IN THE HIGH COURT OF KARNATAKA, EANGADORE DATED THIS THE 29TH DAY OF SEPTEMBER; PRESENT THE HDNBLE MRS. JUSTICE(...NLANJ_U'LA'.C'H'E'[.I3LTR_ " " AND THE HONBLE MR. JUSTTQE SALES TAX O: 141 DE: 260:3} BETWEEN J % 3 AL Mr.IVar1 S. Muthu A S/0 Edwin }\.«'Iu.t_hu _ White Hoju..S'.e4 ~ ' Bejai Be3a?.PoTstAN NA 31 Mangaioit V ' - APPELLANT (By Sri.'G_. K. and Sri. P. E. Umesh, G10b*al_Law--In'e. Advocates] "'}S_ShéE'A. cE--£iiii%Vc§1-1f;ii's Commissioner '-of 'Comr1:i"erCD;ia1 Taxes Zane-VI', 'VéLDijya Terige Bhavan Gandhinagar AA I3anga1Dre--56O 009 RESPONDENT
” T. K. Vedamurthy, HCGP)
~\ ‘ ‘
\ (N.
\3
This Appeal is filed u/s 24(1) of the KST Act
against the Revision Order dated 20.10.2008 passed in
No.ZAC–1/MNG/SMR-22/O7–O8, T.No.694/08-09 on
the file of the Addl. Commissioner of Cornrnercia1___Taxes,
Zone–l, Bangalore, revising and setting aside the appeal
order and restoring the orders of assessnf1″en”t. “and
penalty of the check post authority and:V”‘accor_dingly
concluding the revision proceedings.
This Appeal coming on
Manjula Chellur J ., delivered the folltoiwingfil
On our direction, Government
Advocate placed file pertaining to
the assessinentof ‘foi*,__the_ y:.earl2001–O2, 2002»
O3 Ltd. (for short ‘M/s.
Vivel{7Pet-ro’ is perused. The questions of
lavv-1faised”are’as’ un der:
3-i} ..__Whether on the facts and
it ciifcumstances of the case the
A A j_ proceedings the
Appellant under Sections 28–AA of the
Karnataka Sales Tax Act, 1957 are void
initiated against
ab initio in view of the fact that the
goods had become part of local stock of
the consignor, who is also a registered
dealer in the State Act, before they
were transported Outside the State?’
Whether on the
“:1.
circumstances of the .casel,:p the
Respondent has committed l’an’:le’rr_o’r.. f
ignoring the _ suomission * itheg’ it
Appellant that thjegprovilsionsupofj
28–AA of__the Karrlatalia Sales..Ta:§3Act,
1957′ are-not a;.pplioabie.to _ the facts of
the present_ca_se’.l? A V’
facts and
1 the case the
is in rejecting the
A’ A Appellant that the
“procsedlirigggsf initiated agaisnt the
Applelllani: under Section 28–AA of the
A._Karnvatalka Sales Tax Act, 1957 is Void-
.ab_;initio in View of Explanation to the
A A j_ said Section according to which hirer of
the goods Vehicle is presumed to be its
owner and not the registered owner of
the Vehicle?
facts”
iv}
Whether on the facts and
Circumstances of the case the
Respondent is right in holding that for
the purpose of Explanation to
28~AA of the Karnataka Sales
1957, consignor of the
considered as the ‘:’~h’irer’f
Vehicle and the said *».i_i_fo~r(i,
applicable to only adddtraiasporter
obtains goods ondddiease
he does r1″o.t_gown”a ‘gojodstyehicIe”‘?”Vv
Whether VA ,_on” ugfaets and
cireurnstaneesdii ease the
x”Resp_oncient.___is_ justified in drawing a
‘- presufr1pt’ion»«t}’1at the goods in question
, have ‘v.bee_n”so1d inside the State for the
oniyreason that the transit pass has
“not been surrendered at the exit check
inspite of the fact that the
assessing 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 ‘?
