M/S Raj Shree Granites Limitied vs The State Of Karnataka
2022 Latest Caselaw 2223 Kant

          IN THE HIGH COURT OF KARNATAKA,
                   DHARWAD BENCH
                                                    R
      DATED THIS THE 11TH DAY OF FEBRUARY 2022

                      PRESENT

        THE HON'BLE MR. JUSTICE S.G. PANDIT

                         AND

 THE HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE

               STRP NO.100024 OF 2016
        C/W STRP NOS.100025/2016, 100026/2016
                  AND 100027/2016.

IN STRP NO.100024 OF 2016

BETWEEN

M/S RAJ SHREE GRANITES LIMITED
BASAVASADAN JOSHI GALLI
ILKAL, BAGALKOTE DIST-587125.
(REPRESENTED BY MANAGING DIRECTOR
SRI.VINODKUMAR AHUJA).
                                        ... PETITIONER
(BY SRI.AUTUL.K.ALUR, ADVOCATE)

AND

THE STATE OF KARNATAKA
REPRESENTED BY THE
COMMISSIONER OF
COMMERCIAL TAXES,
VANIJYA THERIGE KARYALAYA
GANDHINAGAR, BENGALURU-560009.
                                       ... RESPONDENT

(BY SRI. SHIVAPRABHU HIREMATH, GOVT. ADVOCATE) `

THIS STRP IS FILED U/S.65(1) OF KARNATAKA VALUE- ADDED TAX ACT 2003 AGAINST THE ORDER DATED:23.03.2016 PASSED IN STA NO.306-351/2003, ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT BENGALURU, DISMISSING THE PETITION FILED UNDER SECTION 63 OF THE KARNATAKA VALUE ADDED TAX ACT 2003.

IN STRP NO.100025 OF 2016

BETWEEN

M/S RAJ SHREE GRANITES LIMITED BASAVASADAN JOSHI GALLI ILKAL, BAGALKOTE DIST-587125.

(REPRESENTED BY MANAGING DIRECTOR, SRI.VINODKUMAR AHUJA).

... PETITIONER (BY SRI.AUTUL.K.ALUR, ADVOCATE)

AND

THE STATE OF KARNATAKA REPRESENTED BY THE COMMISSIONER OF COMMERCIAL TAXES, VANIJYA THERIGE KARYALAYA GANDHINAGAR, BENGALURU-560009.

... RESPONDENT

(BY SRI. SHIVAPRABHU HIREMATH, GOVT. ADVOCATE)

THIS STRP IS FILED U/S.65(1) OF KARNATAKA VALUE- ADDED TAX ACT 2003 AGAINST THE ORDER DATED:23.03.2016 PASSED IN STA NO.306-351/2003, ON THE `

FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT BENGALURU, DISMISSING THE PETITION FILED UNDER SECTION 63 OF THE KARNATAKA VALUE ADDED TAX ACT 2003.

IN STRP NO.100026 OF 2016

BETWEEN

M/S RAJ SHREE GRANITES LIMITED BASAVASADAN JOSHI GALLI ILKAL, BAGALKOTE DIST-587125.

(REPRESENTED BY MANAGING DIRECTOR, SRI.VINODKUMAR AHUJA).

... PETITIONER (BY SRI.AUTUL.K.ALUR, ADVOCATE)

AND

THE STATE OF KARNATAKA REPRESENTED BY THE COMMISSIONER OF COMMERCIAL TAXES, VANIJYA THERIGE KARYALAYA GANDHINAGAR, BENGALURU-560009.

... RESPONDENT

(BY SRI. SHIVAPRABHU HIREMATH, GOVT. ADVOCATE)

THIS STRP IS FILED U/S.65(1) OF KARNATAKA VALUE- ADDED TAX ACT 2003 AGAINST THE ORDER DATED:23.03.2016 PASSED IN STA NO.306-351/2003, ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT BENGALURU, DISMISSING THE PETITION FILED UNDER SECTION 63 OF THE KARNATAKA VALUE ADDED TAX ACT 2003.

`

IN STRP NO.100027 OF 2016

BETWEEN

M/S RAJ SHREE GRANITES LIMITED BASAVASADAN JOSHI GALLI ILKAL, BAGALKOTE DIST-587125.

(REPRESENTED BY MANAGING DIRECTOR, SRI.VINODKUMAR AHUJA).

... PETITIONER

(BY SRI.AUTUL.K.ALUR, ADVOCATE)

AND

THE STATE OF KARNATAKA REPRESENTED BY THE COMMISSIONER OF COMMERCIAL TAXES, VANIJYA THERIGE KARYALAYA GANDHINAGAR, BENGALURU-560009.

