IN THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THE 291?! DAY OF A' PRESENT THE HONBLE MRS. JUSTICE *MA.NJ['iiiA'< 00 AND ' THE HONBLE MR. JUs9rii_§E'K. AACEOX/"iNV[3_ARAJ'Ui0U SALES TAX APPEALN is 015 2009' BEVWEEN Sri.Va1erian I 'Amith' Bej'aiVNe';W_Rd.;« A _ A Beja1'Post". APPELLANT (By S:'i'.'P. E. Umesh, M / s. Global. vLa»w<. C,» Ad'voCa.tes] AND The_§Addi_tiona1" Commissioner ' V' . of 'Corr21meIv:ia1 Takes _ . Z'o--n_e-1,,' Van_ijya Terige Bhavan " Gandh_i'11agaI=- _ Banga1o1'e.'§56:0 009 RESPONDENT
[By44S1.’i:’vT..VI4′{. Vedamurthy, HCGP]
“=–._This Appeal is filed u/s 24(1) of the KST Act
_ A :ageu’.r1si: the Revision Order dated 21.10.2008 passed in
N;0.ZAC-1/MNG/SMRMII/07-08, T. NO.662/O8~09 on
A …the file of the Addl. Commissioner of Commercial Taxes,
Zone–l, Bangalore, revising and setting aside the appeal
order and restoring the orders of assessment», and
penalty of the check post authority and ac’cor’di’i:g1y
concluding the revision proceedings. . A” 5 . A
This Appeal coming on for
Manjula Chellur J., delivered thc~fol.1ow:?_ng; ‘ A A
JUDGMs§j”
On our direction, 1ea~rn’ed G’ove’rnmentT
Advocate placed before usp..t’h’e. filepertaining to
the assessment of sales 2002*
03 (fi’Bd/snlflvekfkaro ext flvp,l@d} fibr short’h4/s.
Vivek Petzéw péflsea. The questions of
law A I
ll . the facts and
c1rculmslt.aric_es of t_he case the
proceedings initiated against the
Appellant under Sections 28wAA of the
fxiariaataka Sales Tax Act, 1957 are void
T17;ab”1niuo H1 vunv of due fiufi: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
the said Section is applicable only in
case of transportation of in1p0rtVéd.]~.i’
goods by using Karnataka as a
state’?
ii) Whether on the
circumstances _ of 7the–_ casieA,.l”‘ the’;
Respondent has ,§Q.mmitted ‘an “error”in’V
ignoring the V__sili”o_r_nission “-o_f Hvgithe
Appellant’—-thjat of Section
28--AA of the’ Tax Act,
‘are the facts of
“the jé.17Ese’nt ca-s_e’.7-7 ‘
sigma facts and
” 4’ of the case the
right in rejecting the
llcontentioln of the Appellant that the
proceedings initiated against the
:,”‘A:ppellant under Section 28~AA of the
-Kiirnataka Sales Tax Act, 1957 is void-
. ‘”Lab–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’?
Whether
Circumstances of
on the facts and
the Case
Respondent is right in holding thatvi’or:~_:x¥.
the purpose of Explanation to ‘
28~~AA of the Karnataka 7
1957, consignor of the
considered as the “hi«r_ei1″‘_VAof the ggoo’dsJ”~ it
vehicle and thefsaid Word; _”hvi_rer”””is
applicable to transporter _\}Jho
obtains goods wfehiele.__on”vhire in case
he does not own a’good.siV’ve:hi_e1e ‘P
A V’ and
_A . of the ease the
it justified in drawing a
it the goods in question
haVe.he_en sold inside the State for the
gonly reason that the transit pass has
ihVetV’.1been surrendered at the exit check
inspite of the fact that the
assessing authority of the eonsignor
has in his assessment order passed
under the provision of the Karnataka
Sales Tax Act, 1957 given a finding
the
that the very same goods as that
involved in the present case have
transported out of the State.’
