The Commissioner Of Commercial ... vs M/S Agamtel India Pvt. Ltd
2022 Latest Caselaw 3763 Kant

  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 5TH DAY OF MARCH, 2022

                         PRESENT

         THE HON'BLE MRS.JUSTICE S.SUJATHA

                           AND

THE HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR

                   S.T.R.P.No.56/2019

BETWEEN :

THE COMMISSIONER OF COMMERCIAL TAXES
VANIJYA THERIGE KARYALAYA,
P.KALINGA RAO ROAD,
1ST MAIN ROAD, GANDHINAGAR,
BENGALURU.                               ...PETITIONER

(BY SRI JEEVAN J. NEERALGI, AGA.)

AND :

M/s AGAMTEL INDIA PVT. LTD.,
# 158-35/3, III MAIN,
INDUSTRIAL TOWN, RAJAJINAGAR,
BENGALURU-560044                        ...RESPONDENT

(BY SRI ATUL K. ALLUR, ADV.)

     THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
JUDGMENT DATED 04.10.2018 PASSED IN STA.NO.682/2016
ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT
BENGALURU, ALLOWING THE APPEAL AND SETTING ASIDE
THE ORDER DATED 26.04.2016 PASSED IN VAT.AP.No60/2014-
15 ON THE FILE OF THE JOINT COMMISSIONER OF
COMMERCIAL TAXES, (APPEALS-2) BENGALURU, DISMISSING
THE APPEAL FILED AGAINST THE PENALTY ORDER AND
ENDORSEMENT BOTH DATED 19.03.2014 ISSUED BY
                              -2-




COMMERCIAL TAX OFFICER, (ENFORCEMENT-46) BENGALURU
(HEREINAFTER REFERRED IN SHORT AS THE PA) UNDER
SECTION 53(12) OF THE ACT, FOR NON-PAYMENT OF PENALTY.

      THIS PETITION COMING ON FOR HEARING, THIS DAY,
S. SUJATHA, J., MADE THE FOLLOWING:

                         ORDER

This Sales Tax Revision Petition is filed by the

revenue under Section 65(1) of the Karnataka Value

Added Tax Act, 2003 (hereinafter referred to as 'the Act'

for short) challenging the judgment dated 04.10.2018

passed by Karnataka Appellate Tribunal, Bengaluru, in

STA No.682/2016 raising the following questions of law:

1. "Whether, the Tribunal has erred in setting aside the

levy of penalty, despite the admitted fact that the

respondent was transporting Spectrum Analyzer

without being accompanied by e-sugam as prescribed

under the Notification dated 09.10.2013.

2. Whether the Tribunal has erred in holding that the

Spectrum Analyzer is an It product without examining

the question as to whether the said goods are

electronic goods or not falling within the scope of the

notification dated 09.10.2013."

2. The respondent herein is a Private Limited

Company engaged in business and trading in IT

products like computers, printers, UPs and other

materials required for the IT industries under the name

and style, M/s Agmatel India Pvt. Ltd., having its

registered office at No.158-35/3, 3rd Main, Industrial

Town, Rajajinagar, Bengaluru, registered under the

provisions of the Act.

3. The respondent having awarded with the

contract by the Director General, Supplies and

Disposals, Government of India, New Delhi, for supply

of various IT products, the Spectrum Analyzer worth

Rs.32,23,163-07 were moved from the office of the

respondent on 09.03.2014 as per the invoice raised

dated 08.03.2014 pursuant to the orders placed by the

office of Prasara Bharati, All India Radio and Dhoor

Darshan, Chennai. However, no e-sugam was

accompanied with the goods considering the Spectrum

Analyzer as IT product. The Enforcement Officer has

checked the goods vehicle and after noticing the other

documents except e-sugam produced by the driver

incharge of the vehicle, issued an endorsement dated

09.03.2014 levying penalty of Rs.3,36,719-00 under

Section 53(12) of the Act treating the Spectrum Analyzer

as electronic goods. Being aggrieved, the respondent

preferred an appeal before the First Appellate Authority

unsuccessfully. On further appeal before the Tribunal,

the same came to be allowed, setting aside the order of

the First Appellate Authority confirming the order of the

Enforcement Officer. Being aggrieved, the petitioner-

State has preferred this revision petition.

4. Learned AGA appearing for the petitioner-

State submitted that the Tribunal has erred in

misconstruing the scope of the notification dated

31.03.2006 read with Entry No.53 of the III Schedule.

The said notification cannot be looked, while analyzing

the scope and ambit of the notification dated

09.10.2013, specifying the commodities for the purpose

of issuing e-sugam. The Spectrum Analyzer cannot be

classified as IT product to bring it within the purview of

Entry No.53 of the III Schedule.

5. It is further argued that even assuming that

Spectrum Analyzer is an IT product, still it continues to

be electronic goods which necessarily requires the

compliance of notification dated 09.10.2013, wherein

the electronic goods of all kinds have been specified

which mandates the documents to be accompanied with

the goods carried in the goods vehicle i.e., e-sugam in

the present case.

