IN THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THE 29'?" DAY OF SEPTEMBER} PRESENT THE HON'BLE MRS. JUSTICEAAMEANJEJLAS'CfHELI4§_UR'.0 A AND THE HONBLE MR. JUSTICE SALES TAX APPEAI§;j\_IO';.22 c5E.2Q?Q_g3f BEE WEEN Smt. GeethaBhg_1t . . D/0 Sri. Kes'hziTs?ia'Bhiat =i Suresh Eihat._CL1.rz1pO\L111__cl;' Dongeraksri-::__ _ p_ Mar1g~:1--1ar€V"'~i. APPELLANT [By S1x"i;uG'. Sri. P. E. Umesh. M/s. Gldbéal. Law._Ir'i(_:.' Advocates) ANLi'_) RV ' ,.'VI'h-B. Agiditiofial. Commissioner '-- of Cpomine-rC.iaE" Taxes Zoiiewi, Vafnijya Terige Bhavan G'and}.1ifiagar Banga1'Qre~560 009 RESPONDENT
A i.{Ey~_s1-1. T. K. Vedamurthy, HCGP)
This Appeal. is filed 1,1/s 24(1) of the KST Act
A 0′ “against the Revision Order datead 21.10.2008 passed in
Ex)
l\§o.ZAC~1/MNG/SiVIR»18/07-08, ‘I’.No.893/08-09 on
the file of the Addl. Commissioner of Comrr1eroial.””T-axes,
Zone–I, Bangalore, revising and setting aside the_f-appeal
order and restoring the orders of EElSS€S_S.I”_I1’n’31f1’te-“V:*F1VV1″E.§i
penalty of the check post authority
concluding the revision proceedings.
This Appeal coming on
Manjula Chellur J., delivered th”eVfo:11owing-:0 .. _ _ ”
JuncmEwT_e
On our dirfifl/9..ibn~e»Ai”‘tl;3’¢’ lwwatneld'”–Government
Advocate placed file pertaining to
the assessrI§1ent;r;).f 200102, 2002-
03 of M Ltd. (for short ‘M/s.
Viveli The questions of
law raised. H
_ 1) “don the facts and
it 0′ circtiinstlances of the ease the
.AV–proceedings initiated against the
g Vli=’\,p«pellant under Sections 28~«AA of the
Karnataka Sales Tax Act, 1957 are void
0 ab initio in view of the fact that the
goods had become part of local stock of
the consignor, who is also a registered
\~»/’\«_
vx
proceedings
Appellant under Section 28~AA of the
iii} A
dealer under the said Act, before they
were transported outside the State and
the said Section is applicable only in
case of transportation of
goods by using Karnataka as -I~
state’?
Whether on the
circumstances; _ of lathe casi:.:” the
Respondent has..l.1c.j’0rnmitted a,n*_;er1?or”in
ignoring the _.«~.si’Jb_rni_.ssion”‘–..of_7 the
Appellant tliat they ‘ of Section
28A–V_AA of gthié sKz§rnt;;takaisra,ies Tax Act,
~are__ the facts of
A A’ ‘i;i1:e’sVpi?esent.case’ ‘E’
* = the facts and
it cirlciirnsvtances of the case the
Respondent is right in rejecting the
;:contention of the Appellant that the
initiated against the
Karnataka Sales Tax Act, 1957 is Void-
ab–intio in View of Explanation to the
said Section according to which hirer of
the goods vehicle is presumed to be its
I
owner and not the registered owner of
the vehicle ‘?
iv] Whether on the facts and
circumstances of the case
Respondent is right in ho1ding’_thHa’t ;_.
the purpose of Explanationto
28uAA of the Karna=taka:A’Sa1e_s
1957, consignor of the
considered asVt.h”e-…V”hire’r’f of the ‘goods:
vehicle and the said-.oWord,«.ffhirer” is
app1icabie””‘to only. trétnsporter who
obtains goods xfehto1e~.._o’rijhire in case
does not V»C)’\”7y’.I1 agtoods vehicle ‘?
