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2019 DIGILAW 1478 (KAR)

Electrex India Limited v. State Of Karnataka

2019-06-28

S.SUJATHA

body2019
JUDGMENT : S. Sujatha, J. The petitioner has challenged the assessment orders relating to the assessment years 1995-1996 to 2007-2008 passed under the provisions of the Karnataka Tax on Entry of Goods Act, 1979, Karnataka Sales Tax Act, 1957, Karnataka Value Added Tax Act, 2003 and Central Sales Tax Act, 1956 and the demand notice dated 18.01.2018 issued by the respondent No.3 in pursuant to the aforesaid assessment orders. 2. The petitioner is a Company incorporated under the provisions of the Companies Act, 1956 inter alia engaged in the business of manufacturing and sale of lighting equipment, electrical equipment, tools, drills, wrenches, hammers and other automobile electric tools etc., 3. It is submitted that the petitioner during the year 1996-97 undertook an expansion programme in anticipation of high growth and market demand, however could not sustainably run its business and was referred to the Board of Industrial and Financial Reconstruction ('BIFR' for short) on 18.07.2000. Subsequently, on 31.10.2001, the petitioner company was declared sick in terms of the Sick Industrial Companies (Special Provisions) Act, 1985. In the said proceedings, the petitioner company could not take steps to assail the assessment orders. However, the petitioner's aggregate tax liability was computed at Rs.11,92,01,000/- (Rupees eleven crores ninety two lakhs one thousand only) and inclusive of interest, stood at Rs.42,91,69,000/- (Rupees forty two crores ninety one lakhs sixty nine thousand only). The operating agency- Canara Bank directed the petitioner to reconcile its accounts with the claims of the respondents 2 to 4 since the petitioner did not had significant amount of sales turnover so as to attract tax liabilities aggregating to Rs.11,92,01,000/- (Rupees eleven crores ninety two lakhs one thousand only). Before the petitioner company could make efforts to reconcile the accounts, the respondent Nos.2 to 4 had initiated coercive recovery proceedings against the petitioner. 4. Learned counsel Sri.G.K.V.Murthy, appearing for the petitioner reiterating the grounds as aforesaid, submitted that no statutory Forms were submitted by the petitioner company to avail the reduced rate of tax. As such, huge tax liability has been created by the respondent authorities. 4. Learned counsel Sri.G.K.V.Murthy, appearing for the petitioner reiterating the grounds as aforesaid, submitted that no statutory Forms were submitted by the petitioner company to avail the reduced rate of tax. As such, huge tax liability has been created by the respondent authorities. Placing reliance on Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957 ('Rules' for short) which contemplates that the declaration in Form 'C' or Form 'F' or the certificate in Form 'E-1' or Form 'E-II' shall be furnished to the prescribed authority within three months after the end of the period to which the declaration or the certificate relates, provided that if the prescribed Authority is satisfied that the person concerned was prevented by sufficient cause from furnishing such declaration or certificate within the aforesaid time, that Authority may allow declaration or certificate to be furnished within such further time as that authority may permit, submitted that the prescribed Authority is empowered to accept the statutory Forms even at this stage if the petitioner shows sufficient cause. 5. In support of his contentions, learned counsel has placed reliance on the ruling of this court in the case of Weir BDK Valves Vs. Asst. Commissioner of Commercial Taxes (Audit-1) and others in W.P.No.72328/2012 and connected matters (D.D.5.6.2015) as well as the Full Bench decision of Madras High Court in the case of State of Tamil Nadu Vs. Arulmurugan and Company, (1982) 51 STC 381 . Learned counsel submitted that the respondents may be directed to re-assess the tax liability of the petitioner in a time bound manner considering the declaration Forms to be submitted to facilitate the petitioner to avail the benefit of Karasamadhan Scheme, 2019. 6. Learned AGA strongly objecting to the challenge made to the re-assessment orders relating to the assessment years 1995-1996 to 2007-2008 argued that no writ jurisdiction can be invoked by the petitioner to seek a remand to the Assessing Officer to furnish the statutory Forms at this length of time. 7. Heard the learned counsel for the parties and perused the material on record. 8. There is no cavil on the proposition that the declaration Form can be filed at a subsequent point of time and not necessarily along with the returns. It is also well established principle that the declaration Forms can be filed before the Appellate Authority also. 7. Heard the learned counsel for the parties and perused the material on record. 8. There is no cavil on the proposition that the declaration Form can be filed at a subsequent point of time and not necessarily along with the returns. It is also well established principle that the declaration Forms can be filed before the Appellate Authority also. Rule 12(7) of the Rules reads thus: “12(7) The declaration in Form 'C' or Form 'F' or the certificate in Form 'E-1' or Form 'E-11' shall be furnished to the prescribed authority within three months after the end of the period to which the declaration or the certificate relates: Provided that if the prescribed authority is satisfied that the person concerned was prevented by sufficient cause from furnishing such declaration or certificate within the aforesaid time, that authority may allow declaration or certificate to be furnished within such further time as that authority may permit." 