6. Learned counsel appearing for the

respondent-assessee justifying the impugned order

submitted that in view of the notification dated

31.03.2006 issued by the Government of Karnataka

wherein, it has been specified that Spectrum Analyzer

would come under Sl.No.22 - heading and sub-heading

No.9030 of the Central Excise Tariff Act, 1985, as

Information Technology (IT Products), non-carrying of

e-sugam along with the goods, that too in the inter-state

movement of goods was not in violation of the provision

of Section 53(2) of the Act to attract any penalty.

7. Learned counsel further submitted that

indeed e-sugam was raised and was produced along

with the reply before the Enforcement Officer. Thus, the

Tribunal having analyzed these material aspects, has

allowed the appeal filed by the respondent-assessee

which requires to be confirmed by this Court answering

the questions of law against the revenue and in favour

of the assessee.

8. We have given our anxious consideration to

the arguments advanced by the learned counsel

appearing for the parties and perused the material on

record.

9. The questions of law raised in this revision

petition revolves around the interpretation of the

notification No.FD 116 CSI 2006 (9) dated 31.03.2006

vis-a-vis the notification dated 09.10.2013 issued by the

office of the Commissioner of Commercial Taxes

(Karnataka) specifying the documents necessarily

required to accompany the goods moving in the goods

vehicle, which have to be produced at the time of

checking of such vehicle. It is trite to refer the relevant

portion of the notification No.FD 116 CSI 2006 (9) dated

31.03.2006 and the same reads as under:

"NOTIFICATION

No.FD116 CSL 2006 (9), Bangalore dated

31.03.2006.

In exercise of the powers conferred by clause (a) of

sub-section (1) of the Section 4 read with Entry 53 of the

Third Schedule to the Karnataka Value Added Tax Act,

2003 (Karnataka Act 32 of 2004) and in supersession of

Notification No.FD 197 CSL 2005 (7), dated 30th April,

2005 (See Sl.No.231) the Government of Karnataka

hereby specifies with effect from the first day of April,

2006, the goods specified in column (3) of the table

below with heading and sub-heading numbers under

the Central Excise Tariff Act, 1985 (Central Act 5 of

1986), as IT (Information Technology) products, namely.

TABLE

Heading and sub-

    Sl.No.                                               Description
                    heading No.


                                            Cathode    ray   oscilloscopes,
                                            spectrum analysers, cross talk
                                            meters,     gain    measuring
     22                   9030              instruments, distortion factor
                                            meters, psophometers, network
                                            and logic analysers and signal
                                            analysers.




     10.     Similarly,     it   is    beneficial   to    quote      the

notification dated 09.10.2013, the relevant portion of

which reads thus:

"PREAMBLE

Whereas, sub-section (2) of Section 53 of the

Karnataka Value Added Tax Act, 2003 (Karnataka Act

No.32 of 2004) specifies that certain documents shall

accompany a goods vehicle which has to be produced at

the time of checking of such vehicle and

Whereas Clause (b) of Sub-Section (2) of Section 53

of the Karnataka Value Added Tax Act, 2003 (Karnataka

Act No.32 of 2004) authorizes the Commissioner to notify

the documents which should accompany the goods carried

in the goods vehicle and

Whereas such production and verification of the

documents consume time and may also lead to avoidable

delays at the time of check and

Whereas it is expedient in the public interest to

have a system where all transactions recorded in such

documents are properly accounted for by the dealers and.

NOTIFICATION

PART - A

FOR DESPATCHES BY REGISTERED DEALERS AS A

RESULT OF SALE

- 10 -

1. Every dealer registered under the Act who dispatches

any of the following goods:

13. Electronic goods of all kinds"

11. The Entry No.53 of the III Schedule of the

Act, reads thus:

"53. IT products including telecommunication equipments

as may be notified."

12. Indisputably, by virtue of the notification

dated 31.03.2006, the Spectrum Analyzer is classified

under Entry No.53 of the III schedule to the Act. IT

products do not find a place in the notification dated

09.10.2013. However, an endeavor has been made by

the department to bring this Spectrum Analyzer under

the category of 'electronic goods of all kinds' to levy

penalty under Section 53(12) of the Act for non

compliance of accompanying the e-sugam along with

the goods carried in the goods vehicle. This exercise of

the Revenue certainly runs counter to the FD

- 11 -

notification dated 31.03.2006. The Spectrum Analyzer

having classified as IT product in terms of the said

notification ought not to have been brought under the

Entry 13 - 'electronic goods of all kinds' as per the

notification dated 09.10.2013 by the Revenue to levy

penalty under Section 53(12). Even otherwise, it is not

in dispute that the assessee has subsequently raised e-

sugam and produced the same along with the reply. It

is also not in dispute that the goods were moving to

Chennai Office of Prasara Bharati, All India Radio and

Dhoor Darshan, pursuant to the orders placed for

supply of the Spectrum Analyzer to their Chennai

Office. In this background, the Tribunal has rightly

analyzed the matzerial facts and arrived at a conclusion

that the Spectrum Analyzer being an IT product,

included under the notification dated 31.03.2006, the

department ought not to have insisted for e-sugam to be

accompanied with the goods moving in the goods

vehicle.

- 12 -

13. For the aforesaid reasons, no irregularity or

perversity being found with the order impugned, the

same deserves to be confirmed. Hence, we answer the

questions of law against the revenue and in favour of

the assessee.

Resultantly, Sales Tax Revision Petition stands

dismissed.

Sd/-

JUDGE

Sd/-

JUDGE KTY