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2022 DIGILAW 191 (KAR)

Raj Shree Granites Limited v. State of Karnataka

2022-02-11

ANANT RAMANATH HEGDE, S.G.PANDIT

body2022
JUDGMENT : ANANT RAMANATH HEGDE, J. 1. This batch of Sales Tax Revision Petitions raise common questions of law and these petitions are arising out of order dated 23.3.2016 passed by the Karnataka Appellate Tribunal, Bengaluru (CAMP at Belagavi). Thus the petitions STRP Nos. 100024/2016 to 100027/2016 are heard together and disposed of by common judgment. 2. The dispute is pertaining to the assessment year 2007-2008. The appeals before the Tribunal, in STA No. 306 to 351 were directed against the order passed by the Commissioner of Commercial Taxes (Appeals) Belgaum (for short ‘the first appellate authority’) in Proceeding No. JCCT/AP/BG/KVCT-312 to 357/2011-12/B. In terms of the said judgment dated 16.11.2012, the first appellate authority has dismissed the appeals filed by the present petitioner. As a consequence of the dismissal of the said first appeals, the reassessment orders dated 14th and 15th July-2011 passed in exercise of powers under Section 39(1), 72(2) and 36 of the Karnataka Value Added Tax Act, 2003 (KVAT Act for short) are confirmed. Brief facts: 3. The present petitioner is a public limited company engaged in extracting, processing and sale of granite blocks. The petitioner is having head office at Kolkatta and is having its factory/mine in Balakundi village, Ilkal, Bagalkot. 4. On 11.2.2011, the office premise of the petitioner at Ilkal was subjected to inspection. Six documents were reseized on that day. These six documents form the basis for reassessment orders. The petitioner-company in the first instance took a stand that the seized documents are not the documents of the petitioner company, on the premise that the room of the factory manager from where the documents were seized is not the premises of the petitioner company. 5. Subsequently, the Assistant Commissioner of Commercial tax passed an order of reassessment after issuing show-cause notice. Petitioner challenged the reassessment order before the appellate authority. The challenge failed. Petitioner approached the Appellate Tribunal. Tribunal did not entertain the second appeal and dismissed the same. Hence the present revision petition under S.65 of the Karnataka Value Added Tax 2003. 6. This Court has admitted the revision petition in terms of order dated 05.02.2018 and framed the following substantial questions of law: “(A) Whether on the facts and circumstances of the case the order passed by the enforcement authority and the audit authority u/s 39(1) of the KVAT Act, is biased against the petitioner? 6. This Court has admitted the revision petition in terms of order dated 05.02.2018 and framed the following substantial questions of law: “(A) Whether on the facts and circumstances of the case the order passed by the enforcement authority and the audit authority u/s 39(1) of the KVAT Act, is biased against the petitioner? (B) Whether on facts and circumstances of the case the audit authority has given a sufficient opportunity to the petitioner to produce the books of accounts? (C) Whether on the facts and circumstances of the case the Tribunal was right in concluding that books of accounts seized from the other premises can be relied on in concluding the assessment order? (D) Whether on the facts and circumstances of the case when the selling dealer has already discharged the taxes, the tax can be levied on the same turnover in the hands of the petitioner? At the time of hearing the petitions, considering the contentions raised, the additional substantial question of law is framed as under. (E) Whether the appellate authority is justified in dismissing the appeal without analyzing additional documents produced by the appellant before it?” 7. We have heard the learned counsel, Sri. Atul K. Alur for the petitioner and the learned Government Advocate, Sri. Shivaprabhu Hiremath for the revenue. 8. The Learned counsel for the petitioner would raise the following contentions: (a) The authority/officer who seized the books of account himself passed the reassessment order, as such, the assessment order is vitiated on account of bias. (b) Assessment order dated 14.07.2011 and 15.07.2011 is virtually an ex-parte order, passed without affording sufficient opportunity of hearing to the petitioner. (c) Though the additional documents are produced before the appellate authority, the authority has not taken into consideration the additional documents. (d) The petitioner is ready to furnish all the necessary documents for inspection and reassessment. 9. The learned Advocate Mr. Shivaprabhu Hiremath, defending the impugned order would raise the following contentions: (a) The assessing officer has granted sufficient opportunity to the petitioner to defend the case and the same has not been availed by the petitioner. (b) Before the appellate authority the petitioner has produced the additional documents and also raised additional grounds and the appellate authority has considered the additional grounds as well as the additional documents and based on the materials available on record has rightly dismissed the appeal. (b) Before the appellate authority the petitioner has produced the additional documents and also raised additional grounds and the appellate authority has considered the additional grounds as well as the additional documents and based on the materials available on record has rightly dismissed the appeal. (c) Section 39(1) of the Act, confers power on the Commissioner to authorize a competent officer to pass an order of reassessment. Since the statute itself confers powers on the commissioner to appoint any prescribed officer to pass an order of reassessment, the authority who seized the materials on inspection is better suited to pass an order of reassessment, as the said officer will be having first-hand information relating to the suppression of tax. 10. We have considered the contentions raised at the bar and perused the judgments cited. 