... RESPONDENT

(BY SRI. SHIVAPRABHU HIREMATH, GOVT. ADVOCATE)

THIS STRP IS FILED U/S.65(1) OF KARNATAKA VALUE- ADDED TAX ACT 2003 AGAINST THE ORDER DATED:23.03.2016 PASSED IN STA NO.306-351/2003, ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT BENGALURU, DISMISSING THE PETITION FILED UNDER SECTION 63 OF THE KARNATAKA VALUE ADDED TAX ACT 2003.

THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS, COMING ON FOR 'PRONOUNCEMENT OF ORDERS', THIS DAY, ANANT RAMANATH HEGDE J., MADE THE FOLLOWING:

`

COMMON JUDGEMENT

This batch of Sales Tax Revision Petitions raise

common questions of law and these petitions are arising

out of order dated 23.3.2016 passed by the Karnataka

Appellate Tribunal, Bengaluru (CAMP at Belagavi). Thus

the petitions STRP Nos.100024/2016 to 100027/2016

are heard together and disposed of by common judgment.

2. The dispute is pertaining to the assessment

year 2007-2008. The appeals before the Tribunal, in STA

No.306 to 351 were directed against the order passed by

the Commissioner of Commercial Taxes (Appeals)

Belgaum (for short 'the first appellate authority) in

proceeding No.JCCT/AP/BG/KVCT-312 to 357/2011-

12/B. In terms of the said judgment dated 16.11.2012,

the first appellate authority has dismissed the appeals

filed by the present petitioner. As a consequence of the

dismissal of the said first appeals, the reassessment

orders dated 14th and 15th July-2011 passed in exercise

of powers under Section 39(1), 72(2) and 36 of the `

Karnataka Value Added Tax Act, 2003 (KVAT Act for

short) are confirmed.

Brief facts.

3. The present petitioner is a public limited

company engaged in extracting, processing and sale of

granite blocks. The petitioner is having head office at

Kolkatta and is having its factory/mine in Balakundi

village, Ilkal, Bagalkot.

4. On 11.2.2011, the office premise of the

petitioner at Ilkal was subjected to inspection. Six

documents were reseized on that day. These six

documents form the basis for reassessment orders. The

petitioner-company in the first instance took a stand that

the seized documents are not the documents of the

petitioner company, on the premise that the room of the

factory manager from where the documents were seized

is not the premises of the petitioner company. `

5. Subsequently, the Assistant Commissioner of

Commercial tax passed an order of reassessment after

issuing show-cause notice. Petitioner challenged the

reassessment order before the appellate authority. The

challenge failed. Petitioner approached the Appellate

Tribunal. Tribunal did not entertain the second appeal

and dismissed the same. Hence the present revision

petition under S.65 of the Karnataka Value Added Tax

2003.

6. This Court has admitted the revision petition

in terms of order dated 05.02.2018 and framed the

following substantial questions of law.

"A) Whether on the facts and circumstances of the case the order passed by the enforcement authority and the audit authority u/s 39(1) of the KVAT Act, is biased against the petitioner?

B) Whether on facts and circumstances of the case the audit authority has given a sufficient opportunity to the petitioner to produce the books of accounts?

 `




           C)    Whether        on   the   facts   and

circumstances of the case the Tribunal was right in concluding that books of accounts seized from the other premises can be relied on in concluding the assessment order?

D) Whether on the facts and circumstances of the case when the selling dealer has already discharged the taxes, the tax can be levied on the same turnover in the hands of the petitioner?"

At the time of hearing the petitions, considering the contentions raised, the additional substantial question of law is framed as under.

E) Whether the appellate authority is justified in dismissing the appeal without analyzing additional documents produced by the appellant before it?

7. We have heard the learned counsel, Sri Atul.

K.Alur for the petitioner and the learned Government

Advocate, Sri Shivaprabhu Hiremath for the revenue.

8. The Learned counsel for the petitioner would

raise the following contentions. `

(a) The authority/officer who seized the books of account himself passed the reassessment order, as such, the assessment order is vitiated on account of bias.

(b) Assessment order dated 14.07.2011 and 15.07.2011 is virtually an ex parte order, passed without affording sufficient opportunity of hearing to the petitioner.

(c) Though the additional documents are produced before the appellate authority, the authority has not taken into consideration the additional documents.

(d) The petitioner is ready to furnish all the necessary documents for inspection and reassessment.