v]_ :1 _’ the facts and
* of the Case the
hReSp’Qr1dder1t”nVis justified in drawing a
1:iresI.,1_rnpvtion that the goods in question
rhave been sold inside the State for the
hi reason that the transit pass has
not been surrendered at the exit check
post 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
involved in the present case
transported out of the
Karnataka’? it it
2. The admitted facts in
appellant is a transporter’-._ven.gaged._in -the of’
transportation of goods. ‘nionth of’Ju1yV:2002, the
consignment belonging’ by name M / s
Vivek Petro: ‘:’egi$§ter€ed.’ Karnataka Sales
Tax Aetfi eonsitgnment of a product
called ‘naptv}.1’.va7.pV_t}omjfivinangalore. The contention of the
departinent pass which was required to
be ; taken ., driver or the person incharge of the
‘ the checkpost of entry after commencement of
the ti’a.’1;1sit..a;’\v.as not handed over at exit Check post.
a presumption under Subsection 4 of
” Seetiotn 28«AA is available to hold that the consignment
not move out of the State but was sold within the
”
State.
(3
3. In the present case, the transit pass was___issued
by Kannur CheckPost, Kannur and the exit .ch.eel_{post
was Attibele near Hosur. Admittedly, the
reach the destination outsidethe.Statehelof-lI.iiaVi*n_atal«:aVV’
i.e., Pondicherry. On the basis’of of
pass (T19) at Attibele ‘the time»
under the above sai–d._.proviision’,; ‘they not”onl’y imposed
tax but also levied transported.
The contentiofnyy:’ of aisslessee was apart
from the’ representative of
the Mangalore, who was
incharge the commencement of the
journey till ‘reaclh-edlthe destination and he was the
p”m§’ who’t’..ptooklv”not only the transit pass but was
the duty of handing over the same at
exit post. Therefore, the owner of the transit
vehicle; was not liable to pay either the tax or the
0′ ”~_p’enalty imposed. However, the order dated 10.12.2003
” -“by the Assessing Officer goes to show that the said
defence was not accepted and they proceeded to impose
tax of Rs.1_0,800/– and another Rs.i0,800/was penalty.
‘1’ his was challenged before the appellate -in
KST Appeal No.209/03-04.
4. The appellate authoriityjgin;
after taking into consideration that the cassessrnent’ton~ag
the return submitted by the ‘goods i.e.,
Vivek Petro, Mangaiore, ooncl there was no
evasion of any Therefore,’&onl”‘ass’umptions taxes
cannot b€§~.,,1e:v’ie_d..vJhen thevlllalsselssee was able to
establish’ that’:’t.her>e”i»was’ample evidence to prove the
movement of goods” .o1;1tside the State and not to sell
theStat_e,”, According to him, the order of
‘ Viwlassessinentvpassed under Section 12(2) of the Act by the
“Assistant: Commissioner of Commercial Taxes,
Mangalore, indicates there was no evasion of any taxes
” all the goods imported by M / s Vivek Petro were the
subject matter of assessment and all the consignments
‘ Hf-‘xi:
which were to reach Pondicherry unit belonged to the
very owner M/s Vivek Petro but did in fa’ct’}.re«aCh
Pondicherry which was evident by the p
of the Superintendent of Centra1._4Exoi.seV’,”
dated 9.9.2003. He also refers to
naptha in favour of the consignor and also’-.le’t.tei”s~ issued’ V
by the Deputy Comrnerciai.—-‘llaiz. of-Pondicheriy.
