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2011 DIGILAW 716 (KAR)

ETA MELCO Engg. v. Commercial Tax Officer

2011-07-20

S.ABDUL NAZEER

body2011
Judgment :- 1. In these cases, the petitioner has called in question the validity of the order at Annexure ‘A’ dated 24.2.2010 passed by the Commissioner of Commercial Taxes, the 4th respondent herein conferring jurisdiction on the first respondent to reassess the petitioner under Section 39(1) of the Karnataka Value Added Tax Act, 2003 (‘Act’ for short) and to impose penalty and demand payment of interest. Consequent upon the power conferred by the 4th respondent as above, the first respondent has passed the orders of reassessment and penalty under Section 39(1) and 72(2) of the Act as per Annexures ‘B’, ‘B1’, ‘B2’, ‘B3’, ‘C’, ‘C1’, ‘C2’ and ‘C3’ all dated 13.4.2011. 2. Sri A. Satyanarayana, learned Counsel appearing for the petitioner contends that the power conferred by the 4th respondent in favour of the first respondent is invalid and unauthorised. It is argued that the petitioner has filed correct and complete returns, which have been accepted all along by the assessing Authority. Therefore, question of reassessment of the petitioner under Section 39(1) of the Act and levy of penalty under Section 72(2) of the Act does not arise. 3. On the other hand, learned HCGP appearing for the respondents submits that on the recommendations made by the first respondent that the petitioner has evaded payment of tax and the need to initiate reassessment proceedings against it, the 4th respondent has authorised the first respondent to initiate proceedings for reassessment and to impose penalty and demand payment of interest. It is further argued that if the petitioner is aggrieved by the orders of reassessment and penalty as per Annexures ‘B’, ‘B1’, ‘B2’, ‘B3’, ‘C’, ‘C1’, ‘C2’ and ‘C3’ all dated 13.4.2011, it has to file appeals challenging the said order because the alternative remedy available to the petitioner is not only adequate but also efficacious in nature and that the disputed questions of fact cannot be decided in the writ petition. 4. I have carefully considered the arguments of the learned Counsel made at the Bar. 5. A perusal of the order of re-assessment at Annexures ‘B’ and ‘C’ dated 13.4.2011 shows that the business premises of the petitioner was inspected by the predecessor of the first respondent on 7.7.2008. 4. I have carefully considered the arguments of the learned Counsel made at the Bar. 5. A perusal of the order of re-assessment at Annexures ‘B’ and ‘C’ dated 13.4.2011 shows that the business premises of the petitioner was inspected by the predecessor of the first respondent on 7.7.2008. On verification of the books of accounts of the petitioner for the periods from April, 2006 to March, 2007 and from April, 2008 to March, 2009, he had made certain observations relating to evasion of tax. Incorporating the said observations, the first respondent issued the proposition notice dated 16.7.2010 under Section 39(1) of the Act and passed orders of reassessment and penalty. The contention put forth by the learned Counsel for the petitioner is that the 1st respondent had no authority to pass the orders of reassessment because the order at Annexure ‘A’ dated 24.2.2010 issued by the 4th respondent authorizing the first respondent to reassess the petitioner is illegal. Therefore, the first question for consideration is whether the order at Annexure ‘A’ passed by the first respondent authorizing the 4th respondent to pass the orders of reassessment is valid? 6. Section 39(1) of the Act states that where the prescribed authority has grounds to believe that any return furnished which is deemed as assessed or any assessment issued under Section 38 understates the correct tax liability of the dealer, it may reassess the dealer concerned under sub-sections (a) and (b) of the said Section and also impose penalty under sub-section (5) of Section 72 and demand payment of any interest. The expression ‘prescribed authority’ has been defined under sub-section (24) of Section 2 of the Act as under: “PRESCRIBED AUTHORITY: means an Officer of the Commercial Taxes Department, authorised by the Government or the Commissioner to perform such functions as may be assigned to him.” 7. Thus, if the Commissioner of Commercial Taxes authorizes an Officer of the Department under sub-section (24) of Section 2 of the Act to perform such functions as may be assigned to him, he can function in terms of the said authorisation. It is clear from the order at Annexure ‘A’ dated 24.2.2010 that the Commissioner of Commercial Taxes has authorised the first respondent to reassess the petitioner under sub-section 39(1) of the Act as also to levy penalty and demand payment of interest. It is clear from the order at Annexure ‘A’ dated 24.2.2010 that the Commissioner of Commercial Taxes has authorised the first respondent to reassess the petitioner under sub-section 39(1) of the Act as also to levy penalty and demand payment of interest. Therefore, there is no merit in the contention of the petitioner that the order at Annexure ‘A’ is invalid or that the orders of reassessment and orders of penalty passed by the first respondent are without jurisdiction. 