IN THE HIGH COURT OF KARNATAKA, BANGALORE
DATED THIS THE 29% DAY OF SEP1'EMBER;.2_'Q_1'O_
PRESENT
THE HONBLE MRS. JUSTICE1»A1\/LAl\iJIjl.lA All
AND
THE HONBLE MR. JUSTICE LU
SALES TAX.APPEAL:..l\;Ef)lI2i.1 OR '20o97
BEI WEEN
Smt. Geetha,E*':ha-t S _,
D/o Sri. KeS_ha'§92£ __Bl1at _ V V
Suresh Bha:eeEo':np_ouRr;: . '
Dongerakeri '!
... APPELLANT
(By Sfi-.. K. Sri. P. E. Umesh.
M/ S. Global LaW_Ii1c.»~iA'(fv0cateS)
AND
_ » Fhe A_ddiu7Qf1a_l Commissioner
' C.§.Co:1j:=ne'i"cial_i.TaXes
'
'Z0r1ie--IV, V Terige Bhavan
Ga.Ddhinag.ar
Bar1gal0re~560 009 RESPONDENT
T. K. Vedamurthy, HCGP)
This Appeal is filed “L1/S 24(1) of the KST Act
Against the Revision Order dated 21.10.2008 passed in
K o.
4
No.ZACw1/MNG/SMR~12/07~wO8. T.No.692/08-09 on
the file of the Acldl. Commissioner of Commercial Taxes,
Zone–I, Bangalore, revising and setting aside the appeal
order and restoring the orders of assessment and
penal.ty of the Check post authority and accordingly
concluding the revision proceedings.
This Appeal coming on for Admission”
Manjula Chellur J., delivered the following: ll ” ‘
On our direction, the’.__ le_arried*,_ Go’vei’nrnen_t.
Advocate placed before us”the__origin.al file’i3lAe1Ajtai.ni_ng
the assessment of sales tax 2002-
03 of M/ s. Vivek Pet’rol.Cc,.’ short ‘M/ s.
VivekvvPetro?}:’:and isjierused. The questions of
law raised are -as ‘ ~ ,
il”V’l-fllletirierl don
V .1’_) the facts and
‘ ‘__circ1l,1″mst..ances of the case the
V go’1″-‘:)__c_:ee(lings initiated against the
* under Sections 28–AA of the
‘ ftiarnataka Sales Tax Act, 1957 are void
ab initio in view of the fact that the
goods had become part of local stock of
the consignor. who is also a registered
iii)
DJ
dealer under the said Act, before they
were transported outside the State’?
Whether on the facts
circumstances of the
Respondent has committed an
ignoring the subrnission_”m§’f:’_’:p.fihietix
Appeiiant that the pr.ovisiotns4tof_1
28~AA of the Kar_nataI(a”Sa1escVTa;: it
1957′ are not app1ica.b1e tc._the
the present case-‘?’* –. it
Whether t ” and
ciren1nstE;nces:’V..: .Qf~~.i”_*..th’e case the
in rejecting the
” 4’ the Appellant that the
procceadi.ngs””..»s. ‘initiated against the
aApp_e11:ar1t under Section 28–AA of the
._Karnata’ka Sales T ax Act, 1957 is void»
:,”a:b:.i:ntio in View of Explanation to the
‘V T Section according to which hirer of
t * “the goods Vehicle is presumed to be its
owner and not the registered owner of
the Vehicle ‘?
andiirit
Whether on the facts and
circumstances of the case
1″
Respondent is right in hoiding
the purpose of Expianation to’VS:ectiron
28–AA of the Karnat-aka..SaIes ;’»\o’t,’_f,
1957, Consignor of the goods
considered as the “hir’e_r”” of _the’ ‘goods;
vehicle and thesaid word, is
applicable _to oriiy ‘t’ra.nsport’er Kivho
obtains goods. in case
he does not a. goods ‘?
v and
“Voirc’Lt;ri1stat1ees” the case the
_1RespoVnde–nt”~.i_s __}’1_1stified in drawing a
i « that the goods in question
have been inside the State for the
only. reason that the transit pass has
not been surrendered at the exit check
it inspite of the fact that the
iioiiiassessing authority of the consignor
has in his assessment order passed
under the provision of the Karnataka
Sales Tax Act, 1957 given a finding
that the Very same goods as that
involved in the present case have been
transported out of the State
Karnataka ‘P
2. T he admitted facts in-the—present.’ the it
appellant is a transporter engaged in
transportation of goods. In the
consignment belonging tofla By’ name M/s
Vivek Petro — a registered ;_:fid§r~.,A}garnataka Sales
Tax Act, of a product
called ‘The contention of the
which was required to
be taltenfov the the person ineharge of the
vehicles. at the Aohelokpost of entry after commencement of
the not handed over at exit Check post.