11. As far as contention relating to the bias raised by the petitioner is concerned it is to be noticed that Section 39(1) of the Act, confers power on the prescribed authority to pass an order of reassessment. Sub-Section 2 of Section 24 of the Act defines the term ‘prescribed authority. As per Sub-Section 2 of Section 24 of the Act, prescribed authority means an officer of the Commercial Taxes Department, authorized by the Government or the Commissioner to perform such functions as may be assigned to him. There is no dispute that the Commissioner has authorized the jurisdictional Assistant Commissioner of Commercial Taxes to carry out a reassessment order. The learned counsel for the petitioner with all vehemence urged before this Court that the officer who conducted inspection namely Assistant Commissioner of Commercial Taxes could not have passed the reassessment order under Section 39 (1) of the Act. The learned counsel elaborating his submission would urge before the Court that the order violates the principles of natural justice as the Assistant Commissioner who conducted inspection would be biased to defend his actions as he has proposed to impose a tax on reassessment. According to the learned counsel, it violates one of the fundamental principles of natural justice namely Nemo Judex in causa sua, that is to say, no one should be a judge in his cause. 12. Indeed, fundamental principles of natural justice mandate that before passing any order against any person, the person should be heard and the person who is passing the order should not be a judge in his own cause. 12. Indeed, fundamental principles of natural justice mandate that before passing any order against any person, the person should be heard and the person who is passing the order should not be a judge in his own cause. However, these principles are not without exception. The statute in certain circumstances can do away with the aforementioned principles or dilute the rigour of the principles of natural justice to the extent required. A reading of Section 39(1) read with sub-section 2 of the Act, would lead to the inevitable conclusion that under the scheme of the Act, there is no prohibition for an officer, who has caused inspection to conduct the proceedings for reassessment provided he is authorized under the Act. Section 61 of the Act deals with officers’ jurisdiction under the Act. Section 61 of the Act would read as under: 61. Jurisdiction of officers and change of incumbent of an office: (1) The Additional Commissioners, Joint Commissioners, Deputy Commissioners, Assistant Commissioners and Commercial Tax Officers shall perform their functions in respect of such areas or of such dealers or classes of dealers or such cases or classes of cases as the Commissioner may direct. (2) The word case in relation to any dealer specified in any order or direction issued thereunder means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year. (3) Whenever in respect of any proceeding under this Act, any prescribed authority ceases to exercise jurisdiction and is succeeded by another who may exercise that jurisdiction, the authority or officer so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor. (4) The person concerned may demand that before the proceeding under sub-section (3) is so continued, the previous proceeding or any part thereof be reopened or that before any order is passed against him, he be reheard. 13. In terms of Section 61(1) the Assistant Commissioner and other officers specified in the provision shall perform functions in respect of such area or such dealers or classes of dealers or clauses of cases as the Commissioner may direct. 13. In terms of Section 61(1) the Assistant Commissioner and other officers specified in the provision shall perform functions in respect of such area or such dealers or classes of dealers or clauses of cases as the Commissioner may direct. The word ‘case’ referred to in sub-section (1) refers to all proceedings under the Act in respect of any year which may be pending on the date of such order or direction or which may not be completed on or before such date and includes all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year. The provision referred above does not put any embargo on the Commissioner while referring the cases for reassessment to the prescribed officer. Thus, from the language employed in sub-section (1) and (2) of Section 61, it is manifestly apparent that the authorities specified are enjoined to carry out such work and to pass such orders as prescribed. S.39 and S.61 do not disable the officer who conducts inspection from passing the reassessment orders. Under the scheme of said Act, there is no bar for the authority who conducts inspection from passing the reassessment order under Section 39(1) of the Act. Thus, the contention that the order passed by the Assistant Commissioner of Commercial Taxes violates principles of natural justice has no merit. 