IN THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THE 29m DAY OF sEPTEMBER,VDA;2oD10 PRESENT THE HONBLE MRS. JUSTICE , THE HONBLE MR. JUSTICE . SALES TAX APEEAENQ. 15" 2,609; BETWEEN A A A Z Sri. Deepak D'S0uza_--- E A S/0 Sebast1fa11,I)-'SoL§1za: SAC HouseJ._He§1eyangadi_VPo_§§t 3 Eu Mangalofe 5_f_74V"i'4'--6, E E' APPELLANT (By ._G_ Sri. P. E. Umesh, M / s. Giobal Law Advocates] 2i\,N.mI2.D ' T'he'Addi'ciDnal C6rhmissi011er » of _Com'me1jC17a_1 Taxes 4Z_0he:I',>-..Yan:'ijya Terige Bhavan '-Gar1dhi11;é;gar B'a._r1ga_lOre}'56O O09 RESPONDENT
my S1′.;.:T. K. Vedamurthy, HCGP]
E’ This Appeal is filed u/s 24(1) of the KST Act
Eagainst the Revision Order dated 03.11.2008 passed in
~”N0.ZAC–1/MNG/SMR–07&:07A/07-08, 011 the file of the
f”-J
Addl. Commissioner of Commercial Taxes, Zoned,
Bangalore, revising and setting aside the appeal order
and restoring the orders of assessment and penalty of
the check post authority and accordingly concludi.ng_ the
revision Proceedings. H
This Appeal coming on for Adrniss’ion’
Manjula Chellur J., delivered the.,.following’i”
J U D G 9
On our direction’,_”~the Ale.arr_1ecliv, G_Vovernment’
Advocate placed before usAythle”originall fiie._pe.:’§taining to
the assessment of theifj/eai* .2002~O3 of M / s.
Vivek Petro co.._ Pvr,”Ltc1{; {fo1€fs.hort’v:«AM/s. Vivek Petro’
and the iis:ip’eru:sie.d.~».._Theillqilyestions of law raised in
the abov_e- under.
i]l ° the facts and
lc’irc1I11nstances of the case the
._procee’d’ings initiated against the
l_VA:p{)ellant under Sections 28~AA of the
A ‘ -: Krarnataka Sales Tax Act, 1957 are void
. “slab initio in View of the fact that the
goods had become part of local stock of
the consignor, who is also a registered
dealer under the said Act, before they
were transported outside the State and
U’)
the said Section is applicable only i._r__1
case of transportation of impovrtgedéf.
goods by using Karnataka as a_ 5
state?
Whether on the
circumstances. of Ithler. cas7’e,A:’ the} 3
Respondent
it l the
Appellant~–._fhat ‘t_he:j_pprovisi:on,s of Section
28-AA of thgrmnatakda Act,
l..95i7″_’arelA_no€t the facts of
ignoring the p_..sti”on*1’i~ssion
. “‘th.e pre_se11t_–.case ‘
V ” ‘ facts and
‘ 4’ of the case the
right in rejecting the
lcontgentioii of the Appellant that the
..proceedings initiated against the
l.l”App.e1lant under Section 28-AA of the
V ‘ 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
owner and not the registered owner of
the vehicle ?