2. The admitted facts in the prese.nt:ttt}teVVt
appellant is a transporter engaged<ptAi11–''ih{e_.' '
transportation of goods. h'1.the Vtbje'.
consignment belonging to tjgame M/ s
Vivek Petro — a registere_d Karnataka Sales
Tax Act, 1957. of a product
called contention of the
depart1'iivent'i3Ia:si;,; which was required to
be ta};en.:_ the person incharge of the
vehicle at«..theVe:_1tr3r checkpost after commencement of
Was'not'har1ded over at the exit check post.
presumption under Subsection 4 of
tfiueetiovn. is available to hold that the consignment
did not move out of the State but was sold Within the
V' 'T
6
3. in the present case, the transit pass washissued
by Kannur CheckPost, Kannur and the exit _.C’hyfCC»_1{pvost
was Attibele near Hosur. Admittedly,
reach the destination outside_.the.h ‘ 0.
i.e., Pondicherry. On the basis”.of::hoh–recei;it
pass {T13} at Attibele the time»
under the above sat-d._.proyi’sioij–, they niotxmly imposed
tax but also leviefi ‘V_4ai£3»y transported.
The Contention:-.of was apart
from the? representative of
the Mangalore, who was
inchargVe4′.of the Commencement of the
journey tiil hhitrreaehetds the destination and he was the
hoiaé’ 5w.ho’..AtookAVhot only the transit pass but was
the duty of handing over the same at exit
eh__eCk__v Therefore, the owner of the vehicle was not
nlhiablzeveto pay either the tax or the penalty imposed.
0′ *_vVf’IG”\}\7E3V€I’, the order dated 09.12.2003 by the Assessing
~’:Officer goes to show that the said defence was not
accepted and they proceeded to impose of
Rs.lO,800/– and another Rs.l0,800/~ as penalty;««.i»_lThis
was challenged before the appellate
Appeal No.213/03-04.
4. The appellate autho;rity7..A_ilri:lthe–
after taking into consideratiiorig that __the_ass’ess’rr1e:11t on’
the return submitted’ by of ‘tire-goods i.e.,
Vivek Petro, l\/iangaloxl-§;~’ there was no
evasion of on:j’assumption taxes
cannot the assessee being able
to ‘goods outside the State
and = State. According to the
appe.llate4l’a*dt1’1o’:”ityi order of assessment passed
S”ectionll”ll’2l(2] of the Act by the Assistant
lC1;omrr,iiss’1or1er~ of Commercial Taxes, Mangalore,
indicates there was no evasion of any taxes and all the
.. goods imported by M/s Vivek Petro were the subject
l”~._ll1’r1atter of assessment and all the consignments which
Vlwere to reach Pondicherry unit belonged to the very
owner M / s Vivek Petro but did in fact reach Pondicherry
which was evident by the Very endo1’sement_p”of<._the
Superintendent of Central Excise,
9.9.2003. It also refers to the r_elea_se of
naptha in favour of the consigncr and'fa1s'o _l'et.ters"
by the Deputy Commercia]..:T~ax (A)ff1'.cer__of:
The assessing authority conchisivon that all
the entries effected ._moVe out of the
State. Basecikon authority
allowed the appellant, setting
aside" post officer dated
authority took up the
matter by 'w_ay.o'f suo¥'inotto revision and issued a show
A c'ause"inotice to thlelassessee calling upon him to explain
1 lithe' c:ont'ents_}~of the notice. The assessee appeared
ljefore' ' revisional authority and submitted the
. explanation. However, the revisional authority found
lfilltliel order of the appellate authority as improper and
9
prejudicial to the interest of the State revenue for the
following reasons:
1. The appellant is the owner
Vehicle has obtained transj_tj”‘r.ul3’a:ss. V
No.0185798 dated””’14fC.7.Q2:”7._for-T.
transportation of l\l’apt1_p.’1a..–l’frorn’-.