14. The learned counsel for the petitioner would alternatively submit that assuming that the Assistant Commissioner of Commercial Taxes is not disabled to pass orders on reassessment, nevertheless, it is open for the petitioner to allege bias if there are materials to support the contention. There is no difficulty in accepting this contention. However, the question is whether there are any materials to prove the bias. To justify the contention of bias, the learned counsel would invite the attention of the Court to the fact that the Assistant Commissioner of Commercial Taxes has passed the order in haste without affording sufficient opportunity of hearing. It is urged before this Court that the petitioner sought time to produce the documents in support of their defence. However, it is urged that the time granted to produce the documents, was not sufficient. Based on this it is urged that the Assistant Commissioner of Commercial Taxes who caused inspection and proposed the tax was also interested in justifying the order and same suffers from bias. However, it is urged that the time granted to produce the documents, was not sufficient. Based on this it is urged that the Assistant Commissioner of Commercial Taxes who caused inspection and proposed the tax was also interested in justifying the order and same suffers from bias. This Court has gone through the records. It is noticed that the petitioner who appeared pursuant to show-cause notice in the reassessment proceeding sought an adjournment to produce certain documents and the same was granted. The adjournment was sought in terms of application dated 17.6.2011 which was received by the Assistant Commissioner of Commercial Taxes on 20.6.2011. Four weeks time was sought by the petitioner to produce the documents. This application was considered by the Assistant Commissioner of Commercial Taxes and by taking note of a series of adjournments granted from 28.2.2011 up to 21.6.2011, four weeks adjournment sought in terms of application dated 17.6.2011 is rejected. Nevertheless, one week time is granted to produce the documents. And same was communicated through speed post which is delivered to the petitioner on 1.7.2011. However, there was no response from the petitioner. Under the circumstances, the Assistant Commissioner of Commercial Taxes passed the reassessment order on 14.7.2011. Looking into the nature of the case and the time granted by the authority to the petitioner, to produce the documents which the petitioner wanted to produce, this Court is of the opinion that the alleged bias is not established. It is a settled position of law that bias if alleged must be proved by definite evidence. Mere general statements will not be sufficient to accept the plea of bias. There must be cogent evidence available on record to conclude as to whether in fact or a mala-fide move that resulted in miscarriage of justice, as held by the Hon’ble Apex Court, in the case of State of Punjab vs. V.K. Khanna and Others, (2001) 2 SCC 330 . In the matter of G.K. Naik vs. Goa University and Others, (2002) 2 SCC 712 the apex court has held that bias may be defined as partiality or preference. It is true that, any person or authority required to act in a judicial or quasi-judicial matter must act impartially. It is not every kind of bias which in law is taken to vitiate an act. It is true that, any person or authority required to act in a judicial or quasi-judicial matter must act impartially. It is not every kind of bias which in law is taken to vitiate an act. It must be a prejudice which is not founded on reason and actuated by self-interest whether pecuniary or personal. If a preference is rational and unaccompanied by considerations of persona interest, pecuniary or otherwise, it would not vitiate a decision. 15. The order passed by the Assistant Commissioner of Commercial Taxes neither can be termed as an order passed in haste on account of bias nor an ex-parte order denying the opportunity of hearing. 16. It is also to be noticed that the plea of bias is raised for the first time in this revision petition. The petitioner pursuant to the show-cause notice issued on 17.03.2011, has subjected himself to the jurisdiction of the Assistant Commissioner of Commercial Taxes and till the filing of revision petition before this Court has not raised the plea of bias. Having repeatedly appeared before the authority, the petitioner has sought several adjournments and sufficient indulgence is shown by the authority by granting adjournments. After having suffered the final order from the said authority, the petitioner has filed the first appeal. Said appeal is dismissed and it was questioned before the Tribunal. In these two statutory appeals, a plea of bias is not raised. Such a specious plea is raised for the first time in this revision petition. The plea of bias, if to be raised, has to be raised immediately. After participating in the proceeding, being fully aware of the background of facts that made the basis for a plea of bias, cannot be permitted to be raised after the conclusion of the proceeding and after the conclusion of two statutory appeals from the said order. On the other hand, the petitioner is estopped from raising the contention of bias. For the aforesaid reasons, this Court is of the opinion that the contention of bias is not available to the petitioner. Thus, the contention of bias is rejected. Thus substantial questions A, B, C and E are answered against the petitioner. And question D does not survive. 17. For the aforesaid reasons, this Court is of the opinion that the contention of bias is not available to the petitioner. Thus, the contention of bias is rejected. Thus substantial questions A, B, C and E are answered against the petitioner. And question D does not survive. 17. Coming to the contentions relating to non-consideration of additional documents produced before the appellate authority, the learned counsel for the petitioner would submit that since the provision under the Act enables the production of additional documents in support of their claim, the appellate authority was bound to consider the additional documents in a way, it is required to be considered by the assessing authority. Referring to sub-Section 6-A of Section 62 of the Act, it is urged that there is no scope for remand of the matter to consider the additional documents. Thus appellate authority is bound to consider the additional documents is the submission. 