.’_l””£-i__L:refore.,. ‘éi””‘..presumptio11 Lmder Subsection 4 of
Sebtion: is available to hold that the consignment
d;’d_not move out of the State but was sold within the
state.
6
3. In the present case, the transit. pass was_._._issued
by Kannur CheckPost, Kannur and the exit
was Attibele near Hosur. Admittedly, the
reach the destination outside.:the..Sta:te ‘
i.e., Pondicherry. On the basis°’of of
pass [TP] at Attibele exit-.._within.V.the’ time’
under the above said…vprovi’s’ion;j4 notoniy imposed
tax but also levied transported.
The contenitionjr-of was apart
from the representative of
the Mangalore, who was
inchargeff the commencement of the
journey reaeh”edf”the destination and he was the
one.’€’w11QtQok fnfotf only the transit pass but was
the duty of handing over the same at
e)dt__Chee1{I’pfost. Therefore, the owner of the transit
Vehicfevwvas not liable to pay either the tax or the
‘ ‘.pe’naity imposed. However. the order dated 09.12.2003
the Assessing Officer goes to show that the said
defence was not accepted and they proceeded to impose
tax of Rs. lO,800/- and another Rs.l0,800/«w
This was challenged before the
KST Appeal No.229/OSWO4.
4. The appellate au.thority__’i’n the”‘v’pre4sent;
after taking into consideration assessment on
the return submitterlfhy the “goods i.e..
Vivek Petro, there was no
evasion Qpf fif’hfere:tct’fe’,”x’onmliassuniptions taxes
cannot”vhe.iieiz;i:ecl” assessee was able to
‘ample evidence to prove the
movenien_to_t ” the State and not to sell
the According to him, the order of
» ;assVes,smen:t”*passed under Section 12(2) of the Act by the
‘As’sista11tj— vf=Comm1ssioner of Commercial Taxes,
Maiigiaiorve, indicates there was no evasion of any taxes
and all the goods imported by M / s Vivek Petro were the
subject matter of assessment and all the consignments
;
which were to reach Pondieherry unit belorzged_.__t0 the
Very owner M/s Vivek Petro but did in fa’e-t”‘–«re’aeh
Pondicherry which was evident by the
of the Superintendent of Cenitral–.Excj’isevi’
dated 9.9.2003. He also refers i~e1ieape’e.er.yofV
naptha in favour of the and issued’
by the Deputy Co1nine1*ciai””‘1″;a§{:’ fl”‘fi”ieerA’of”Pondicherry.
The assessing authority’had’i”e:er1i§’i:.{o;.afconclusiorz that
all the entries’:ei’fii”eete_d’ did move out of
the State? the appellate authority
aliowiediiitheeiVieypipiégai the appellant, setting
aside:vv”.t,1E1e check post officer dated
Tiled.”-re{r.isiona1 authority took up the
‘ pm”attei5″by”i’way ofmsuo-motto revision and issued a show
ea11sie._h=otiCVer- the assessee calling upon him to explain
co_nter3;ts of the notice. The assessee appeared
beforze’=—the revisional authority and submitted the
‘=e’X’peanati0n. However, the revisional authority found
order of the appellate authority as improper and
‘\\{\ I .«
9
prejudicial to the interest of the State reVenue_for the
following reasons:
I. The appellant is the owner
vehicle has obtained trarisit.::’~..l3ass’-A
No.0185584 dated’ ‘os,ci..7.o2.CV]e . _for*7*
transportation of N’aptlfi’a..f1’om”‘
Kannur, but failed to; lsurrende1’2’ the} 3
Transit pass at _ Exit ” Cheeks-.