Karnataka ‘P
2. The admitted facts in the’pre–se1i1;t.c’ase,_are the 7
appellant is a transporter engaged in of
transportation of goods. rr1or1th_l_o’f the
consignment belonging llama M/S
Vivek Petro — registered’ ‘dealer-“uln’d:erl-Karnataka Sales
Tax Act, of a product
called lhe contention of the
pass which was required to
be talrenmbyl the person incharge of the
vehicle at checkpost after commencement of
‘ Vlthe t–1fvE111sit”w_as not handed over at the exit check post.
presumption under Sub–section 4 of
Selction is available to hold that the consignment
not move out of the State but was sold within the
U V’ 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..’Statedl_lof.-lifiariiataka
i.e.. Pondieherry. On the basislllof of V
pass (T?) at Attibele time’
under the above said…provisior1l;;:they notlonlyl imposed
tax but also levied transported.
The contentitrirp-of was apart
from the representative of
the Mangalore, who was
inehargepll the commencement of the
journey till” 1’each’edl'”the destination and he was the
one.l:lvv.hotook only the transit pass but was
\vi.t.h..~~the duty of handing over the same at exit
cheek Therefore, the owner of the vehicle was not
liable.’ pay either the tax or the penalty imposed.
‘However, the order dated 10.12.2003 by the Assessing
-~-Clffieer goes to show that the said defence was not
accepted and they proceeded to impose of
Rs.l0,800/– and another Rs.10,800/~ as
was challenged before the appellate
Appeal N0.2lO/03-042.
4. The appellate a.uthority<_v_in
after taking into consideratio'npV:'thVat theialslsesfsment on
the return submittefdliby the goods i.e.,
Vivek Petro, l\/i_angalAore.,'. there was no
evasion of_ assumption taxes
cannot assessee being able
to of goods outside the State
and not'-rjglsold State. According to the
appellate aulth–ori_t_yH,_ the order of assessment passed
»A 12(2) of the Act by the Assistant
Coin'missio-ner 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
rnatter of assessment and all the consignments which
were to reach Pondioherry unit belonged to the Very
owner M / s Vivek Petro but did in fact reach
which was evident by the very endorse1fn'ente:VV'o'f"l
Superintendent of Central E.1XCise.,._ 'dated V
9.9.2003. It also refers to the re'1.eas.'et'of
naptha in favour of the conlsigiaor and __also letlteVrs"issued'V'
by the Deputy Commereialyyi-Test'fjffieer of Poxidicherry.
The assessing authoritythadt- ,AA(_;:.~'.)vli1'§_'l11SlOI1 that all
the entries out of the
State. appellate authority
allowed H l V V' the appellant, setting
aside check post officer dated
l0.12..200:§."' The revisional authority took up the
' V' '*–matter by Way of suo~motto revision and issued a show
sea-u;sei'no't.ie'eVtoythe assessee calling upon him to explain
the *—..con_tent.sd of the notice. The assessee appeared
.u""'-Lbeforez the revisional authority and submitted the
e.iex_p'l-ariation. However, the revisional authority found
the order of the appellate authority as improper and
10
Post Office for fresh consideration in
View of above mentioned Judgment. ‘
3. The FAA has misread the provision
Section 28(6) of KST Act while allowing”
the appeal as the said proVis_i,0_ns=..rel.ate_
to conclusion of provisional assessr1ierit._jp.
order by the inspecting a,u’tjhority’whic’hp
is independent of provisions of _v’sectioi1:*._.
28AA[4). The,’proceedin’gs up/s 1 s 28(6)
and 28AA (4) a1″e_findepe1iden._t “an’d”t’i’1e”
powers are confirmed the
inspecting:-‘.3 auth’o1ity’- “-and the V-‘CPO
respectivelyfi On the~–.._”oasis of orders
passed u/s :>,s(s;la,z t1_1effA.CCT (Ins) II
Man.VgaloreA.V~–the”» I4’;-‘XAA shi_m/m not have
lini-:e_d1’.thi;s pr,o’vision.a],_orfder with the
4.(}’i,1ElITKi:Vtuif1’CEEi’Cl”01;I- of taéies made 11/ s 28AA
(4}-“m”ade, “Therefore, on this
“coVunt:.V_also’;’ the” appeal order passed by
” s*é’if’i’e_r’s.V.f1’omillegality and liable to
Ultimately “the” the appellate authority were
revised” and s-etgflasirde. The orders of assessment and
‘ ;penalt_y’~o’f.the\check post authority were restored.