18. Sub-Section (6-A) (i) of Section 62 of the Act reads as under: “In disposing of an appeal before it, the appellate authority shall not remand the case to make a fresh assessment or fresh order, but shall proceed to dispose of the appeal on its merit, as it deems fit, if necessary by taking additional evidence.” 19. The expression “if necessary by taking additional evidence” found in sub-section (6-A) (i) of Section 62 of the Act makes it abundantly clear that the appellate authority in its discretion may allow the production of additional documents. 20. The expression “In disposing of an appeal before it, the appellate authority shall not remand’’ apart from having a negative connotation prohibiting remand, when read with the power to take additional evidence, unravels the inbuilt positive connotation to consider prayer for production the additional evidence. Thus, Section 62 (6-A) of the Act mandates the appellate authority to consider the prayer for production of additional evidence. 21. This Court has perused the order passed by the appellate authority. The appellate authority in the impugned order dated 16.11.2012 has referred to the additional grounds raised on 04.09.2012. However, there is no reference to the additional documents produced in the appeal except listing them while narrating the contentions of the appellant. The appellate authority in the said order has not passed any orders on the additional documents. Since S.62 (6-A) of the Act prohibits remand of the case. However, there is no reference to the additional documents produced in the appeal except listing them while narrating the contentions of the appellant. The appellate authority in the said order has not passed any orders on the additional documents. Since S.62 (6-A) of the Act prohibits remand of the case. Thus if additional documents are produced before the appellate authority in appeal under S.62 of the Act, the authority is bound to pass the orders on the prayer to consider additional documents under S.62 (6-A). Appellate authority either may allow the production or reject the production of documents. However, it must give reasons for either of the decision to allow or reject the prayer for the production of documents. In case the production is allowed, the implications of those documents should be discussed while analyzing the correctness of the reassessment order passed by the assessing authority as there is a bar to remand the matter. Whenever the provision of the law directs an adjudicatory process in a particular way, the same should be carried out in a way it is mandated in law. The expression “if necessary by taking additional evidence” found in S.62 (6) of the Act is to be construed as not only the appellate authority on his own may secure additional evidence but also the party may produce additional evidence. If additional evidence is produced at the instance of the party, the appellate authority under the Act is required to consider the prayer for the production of documents and pass orders on the said prayer either rejecting the same or allowing the same. In either case, it must be supported by reasons. If production is allowed said additional evidence is required to be considered while deciding the correctness of the order impugned. However, the first appellate authority has not carried out this mandatory exercise. 22. Learned Government advocate, Sri. Shivaprabhu Hiremath taking this Court through the order passed by the appellate authority would urge that there is enough consideration by the appellate authority on the additional documents produced by the present petitioner. However, the appellate authority’s order does not give the impression that the additional documents received due consideration by the appellate authority. Under these circumstances, this Court is of the opinion that the appellate authority erred in exercising the jurisdiction vested in it under Section 62 more particularly S.62 (6-A) of the Act 2003. 23. However, the appellate authority’s order does not give the impression that the additional documents received due consideration by the appellate authority. Under these circumstances, this Court is of the opinion that the appellate authority erred in exercising the jurisdiction vested in it under Section 62 more particularly S.62 (6-A) of the Act 2003. 23. Learned counsel for the petitioner inviting the attention of this Court to the orders passed by the appellate Tribunal would take us to the finding of the appellate Tribunal wherein the Tribunal has proceeded to observe that the appellant has failed to produce the seized exhibits before the Tribunal. It is to be noticed that the documents are produced before the appellate authority was before the Tribunal and the same is not considered by the Tribunal. Under these circumstances, this Court has no other option but to set aside the order of the first appellate authority as well as the Tribunal accordingly. The substantial questions of law framed above are partly answered in favour of the petitioner as indicated above. Hence, the following: ORDER: STRP Nos. 100024/2016, 100025/2016, 100026/2016 and 100027/2016 are allowed in part. The judgment dated 23.3.2016 passed by Karnataka Appellate Tribunal, Bengaluru (CAMP at Belagavi) in STA Nos. 306 to 351/2013 is set-aside. The order dated 16.11.2012 passed by the first appellate authority marked at Annexure-L in Proceeding No. JCCT/AP/BG/KVAT-312 to 357 of 2011-12/B-946 is set-aside. The matter is remitted back to the Joint Commissioner of Commercial Taxes (Appeals) Belagavi Division, Belagavi to consider the appeals afresh by taking an appropriate decision on additional documents produced along with the appeals, in accordance with law, within six months from the date of this order. No order as to costs.