Kannur, but failed to, l’surrender” thet
Transit pass at Exit” Cheek;~,_Post”‘at”l
Attibele on or bergrep 1s.o7{o’2. On
enquiry tl’i1jougl,”1″”(:orrels’pondenee “with
cro of Ambeie. C.j2pi1Vee’lrj réost the cro
Kannur ascertained’ that” ‘fti€_ ‘records of
Ch€Cl{_ postmldo; I:i0t’–.v_sl”1V()W ‘passage of
No. 92%-“5775 through
lCh’eok”3Postojp*:-afid_ transit pass was
“also’l«:.;:r1ot__’su’i-trendered and there by
‘ o€ir1tra’$fen._ed«.Sectiolnl 28AA(2] of KST Act
= 1.9522». n
2.l’.__’l’hove V’ FAA” wrongly allowed the
‘Appeal irz so far as levy of tax and
V penaltyf____&y.u/s 28AA[4] 8: 28AA(5]
concerned which is against the
a “Judgment of Hon. Supreme Court of
” Iridia in the case of civil Appeal No.3787
‘ Vfjof’ 2006 M/s KGOPALA KRISHNA
AND OTHERS vs STATE or
KARNATAKA with CA. Nos.3788–3844 of
2006 dated 25.07.2007. Therefore it is
hereby proposed to set aside the said
appeal order in so far as the provisions
of Section 28AA (4) <3: (5) are Concerned
and to remit the matter to the Check
Post Office for fresh consideration in
View of above mentioned Judgment.
3. The FAA has misread the provision of
Section 28–{6) of KST Act while allowing
the appeal as the said provisionsMifelatef.
to conclusion of provisional asses_snienjt._
order by the inspecting a11t,h0rif.y._wh’iCh
is independent of provisions'”of”‘-sleotions
28AA[4). The proceedings7.u,e”s. «
and 28AA (4) are inkiepe’rirlentt.sand tile.’
powers are confirmed wit’i1_”‘ the;
inspecting au’tho*:?ity land. _the
respectively. Oilligtlie basis “of-Z orders
passed u[s 28(6.)…by._ti1e ACCT,_H[In’s) II
Mangalore “the -,should not have
linked this’ ‘ipro’v,i_s’io}nal’ with the
quantification vQ1’vt_a:§€S.”~1’n&Ct€f “LI/S 28AA
(4) rnade {by Thercgfore, on this
c?ouijLt~’ the appealle-rder passed by
“FAA.”su:ffe1’sy«fro~m””illegality and liable to
Ultimatelytlthel’ the appellate authority were
revised and “s-et;asi.de. The orders of assessment and
‘ check post authority were restored.
A 28-AA of the Karnataka Sales Tax Act reads
as4llL1nd.er.3
“Transit of goods by road through the State
and issue of transit pass– (1)Where a vehicle
is carrying goods taxable under this Act-
(a) from any place outside the State
and bound for any piaoevdoutside
the State and passes
State: or
(b) and whirghi ”
into the’—_ state’ fi»o_m :’anyj”eeA«.9Ia¢e
outside the ‘country;
good’s’e’s»,:are being to any
V place’ ‘oats: the State; ” it
the driver or Apersionéinzgcharge of such
Vehicle shall -the information
and .ti?ar;’:sit oass”–ifiv–«d»up1icate Containing
such’ Sprescribed, from the
,offi-ceréfin-Eharrge9 of th”e-fi1’st check post or barrier
axaftei the State or after movement
hasoon1me’noed”‘—-fron1 the State as the case may
— ., be, or .fro1n5the officer empowered for the purposes
V..sub–‘se1:tion (3) of Section 28–A, upon
A V’ ” –vinte1’oep_tion of the goods vehicle after its entry into
“th”e_v_v.._S’tate or after movement has commenced as
t’h’e-ease may be.
[2)The driver or the person–in–charge of the
A vehicle shall deliver Within the stipulated time a
copy of the transit pass obtained under sub-
section{1) to the officer–in–charge at the last
eheckpost or barrier before his exit from the State.
