Karnataka High Court
M/S Total Earthmovers Pvt. Ltd., vs The State Of Karanataka on 21 September, 2011
Author: B.V.Nagarathna
Bench: B.V.Nagarathna
--. Annexure-K. fi). Quash the notification issued bv t IN THE HIGH COURT OF KARNATAKA CIRCUIT BENCH AT DHARWAD |. DATED) THIS Thin 21°) DAY OF SEPTEMBER, Or Po BEFORE ne WP NO.65386/201i (T-RES) Between: M/s.Total Earthmovers Private Limited: Represented by its Chief Operating Officer. Shri. Mohan Subramaniam, 6 Age 49 vears, Manas Pravag, Palspe Phata,» Goa Bypass Road, Panvel, Maharashtra. pr ... Petitioner (By Sri.Yadawad Prarcod: Shrini as, Advocate) And: 1. State of Karnataka. Vidhana. Soudha,~. Dr.B.R.An:bedkar. Veedhiy. [email protected] |. | 2... The Commissioner of Commercial Taxes In _Karnatake Vanijva Therige Karvalava, . Gandhi.Nagar, Bangalore-560009. 3. The-Conintercial Tax Officer, . Sales Tax Checkpost, Nippani (Out), - Belgasumi. District. me a ... Respondents {By Smt.Megha C.Kolekar, HCGP) _ «This writ petition is filed praying to () Quash the order dated 01/08/2011 passed by the respondent No.3 vide _-.Commissioner of Commercial Taxes in Karnataka on "28/02/2011 vide Annexure-L to the effect of imposing 3 conditions on the validity on the e-Sugama. Le ~.. transporter, M/s.Master Cargo, Dharwad. According to th This petition coming on for dictating orders this day. the court made the following: mo ORDER
This writ petition is filed by the consignee of the goods", assailing the order dated 01.08.2CG11. passed. by «the oy respondent No.3 (Annexure-k} as 'yell as Notification Issued by the 24 respondent Commissioner of Commercial. Faxes on 28.02.2011 (Annexure-L) imposing..certaim'=conditions with regard to the validity .ef e-Sugama-y
2. The relevant facts: af "th e& case are that t petitioner had purckased 'certain 'machinery (goods) from M/s. Telco Constructi6n..Equipment Company Limited, Dharwad under excise invoice dated 30.04.2011 in course of e 7 inter-State sale at concessional rate at . The petitioner is a 3 » registered. dealer in the State of Maharashtra and_ the
-consignor,namel\' M/s. Teleco Construction Equipment is a registerec. dealer in Karnataka State. The consignor of the "goods "entrusted transportation of the machinery to a , 4 os petitioner, since there was non-availability of an appropriate Lal vehicle capable of transporting the heavy earth moving equipment, the same was not transported from Dharwad: te Panvel, Maharashtra State, till 08.05.2011. On 08.05.2011 the transporter arranged for a_ goods vehicle bearing ; registration No. HR-14/E-0468 for the purpese of transporting the goods and the consignor uploaded the detail'. of the transaction in e-Suguma Portal (schemel, bearing e-Suguma No.1516759634. a copy of whieh "was hand led over to the transporter
3. The petitioner However, 'yequested the transporter to withhold the shipment. of the goods from Dharwad, as all roads leading ta the stock vard were damaged due to heavy rain and water logging. As a' result, the goods were unloaded from 'the 'Vehicle, 'and were kept in the premises of the 7 transporter. or 10 | 07.2 2011, the petitioner informed the 'transporter tov take arrangements for the shipment of the goods, The trafisporter thereafter loaded the goods on vehicle hearing: régistrati on No.RJ-14/GD-717. The said vehicle "reached the commercial tax outpost at Nippani on 20.07.2011 ~.at, about 3:45 p.m. and the driver of the vehicle voluntarily Ly
4. tendered the documents accompanving the goods with respondent No.3. However, at that stage respondent No.3 issued a Goods Consignment Endorsement (GC endarsement). dated 20.07.2011 alleging that there was. non-somplianice of sub Section (12) of Section 33 of the Karnataka Value Added Tax Act, 2003 (hereinafter referred, to 'as, the. Act} and imposed penalty on the ground that. there was, delay in transportation of goods. The copy of the GC. endorsement is produced at Annexure-D. The petitiorier got issued a reply to the GC endorsement "through 'its counsel. Subsequently, respondent No.3 issued a notice dated 26.07.2011 under Section 53(2)(b) of the Act calling upon the petitioner to show cause, as to why the penalty should not be imposed for non- compliance 'with the provision of Section 53 (12) of the Act. The petitioner got issued a reply to the show cause notice _aicng with the.alfidavit filed by the transporter. The copy of
-the-aifidavit is produced at Annexure-H.