9. If the Assessing Authority is satisfied that the assessee was prevented from sufficient cause which disenabled him to file the Forms in time, the same can be accepted in terms of the proviso to Rule 12(7), albeit rule 12(7) prescribes a time limit of three months after the end of the period to which the declaration has to be filed, but that cannot be extended to decades. Prescribing three months time for furnishing declaration Forms may be directory but the same should be furnished within a reasonable time. The submission of the learned counsel for the petitioner to remand the matter now to the Assessing Authority to furnish the statutory declaration Forms relating to the assessment years 1995-96 to 2007- 08, at any stretch of imagination cannot be construed as the reasonable time to provide an opportunity to the assessee to avail the benefit of Karasamadhan Scheme 2019. 10. The provisions of the respective Acts provides a time limit for maintaining the books of accounts. For eg., in terms of Rule 26(10) of the Karnataka Sales Tax Rules, 1957, the accounts books are required to be maintained till the assessment for the year to which it relates has become final i.e., ordinarily eight years from the expiry of the year to which the tax relates. Similarly, in terms of Section 32 of the KVAT Act, 2003, five years or until the assessment reaches finality whichever is later. Similarly, in terms of Section 32 of the KVAT Act, 2003, five years or until the assessment reaches finality whichever is later. In terms of section 9(2) of the CST Act, 1956, General Sales Tax law of the State is applicable inasmuch as the assessment, re-assessment, collection and to enforce payment of any tax is concerned. The time prescribed for re-assessment, revision, appeal, rectification of the orders relating to the assessment years in question has come to an end long back, ascertaining the genuineness of such declaration Forms would be infeasible and futile. Such being the position, it is hard to countenance the request of the petitioner to remand the mater to the Assessing Authority under the pretext of filing declaration Forms after decades. 11. In the judgment of Weir BDK Valves supra, the assessment order dated 25.05.2011 relating to the assessment year 2008-2009 and the consequential demand notices as well as the order passed by the Appellate Authority were challenged. The Appellate Authority has dismissed the appeal on the ground of limitation without accepting the declaration Forms submitted. Hence, this court allowed the writ petitions and restored the proceedings to the Assessing Authority to redo the assessment taking into consideration the statutory Forms/declaration Forms furnished by the petitioner. 12. However, in the present case, no such declaration Forms are furnished, but it is only permission sought to furnish such declaration Forms before the Assessing Authority beyond the period of limitation to file an appeal before the Authorities. The inordinate delay of decades cannot be condoned merely for the reason that the proceedings were pending before BIFR. 13. The Full Bench of Madras High Court in the case of State of Tamil Nadu, supra, in the context of furnishing of declaration Forms under Rule 12(7) of the Rules has observed that the assessee did not file statutory Forms before the statutory Authority before the completion of the assessment, however before the Appellate Authority leave to file the relevant declaration Forms was sought for, but was declined. However, in further appeal the Tribunal accepted the same. In such circumstances, it has been held thus: "18..... We do not think there is any room for the perplexity given expression to by the learned Government Pleader. However, in further appeal the Tribunal accepted the same. In such circumstances, it has been held thus: "18..... We do not think there is any room for the perplexity given expression to by the learned Government Pleader. Given the assessing authority's undoubted power to allow further time for C Forms to be filed on sufficient cause, the rest of it is mere procedure or follow up action. Where the assessing authority is satisfied, in a given case, about the existence of sufficient cause, it must necessarily be followed up by appropriate action, such as reopening the assessment already completed. Perhaps the requisite corrective action can be taken by invoking the assessing authority's statutory power of rectification of mistakes. Even otherwise, the implementation, in appropriate cases, of the power to allow further time cannot be withheld on the excuse that there is not express provision either in the statute or in the statutory rules for reopening the assessment. When the power is there and the facts are there demanding its exercise, the implementation must be done as a matter of course, on the doctrine of implied or ancillary powers. Where there is a power, and where there is a will, there will be a way. It is, however, unnecessary to pursue the line of discussion further, because the particular problem we are concerned with in the two cases before us is quite different. What we are asked to consider, and what we have been engaged in discussing so far, is whether an appellate authority has the same power as the assessing authority to allow further time for accepting C Forms, and not how and by what process the assessing authority itself could exercise the power after the completion of the assessment. 14. As discussed in the preceding paragraphs, there is no dispute with the aforesaid legal principle enunciated by the Hon'ble Court. In the present case, the challenge made to the assessment orders under the writ jurisdiction relating to the assessment years 1995-1996 to 2007-2008 cannot be entertained to enable the petitioner to avail the Karasamadhan Scheme, 2019. Writ petitions are bereft of merits, accordingly stand dismissed.