Karnataka High Court
M/S Hira Enterprises vs The State Of Karnataka on 27 May, 2024
Author: Pradeep Singh Yerur
Bench: Pradeep Singh Yerur
-1-
NC: 2024:KHC-D:7032
WP No. 61948 of 2012
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 27TH DAY OF MAY, 2024
BEFORE
THE HON'BLE MR JUSTICE PRADEEP SINGH YERUR
WRIT PETITION NO.61948 OF 2012 (T-RES)
BETWEEN:
M/S HIRA ENTERPRISES,
37/2, BIRBAMAL, YAMAL ROAD,
NIPANI, TQ: CHIKKODI, DIST: BELGAUM,
THROUGH ITS MANAGING PARTNER,
SRI ASLAMBHAI S/O HASHAMBHAI,
TAMBOLI, AGE: 45 YEARS, RES: NIPANI.
... PETITIONER
(BY SRI NARAYAN G. RASALKAR, ADVOCATE)
AND:
1. THE STATE OF KARNATAKA,
REP. BY ITS PRINCIPAL SECRETARY
TO GOVERNMENT OF KARNATAKA
FINANCE DEPARTMENT,
VIDHANA SOUDHA, BANGALORE-560001.
BHARATHI 2. THE COMMISSIONER OF COMMERCIAL TAXES,
HM I MAIN, GANDHINAGAR,
Digitally signed by BHARATHI
HM
Location: HIGH COURT OF
VANIJYE THERIGE BHAVAN,
KARNATAKA DHARWAD
BENCH
Date: 2024.06.05 15:30:31
+0530
BANGALORE-560009.
3. THE JOINT COMMISSIONER OF
COMMERCIAL TAXES (ENFORCEMENT),
NORTH ZONE, CLUB ROAD,
SUMOULYA SOUDHA, 4TH FLOOR, BELGAUM.
4. THE DEPUTY COMMISSIONER,
COMMERCIAL TAXES (ENFORCEMENT),
NORTH ZONE, CLUB ROAD,
SUMOULYA SOUDHA, 4TH FLOOR, BELGAUM.
... RESPONDENTS
(BY SRI SHIVAPRABHU S. HIREMATH, ADDL. GOVERNMENT
ADVOCATE.)
-2-
NC: 2024:KHC-D:7032
WP No. 61948 of 2012
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA, PRAYING TO:
A) ISSUE A WRIT OF CERTIORARI OR WRIT IN THE
NATURE OF CERTIORARI OR ANY OTHER WRIT SETTING ASIDE THE
IMPUGNED E-ASSIGNMENT NO.992662 DATED 07.02.2012 ISSUED
BY THE JOINT COMMISSIONER OF COMMERCIAL TAXES
(ENFORCEMENT) BELGAUM, AUTHORIZING THE DEPUTY
COMMISSIONER OF COMMERCIAL TAXES (ENFORCEMENT)
BELGAUM, AS PER ANNEXURE-Q AND ALL FURTHER CONSEQUENTIAL
IMPUGNED INSPECTIONS, ORDERS, COLLECTION OF TAXES AND
COLLECTION OF COMPOUNDING FEE BY THE SAID AUTHORITY, AS
BEING CONTRARY TO THE PROVISIONS OF SECTION 52(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AND AS BEING WITHOUT
JURISDICTION AND AUTHORITY AND;
B) ISSUE A WRIT OF CERTIORARI OR WRIT IN THE
NATURE OF CERTIORARI OR ANY OTHER WRIT SETTING ASIDE THE
IMPUGNED ORDER NO.VATEYYUAA.JARI.YUVA.BE.T.11-12 DATED
09.02.2012 PASSED UNDER SECTION 82(1) OF THE KARNATAKA
VALUE ADDED TAX ACT, 2003 BY THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES (ENFORCEMENT), NORTH ZONE, BELGAUM
IMPOSING COMPOUNDING FEE OF RS. 1,05,850 ON THE PETITIONER
AS PER ANNEXURE-B AS BEING WITHOUT JURISDICTION AND
AUTHORITY AND;
C) ISSUE A WRIT OF CERTIORARI OR WRIT IN THE
NATURE OF CERTIORARI OR ANY OTHER WRIT SETTING ASIDE THE
IMPUGNED INSPECTION PROCEEDINGS INITIATED UNDER SECTION
52(1) OF THE KARNATAKA VALUE ADDED TAX ACT, 2003 BY VIRTUE
OF STATEMENT RECORDED ON 08/02/2012 VIDE ANNEXURE-D, AND
STOCK PARTICULARS STATEMENT DATED 08/02/2012 DETERMINING
THE VALUE OF THE STOCK AS PER STATEMENT OF STOCK DATED
08/02/2012 AS PER ANNEXURE-E, AND FURTHER STATEMENT OF
INSPECTION DATED 09/02/2012 AS PER ANNEXURE-F AND
DETERMINATION AND COLLECTION OF ALLEGED SUPPRESSION OF
