® IN THE HIGH COURT OF KARNATAKA AT BENGALURU Dated this the 29th day of June, 2016 Before THE HON’BLE DR JUSTICE VINEET KOTHARI Writ Petitions 35155 – 166 / 2016 (T Res ) Between Petitioner Pharpur Cooling Towers Ltd By its Senior Executive – Commercial Mr B N Balakrishna, 49 yrs Paharpur House, # 41 Cunningham Cross Road Bangalore 52 (By Mr R V Prasad, Adv. ) And 1 2 (By Mr T K Vedamurthy, AGA ) Assistant Commr. Of Comml. Taxes (Audit) 1.3 DVO1 5th Floor, TTMC Building BMTC Bus Stand, Yeshwanthpur Bangalore 22 Commissioner of Comml. Taxes in Karnataka Vanijya Therige Karyalaya, I Main Gandhinagar, Bangalroe 9 Respondents Dt:
29. 06.2016 WPs 35155-166/2016 Pharpur Cooling Towers Ltd Vs Asst. Commr. Of Comml. Taxes 2/11 Writ Petitions are filed under Art.226/227 of the Constitution praying to quash the reassessment order dated 29.4.2016 by the 1st respondent at annexures D and E. The Petitions having been reserved for Orders on 28.6.2016, coming on for Pronouncement of Orders this day, Dr Vineet Kothari, J, made the following: ORDER
Mr R V Prasad, Adv. For Petnr. Mr T K Vedamurhty, AGA For Respdts. 1 Petitioner has filed the present writ petitions aggrieved by the impugned reassessment order passed by the respondent Assistant Commissioner of Commercial Taxes (Audit) 1.3, Bangalore under S.39(1) of the Karnataka VAT Act, 2003. The petitioner has raised the grounds in the present writ petitions of breach of principles of natural justice by the respondent Assessing Authority and the question of jurisdiction of the appellate authority under S.62 of the Karnataka VAT Act. 2 Learned counsel for the petitioner submitted that in the objections filed by the petitioner to the proposal notice Annexure A dated 1.4.2016 which were filed on 29.4.2016, the assessee while giving a preliminary Dt:
29. 06.2016 WPs 35155-166/2016 Pharpur Cooling Towers Ltd Vs Asst. Commr. Of Comml. Taxes 3/11 reply to the proposal notice, had asked for personal opportunity of hearing also and to lead further evidence against the show cause notice proposing to impose additional VAT for the works contract of constructing cooling towers and trading cooling tower spares undertaken by the petitioner company. 3 Learned counsel for the petitioner assessee vehemently submitted that notwithstanding the remedy by way of an appeal under S.62 of the Karnataka VAT Act, the impugned order deserves to be quashed and set aside by this Court as there is breach of principles of natural justice and the Assessing Authority has no jurisdiction to pass the impugned order raising a demand of Rs.6.08 crores including tax, interest and penalty much beyond the proposal notice itself in which a demand of Rs.5.83 crores was proposed to be raised against the petitioner. 4 On merits of the impugned assessment order also, he submitted that even the prescribed deductions of labor charges, as per the schedule given in the relevant Rules, has not been given by the respondent Dt:
29. 06.2016 WPs 35155-166/2016 Pharpur Cooling Towers Ltd Vs Asst. Commr. Of Comml. Taxes 4/11 Assessing Authority while computing the taxable turn over in the impugned reassessment order. 5 Learned counsel for the respondent Department, however, opposed these submissions and raised the objection of availability of alternate remedy to the petitioner assessee as the prime objection. 6 The provisions of S.62 of the Karnataka VAT Act are quoted below in-extenso for ready reference: S62: Appeals (1) Any person objecting to any order or proceedings affecting him passed under the provisions of this Act by the prescribed authority may appeal to the prescribed appellate authority. (2) The appeal shall be preferred – (a) in respect of an order of assessment, within thirty days from the date of which the notice of assessment, was served on the appellant, and (b) in respect of any order or proceedings, within thirty days from the date on which the order was communicated to the appellant. Dt:
29. 06.2016 WPs 35155-166/2016 Pharpur Cooling Towers Ltd Vs Asst. Commr. Of Comml. Taxes 5/11 it (3) The appellate authority may admit an appeal preferred after the period as aforesaid but within a further period of one hundred and eighty days, if it is satisfied that the appellant had sufficient cause for not preferring the appeal within that period. (4) (a) No appeal against an order of assessment shall be entertained by the appellate authority unless is accompanied by satisfactory proof of the payment of tax and other amount not disputed in the appeal. (b) The tax or other amount shall be paid in accordance with the order or proceedings against which an appeal has been preferred. (c) (i) The appellate authority may, in its discretion, stay payment of seventy per cent of tax and other amount, if the appellant makes payment of the balance thirty percent of the tax and other amount along prescribed form of appeal. (ii) Where any application made by an applicant for staying proceedings of recovery of any tax or other amount has not been disposed of by the Appellate Authority within a period of thirty days from the date of such application, it shall be deemed that the Appellate Authority has made an order staying proceedings of recovery of such tax or other amount subject to payment of thirty per cent of the tax and other amount disputed and furnishing of sufficient security to the satisfaction of the Assessing Authority in regard to the balance seventy percent of such tax or amount within a further period of fifteen days. (d) Where an order staying proceedings of recovery of any tax or other amount is passed in any proceedings relating Dt:
29. 06.2016 WPs 35155-166/2016 Pharpur Cooling Towers Ltd Vs Asst. Commr. Of Comml. Taxes 6/11 to an appeal under sub-section (1), the appellate authority shall dispose of the appeal within a period of two hundred forty days from the date of such order. (e) ……. (5) The appeal shall be in the prescribed form and shall be verified in the prescribed manner: Provided that the Commissioner may notify the website in which appeal shall be filed electronically: Provided further that a single appeal may be preferred against orders of assessment or any other orders or proceedings, in respect of more than one tax period of any financial year. (6) In disposing of an appeal, the appellate authority may, after giving the appellant a reasonable opportunity of being heard - (a) in the case of an order of assessment or penalty: (i) confirm, reduce or enhance the assessment including any part thereof whether or not such part is objected to in the appeal; (ii) pass such other orders as it may think fit; and (b) in the case of any other order or proceedings, confirm, cancel or vary such order. (6-A)(i) In disposing of an appeal before it, the appellate authority shall not remand the case to make fresh assessment or fresh order, but shall proceed to dispose of Dt:
29. 06.2016 WPs 35155-166/2016 Pharpur Cooling Towers Ltd Vs Asst. Commr. Of Comml. Taxes 7 7/11 the appeal on its merit, as it deems fit, if necessary by taking additional evidence. (ii) The appellate authority shall pass an order by disposing of an appeal, within a period of ninety days from the date on which the hearing of the case was concluded. (7) Every order passed on appeal under this Section shall, subject to the provisions of Sections 63 to 67, be final There is no doubt that the impugned re-assessment order passed by the respondent authority on 29.4.2016 is an appealable order before the learned Deputy Commissioner (Appeals) and the second appeal would lie before the Karnataka Appellate Tribunal, as per the said provisions of S.63 onwards. The ground of attack to the impugned reassessment order including the issues relating to breach of principles of natural justice and computation of the taxable turnover, as per Rules – are all questions which certainly can be raised by the petitioner assessee before the appellate authority. It is no ground to avoid the appeal remedy merely because sub-sec.(6-A) of S.62 does not permit the appellate authority to remand the case back to the Assessing Authority and decide the appeal on merits taking the additional evidence on record, if found necessary. This Dt:
29. 06.2016 WPs 35155-166/2016 Pharpur Cooling Towers Ltd Vs Asst. Commr. Of Comml. Taxes 8/11 sub-sec.(6-A) appears to have been introduced later on by Act 6/2005 with effect from 19.3.2005. The restriction on the power of the appellate authority to remand the case back to the Assessing Authority as against the power to pass such orders as he thinks fit, as enumerated in sub- sec.(6)(a)(ii) of S.62, does not entitle the petitioner assessee to invoke the extra-ordinary jurisdiction of this Court under Art.226 of the Constitution of India against the assessment order itself. There is no conflict between these two sub-sections of S.62 and on the other hand, it will save rounds of litigation and will permit and compel the appellate authority to apply his mind to the merits of the case in stead of just remanding it back the learned Assessing Authority. 8 While the settled parameters for invoking the writ jurisdiction against the appeable orders are not satisfied in the present case at all, the narrow parameters like (I) where the vires of the Act or Rules are challenged (II) where there has been a breach of principles of natural justice or that (III) there is a patent lack of jurisdiction with the authority passing the impugned order, are not attracted in the present case. Dt:
29. 06.2016 WPs 35155-166/2016 Pharpur Cooling Towers Ltd Vs Asst. Commr. Of Comml. Taxes 9/11 9 The breach of principles of natural justice as suggested in the memo of writ petitions and as canvassed by the learned counsel for the petitioner with great vehemence, is not of that form or severity as if the assessee was not given any opportunity at all to raise his objections before the impugned reassessment order itself was passed. Admittedly, the notice Ex.1 was given to the assessee on 1.4.2016 to which the assessee himself has filed objections vide Annexure C dated 29.4.2016, may be a detailed but a preliminary reply simultaneously asking for more time to file a more detailed reply. In fact, the re-assessment order indicates that the assessee company vide letter of 11.4.2016 had asked for four weeks time for filing detailed objections, but the Assessing Authority gave time only up to 25.4.2016 but till then, since the assessee did not file further objections, therefore, considering the objections dated 29.4.2016, the Assessing Authority passed the reassessment order on that very date on 29.4.2016 itself. Dt:
29. 06.2016 WPs 35155-166/2016 Pharpur Cooling Towers Ltd Vs Asst. Commr. Of Comml. Taxes 10/11 10 Thus, the principles of natural justice cannot be said to have been grossly or totally violated or totally ignored in the present case so as to render the impugned order a nullity, as contended by the learned counsel. The assessee failed to file detailed reply before 25.4.2016 as directed by the Assessing Authority. 11 Therefore, this Court is satisfied that the assessee can even now raise all these objections before the appellate authority as well and the Appellate Authority who always has the co-extensive powers as well as wider as that of the Assessing Authority, can determine the tax liability and compute the taxable turnover in accordance with law, once again. In fact, the curtailment of his power for not remanding the case back to the Assessing Authority by insertion of sub-section (6-A) in S.62 of the Karnataka VAT Act saves the time which upon remand, the Assessing Authority would take and would avoid multiple rounds of litigation. Therefore, sub-sec.(6) has been enacted with a laudable object and subserves the ends of justice. Dt:
29. 06.2016 WPs 35155-166/2016 Pharpur Cooling Towers Ltd Vs Asst. Commr. Of Comml. Taxes 11/11 12 Therefore, the assessee has an equally adequate and efficacious alternate remedy available to him against the impugned reassessment order and therefore, this Court is not inclined to invoke the extraordinary jurisdiction under Art.226 of the Constitution against the impugned reassessment order. 13 Accordingly, the writ petitions are liable to be dismissed. The same are accordingly, dismissed with no order as to costs. Sd/- Judge An