(3) If for any reason, the goods carrie.dS’ei_n a
goods vehicle are, after entry into ,:[or
after Commencement of movement,”‘«.as.:the teased’
may be) not moved out of .the..Stat’eVi2{fitii’int’l1ejAtimeu ‘
stipulated in the transit’».:4pass,..itheoi>ifner:”Qf”iAii1e
goods Vehicle shVaii.4_’ to’73 bfficejrfl
empowered in this such
delay and other partEC:’o”l_ars’;»r._if ai:y~,» thereof and
such officer shajfl1.,aftefrV:.dije,’:i’ei1q1iiry extend the
time of exist _b3r.,..S:uita,b1y” the transit
.»pass_:. ‘
-.Proifidedé’ithat:”‘wl*iere the goods carried by a
\fehic].e Sare;~.AVafter_”their entry into the State, [or
after” eoiimiexieefnent of movement, as the case
;_rI.:1aj,rA be]V”V’tr’ar1sported outside the State by any
-.othe3f”‘vehie1e or conveyance, the onus of proving
goods have actually moved out of the
shall be on the owner of the vehicle who
” .o3}iginaI1y brought the goods into the State.
(4)If the driver or any other perso11–in–eharge of
the vehicle does not comply with subsection (2), it
shall be presumed that the goods carried thereby
have been sold within the State by the ‘owner of
the vehicle and shall, notwithstanding’
contained in subsection {5} of —
assessed to tax by the offircer
behalf in the prescribed rr1anner_:’
(5)If the owner Vehvicle’thavirrgpbtained’S
the transit pass as pro_yi’ded_yunde1″« subjvsection (1)
fails to deliVeri—.__the s_ar::_.e.:.as=.proVided under sub~
section[2}, he shall_ :liablve’d-l.Ito__Cpay by way of
penalty sumlinot e.Xceedi_ngvdouble the amount of
taxp-le:?iabl.e-‘;ori goo’ds:ftra_nsported.
tttt and the penalty levied
‘under _tirtsc..Secrtio’i1__ shall be recovered in the
pr”escribed_ mariner.
.._(7]Vlfxhere-~’the owner of the vehicle who is
to tax under subsection [4], is carrying
assessment, any goods taxable under
in a goods Vehicle from any place outside
” ._the State (or movement from within the State, as
the case may be) and bound for any other place
outside the State and is passing through the
State, the prescribed authority may demand from
such owner an amount equivalent to two times the
tax leviable on such goods under as
security.
(8)The prescribed authority”‘v*
satisfied that the goods ca,rried._
Vehicle in respect of which the security’ amdountp
under sub~section(7}-..,.:WaS chollectedg passed’
through the State, ‘refund”«.such§ security
amount to the o_\XrI1_er:,_ ” ‘
(9]Thf3 prescribed ‘ ivihiay by an
order “iivhoipe”–“or…..:any part of
sec’%irit_3r”Vamo.untfjto\}Vardszany amount of tax
this section by
“such owmer}, it ‘
B;xp1Vania:i¢ri’§ In case where a Vehicle
Eowriedi dby ____ _.«a person is hired for
ltransiportation of goods by some other
it hirer of the Vehicle shall for the
of this section, be deemed to be the
* voivmer of the vehicie}. ”
6. Presumption under sub–section [4] of sec. 28~
of the Act undisputedly is a rebuttable presumption.
Rebuttabie presumption would mean the person against
whom the impugned order came to be passed.t:”tf_%.;\’_?”‘-the
checkwpost officer must be abie to satisfy
that there was no evasion of .pa3rrner..=}tMoVf the’
intention of the legislature werehtto that
payment of tax on the questignm-:,_;;febuttab1e’
presumption was V:-ayaikabie “as’sAes’s§ee, then
whether those goods of tax
or not wouldsibe of the fact that
to be brought on record
by be open for him to
handed over at exit check
post or that.:vthe7′ goods: in question did move out of the
Therefore;”presumption of sale Within the State
I viwouidflnoit beavaiiabie to the revenue.