« 28–AA of the Karnataka Sales Tax Act reads
as unde_r:.v if
“Transit of goods by road through the State
and issue of transit pass- (l)Where a vehicle
is carrying goods taxable under this Act-
– ,,\\r\
[a] from any place outside the State
and bound for any place/outside
the State and passes this
State; or
(b) and which good.s…aifeV’impoi§ted..pS*~–
into the’; State ‘from
outside ” and 2
goo’ds”*~are being ‘ carriecl-‘to any’?
place o’utside the V}
the driver or other.’person.~;in–charge of such
vehicle shall information
and obta:ir1v.._a l’d’uplicate containing
such4..p.artiici.1lar:sas be prescribed, from the
of the’*fir’st check post or barrier
iiafter the State or after movement
has the State as the case may
, be, or f_1:9orn.Tthe- officer empowered for the purposes
..sub–Asect-i-on (3) of Section 28-A, upon
i_n’tei*ce”ption of the goods vehicle after its entry into
; t’he_~v..Stat’e or after movement has commenced as
the may be.
(2}The driver or the person-in–charge of the
vehicle shall deliver within the stipulated time a
copy of the transit pass obtained under sub»
section{l) to the officer–in–charge at the last
checkpost or barrier before his exit from the State.
(3) If for any reason, the goods carrieyddin a
goods vehicle are, after entry into
after commencement of movement,-jasythe”4_
may be} not moved out of .
stipulated in the trar1sit;_Vpass.z flthe “I owner 1’s-goiltghle
goods vehicle shall furnish tofi. offIcer’g
empowered in this ‘Eaehalf it such’
delay and other parti-cuia.rs–~,.._ if any….th’ereof and
such officer sl’1all._afte%r’ enquiry extend the
time of ‘exist the transit
the goods carried by a
vehicle entry into the State, (or
afterc’orr1r:1encer:ient of movement, as the case
it may E>”e’}-V transported outside the State by any
“otl1er’«.vehicle or conveyance, the onus of proving
goods have actually moved out of the
‘shall be on the owner of the vehicle who
S .. originally brought the goods into the State.
(4)If the driver or any other persor1–ir1–charge of
the Vehicle does not comply with sub–section (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 anything
contained in subsection {5} of sectiovnij:5,. be
assessed to tax by the officer empowered:inftiliiws
behalf in the prescribed manner.
[5)If the owner of thefvyehiclev
the transit pass as provided
fails to deliver the sanie aslprovided “u_’r1der–‘:sub+~.’
section[2), he shall befiliable to” way of
penalty a sump eXceedvi’ng.double theflamount of
tax leviable on
[6}Th’e}:jp.ra’nio;i.in’£:; ta}:t’:a1id…:the penalty levied
VV’Secti”on shall be recovered in the
V’prescrlbed:’manne.r;”
l7lWh,€ife owner of the vehicle Who is
assessed””to._._t.ax under sub–section [4]. is carrying
.,afterfsu__ch assessment, any goods taxable under
a goods vehicle from any place outside
t.h~e_!State [or movement from within the State, as
* 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 this Act as
security.
(8)The prescribed authority after being
satisfied that the goods carried in the_..___goods
vehicle in respect of which the securityaaznounii
under sub«~section[7) was co11ected,__;hasj_~passedp
through the State, shall refund”suchifjpseécilritypyi
amount to the owner.
[9)’I’he prescribed authority by
order adjust the Vw’h:bo~]Ve or .__a1’1yAV of
security amount towards any amount tax
or penalty payable 7_Vu1;d,.ei<.__'t.his_ section by
;'si;i'ch _ ezj.'