4. "Since there was no response to reply given by the s petitioner, another representation was made on O1 08.2011. Respondent No.3 by its order dated 02.08.2011 overruled the oo
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explanation given by the petitioner and imposed penalty of Rs.1,57,508/-. The said order was communicated to the driver of the vehicle on 03.08.2011. a copy of whichis. produced as Annexure-K. Being aggrieved. by the order dated ; 01.08.2011, the petitioner has filed this writ petition not only assailing the said order but aiso™ certain conditions "of Annexure-L, which is_ the. notification "dated -28.02.201 l issued under Section 53(2-a}(2-bj ofthe Act...
5. In response to the. writ petition; the State has filed Statement of objecticns adverting to: various clauses of Section S3 of the Act 'and 'stating that there was non- compliance with. the terms of the notification pertaining to E- Suguma, inasmuch 'as in the instant case, the distance of shipment / transportation 'of the machinery in question is
-. between 400 10500 kilometers, the shipment had to take 'place within © five' days from the date of uploading the doctiment, In ihe instant case, there is delay of 74 days and therefore, there is non-compliance with Section 53 of the Act. 'Uniter the circumstances, GC Endorsement was rightly 4 mo "issued to the driver of the vehicle and subsequently, penalty proceedings were rightly initiated under Section 53(12) of the Act. Therefore. it is stated that Annexture-K is in accordance with law, which would not call for any interference inthis'. Writ Petition. --
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6. | have heard the learned counsel for the. netitionei and also the learned Government Pleader for the respondents, peg 7, It is contended on- behalf of the petitioner that respondent No.3 has invoked Section 53/12) of the Act erroneously in the instant case,, since that Section can be invoked only for.contravention.or non-compliance of Section 53(12) of the Aci and in-the instant case, there has been no such non-compliance. Theréfore the very initiation of the proceedings. under Seetiom 53(12) of the Act is not in accordance.with law. >
8. ~.Hedurther submitted that even if it is assumed for a-mortient that respondent No.3 was justified in initiating proceedings under Section 53(12) of the Act, before imposing "ari penalty, cause shown for the alleged contravention had to
-. "be considered and if in the opinion of respondent No.3, the LL explanation is insufficient. it is only under such circumstances, that the penalty can be imposed for ree SO stated. He has drawn my attention to Annexure-L. ch ich is ie notification dated 28.02.2011 issued by-the Commissioner OF. Commercial Taxes, Karnataka, wherein, the * scheme »ol Le uploading of documents called E-St isuma_ iat AS be c a) envisaged by exercising power under Se ction 53i2-a &% (2-b} otthe Act. Even if there is said to be "olation of the terms of the scheme, assuming for a moment that, there has been no shipment of goods as per Clause vii of, part-E of the scheme, he contended that, favoking Section S3(12) of the Act it would not be correct for ithe simple. reason that the said scheme is mandatory in respect of the 'goods which are mentioned in Part: A. It thejnstant case, what was being transported was machiner ry. which does not find a place in part-A of the said
- otification containing the scheme. Even though the petitioner had: uploaded the document for facilitating 'expeditious' clearance at the Checkpost, the condition at clause-vii of part-E, cannot be the basis for imposing pe ralty "oftne petitioner. He further stated that the said conditions cannot be to be mandatory conditions, havi he stated that there has been amendment made to Section 53 of the Act and incorporation of sub Section (2-A) and the, said sub section has overriding effect since it begins with a-non-* obstanate clause and it is mandatory.-fer the d river, of ¢ vehicle to produce the proof of the d ocum en is en rered in t he website before the concerned offi cer'an dl aii viola tion of Sub Section (2-A) would invite, penalty. under Section 5344 2)fa) of the Act, which is more particuilarty specified under the clause- b of sub Section (2-A} of. the Act as stated under sub Section (2-B) of Section S53 ofthe Acto.