9. The learned Advocate Mr Shivaprabhu

Hiremath, defending the impugned order would raise the

following contentions.

(a) The assessing officer has granted sufficient opportunity to the petitioner to defend the case and the same has not been availed by the petitioner.

`

(b) Before the appellate authority the petitioner has produced the additional documents and also raised additional grounds and the appellate authority has considered the additional grounds as well as the additional documents and based on the materials available on record has rightly dismissed the appeal.

(c) Section 39(1) of the Act, confers power on the Commissioner to authorize a competent officer to pass an order of reassessment. Since the statute itself confers powers on the commissioner to appoint any prescribed officer to pass an order of reassessment, the authority who seized the materials on inspection is better suited to pass an order of reassessment, as the said officer will be having first-hand information relating to the suppression of tax.

10. We have considered the contentions raised at

the bar and perused the judgments cited.

11. As far as contention relating to the bias raised

by the petitioner is concerned it is to be noticed that `

Section 39(1) of the Act, confers power on the prescribed

authority to pass an order of reassessment. Sub-Section

2 of Section 24 of the Act defines the term 'prescribed

authority. As per Sub-Section 2 of Section 24 of the Act,

prescribed authority means an officer of the Commercial

Taxes Department, authorized by the Government or the

Commissioner to perform such functions as may be

assigned to him. There is no dispute that the

Commissioner has authorized the jurisdictional Assistant

Commissioner of Commercial Taxes to carry out a

reassessment order. The learned counsel for the

petitioner with all vehemence urged before this Court

that the officer who conducted inspection namely

Assistant Commissioner of Commercial Taxes could not

have passed the reassessment order under Section 39 (1)

of the Act. The learned counsel elaborating his

submission would urge before the Court that the order

violates the principles of natural justice as the Assistant

Commissioner who conducted inspection would be `

biased to defend his actions as he has proposed to

impose a tax on reassessment. According to the learned

counsel, it violates one of the fundamental principles of

natural justice namely Nemo Judex in causa sua, that

is to say, no one should be a judge in his cause.

12. Indeed, fundamental principles of natural

justice mandate that before passing any order against

any person, the person should be heard and the person

who is passing the order should not be a judge in his

own cause. However, these principles are not without

exception. The statute in certain circumstances can do

away with the aforementioned principles or dilute the

rigour of the principles of natural justice to the extent

required. A reading of Section 39 (1) read with sub-

Section 2 of the Act, would lead to the inevitable

conclusion that under the scheme of the Act, there is no

prohibition for an officer, who has caused inspection to

conduct the proceedings for reassessment provided he is `

authorized under the Act. Section 61 of the Act deals

with officers' jurisdiction under the Act. Section 61 of the

Act would read as under;

61. Jurisdiction of officers and change of incumbent of an office.

(1) The Additional Commissioners, Joint Commissioners, Deputy Commissioners, Assistant Commissioners and Commercial Tax Officers shall perform their functions in respect of such areas or of such dealers or classes of dealers or such cases or classes of cases as the Commissioner may direct.

(2) The word 'case in relation to any dealer specified in any order or direction issued thereunder means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year.

`

(3) Whenever in respect of any proceeding under this Act, any prescribed authority ceases to exercise jurisdiction and is succeeded by another who may exercise that jurisdiction, the authority or officer so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor.

(4) The person concerned may demand that before the proceeding under sub-section (3) is so continued, the previous proceeding or any part thereof be reopened or that before any order is passed against him, he be reheard.