IV)
Whether on the facts and
circumstances of the ease
Respondent is right in holding
the purpose of Explanation ‘
28~AA of the Karna1’aka.eSa1e.s’tfi’afi it
1957, consignor of goods’
considered asthe “hirer” of thegoods”;
vehicle and the”=.s’aid word_,”‘A’g’h*ire1j”‘ is
applicable .. to only: ‘”transpor’i:erV-‘ izvho
obtains ?Jehie1e”‘–V-jndjhire in case
he does ‘P
facts and
V ~ the ease the
._justified in drawing a
= “that the goods in question
“s-old inside the State for the
V on1yr__eason that the transit pass has
_g’not been surrendered at the exit check
inspite of the fact that the
“tgassessing 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 presen’t\jease:are
appellant is a transporter enga”ged.iAn”..pth;e 97
transportation of goods. In theaéinonth of
consignment belonging to”~a””iComp’any”A narrie M/st
Vivek Petro – a regi.sft’e1jed Karnataka Sales
Tax Act, 1957 transpo-rtedl’eonsiénnient of a product
called ‘I’l3pth3ALfl:7fI;01T1;:~.MalTga.1’0l%€”i~V.'”‘Th,% contention of the
departniv-erit1was;:.;the«transit'”pass which was required to
be tai<_en_ the person incharge of the
vehicle at–«..theVer1try_s ehneekpost after commencement of
was'1'rot'Vhanded over at the exit cheek post.
presumption under Sub–section 4 of
is available to hold that the consignment
did rr.o_t} move out of the State but was sold within the
it ' ' 'S.tate.
(3
3. In the present Case, the transit pass was issued
by Kannur CheekPost, Kannur and the exit cheokpost
was Attibele near Hosur. Admittedly, the
reach the destination outside the State
i.e., Pondicher . On the basis of non~’r_ec’eiw_t”o;f.transit
pass (T1?) at Attibele exit: _within_ the
under the above said provision, imposed
tax but also levied’ “t_l1¢.”gQods transported.
The contention of the:.’app_e1lant’/ assessee was apart
from the d1?_iver=there was authlorised representative of
the (jonsignoor i”.fe.’, Petro, Mangalore, who was
ineharge ‘of the”goodsy_x’frorn the commencement of the
journey rehachedvlthe destination and he was the
‘one. wl1o’li’A.t_ook only the transit pass but was
the duty of handing over the same at exit
oheckppost’; A Therefore, the owner of the Vehicle was not
..lial3le’*=to pay either the tax or the penalty imposed.
2 “‘._lH”os/yever, the order dated 24.12.2003 by the Assessing
I
‘Officer goes to show that the said defence was not
accepted and they proceeded to impose tax of
Rs.l6O180/M and another Rs.16,018/– as penalt_VV-‘.–._’ This
was challenged before the appellate
Appeal No.232/O3~O4.
4. The appellate authority :_p’in..:’th”e_lpresent—..ca.S€
after taking into consideration that the onf’
the return submitted by tl1_€3lli’0_\_N’i’1§?I’ of ” the goods i.e.,
Vivek Petro, Mangalore,.cOncludled_ there was no
evasion of any” on «assumption taxes
cannot be ‘thje_y_~li–g_ht.” assessee being able
to “of goods outside the State
and not”*..soEd State. According to the
appellate Vauth’or.ity,.» the order of assessment passed
‘ nrider’-v._V4’SeVction 12(2) of the Act by the Assistant
C.ornmissio’ne’r of Commercial Taxes, Mangalore,
indilcates there was no evasion of any taxes and all the
imported by M/s Vivek Petro were the subject
matter of assessment and all the consignments which
were to reach Pondieherry unit belonged to the very
owner M / s Vivek Petro but did in fact reach Pondicherry
which was evident by the Very endo1*senienVtVV”‘o:f..fthe
Superintendent of Central Excise, Pondi’eher1yVVt’datetdk’
9.9.2003. It also refers to the .I’e’A1AeaseA_ of ‘
naptha in favour of the consignor. a1so’V_1etter~s
by the Deputy Con1mercia1″‘vef.I?a,*< Officer"'of?Po1ndieherry.VV
The assessing authority hadtteovrne Vt"o..'cone1usiAon that all
the entries effected by vd_id'_'inoVe out of the
State. Based"i«pon this ":ti1e_._.appe11ate authority
allowiedttfftheegappieal the appellant, setting
asidg check post officer dated
ft'-reyfisional authority took up the
n1'at.tei*'oy't'way of suo~motto revision and issued a show
ea-u~t.o' the assessee calling upon him to explain
the contents of the notice. The assessee appeared
'before"'-the revisional authority and submitted the
"explanation. However, the revisional authority found
"the order of the appellate authority as improper and
prejudicial to the interest of the State revenue for the
9
following reasons:
A
1.