Attibele on or befoise 08.0T?A.0:2. On
enquiry th_rough~”*Corresp_onder1ce wlvith
CTO of Att”1″‘.oele_ C.hveck_’».VPost the CTO
Kannur ascertain-ed;th_at’–tl1e’records of
Check pog;.t– r1-o’t’»r._shovsf””passage of
goodsfivehiele N’o.”‘K.A–;.’14.e.8t’)99 through
_.Chec1k_..’Post:__ai1.d the,’ transit pass was
lalsfolfjnot ‘ .si§’1~.r’reridere’;<il and there by
~~~~ .Aeo;1t1*at*g%e.ned' 'Sect1or;'–28AA[2) of KST Act
2. ‘,_The “FAA ” .hlas wrongly allowed the
Appealvl’ ir1′- so far as levy of tax and
penalty _____ “Au/s 28AA[4] & 28AA[5)
. ‘concerned which is against the
..V”«.t’J_1i’dgment of Hon. Supreme Court of
injdia in the case of civil Appeal No.3787
2006 M/s KGOPALA KRISHNA
AND OTHERS Vs STATE OF
KARNATAKA with CA Nos.3788–384~-4» of
2006 dated 25.07.2007. Therefore it is
now proposed to set aside the appeal
order in so for as the provisions of
Section 28AA(4] & (5) are concerned
and to remit the matter of CPO for fresh
10
consideration in the light of the above
judgment. ‘
3. The FAA has misread the provision’ , ”
Section 28(6) of KST Act While allowing”
the appeal as the said provisions–..re1ate4_
to conclusion of provjisiorial asses’sinerlt__:VA.
order by the inspecting au.tho’rity “w_h’ieh_
is independent of priovisieons of _Vsecvtion\:..,,,_.
28AA[4). The eaproceeldings ufsl ‘ 28(6)
and 28AA [4] areV_vlin_depe’11den.t ajildivlthell
powers are confirmed ‘-with ‘the
inspecting, autho’rity’- and the {SP0
respectivelyffi Cin ,th’e’.._ba”siys of orders
passed u/s ‘2a8′{6}.,by’ the ACCT {Ins} ll
Mangalore should ‘not have
linked»–._this proy1sio’n’al_V order with the
q1?_1an};i»iiea.t1oriof taxes’ rnade u/ s 28AA
[‘4)ly.rri’ad’cf by:p.l.___C”}°Q”;p_ Therefore, on this
eQun:t_also,’–.the order passed by
‘ sij;fi”‘ers..frorIi “illegality and liable to
__ beqt1a_slied«f’=v..__ – l
Ultimately’ 4 the appellate authority were
revi§sedi”and ls’e-t–a_side. The orders of assessment and
V ple-naltyoi’ cheek post authority were restored.
ll ‘ 5, Seetion 28–AA of the Karnataka Sales Tax Act reads
‘ , as under::
“Transit of goods by road through the State and
issue of transit pass– {1]V\/’here a vehicle is
carrying goods taxable under this Act-
(a) from any place outside the State
and bound for any place outside the
State and passes through thiys”‘S1,ate;
01’
(b) and which goods ir::._t_o
the State from any_plae’e. they
country and “such, goods are’ “being;
carried iiplacer
stare,-._ V _ V
the driver or any other:’tpers0fi–~i1’i5(;h’arg§e of such
vehicle shall fumish ‘t:’rie=rieees.sary iiriforrnéation and
obtain a ti’ansit.”;oass’– containing such
particulalfs as rnAa.yy,:.be pvre-s_cr1tbved’,”VV–.tjrom the offieer~in–
chargegoi’ first. ‘orbbyarrier after his entry
i1’l'[.O::”[:1″i.t”V’,<«-__Sff'cZ'.v"t~'t?';_V or<a£t_eI'~_n1oVe1fne_nt has Commenced from
7the_ _.9té:e;_éstth<:_'egse f may be, or from the officer
emyp'oWe1"ed"A:.tGrd"t.heepurposes of subsection (3) of
Sect'ion'»2V8–'A, 71,1bpo–n interception of the goods vehicle
ua'f1;er its"e.1jitry&j11t.o the State or after movement has
"Commenced as the case may be.