V " case where a vehicle
ovvriedpd' .by person is hired for
Etranspo'r'tat.,iQnv of goods by some other
the hirer of the vehicle shall for the
it of this section, be deemed to be the
ovrneriwnof the Vehicle). "
~~ Presumption under subsection (4) of sec. 28w
hi the Act undisputedly is a rebuttable presumption.
it ‘?Rebuttab1e presumption would mean the person against
Whom the impugned order came to be passed by the
check-post officer must be able to satisfy the avu’t.-horities
that there was no evasion of payment of’::tax’,:’.s:’Ifl
intention of the legislature Wereuto’ bepthat irrespelctiivellof 9
payment of tax on the goods
presumption was availablefto the V ‘a.s_”ses’see’;’ then’
whether those goods” fipayrnent of tax
or not would be irrelevari’t;~5.f”‘ the fact that
rebuttable ‘(to brought on record
by the be open for him to
establish’ walshhanded over at exit check
post question did move out of the
State. pTh’ere:fo’rev; presumption of sale within the State
. * woL1jlld3niotVl’be available to the revenue.
A lithe present case, the contention of the
appellant consistently was to the effect that along with
A the”~«_driver of the vehicle, the owner of the goods also
i téravelled because the consignor and the consignee were
_ . xrx _
if)
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.
case. the goods had to move. __fron_i””ii/Ialngalolre to it
Pondicherry which is outside the State.
section 28--AA contemplatesivellthat thegoods: iinp’or’ted by-t
the owner if moved out oft-the’fSlta.te. hehasfgto obtain
transit pass, i.e. thel4l’driV’e’r_Vrl;:)’»jf:v thevlperson in Charge of
the vehicle._ .The sub~sec. (4) as
alrea:dyWlsteate_d it presumption and the
appellant’-reliesluipori’order of the assessment of the
consi.gnorllor._:theicon-signee of the goods.
ltnis alsownlot disputed by the revenue that in
vi.evv’ sent by the cheek–post officer
oe’rtain’i11g{.:’~”to M / s. Vivek Petro, investigation was made
iegard to the accounts of M/s. Vivek Petro and
Keveri intelligence wing of the revenue also made a
thorough investigation both at Mangalore and
Pondicherry, so far as the business of M/ s. Vivek Petro.
The material that was placed before the assessing»~.oi”f§_cer
at the time of final order of assessmeritll’ind-ic’a’tesv_v
whatever goods that were irnported, i.e._-‘a”pro_d1ict,v’ea11ed
‘naptha’ was in fact sent to;gPond~l’1icl1errv’ aiiid–ltvvas
accounted at PondicherrvipviKlt was evenJ’c._ei*tified by-it
Central Excise Department——at”-1°ondiclie’rryf. fit is also
noted that whatever ‘ payable to the
Central Excise:A’Depa{rtr–ne_rit and these are
the ajsslessinlgfaiithority. When once the
assessing took up the assessment
process as avparri: of the investigation into the missing of
l * A or nlonéllaccountinlg of TPS. at exit check post, so far as
ii’/.I_,/Vs’.vv:l(‘ivel;;i’.e’Petro is concerned, it was satisfied that all
the gc-ods7’that were imported which were meant to be
.. sent to¢Ponchicherry did reach Pondichery and not even
“single incident where the revenue was able to
“establish that it was sold within the State. He was
* .n”oi.V’ ‘
p ‘
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 eviderice,..Vthe
appellant relies upon the assessment order__perta;in.cirig
M/s. Vivek Petro, in the absence of _–the
establising that the consignrn’entginfqi:ehstlio’n”‘d’idA
move outside the State,”rev_ision’al lautlii’ority…_Vvva.s not’
justified in setting aside appellate
authority. As a rraatteirp-of revisional authority
did tol’vv_hat the rebuttable evidence
reliedluponl pf the vehicle and whether the
order of authority had reached finality or
other hand, the learned Government
H .i.sp’p:=.fair enough to bring to our notice that the
orldeprlopf assessment pertaining to M / s. Vivek Petro was
tthesubject matter of suo moto revision under section