pen’a1ty_….«’ u/s
V _V::_oncerned which is
“iyv”vJi;1dgment of Hon. Supreme Court of
The appellant is the owner of
vehicle has obtained transit-._ Pass
N0.024l23l
Attibele on or ‘before l6′..0b”:02. On
enquiry t_hrough_….correspondence
cro of A..ttibelt_§ Checl§._0Post the cro
Kannur ascert’ai’n,ed:” that. the — records of
Check po,€~:t~.do V11o’t_ ivpassage of
good.s:_’ vehicle 0.”. Kr’\3–l9;E30949 through
«’Check:j.Post._p__an_d transit pass was
V__also;_no”t’._s’t1.rre’nderedl and there by
of KST Act
* 195?Q.V-“‘”* 0
wrongly allowed the
Appeal in so far as levy of tax and
28AA[4) 81 28AA[5]
against the
ir1d–i’a in the case of civil Appeal No.3787
2006 M/s K.GOPALA KRISHNA
AND OTHERS vs STATE or
KARNATAKA with CA N0s.3788w3844– 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) & [5] are concerned
and to remit the matter to the Check
dated, .ri4.o’6[02–!:yyi for 0’
transportation of Npaptpha ; fr.o1r1_ ‘ ‘-S4’i’-f,_3l?_lV A 0. 0 f
Kannur, but failed 0′-sturrerider.
Transit pass atlthe Eytit. Chec}::l’P.ost.VVVat.3
Post Office for fresh consideration in
view of above mentioned Judgment.
3. The FAA has misread the provision of
Section 2846] of KST Act while allowiiagtay
the appeal as the said provisions rellate”-_.’}
to conclusion of provisional asse_s’s’m-ei1t.: ”
order by the inspecting authority “Which H
is independent of pI’OVlSlOI’1S-..S€C’tl0I1-A
28AA{4]. The proce’edi’ngs’..pu/s_l”£;8(6}-I
and 28AA (4) are inclependent and
powers are Vconfirrned ” ~ the A
inspecting au”-Eherity ‘-and the
respectively. Oiiethe basis’=o,i? orders
passed u/s 28(6_]____T::y_ the ACCT (Ins) II
Mangalore vthe :4 should not “have
linked this wilprovisvionalfforder with the
quantification of.e’taXess’«..Ii’1’Ei:d€;lLu/S 28AA
[4] _*made;i5y”‘Ci’O.A._?»Tlierefore, on this
count ‘also, the appeal} = order passed by
«”FAAEAI.suffers.frorn-..”illegality and liable to
Ultimately the ord_e”1’s:_l’..’i’of the appellate authority were
rgevise_d and “set:~_as.ide. The orders of assessment and
‘ check post authority were restored.
Si ‘iieffiion 28-AA of the Karnataka Sales Tax Act reads
as
“Transit of goods by road through the State
and issue of transit pass~ (l)Where a vehicle
is carrying goods taxable under this Act
[a] from any place outside the
State and bound for any
pface outside the State
passes through this
OI’
[b} and which_ go”ods:7gan-ey_+,
importediv into? the-.’ ‘Stat:e.___
from _any Apiyace the’;
count.f3;~ and such’ Vrgootisépvarep
. being…¢ug;rie»d to any place
V “– . the” _
the driver or anyotherV._pers’or1}Vin§ci1arge of such
vehicle’ furnish’: the”‘n’e~cessary information
a”1″1″ci–._ :’obtai11’– “a.f-trari’sit'” pass in duplicate
v’conytaini’I1g”-~u,y’s1,1ch_'””—- particulars as may be
pre.scribe”c3, officer–in–charge of the first
—checpk or barrier after his entry into the
getatey or ait’er’Vmovement has commenced from
State as the case may be, or from the officer
A for the purposes of sub–section (3) of
Section 28A, upon interception of the goods
Eryephicle after its entry into the State or after
H movement has commenced as the case may be.
