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2011 DIGILAW 937 (KAR)

Rasna Private Limited v. State of Karnataka

2011-09-22

MOHAN M.SHANTANAGOUDAR

body2011
ORDER Mohan Shantianagoudar, J.— The Petitioner has sought for the following relief: to declare the conferment of power of Suo Moto Revision Under Section 64(2) on the Commissioner, in so far as it relates to clarification issued by ACAR, as being violative of Articles 14, 19 and 300A of the Constitution of India and being opposed to Public interest and as being unfair and violative of scheme of Section 60 of KVAT Act 2. Though such a relief is prayed for by the Petitioner, Mr. Gandhi, learned advocate for the Petitioner submits that the prayer made in the writ petition can be treated as having been made by the Petitioner for a clarification that the order to be passed by the Commissioner based on notice at Annexure-A should not have retrospective effect. 3. The records reveal that the Petitioner is a manufacturer of fruit juices, etc. He sought for certain clarification from the Authority for Clarification and Advance Rulings under Section 60 of the KVAT Act, 2003. The said authority has given clarification on 28.3.2007 as per Annexure-B. Since then, the Petitioner is paying taxes accordingly. However, on 15.7.2010, the Commissioner for Commercial Taxes, Bangalore, has issued a notice Annexure-A under Section 64(2) of the KVAT Act, proposing to revise the order passed by the Authority dated 28.3.2007 and to clarify that the fruit flavoured drink concentrates in different flavours like orange, pineapple and mango are unscheduled goods and are liable to tax at 12.5% up to 31.3.2010 and at 13.5% from 1.4.2010 under Section 4(1)(b) of the KVAT Act. Thus, the Commissioner invited objections from the Petitioner to the said notice. The notice at Annexure-A is called in question in this writ petition. 4. It is not in dispute that the Petitioner approached the Authority for Clarification and Advance Ruling for getting clarification in respect of revised tax under KVAT Act. The said authority gave clarification as per the order dated 28.3.2007, clarifying that the concerned juices are covered by Entry No. 3 of III Schedule to the KVAT Act and are liable to tax at 4%. Thus, it is clear that the said clarification by the Authority for Clarification and Advance Ruling binds the Petitioner herein who has sought for clarification in respect of the goods and transaction in relation to which the clarification as sought for. The Officers of the Department are also bound by such clarification. Thus, it is clear that the said clarification by the Authority for Clarification and Advance Ruling binds the Petitioner herein who has sought for clarification in respect of the goods and transaction in relation to which the clarification as sought for. The Officers of the Department are also bound by such clarification. Pursuant to such clarification, the Petitioner is said to have been paying tax at 4%, However, as aforementioned, notice came to be issued as per Annexure-A by the Commissioner under Section 64(2) of KVAT Act on 15.7.2010 proposing to revise the clarification issued by the authority. According to the Commissioner, the clarification issued by the authority is erroneous and the same is prejudicial to the interest of such exchequer. 5. Since it is open for the Petitioner to file objections to the said notice, this Court does not wish to enter into the merits of the matter at this stage. However, the only question to be considered in this matter is as to whether the order to be passed by the Commissioner, if goes against the Petitioner, will have prospective effect or retrospective effect. The said question is already covered by the Division Bench of this Court in the case of Mangalore Minerals (Private) Limited, Mangalore v. State of Karnataka, reported in 2010 (68) KLJ 668, wherein it is held thus: 8. According to us, the Advance Rulings Authority without following the judgment of the Tribunal, erroneously has granted an order in favour of the Respondent We are also of the opinion that the Commissioner exercising his power vested under Section 64 of the Karnataka Value Added Tax Act having found that, the order of the Authority was prejudicial to the interest of the Revenue has rightly exercised his power and ruling of the Commissioner is justified in regard to the classification of the 'Resin Coated Sand' under Residuary Clause. So far as the second point is concerned, we are of the opinion that the order of the Commissioner cannot be retrospective and it could be prospective only for the following reasons: The arguments advance by the learned Government Advocate is that the ruling of the Tribunal was within the knowledge of the Assessee and that there was no occasion for the Assessee to approach the Advance Rulings Authority, seeking clarification. There is no basis for hearing the argument to show that, the Assessee was aware of the order of the Tribunal, Even if it is true, the Advance Rulings Authority has failed to exercise their power properly. When the Government Advocate would contend that the decision of the Tribunal was known to the Assessee, she cannot contend that same decision was not known to the Advance Ruling Authority. They are the officers of the same department. Therefore, we are of the view that the order of the Advance Rulings Authority has been set aside by the Commissioner, it can be prospective and not retrospective, 6. From the above, it is clear that the order to be passed pursuant to the notice Annexure-A by the Commissioner will have prospective effect and not retrospective effect. The order of the Commissioner will come into effect from the date of the order to be passed by the Commissioner. 7. With these Clarification, the writ petition stands disposed of.