TAX AT RS.10,58,497/- VIDE E CHALLAN DATED 21/02/2012 AS PER
ANNEXURE-J AS BEING WITHOUT JURISDICTION AND AUTHORITY;
AND
D) ISSUE A WRIT OF CERTIORARI OR WRIT IN THE
NATURE OF CERTIORARI OF ANY WRIT QUASHING THE NOTICE
NO.VATEYYUAA.JARI.YUVA.BE.T.11-12 DATED 09/02/2012 ISSUED
BY THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES
(ENFORCEMENT), BELGAUM UNDER SECTION 79 OF THE KARNATAKA
VALUE ADDED TAX ACT, 2003 AS PER ANNEXURE-C DETERMINING
-3-
NC: 2024:KHC-D:7032
WP No. 61948 of 2012
THE VALUE OF SUPPRESSED STOCK AT RS.70,56,644/- AND
DETERMINING, LEVYING AND COLLECTING TAX PURPORTED TO BE
SUPPRESSED AT RS.10,58,497/- AS PER ANNEXURE-J BEING
WITHOUT JURISDICTION AND AUTHORITY; AND
E) ISSUE A WRIT OF CERTIORARI OR A DECLARATION IN
THE NATURE OF WRIT OF DECLARATION DECLARING THAT
DETERMINING THE VALUE OF STOCK AND DIFFERENTIAL
SUPPRESSED STOCK AT RS.70,56,644/- AND DETERMINING THE
LEVY AND COLLECTION OF COMPOUNDING FEE OF RS.1,05,850 BY
VIRTUE OF ILLEGAL ORDER NO. VATEYYUAA.JARI.YUVA.BE.T.11-12
DATED 09/02/2012 PASSED UNDER SECTION 82(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 BY THE DEPUTY
COMMISSIONER OF COMMERCIAL TAXES (ENFORCEMENT), NORTH
ZONE, BELGAUM, AS PER ANNEXURE-B AS BEING WITHOUT
JURISDICTION AND AUTHORITY; AND
F) ISSUE A WRIT OF MANDAMUS OR ANY OTHER WRIT IN
THE NATURE WRIT OF MANDAMUS DIRECTING THEM THE
RESPONDENT NO.4, TO REFUND THE ILLEGALLY DETERMINED
COLLECTED TAX OF RS.10,58,497/- PAID AS PER ANNEXURE-J AND
ILLEGALLY LEVIED AND COLLECTED THE COMPOUNDING FEE OF
RS.1,05,850/- PAID AS PER ANNEXURE-H ALONG WITH INTEREST
AND EXEMPLARY COST IN THE INTEREST OF JUSTICE; AND ETC.
THIS PETITION COMING ON FOR PRELIMINARY HEARING IN 'B'
GROUP THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
Heard the learned counsel for the petitioner and the
learned Addl. Government Advocate for the respondents.
2. This petition is filed by the petitioner seeking to
quash the impugned order passed by the respondent for
collection of the value added tax including the penalty and
several orders impugned herein.
NC: 2024:KHC-D:7032
3. Petitioner is a partnership firm engaged in
manufacturing Baba Gutkha, Hira Gutkha and Hira Pan
Masala in Nipani in Belgaum district. It is not in dispute that
the petitioner firm is registered under the Karnataka Value
Added Tax Act, 2003 with TIN No.29530256237 and
registered under the Central Sales Tax Act, 1956 and Entry
Tax Act, 1979. The petitioner as stated earlier is a
manufacturer of Gutkha and sells Gutkha and Pan Masala
within the State, so also in the course of interstate trade,
and export out of the country. For the year 2010-11, the
petitioner firm had declared various sales of various brands
of Gutkha at Rs.80,64,18,862/- and paid Value Added Tax of
Rs.6,46,36,258/-. As per the profit and loss account, the
petitioner had filed the monthly returns for the year 2011-12
and paid Entry Tax as well as Value Added Tax according to
the assessing authority. The same was accepted for the year
2011-12.