(2]The driver or the person–ir1~«charge of the
vehicle shall deliver within the stipulated time a
copy of the transit pass obtained undei1=.44_'”sVub»
section[l] to the officerwin-charge
checkpost or barrier before his exit ‘V
(3) If for any reason;theilgoodsi4.carried__l_in1a
goods Vehicle are, after errtryintopStat.e.'”{or’¢’
after commencement’-.of._mov’ement,”gas; the case’
may be] not moved out._.oii”vthe.._State”within the time
stipulated in trainsgit owner of the
goods vehicle the officer
empower’:e:d”:’.in reason for such
delay” if any, thereof and
‘suchiffofficer’shall-…_after due enquiry extend the
time’* of ‘ Qxlflti.llb3T._:”S£1’lt8.bly amending the transit
_ pass: ~.
l?rovid’ed.____that where the goods carried by a
\i”\
after their entry into the State, (or
rionimencement of movement, as the case
transported outside the State by any
~.o’tJher vehicle or conveyance, the onus of proving
it that the goods have actually moved out of the
State shall be on the owner of the vehicle who
originally brought the goods into the State.
(4)If the driver or any other person~in~charge of
the vehicle does not comply with subsection (2), it
shall be presumed that the goods car1’iedvl_th:er_eby
have been sold within the State by the
the vehicle and shall, notwithstanding
contained in sub~section””‘{5]y section’ ‘be’
assessed to tax by the o’fficer=.emp.oWered :l1″~l’.Vl:”Llf1VlS
behalf in the prescribed manner.
(5)If the owner of y_thev.vehicle.l(l1avin;_}j obtained
the transit pals~s_..:as p_ro§v’ided”1ir1~d_er sub-section [1]
fails to deliver under sub
section(T9l):V,’:-.he pay by way of
zvlllpenaltyya exceeding double the amount of
.leviabl’e” goods transported.
of tax and the penalty levied
;_u:nder **** ‘Section shall be recovered in the
V’ ” –v.pi*es«er’ib’ed manner.
_.”l{f.7A):Where the owner of the vehicle who is
2 .. ‘assessed to tax under sub–section (4), is carrying
after such assessment, any goods taxable under
this Act 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’i~.cthe
State, the prescribed authority may
such owner an amount equivalent to ‘twovtimes the V’
tax leviable on such goods».under_VA’t}:;i’s Act as ‘
security.
(8)The prescribied” authority ‘being ‘
satisfied that the go.od’s.__ ‘carried”–i,np the goods
vehicle in respect _of_ security amount
under sub–sectiVQ_rvi1(7V’) has passed
throug.h’«..the Sptatef such security
[gffiheéniiprescribed “authority may by an
erder V or any part of
security amo’unt.;t’oWards any amount of tax
dour perialtyv payable under this section by
. owner].
E’xp1ar1ation– In case where a vehicle
ownvied by a person is hired for
“transportation of goods by some other
it person, the hirer of the vehicle shall for the
purposes of this section, be deemed to be the
5
owner of the vehicle). ‘
6. Presumption under subsection (4) of sec. 28-
AA of the Act undisputedly is a rebuttable presumption.
Rebuttable presumption would mean the
whom the impugned order came to be
che<::k–p0st officer must be able'to sat1'_si7_v
that there was no evasion of payment o1'"y_tAax§' it
intention of the legislature to be 'ttiata irrelsppeetive of V
payment of tax on ?E:1"}§3 gooldsliiifiquestion, Hrebuttable
presumption was avvailablell ._l-lassessee, then
whether thc;'seljgo'ods–. subjeetedjlto payment of tax
or View of the fact that
rebuttable evidVenee."ai1owed to be brought on record
by the partyiliiiir"question, it would be open for him to
.establi"shllth_at TP was handed over at exit check
goods in question did move out of the
St"ate…__"Therefore, presumption of sale Within the State
..wo_.uld"not be available to the revenue.
