by issue of a writ of certiorari.
21. Learned Government Advocate has indicated that one Mr. Vijay Kumar, presently working as VAT Sub Officer, Kollegal, was the assessing officer for the relevant period in respect of the demand raised which is the matter of W.P. No. 155 22/06 and Mr. Narayan Reddy, presently working as C.T.O, (Intelligence-8) South Zone, Bangalore, was the assessing officer in respect of Annexure-A in W.P. No. 15521/06. If one officer had erred at least the other officer could have corrected, but the other officer has blindly followed.
22. It is high time that the Commercial Tax Department wakes up to the necessity of providing proper training and educating the assessing officers who wield considerable power and authority to act always in consonance with the statutory provisions, to act in a fair and non-discriminatory manner and not to abuse the powers. I cannot help but observe that the conduct of the two officers who had not only straight away issued demand notice but also initiated criminal proceedings for recovery of the amount to say the least is most arbitrary and unbecoming of the officer entrusted with such onerous responsibility. It is necessary for the concerned head of the department to look into this bleak situation and take such remedial measures as are necessary. In the absence of the very officers being made parties to these writ petitions, I do not wish to make further observations or remark about them in these writ petitions, but that part is left to the Commissioner of Commercial Taxes who heads the Department to act upon.
23. Writ petitions allowed with costs of Rs. 5,000/- in each of the petition with liberty to the State to recover the amounts from the concerned official responsible for such lapse.
24. Rule issued and made absolute.
25. It is open to the respondents to take such action as is permitted and in accordance with law for realizing the tax liability from the petitioner for the relevant periods.