submission by stating. that in, the instant case though the documents. were uploadéd with the information pertaining to the, transaction dated 09.05.2011, then within 5S days shipment. had "to.be" completed. In the instant case. till 09.07.2011 t 7 vere. was no transportation of the machinery and there was delay of 74 days. In the circumstances, there is violation "of the notification dated 28.02.2011 and hence, ">. resporident No.3 was justified in invoking Section 53(12) of ke
- 10- the Act. Hence, she submitted that the writ petition has to be dismissed as being devoid of merits.
11. Learned Government Pleader also submitted that. any person aggrieved by an order levying penalty can fle an appeal before the Appellate Authority and therefore, the writ petition is not maintainable, in view-of the other. alternative remedy.
12. In reply, the learned.counse!l for the petitioner submitted that the reason./as. to, why the extraordinary er Article 226 of Constitution of on jurisdiction of this Court, und le India is invoked 1s on atcount of the fact that the machinery is unloaded froin. che vehicle and has been exposed to vagaries of mature, Therefore, the alternative remedy has not been: availed bv the petitioner and the efficacious remedy of . "invoking: the writ jurisdiction has been availed by filing this writ petition:
-3.--Before considering the rival contentions of the "parties; it is necessary to advert to Section 53 of the Act. The rc "said Section speaks of establishment ol! checkposts and inspection of goods in movement. The object of the said Section to prevent or check evasion of tax under the Actin any place or places in the State, by establishment ofa cl ch eck post or the erection of a barrier, or beth at such 'Rage or places as may be notified. The documents' which have to be produced at the check post are stated. under sub Section (2) of Section 33 of the Act. Sub Sections (2- A) & .(2-B) are inserted and effective with effect from, 01,04. 2010 the same have to be read conjointly. Sub Se ction 112-4 'Ay and (2-B) read as follows:
53. Establishinent.of check posts and inspection of s8eds in-moyement.-
(1) XXXX XX (2e A) Now withstanding anvthing contained in clause. (c) ef sub -section (2), the owner or person iy. cha arge of. the goods vehicle carrving goods of "any 'spee ified. class of goods or any specified class of dealers Sor asa result of any specified class of transactions. "as may be notified by the Comimissioner,
(a)-shall report at the first check post or . barrier situated on the route ordinarily taken from the place in the State, from which the movement of goods commences, to its destination; and
(b) shall produce proof of entering in the website, particulars of the goc ods carried by the consignor or consignee of the
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specified in the notification before the officer specified in sub- Section (2) and on such production, the officer may allew 'the. goods vehicle to pass through.