The assessing authority.’headf’:’e:t3n¥¢l.l:ioV:.aponclusion that
all the entries_:effected ‘did move out of
the State? ythleflappeilate authority
the appellant, setting
asidelfclie lcheck post officer dated
10. VThea”v_revilsional authority took up the
rn-atter-ebyvi-vvay of”suo~n1otto revision and issued a show
eause::n.otiee.. the assessee calling upon him to explain
)ClA’lfif’vCC’).I~’i~1.’:.CuT’El.’té of the notice. The assessee appeared
before-plthe revisionai authority and submitted the
Q’ explanation. However, the revisionai authority found
.._.the order of the appellate authority as improper and
9
prejudicial to the interest of the State revenue for the
foiiowing reasons:
1. The appellant is the owner of
Vehicle has obtained trans.i,tf._ V
No.0l85594 dated””0E5p.07.0.2_z”7._for}
transportation of Napt:’_Vna.–5 from» l&’jTC:I}”..,.A
Kannur. but failed to “–surren.der’ the;
Transit pass at Exit” Che_ck-V_P’ost’~at’:
Attibele on or ‘o4efore_ 080,070.02. On
enquiry through””correspondence Vwith
cro of Attibele €;i1Ve§;’Rj~ Fest the CTO
Kannur ascertained? that t.l_1e frecords of
Cheek. pQ’st”V’do not-.Vsho&§.rpassage of
‘_’JQl:’1’iCl§3V. No. 4i'<A.r1–9-9 16 lhrough
lChee'i{'3'–;Poste:p–:..grid transit pass was
"alls'o'«:.;:,nQL__"surr'C11:§1eréd and there by
A i'eontra;\}ened.¢'_Section 28AA{2) of KST Act
— 1957;a’a “= A
The ” smart v..§I’«”.J”udgment of Hon. Supreme Court of
0′ India in the case of civil Appeal N03787
7ff_of 2006 M/s K.GOPALA KRISHNA
W.~’SHE’l’I’Y AND OTHERS vs STATE OF’
KARNATAKA with CA Nos.3788~3844 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
I0
consideration in the light of the above
judgment.
3. The FAA has misread the prowsione-“V;~ V.
of Section 28-[6] of KST Act’while”
allowing the appeal as _t_h_”e~-._ ‘said
provisions relate .to~._con-;:1usion;
provisional assessment oifder ‘1 by_ “the
inspecting authority ._ T ” ‘ whicph –. y _ , , 3 –
independent of’ .provisi_ons of»”‘Lsection”;
28AA[-4]. The proceedings’ .;,1
and 28AA (4) are d’independentd’andg the
powers are _.c’onfinn’ed with the
inspecting— authority” ~-.. _’ari’d _ the CPO
respectively. ;_”On7’the__ b-asis*._of orders
passed u/st-2_8f[6]–.by the ACCT [Ins] II
Mangaiore the,’ FAA”_jV~sVh”oiild not have
_li71_1ke_’d ,th.is provisional order with the
qL_1″antificati–ofn'”of made 11/ s 28AA
“‘{.-{H n3.ade_,by”‘–fj-PQ. }Therefore, on this
“tAco.unti:’fpalso;».Vthe appeal order passed by
-_ ‘ }?’A’A”‘suffer’syplfro1’n~ illegality and liable to
= be ~q1ia;_shed__l ~ ,
V .. f–Th’erefore it is hereby proposed to
set. aside the said appeal order and
alternatively to remit the matter to the
“Check Post Officer STOP, Kannur for
V p”fre~sh consideration in View of above
‘ mentioned Judgment.”
the orders of the appellate authority were
yrevised and set–as1’de. The orders of assessment and
penalty of the check post authority were restored.