13. In terms of Section 61(1) the Assistant

Commissioner and other officers specified in the

provision shall perform functions in respect of such area

or such dealers or classes of dealers or clauses of cases

as the Commissioner may direct. The word 'case' referred

to in sub-Section (1) refers to all proceedings under the

Act in respect of any year which may be pending on the

date of such order or direction or which may not be `

completed on or before such date and includes all

proceedings under this Act which may be commenced

after the date of such order or direction in respect of any

year. The provision referred above does not put any

embargo on the Commissioner while referring the cases

for reassessment to the prescribed officer. Thus, from the

language employed in sub-Section (1) and (2) of Section

61, it is manifestly apparent that the authorities specified

are enjoined to carry out such work and to pass such

orders as prescribed. S.39 and S.61 do not disable the

officer who conducts inspection from passing the

reassessment orders. Under the scheme of said Act, there

is no bar for the authority who conducts inspection from

passing the reassessment order under Section 39(1) of

the Act. Thus, the contention that the order passed by

the Assistant Commissioner of Commercial Taxes violates

principles of natural justice has no merit. `

14. The learned counsel for the petitioner would

alternatively submit that assuming that the Assistant

Commissioner of Commercial Taxes is not disabled to

pass orders on reassessment, nevertheless, it is open for

the petitioner to allege bias if there are materials to

support the contention. There is no difficulty in accepting

this contention. However, the question is whether there

are any materials to prove the bias. To justify the

contention of bias, the learned counsel would invite the

attention of the Court to the fact that the Assistant

Commissioner of Commercial Taxes has passed the order

in haste without affording sufficient opportunity of

hearing. It is urged before this Court that the petitioner

sought time to produce the documents in support of their

defence. However, it is urged that the time granted to

produce the documents, was not sufficient. Based on this

it is urged that the Assistant Commissioner of

Commercial Taxes who caused inspection and proposed

the tax was also interested in justifying the order and `

same suffers from bias. This Court has gone through the

records. It is noticed that the petitioner who appeared

pursuant to show cause notice in the reassessment

proceeding sought an adjournment to produce certain

documents and the same was granted. The adjournment

was sought in terms of application dated 17.6.2011

which was received by the Assistant Commissioner of

Commercial Taxes on 20.6.2011. Four weeks time was

sought by the petitioner to produce the documents. This

application was considered by the Assistant

Commissioner of Commercial Taxes and by taking note of

a series of adjournments granted from 28.2.2011 up to

21.6.2011, four weeks adjournment sought in terms of

application dated 17.6.2011 is rejected. Nevertheless, one

week time is granted to produce the documents. And

same was communicated through speed post which is

delivered to the petitioner on 1.7.2011. However, there

was no response from the petitioner. Under the

circumstances, the Assistant Commissioner of `

Commercial Taxes passed the reassessment order on

14.7.2011. Looking into the nature of the case and the

time granted by the authority to the petitioner, to

produce the documents which the petitioner wanted to

produce, this Court is of the opinion that the alleged bias

is not established. It is a settled position of law that bias

if alleged must be proved by definite evidence. Mere

general statements will not be sufficient to accept the

plea of bias. There must be cogent evidence available on

record to conclude as to whether in fact or a mala-fide

move that resulted in miscarriage of justice, as held by

the Hon'ble Apex Court, in the case of State of Panjab

Vs V.K.Khanna and others1. In the matter of G.K.Naik

Vs, Goa University and others2, the apex court has

held that bias may be defined as partiality or preference.

It is true that, any person or authority required to act in

a judicial or quasi-judicial matter must act impartially. It

is not every kind of bias which in law is taken to vitiate

(2001) 2 SCC 330

(2002) 2 SCC 712 `

an act. It must be a prejudice which is not founded on

reason and actuated by self-interest whether pecuniary

or personal. If a preference is rational and

unaccompanied by considerations of persona interest,

pecuniary or otherwise, it would not vitiate a decision.

15. The order passed by the Assistant

Commissioner of Commercial Taxes neither can be

termed as an order passed in haste on account of bias

nor an ex parte order denying the opportunity of hearing.

16. It is also to be noticed that the plea of bias is

raised for the first time in this revision petition. The

petitioner pursuant to the show cause notice issued on

17.03.2011, has subjected himself to the jurisdiction of

the Assistant Commissioner of Commercial Taxes and till

the filing of revision petition before this Court has not

raised the plea of bias. Having repeatedly appeared

before the authority, the petitioner has sought several

adjournments and sufficient indulgence is shown by the `

authority by granting adjournments. After having

suffered the final order from the said authority, the

petitioner has filed the first appeal. Said appeal is

dismissed and it was questioned before the Tribunal. In

these two statutory appeals, a plea of bias is not raised.

Such a specious plea is raised for the first time in this

revision petition. The plea of bias, if to be raised, has to

be raised immediately. After participating in the

proceeding, being fully aware of the background of facts

that made the basis for a plea of bias, cannot be

permitted to be raised after the conclusion of the

proceeding and after the conclusion of two statutory

appeals from the said order. On the other hand, the

petitioner is estopped from raising the contention of bias.

For the aforesaid reasons, this Court is of the opinion

that the contention of bias is not available to the

petitioner. Thus, the contention of bias is rejected. Thus

substantial questions A, B, C and E are answered against

the petitioner. And question D does not survive. `

17. Coming to the contentions relating to non-

consideration of additional documents produced before

the appellate authority, the learned counsel for the

petitioner would submit that since the provision under

the Act enables the production of additional documents

in support of their claim, the appellate authority was

bound to consider the additional documents in a way, it

is required to be considered by the assessing authority.