A”(‘i]’I§he»AV.i’Vvdi’iver or the person-in-charge of the vehicle
s1’1~.a’_1i14j’..–die1iver within the stipulated time a copy of the
~ transit pass obtained under sub-seetiontl) to the
oifficer-in-charge at the last eheekpost. or barrier before
his exit from the State.
{3)lf for any reason, the goods carried in goods
Vehicle are, after entry into the State4…[or_tta_fter
commencement of movement, as the case.~n1a’y.
moved out of the State within the tiniohstipulated
the transit pass, the owne1’_ofthe goods’
furnish to the officer enipowered
reason for such delay and other_ particulars, if any;’g
thereof and such officerslaall after__ due en(V51’~1v1Viry’elxte11dl’
the time oi” exist by arnending transit
pass:
Provided that. whereithe a vehicle are,
after Eth:-*.«i_r:’_* en__ti’y l*:tl1e___Hl:lState, [or after
comn1’enc_ernei*;_t.V as the case may be}
transp.or:t~eEl_; by any other vehicle or
,t¥oni}éya::;:¢3 of H’ proving that the goods have
the State shall be on the owner
of theyehicie voriginally brought the goods into the
;*St;ate. V
{/:i}I:f the di;iye’r”‘or any other pei*son–in-charge of the
uevhiclregllldoes not comply with sub–section [2], it shall
that the goods carried thereby have been
A sold the State by the owner of the vehicle and
shall, notwithstanding anything contained in sub-
” section (5) of section 5, be assessed to tax by the
..*officer empowered in this behalf in the prescribed
rnann CI’ .
(5}lf the owner of the Vehicle [having obtained the
transit pass as provided under sub–section (1) 7f.ai’}s to
deliver the same as provided under sub–se(:_t4iolr:1′[‘2}’V;
shall be liable to pay by way of penalty” ”
exceedin double the amount of ta):”i’evf§g1ble’=.oi1 the”
9 _ ._ . , ._
goods transported.
(6}The amount of tax ‘the perialty leyied’:._unuer this” V S’
Section shall be recoveredéuini the p.reseribed rrtanner.
[7}Where the owv1i’er” of is assessed to
tax under sub»sAection after such
assessn:1.,ventV, l’_’any:;A_go_od.s taA_$EalbieV_._uVjider this Act in a
goods=’atehiclteflufrontanyoutside the State (or
movenaentlifrgoin State, as the case may be]
place outside the State and is
passing’ the prescribed authority
rnay’~idema1V1″d_ from_s;uch owner an amount equivalent
; ‘togtwo times’ the leviable on such goods under this
Act as gsecurityj” ‘
‘ ” prescribed authority after being satisfied
thatlthetgoods Carried in the goods Vehicle in respect of
which the security amount under sub–section(7) was
collected, has passed through the State, shall refund
fffsuch security amount to the owner.
[9)The prescribed authority may by an
order adjust the whole or any part of security
amount towards any amount of tax or penalty
payable under this section by such owner}.
Explanation– in case where a vehicle
owned by a person is hired for t’ransportatiovn
goods by some other person, the h1rer:v~’o£l_th:e”‘VS
vehicle shall for the purposes of t.his
deemed to be the owner of th.e.».V.ehicle].l ” V’
6. Presumption under sub–:”secti_.’or’1llV4 of
the Act undisputedly is a iy’lf’l5\UjFtal i31’6su’T.1E3tcloi:1..rl””Rebutta’lall
presumption could mean th.el:’person alg’ainstVAfivhom the
impugned._o1=derlcarne=to’–.be«pa-ssed by the check–post officer
must1.be’– authorities that there was no
evasion oftpayment’.:oi”,in’come tax. If the intention of the
legislature wer’e–..to be that irrespective of payment of tax on
.’ ‘the goods –in’=questio11, rebuttal presumption was available to
whether those goods were subjected to
payriient or not would be irrelevant. In view of the fact
i.tlhat rebuttal evidence was allowed to be brought on record
the party in question, it would be open for him to
= .—-establish that in fact TP was handed over at exit check post
or that the goods in question did move out of the State.
Therefore, presumption of sale within the State was not
available to the revenue.