7. In the present case, the contention of the
l V’ “aézvpellant consistently was to the effect that along with
//
I 6
the driver of the vehicle, the owner of the goods also
travelled because the consignor and the consignee’ –vve.1’e
one and the same. Therefore, the entire -formalities»
the check post were looked after bythe 5rgeprels:e.nta’tiveof ‘
the goods. Hence, the driver
illiterate would not know theiidetails. this
case, the goods l’J..é1Cl_a ljfrom ll\H/lan’ga.lore to
Pondicherry which is (2) of
section imported by
the owner he has to obtain
the person in charge of
the vehiele.l under sub–sec. (4) as
already rebuttable presumption and the
– v aplpellarit relies the order of the assessment of the
A *–co«nsign4or_or.A’.th’e consignee of the goods.
also not disputed by the revenue that in
vievv of’. the notice sent by the check~post officer
pl ‘pelrtaining to M/s. Vivek Petro, investigation was made
“With regard to the accounts of M/s. Vivek Petro and
a
even intelligence Wing of the revenue also made a
thorough investigation both at l\/Iangalore” and
Pondieherry, so far as the business of M/ s. Vi\rvel::”l??l_etro.
The material that was placed before the
at the time of final order o_f»~»assessmen*tl;’iridileat’e_s V’
whatever goods that were imported:;~.l_li.’el.
‘naptha’ was in fact Poridhieljierrjffllaridll was”
accounted at Pondieherry,-“” evlerivoertified by
Central Excise Departments—,a’t;:’ It is also
noted that :..V’»’illE1’_4E€V€:ii I payable to the
Centr’allllEXeisVe also paid and these are
the findings of.Vthhe>ase..essi~ng authority. When once the
assessinglaiitlioritv who took up the assessment
proeess ~a partlolf the investigation into the missing of
-(or’l:’:on«:aeeo3fi;nting of TPs. at exit cheek post, so far as
Mfs. v1vei§;’ lPetro is concerned, it was satisfied that all
the goods that were imported which were meant to be
l serif to Ponehicherry did reach Pondichery and not even
“‘”a single incident where the revenue was able to
I
‘7
,/
establish that it was sold within the State. He was
justified in saying that the assessee i.e.
Petro had accounted all the goods that were.p4’ilmpoi;t:ed
them and nothing escaped from.tho._ta,x.ful ofll
the matter, When once by way
appellant relies upon the alssessrnenlt order “pertaining to”
M/s. Vivek Petro, inupthe thle”‘De’partment
establising that the did not
move outsid<3..l[lh::e. was not
justified orders of the appellate
authority; revisional authority
did the rebuttable evidence
reliedvupon' the owner of the vehicle and whether the
'l V. order or thegassesslinlg authority had reached finality or
not "
9., the other hand, the learned Government
Advoca.te is fair enough to bring to our notice that the
of assessment pertaining to M / s. Vivek Petro was
.,_ti’1e subject matter of suo moto revision under section
I
7
.’/
21, but the revisional authority confirmed the said order
of assessment of the assessing officer. When once the
order of assessment of M/s. Vivek Petro has..dr’e.alcheci
finality, it would not be open to the Departrriei1t.i’p:’to
that the presumption under sub:se_c. {4} of” .
still available and the same is :’notf_’_rebutte_’d._:”yIn
the above discussion andv.””r.easoi’iingV,_w¢of the’?
opinion. the appeal deserveis—to”pvbe”-allowed;V…
Accordingly, the setting aside the
order of the 1.2008. If any
recoyeredlllrom the appellant either
towards “the same shall be refunded
within_three..nionths from the date of receipt of a copy of
” the order: 9′
Sdg/..
IUDGE
Sdji’…
REESE