5. Section 28–AA of the Karnataka Sales Act
reads as under: S S
“Transit of goods by road A V’
State and issue transitfvpass:
(1)Where a vehicie a
taxable under t.hisAct.-AS’ T’ A S
(a) frorn-[ally p.1″ace’
. State… ” -~ -.for ii any
‘ —.._..’:p1ac_e State and
jthis State; or
(b) V goods are
H S’ into the State from
____ H any«.._._p_1ace outside the
‘«.,rc.Q_untry and such goods are
carried to any place
_ V “outside the State,
they drniVer.VVorAy.any other person–in~charge of
_v:sn.ch”‘««._Vehic1e shall furnish the necessary
and obtain a transit pass in
d.11ph;:’ate containing such particulars as may
S .. “prescribed, from the officer–in–~charge of
the first check post or barrier after his entry
into the State or after movement has
commenced from the State as the case may
be, or from the officer empowered for the
purposes of subsection (3) of Section
upon interception of the goods vehiele–..aVf.t’er’.j’
its entry into the State or after movein__entV*ahasll * it
commenced as the Case may be.
[2)The driver or thepersAonain;Charg_eof’
Vehicle shall deliver.._Vp:l’w_ipthinV’ .the,_
time a copy of theV….l’:Clli:”A’e*.,nsVi_t p.as”s.l_ohtained
under sub–seCAtion'[ to the’ » .,o1’fieer–in–charge
at the last checl<p'ost his exit
from the
(3}lii'4llio;I"–.angt diheipigoods carried in a
afttérlll entry into the State
'"{_or afterl'eomlni,enr;e'ment of movement, as the
case " moved out of the State
' " within'*t_hHe time stipulated in the transit pass,
i,fhe" ownerlflofl the goods vehicle shall furnish
'officer empowered in this behalf the
"for such delay and other particulars, if
"-anyglthereof and such officer shall after due
"er1quiry extend the time of exist by suitably
amending the transit pass:
rs
Provided that where the goods carried by a
vehicle are, after their entry into the State,
(or after Commencement of movement, as
case may be) transported outside
by any other vehicle or conveyance.,..,t_h~eVV
of proving that the go’ods”h_ave .;
moved out of the State lorilthve iii
of the vehicle who’l__’c;riginal»l_Vfi
goods into the State. l’ V
[4)lf the driver –person–in–charge
of the vehicleA…d-{ties ‘lvvith sub-
it;i_shai’l beiiilpresiilhed that the
goods fhave.–‘been sold within
the State_ by iih’e.___ow1_’;er of the vehicle and
shall,’ anything contained in
sub=~.se’ctior1 section 5, be assessed to
tax bylnlthezoffipcer empowered in this behalf in
‘prescribed manner.
owner of the vehicle [having
v~.obta’ined the transit pass as provided under
it 4-3i1b–section [1] fails to deliver the same as
provided under sub–seetion(2], he shall be
liable to pay by way of penalty a sum not
exceeding double the amount of tax leviable
on the goods transported.
[6)The amount of tax and the
levied under this Section shall be recovvered
in the prescribed manner.»
(7′)Where the owner of the veh.i’c1e”Whvo-..d”’ ‘
is assessed to tax under sub–vsect.io’n 14),” ‘is
carrying after such :a.ssess’mer1t,’ any gdods
taxable under Vehicle
from any P151C.5:1_ *~01.i.t’i3i::C1€'”‘*flié:/,—“V”5tat€ (or
moveme13:t:g1’frorr_1 as the case
may” be) “V-and any other place
‘ V _V ‘VSta’te:.’and dhispassing through the
State; authority may demand
fromfsuch an amount equivalent to
two tiinesddthve tax ieviable on such goods
7unde.1f this as security.
it __ ‘dV~[.:;8′]V”.1’he prescribed authority after being
satisfied that the goods carried in the goods
“iy3ehic1e in respect of which the security
amount under sub–section(7) was collected,
has passed through the State, shall refund
such security amount to the owner.
{9)The prescribed authority may by an
order adjust the whole or any
security amount towards any amount;o1l’.’
or penalty payable under this
such owner). 4′
Explanation» In case
owned by a person
transportation of by
person, the hirer of pthedjehicle shal1’~fo’r: the
purposes of this to be the
owner ofathe vehi*e].e:}p, l l
6. 4 of sec. 28–AA
of rebuttal presumption.