iS. Sub Section (2-B) states that 'if there is any contravention or non-compliance. with'. the provisions Of clause-a or that the particulars as specified under elavise-b of sub Section (2-A}) have not been entered or, the particulars entered are incorrect and incom] nlete >and for which sufficient cause 1s not furnished}. ther an that case penalty could be levied under sub Section (1a. oF Section: 53 of the Act. In the instant CASC., since "proceedings were initiated under sub- section 12 of Séetion 53 af the, Act, it would be necessary to extract the Said prov ision also (1p (1 2) XXXXXXX (12) (aj. The officer in charge of a check post or a-barrier or any other officer in respect of any . contravention of, or noncompliance with, the _. provisions of sub- section (2), for which sufficient cause. is not furnished, levy a penalty which, -
"-(j): shall not be less than the amount of tax leviable but shall not exceed one and half of the amount of tax leviable in respect of the goods under transport in contravention of 1[clause (c) or] clause (d) of sub-section (2), he saler registered under the Act accepts ie is the consignor or consignee of the:
é
(i) in cases other than those falling under fem.
(i), shall not be less than double the amount ~ of tax leviable but not exceed three times .
the amount of tax leviable in respect of "the - goods under transport . Be
(b) Where the amount of penalty. le via leis more than the value of the goe ds, the amount of penalty leviable shall be restric ted. to- such Value." {c} In proceedings. under 'subs. se 'ction (10), where the penalty levied is not paid> the carrier or bailee or person:in-charge.. of the goods vehicle shall jointh ane> severally be Hable-.to- pay such penalty. ne .
(d) Before: tw ing any penalty under this sub-section, -the officer" shall give the person-in- charge sof -the eoods | vehicle: or boat, ship or similar vessel, the carriet.. the bailee >. or dealer registered under 'the Act. oas the case may be, a reasonable opportunity of being heard. 16, "The 'sail, provision enables the officer in-charge to ». levy penalty: if there is contravention or non-compliance of Section 53(2) for which sufficient cause is not furnished. Anv 'contiavention or non-compliance of clauses a or b of (2-A} of "Section 53 has to be read along with Section 53(2-B). When it is "with regard to non-production of proof of entering "information on the website. On a conjoint reading of sub ky ' oy states that the ce porvt we .
Sections (2-A), (2-B) and (12) of Section 53 of the Act penalty could be imposed, if sufficient cause is not shown. The, said provisions no where state that delav in consignment or the 7 carriage of goods in terms of the scheme would result "in:
imposing any penalty. In fact while invoking Settion 53(12). regard must be had to Section 53(2-B).as also clauses bean C of Sub Section (2) of Section 53 of the: Act. te is only under those circumstances that Section 52(12) coud | ne invoked. In the instant case, the corjtravention alleged against the transportation of the. goads-1s with 'regard to there being KR violation of conditot: ! OWN OF p sari- E of the notification dated if 28.02.2011, a.copy ef which.is. produced at Annexure-L and not any provisions.of Section 58 as such.
on oA perusal of the said notification would make it apparent" atthe mandatory compliance of the said "notificatiom. which has been issued under Sections oG(2-A) and (2-B) of the - Act , 18 In respect of certain goods which are "Stated in part-A. Clause-2 of the said notification however ers dispatching goods other than those pam : thentionec d in para | of part-A of the notification may also t.
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upload information so as to facilitate the expeditious clearance at the check post. Therefore, it becomes clear. that in so far as the goods which are not stated in the ratification %, at part-A it would not be mandatory to-upload information Hence, in respect of non-notified goods the schetue is not mandatorily applicable. The question'that Would then ar ise is when the consignor opts to upload information in terms of the notification dated 28.02.2011 in respect of the. goods which are not mentioned in. the notificdtion"-at. part-A, whether the conditions mentioned, t.the.-said 'notification would apply automatically. Particularly "in the instant case, whether clause-vii of part-E would. be apprcable is the question to be answered. Clause-vii of part-E'veads as follows:
. Procedure to enter the information in parts A, Band -C 'of the notification in 'e-SUGAM A . -Formaking entries in the format given Des above, the following procedure may be followed:
: AE ~ (UT) XXXXNX
- vii) in order to ensure that there are no mstances of misuse of the facility of 'e-
SUGAM', it ts prescribed that the 'e-
"
SUGAM' once uploaded shall be valid for the following durations;
f the distance from - validity period IS OS in of the goads to days from the day OF the destination is less uploading then 100 KMs.
co' 1 bora dn If the distance from ~- val lictity) period: is 7 origin of the goods to cays from the-day of the destination is > uploading ~~ between TOO KMs and. ~ S00 KMs, Ko
---- validity period is 15 3S. If the dis stance ™ from. days from the day of origin of the goods to. uploading the destination "is. 0 oo above SOU KMs.. 0.