4. Respondent No.4, Deputy Commissioner of
Commercial Taxes (Enforcement), Belgaum, visited the
petitioner firm, place of business on 08.02.2012 and after
NC: 2024:KHC-D:7032
verification of the stocks found out that there was disparity
in the value of stocks and the payment of tax. That is why
the respondent issued notice under section 79 of the
Karnataka Value Added Tax Act, 2003, on 09.02.2012 to the
petitioner directing the petitioner either to pay the amount or
submit the consent letter for compounding of the offence.
5. It is the case of the petitioner that the petitioner
had maintained all accounts and paid up to date tax, and not
committed any fault or fraud or evasion of payment of Value
Added Tax or the Entry Tax. It is contended by learned
counsel for the petitioner that the assessment of tax, evasion
by the petitioner, the inspection proceedings conducted by
the respondents and with regard to suppression of tax and
the consent letter obtained are all under duress and force
and coercion. It is also contended by him that the impugned
levy of Compounding Fee of Rs.1,05,580/-, collection of the
same are arbitrary, mala fide exercise of powers of the
State. It is not only illegal and arbitrary, but it was
deliberate, unconscionable and it is unconstitutional.
NC: 2024:KHC-D:7032
6. Learned counsel further contends that there is no
jurisdiction or authority to the respondent to initiate
proceedings against the petitioner as no assessment order
was made and no notice was issued and he was not given a
fair opportunity of hearing and as a matter of fact, it only
relates to Entry Tax and does not relates to Value Added
Tax, so also he has paid the Entry Tax as required under law.
Therefore, it is contended by learned counsel for the
petitioner that the entire process of assessment made by the
respondent authority with regard to evasion of tax and
compounding of tax which is said to be agreed or
compounded is false, frivolous and a coercive method, which
is used by the respondents and the petitioner has not agreed
for compounding of fee or either Entry Tax or the Value
Added Tax. Under these circumstances he contends that
there being no jurisdiction to the respondents to levy of tax,
the entire process is vitiated and against the principles of
natural justice and same requires to be quashed.
7. Per contra, learned counsel representing the
respondents contends that on verification of the purchase
NC: 2024:KHC-D:7032
records and purchase invoices pertaining to the purchase
made by the petitioner of "Quimam", it was noticed that the
petitioner has paid the Entry Tax at 1% for the year 2010-11
and 2011-12 treating the "Quimam" as raw material.
Whereas, the "Quimam" being the scheduled goods under
Sl.No.96 of Schedule-1 to the Karnataka Entry Tax Act, 1979
is liable to tax at 2% for the said period. It is also contended
that the dealer has not included the freight paid on the
purchases of the said goods. Therefore, it is contended that
the total value liable to Entry Tax at 2% comes to
Rs.1,59,67,518/- and the tax liability comes to
Rs.3,19,350/-, as against which the petitioner has paid Entry
Tax of Rs.1,45,994/- only and thereby avoided tax liability
under KTEG Act is of Rs.1,73,356/-. On such inspection and
discovery made by the respondents, the same was intimated
to the petitioner through a notice issued under section 79 of
the KVAT Act, providing the petitioner an opportunity of 7
days for compounding the said offence as contemplated in
law in lieu of prosecution by filing a charge sheet in the
Court of law. It is further contended by learned counsel that
NC: 2024:KHC-D:7032
the petitioner was given sufficient opportunity and time to
put forth his case and explore the legal opportunities
available to him under law or to compound the offence.