the present case, the contention of the
‘ ..appe11aht consistently was to the effect that along with
Ivthe; driver of the vehicle, the owner of the goods also
“travelled because the consignor and the consignee were
£6
one and the same. Therefore, the entire formalities at
the check post were looked after by the representative of
the goods. Hence, the driver who normally be
illiterate would not know the details. Apparently’
case, the goods had to movefrorn””‘Mar1galore __to’x
Pondicherry which is outside the
section 28~AA contemplatesthat the goocis lbyl’
the owner if moved __out of_.th:”e..State. dh’e–.hbasvi§to obtain
transit pass. i.e. pe1*Son in charge of
the vehicle.’ ‘The uiicler sub–sec. (4) as
alreajdvllllstalted it presumption and the
appe1Vla1fit’-re1i’es.’uip»oi*i~ order of the assessment of the
consignoru “or_:lthve.v”Cor1sig.nee of the goods.
Iltxis aisollllnot disputed by the revenue that in
sent by the check–post officer
pertai._nii1g*” to M /s. Vivek Petro, investigation was made
..wi_th regard to the accounts of M/s. Vivek Petro and
” thorough
levesn intelligence wing of the revenue also made a
investigation both at Mangalore and
Pondicherry, so far as the business of M / s. Vivelsf. Petro.
The material that was placed before the assessingofficer
at the time of final order of assessrn.Aei<1t
whatever goods that were imported, i.ej.l a p'rroIdulct.l_<;al'EedV ' 2 l
'naptha' was in fact sent to"i4cPoncihicl1er1yV
accounted at Pondicherry:.:Va:ll.'alt even
Central Excise Depa1jtn1er:lt"'«il;1-if-I5ondichlerry.~-'Flt is also
noted that whatever 'payable to the
Central «%aid and these are
the aiitltiority. When once the
assessing up the assessment
process a ::investigation into the missing of
/ or non$a'ccou.nting oi':TPs. at exit check post, so far as
?.Vi_ve.l.s; Petrowis concerned, it was satisfied that all
lt'hVaTt were imported which were meant to be
sent to ~P.o.%1chicherry did reach Pondichery and not even
a single incident where the revenue was able to
it glestablish that it was sold within the State. He was
* V–justified in saying that the assessee i.e. M/s. Vivek
Petro had accounted all the goods that were imported by
them and nothing escaped from the tax. In that View of
the matter, when once by way of rebuttal eVideieice§_g the
appellant relies upon the assessment order,pertai'ni_ng__to_
M/s. Vivek Petro, in the absence of
establising that the consignrIient::"in: 'not
move outside the State,":revisionall not"
justified in setting aside _thlea_o'rders"ofthel appellate
authority. As a Inat"icr–oi'– A.re'v_isional authority
did not evenérefer tfjvvlwhfil «Vrehuttable evidence
relieclllupoirfby vehicle and whether the
orderlof as'sle_:sslin'g::'a1ithority had reached finality or
not; ..
the”‘ot’her hand, the learned Government
enough to bring to our notice that the
‘Sn
order Zafsslessment pertaining to M / s. Vivek Petro was
‘A the llsulbject matter of suo Inoto revision under section
,,,¢l’2.l;5but the revisional authority confirmed the said order
xlof assessment of the assessing officer. When once the
E9
order of assessment of M/s. Vivek Petro has reached
finality, it would not be open to the Department to say
that the presumption under sub–sec. (4) of is
still available and the same is not rebutte_ri_;é..”Iri_’
the above discussion and reasoning,'”Wc.:’_arc» of thefip
opinion, the appeal deserves toibe
Accordingly, the appeal- is allofifed asifie i’
order of the revisional autho:ri.tyad3atecl”120,lV{l§.20O8. If
any amount has the appellant
either towaryjs taxfwor’ 7tl;e” same shall be
the date of receipt of
a of’-the
sag-
‘ . . . . . .. ”
Sé/’—
JUDGE