18. The issue in-the instant, case, is whether the documents which "were. up! oat ded an 08.05.2011 were valid after seven days. fromthe date of uploading. In other words, whether the traisportation of ¢he goods in question had to met ved take Place: within seven days from the date of uploading. | the "instant ease... since transportation of the machinery in
- question commenced only on 19.07.2011 that is after 74 days after uploading. of doc cuments whether the condition of clause-
vi of part was violated and therefore, respondent No.3 was "tty stifie d:in imposing pena uty. Though, the notification dated » 28.02.2011 (Annexure-L) is issued in exercise of power under "Section S3(2-A) and (2-B) of the Act. it is noticed that clatise-b 18 -
of Section 53(2-A) of the Act only pertains to production of proof entering in the website, the particulars of the "goods carried by the consignor or consignee of the eoods'as may he. specified in the notification before the Officer speciticd if sub . Section (2) of sub clause-(b). The said provision. does not. speak about any violation in ternis and condition of 'the notification dated 28.02.2011. It is not. the case' of the respondents that there is" non-production ; of document entered in the website. The allegation. is that there was non compliance with the. condition. prescribed in the notification dated 28.02.2011 - (Antiexur-L} If 'that is so, then in my considered view, 'the invocation' of Section 353(12) was not correct in the instant case. The reasons are that firstly. the goss in questions are not goods notified in part-A of the scheme-it was not mandatory to upload the documents as per Sub clause b of suly Section (2-A} of Section 53, secondly, the validity of the documents uploaded cannot be judged on the ~. basis-of. clause-vii of part-E of Annexure-L containing the scheme in the instant case. Thirdly, even assuming for a "moment that penalty clause was rightly invoked what has to be considered before passing an order im posing penalty is as Y
19. to whether there was sufficient cause furnished, assuming that there was violation of clause mentioned in sub clati Sé-Vii | of part-E. In this regard, the affidavit of the Manages ol transporter M/s.Master Cargo. Dharwad.is furnistied and:
relied upon by the petitioner in reply to 'the notice issu ied under Section 53(12) of the Act. There is no consideration of the said affidavit or reply furnished"! by the petitioner 'as the reasons for delay in transportation of ood have been stated therein. Instead, by order dated o1 08.2011 a has been held that since the "goods were. not "transported within the stipulated date 'of uk load ing the locuments, there has been hon compliance 'of Sec Non 63 312). of the Act and under the cire umsiances, the pe nalty 'nas been imposed.
1 i bie comes clear from the aforesaid reasoning is the fact ch al Section 53(2)(b) of the Act could not have heen 'the basis for invoking the penalty clause. If at all. Section 58(2:8): could have been invoked if there had been non-
"production of proof of entering particulars in the website as i meati oned therein. That is also not the case herein as the os particulars were in fact entered. Violation of clause vii of part dO -
E of the notification dated 28.02.2011 to invoke section 93(12) of the Act in the instant case as stated by Government, Pleader) is also incorrect. Particularly when (Here. is. iio"
reference to the same in Section 53.of -the Act, "Since. no . violation or contravention arise under Section 53(2) of the Act as well as Section (2-B), order dated 01.03.2011 imposing penalty 1s without authority of law."
20, Hence, the order dated 01.08.2014]. (Annexure-K) is quashed. Consequeftly, the respondents are directed to release the machinery:
to writpetition. is allowed.
Sd/-
JUDGE } ey "
_ Vnp* >.