Referring to sub-Section 6-A of Section 62 of the Act, it is

urged that there is no scope for remand of the matter to

consider the additional documents. Thus appellate

authority is bound to consider the additional documents

is the submission.

18. Sub-Section (6-A) (i) of Section 62 of the Act

reads as under;

"In disposing of an appeal before it, the appellate authority shall not remand the case to make a fresh assessment or fresh order, but shall proceed to dispose of the appeal on `

its merit, as it deems fit, if necessary by taking additional evidence."

19. The expression "if necessary by taking

additional evidence" found in sub-Section (6-A) (i) of

Section 62 of the Act makes it abundantly clear that the

appellate authority in its discretion may allow the

production of additional documents.

20. The expression "In disposing of an appeal

before it, the appellate authority shall not remand''

apart from having a negative connotation prohibiting

remand, when read with the power to take additional

evidence, unravels the inbuilt positive connotation to

consider prayer for production the additional evidence.

Thus, Section 62 (6-A) of the Act mandates the appellate

authority to consider the prayer for production of

additional evidence.

21. This Court has perused the order passed by

the appellate authority. The appellate authority in the `

impugned order dated 16.11.2012 has referred to the

additional grounds raised on 04.09.2012. However, there

is no reference to the additional documents produced in

the appeal except listing them while narrating the

contentions of the appellant. The appellate authority in

the said order has not passed any orders on the

additional documents. Since S.62 (6-A) of the Act

prohibits remand of the case. Thus if additional

documents are produced before the appellate authority in

appeal under S.62 of the Act, the authority is bound to

pass the orders on the prayer to consider additional

documents under S.62 (6-A). Appellate authority either

may allow the production or reject the production of

documents. However, it must give reasons for either of

the decision to allow or reject the prayer for the

production of documents. In case the production is

allowed, the implications of those documents should be

discussed while analyzing the correctness of the

reassessment order passed by the assessing authority as `

there is a bar to remand the matter. Whenever the

provision of the law directs an adjudicatory process in a

particular way, the same should be carried out in a way

it is mandated in law. The expression "if necessary by

taking additional evidence" found in S.62 (6) of the

Act is to be construed as not only the appellate authority

on his own may secure additional evidence but also the

party may produce additional evidence. If additional

evidence is produced at the instance of the party, the

appellate authority under the Act is required to consider

the prayer for the production of documents and pass

orders on the said prayer either rejecting the same or

allowing the same. In either case, it must be supported

by reasons. If production is allowed said additional

evidence is required to be considered while deciding the

correctness of the order impugned. However, the first

appellate authority has not carried out this mandatory

exercise.

`

22. Learned Government advocate, Sri.

Shivaprabhu Hiremath taking this Court through the

order passed by the appellate authority would urge that

there is enough consideration by the appellate authority

on the additional documents produced by the present

petitioner. However, the appellate authority's order does

not give the impression that the additional documents

received due consideration by the appellate authority.

Under these circumstances, this Court is of the opinion

that the appellate authority erred in exercising the

jurisdiction vested in it under Section 62 more

particularly S.62 (6-A ) of the Act 2003.

23. Learned counsel for the petitioner inviting the

attention of this Court to the orders passed by the

appellate Tribunal would take us to the finding of the

appellate Tribunal wherein the Tribunal has proceeded to

observe that the appellant has failed to produce the

seized exhibits before the Tribunal. It is to be noticed `

that the documents are produced before the appellate

authority was before the Tribunal and the same is not

considered by the Tribunal. Under these circumstances,

this Court has no other option but to set aside the order

of the first appellate authority as well as the Tribunal

accordingly. The substantial questions of law framed

above are partly answered in favour of the petitioner as

indicated above. Hence, the following;

ORDER

STRP Nos.100024/2016, 100025/2016,

100026/2016 and 100027/2016 are allowed in part.

The judgment dated 23.3.2016 passed by

Karnataka Appellate Tribunal, Bengaluru (CAMP at

Belagavi) in STA Nos.306 to 351/2013 is set-aside.

The order dated 16.11.2012 passed by the first

appellate authority marked at Annexure-L in

proceeding No.JCCT/AP/BG/KVAT-312 to 357 of

2011-12/B-946 is set-aside.

`

The matter is remitted back to the Joint

Commissioner of Commercial Taxes (Appeals) Belagavi

Division, Belagavi to consider the appeals afresh by

taking an appropriate decision on additional

documents produced along with the appeals, in

accordance with law, within six months from the date

of this order.

No order as to costs.

Sd/-

JUDGE

Sd/-

JUDGE am