‘7. In the present case, the contention ofothe’
consistently was to the effect that a1o..n__;§ wit:1″th’e-E:1;;<:£%erpt' the V'
vehicie, the owner of the goods a–lsof_traveiie_c1'-.}§ecau'g.3
consignor and the consignee-._were'~ one a':r_1d{'i;1–1eH san1e.–_"
Therefore, the entire V'_forn1aiitieis..:_at.__the'check Jfaost were
looked after by the o'f.thhe'goods. Hence, the
driver normally."/ho VtZ0"u}tj ibe not know the
details. had to move from
Manga1ore'to is outside the State. Sub-
sec. {Bi contempiates that the goods
irnpiorted by theetowner if moved out of the State, he has to
'ohtainsd t.ra.n's'it:V pass, i.e. the driver or the person in charge of
. the pvehicte. presumption t1I1d€1" subwsec. (4) as aiready
sta–t'edv–._'.is rebuttal presumption and the appellant relies
it upon the order of the assessment of the consignor or the
dkjconsignee of the goods. It is also not disputed by the
.-revenue that on account of the notice sent by the check–post
I6
officer pertaining to l.\/I/ s. Vivek Petro, investigation was
made \m'th regard to the accounts of M/s. Vivek Petro and
even intelligence wing of the revenue also made a thoro.ugh
investigation both at lviangalore and Pondi.cherv;y;.fgglufaijiass
the business of M/ s. Vivek l~"'etro. The rnate'1<ial:.that
placed before the assessing office:-? at
of assessment made it clearthat whatever' goocls"that*.we1'e=.%
imported, i.e. a product called»ina.ptha'"wase factflsent to
Pondhicherry and everything"w'aseacclounted atljondicherry.
Even certified by Central at Pondicherry.
lt is also notedthat whatexter payable t.o the
Central Excilsje Defiai'1<rri'ent wasalso paid and these are the
findings. of authority. When once the
assessing authority took up the assessment process as
a'-V:;:$'artA~-soi'rvt.the inve's't'igation into the missing of / or non-
at exit check post. so far as M/ s. Vivek
'1»~*«.=;fi¥o is_ coneeriied, was satisfied that all the goods that were
importecl which were meant to be sent to Ponchicherry did
reach and there was not even a single incident where the
tevertue was able to establish that it was sold within the
State, was justified in saying that the assessee i.e. M/s.
Vivek Petro had accounted for all the goods t.hVa't44_:v.{e1'e
imported by them and nothing escaped from _
View of the matter, when once by way of 'C'V«:riC§¢'er1C:é,"~~
the appellant. relies upon the assessmentivolrdyetr._§jertaini_ng;;to
M/ s. Vivek Petro, in the' absence oi" the 'uD:e;.3arit;.me1itl°.
establising that the Consignmlentwinyyquestioindldidlynot move
outside the State, "was not 'justified in
setting aside the OI'Cl€At'V_SV_v:'C'-All As a
matter of not even discuss
what was reiiied upon by the owner of
the of the assessing authority
had lfin
V. _8. _:the..'– other": hand, the learned Government
Advocate 1SA.lTEllI' to bring to our notice that the Order
'"oi":_asisessni'e:it 'p.ert.aining to M / s. Vivek Petro was the subject
matter _olf"lsu:'o moto revision under section 21, but the
revisiorial authority confirmed the said order of assessment
of the assessing oliicer. When once the order of assessment
or M/s. Vivek Petro has reached finality, it would not be
open to the Department: to say that the presumpt.i0_n__ under
sub~sec. {4} of Sec. 28–AA is still available and is
not rebutied. In View of the above diseussionarid 1:éas'oin,i'n:g,'*. '
we are of the opinion, the appeal (_i_ee.ser_\'/es ;.:$"b'e
Accordingly, the appeal is valleiwed
order of the revisional authO1'=iei;jk"'i.da1:ec1"2i'."}fii;2OQ8.W If any
amount has been Vrergpveredm the aipjielivani either
towards tax or penalty; ihe $.ha3.A1':he_j.refur1ded Within
three I1101'l*L'l'1Sufi'{é.I11-_th€::'da#fi":Gi ;.~.e':2~c§'ip:,g'r eopy of the order.
….
Sd/-
JUDGE