Rebuttai mean the person against
whom thelirnpu.gned”~~olrder came to be passed by the
” _ oftieer–‘I’riust be able to satisfy the authorities
‘that theiielliyas no evasion of payment of income tax. If
intention of the legislature were to be that
irrespeetive of payment of tax on the goods in question,
“rebuttal presumption was available to the assessee,
glthen whether those goods were subjected to payment of
;,mi
16
tax or not would be irrelevant. In View of the fact that
rebuttal evidence was allowed to be brought .onl:’rec.ord
by the party in question, it would be opeil
establish that in fact TP was h.and.ed
post or that the goods in questi.onl.A_dild
State. Therefore, presumption» ofhlsale’ x2srithi”1~ilti1e’llState’
was not available to the rexrle’rio.le. fl
7. In the prels’ent~ l.thlevAA.lv:co.ntention of the
appellant along with
the driver” of the goods also
travelled and the consignee were
one “l’:ll’::l_.inelrefore, the entire formalities at
postvvv_e_re. looked after by the representative of
‘ Lethe goods..ll”‘vHence, the driver normally who would be
“illiterate.l–“V;oiild not know the details. Apparently in this
case.l}_t.hle goods had to move from Mangalore to
A [T 1’ AA.Vl5loé§1dicherry which is outside the State. Sub–sec. (2) of
bisection 28–AA contemplates that the goods imported by
L)?
l Pondicherry.
“Department at Pondioherry.
the owner if moved out of the State, he has to___obtain
transit pass, i.e. the driver or the person in
the Vehicle. The presumption under
already stated is a rebuttal»'”presurnption’4 the’;
appellant relies upon the orderbtlof
consignor or the Consignee~v..t:::0df._pthehvgoodsi not V
disputed by the revenue thatne_onu:’aooo1int’-of”the notice
sent by the check~po’st._’ofiieer::V to NUS. Vivek
Petro, regard to the
accounts” even intelligence wing
of thiellrevennve ‘adthorough investigation both
at Mangalore’ ¥5o’nd’i»ctierry, so far as the business of
M /_s… \1fiveuR Fetro. material that was placed before
alssessing officer at the time of final order of
Inade it clear that whatever goods that were
in2..po1jtedi§’iie. a product called ‘naptha’ was in fact sent
.. to I50-ridhicherry and everything was accounted at
Even certified by Central Excise
It is also noted that
I 9
justified in setting aside th.e orders of the appellate
authority. As a matter of fact. the revisional.«jaiitherity
did not even discuss What was the rebuttal.evidence;
relied upon by the owner of the ve»h_icle’_:anjd”virhether the t j a
order of the assessing authoritlvhtadt’treachled,
no 8. On the other hand..; tth_e learned” Government
Advocate is fair enoiigh to ‘our notice that the
order of assessment Apertaiiiinig -Vivek Petro was
the subject:m§3.tter_hf rnoto’ li’ev=ision under section
21, but the.revi’s.ionaii’ .ai”1tho’rity confirmed the said order
of assessrrienttlof tthewegssessing officer. When once the
order of assessr1f1_eri;t or M/ s. Vivek Petro has reached
‘ ;fina1ity;~iit«._vvould not be open to the Department to say
“that the’.t-jjresizmption under sub~sec. {4} of Sec. 28~AA is
stilllavailable and the same is not rebutted. In View of
the: above discussion and reasoning, we are of the
tfiopiriion, the appeal deserves to be allowed.
20
Accordingiy, the appeal is allowed setting aside the
order of the revisional authority dated 21.10.2008. E1′
any amount has been recovered from the Vapfiijeiiant
either towards tax or penalty. the
refunded within three months from the_-<iate:'i'ec'eVipt of
a Copy of the order. .. A
%?§DGE
Brn,/Sak " ' ~ .25 _V 31:1