8. That brings us to the second question relating to the validity of the orders of reassessment and penalty at Annexures ‘B’, ‘B1’, ‘B2’, ‘B3’, ‘C’, ‘C1’, ‘C2’ and ‘C3’ dated 13.4.2011. It is not in dispute that they are appealable under Section 62 of the Act. It is well established that though the jurisdiction of the High Court under Article 226 of the Constitution is extensive, normally the High Court does not exercise that jurisdiction by entertaining petitions against the order of taxing authorities when the statute under which the tax is sought to be levied provides the remedy by way of an appeal thereby by-passing the statutory machinery. The High Court leaves it to the taxpayer to obtain adjudication from the taxing authorities in the first instance. There is no reason why this Court should entertain these writ petitions when the Act contains a detailed mechanism for the redressal of the grievances of the petitioner especially when the matter involves public money. The Apex Court in UNITED BANK OF INDIA VS. SATYAVATHI TANDON – (2010) 8 SCC 110 has emphasized the need for circumspection, caution and care by the High Courts to ensure that statutory schemes are not defeated by exercise of writ jurisdiction. It has been held thus: “43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types to public money and the dues of Banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute. 44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.” 9. It is also well settled that the mere fact that an assessee has to deposit the amount of tax while filing an appeal cannot be said to be a good ground to bypass the remedy provided under the Act. There must be something more in a case to warrant the entertainment of a petition under Article 226, something going to the root of the jurisdiction of the taxing authority. In SALES TAX OFFICER, JODHPUR & ANOTHER VS. M/S SHIV RATAN G. MOHATTA- AIR 1966 SC 142 , the Apex Court has held that it is not the object of Article 226 to convert High Courts into original or appellate assessing authorities whenever an assessee chooses to attack an assessment order on the ground that a sale was made in the course of import and, therefore, exempt from tax. The fact that the assessees have to deposit sales tax while filing an appeal is not a ground to bypass the statutory remedies. The fact that the assessees have to deposit sales tax while filing an appeal is not a ground to bypass the statutory remedies. The relevant paragraphs of the decision is as follows: “The facts that the assessees have to deposit sales tax, while filing an appeal, does not always mean he can bypass the remedies provided by the Sales Tax Act. To warrant the entertainment of a petition under Article 226, there must be something more in a case, something going to the root of the jurisdiction of the Sales Tax Officer, something which would show that it would be a case of palpable injustice to the assessee to force him to adopt the remedies provided by the Act.” 10. In ASSISTANT COLLECTOR OF CENTRAL EXCISE VS. DUNLOP INDIA LTD.- (1985) 1 SCC 260 , the Apex Court after taking note of the decision in TITAGHUR PAPER MILLS CO. LTD. & ANOTHER VS. STATE OF ORISSA & ANOTHER- AIR 1983 SC 603 has held as under: “That it has become necessary, even now, for us to repeat this admonition is indeed a matter of tragic concern to us. Article 226 is not meant to short-circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations, as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article 226 of the Constitution. But then the Court must have good and sufficient reason to by-pass the alternative remedy provided by statute. Surely matters involving the revenue where statutory remedies are available are not such matters.” 11. For the reasons stated above, I decline to entertain these writ petitions. They are accordingly dismissed. However, liberty is reserved to the petitioner to challenge the orders of reassessment and penalty at Annexures ‘B’, ‘B1’, ‘B2’, ‘B3’, ‘C’, ‘C1’, ‘C2’ and ‘C3’ all dated 13.4.2011 by filling appeals before the competent authority. For the reasons stated above, I decline to entertain these writ petitions. They are accordingly dismissed. However, liberty is reserved to the petitioner to challenge the orders of reassessment and penalty at Annexures ‘B’, ‘B1’, ‘B2’, ‘B3’, ‘C’, ‘C1’, ‘C2’ and ‘C3’ all dated 13.4.2011 by filling appeals before the competent authority. If the petitioner files appeals as above within a period of four weeks from the date of receipt of a copy of this order, the authority concerned is directed to receive the appeal without raising objections only in so far as limitation in filing the appeals is concerned and subject to compliance of the other provisions of the Act and dispose of the same in accordance with law. All the contentions of the parties on merits in so far as the orders of reassessment and penalty at Annexures ‘B’, ‘B1’, ‘B2’, ‘B3’, ‘C’, ‘C1’, ‘C2’ and ‘C3’ dated 13.4.2011 are kept open. The order at Annexure ‘A’ dated 24.2.2010 passed by the 4th respondent is sustained. 12. In view of the dismissal of the writ petitions as above. Misc.W.No.5772/2011 does not survive for consideration. It is accordingly dismissed. No costs.