8. This being the state of affairs, the petitioner in his
statement made on 09.02.2012, agreed the VAT liability on
account of sales effected without a proper document and
undertook to pay the evaded tax liability by e-payment to
the office of the LVO-400, Nippani. Further, he has given a
letter of admission also dated 09.02.2012 admitting the tax
liabilities and willing to compound the offence departmentally
in a sum of equivalent to 10% of the VAT liability and
accordingly requested to drop the further proceedings. On
the statement made by the petitioner, the process of
compounding took place and he has compounded the offence
departmentally and paid the CF amount of Rs.1,05,850/- by
way of cheque dated 09.02.2012, so also discharged and
paid the VAT liability of Rs.10,58,497/- by way of e-payment
to the office of the LVO-400, Nippani, on 21.02.2012. Along
with it he had discharged the Entry Tax liability of
Rs.1,73,356/- by issuing a cheque bearing No.217979 dated
NC: 2024:KHC-D:7032
09.02.2012 in favour of LVO-400 Nippani. These documents
which are forthcoming in the writ papers produced by the
petitioner himself show that these amounts have been paid
by compounding the offence.
9. It is also contended by the learned counsel for
respondent department that the contention taken by the
petitioner that the proceedings is not maintainable for want
of jurisdiction is without any proper basis for the reason that
the entire process has been initiated by issuance of notice,
opportunity was provided, he has participated by filing
statement, has agreed for making payment and
compounding the offence, made the payment of Entry Tax,
the CF amount, so also the VAT liability and compounded the
same by issuing letters which are annexed along with the
writ papers. It is further contended that if at all the petitioner
is aggrieved by any such order wherein it has violated any of
his rights, it is always open to him to challenge the same as
the appeal remedy is provided under section 62 of the KVAT
Act, 2003.
- 10 -
NC: 2024:KHC-D:7032
10. It is also contended by the learned counsel for
respondent with regard to argument as to no jurisdiction and
authorization available to the respondent, he contends that
the Karnataka Act No.5 of 2008, the provisions of sub
section (1) of section 52 of the Value Added Tax 2003 have
been amended, whereby in sub-section (1) of section 52 of
the Act after the words "authorized by the Commissioner",
the words "to exercise all or powers specified below either
generally or specifically" have been inserted with
retrospective effect from 01.04.2005 and the Commissioner
of Commercial Taxes from time to time has been issuing
notification delegating the powers to the various officers of
the Commercial Tax Department to conduct any further
process of delegation. He further contends that in the instant
case, the assignment note for conducting inspection by the
Deputy Commissioner of Commercial Taxes (Enforcement),
North Zone, Belgaum, is generated by the Central Processing
Unit situated in the office of the Commissioner of Commercial
Tax, Bengaluru. Therefore, respondent No.4 is properly
authorized by the Commissioner to conduct inspection of the
- 11 -
NC: 2024:KHC-D:7032
business premises of the petitioner as per the assignment
issued. Hence, the question of there being no jurisdiction or
unauthorization by the competent authority is uncalled for
and would not hold water.
11. It is also further contended by learned counsel for
respondent that nothing material has been placed before the
Court to show that there is apparent inherent violation of any
fundamental right or violation of principles of natural justice,
which would attract the filing of the present writ petition for
interference by this Court under Article 226 of the
Constitution of India when there is an alternative efficacious
remedy available under the Act. Therefore, he contends that
when the petitioner himself has accepted the notice, issued a
statement in which he has agreed to make good the
payment of the Entry Tax, the CF amount, the Value Added
Tax, which are enclosed along with the writ papers and has
agreed to compound and compounded the offence and made
good the amount, he cannot now turn around and blow hot
and cold at the same time by saying that the respondent
does not have the jurisdiction and authority to initiate the
- 12 -
NC: 2024:KHC-D:7032
process after making good the payment which is sought for
by the respondent, including the Entry Tax as well as the
Value Added Tax along with CF amount.
12. Under these circumstances and on careful perusal
of the records, though the learned counsel for the petitioner
has relied on several judgments in support of his case to
show that the assessment order has not been done and
neither is the reassessment been done. The same would not
apply to the petitioner in the present case for the reason that
the petitioner had not approached this Court to show that
the assessment order is not done or reassessment has not
been done after subjecting himself to the statement agreeing
to pay the penalty amount, CF amount, the Entry Tax
amount as well as the VAT amount, by subjecting himself to
the compounding of the offence under section 82 of the Act,
which deals with compounding of the offence and pursuant
to such compounding of the offence, the entire case is closed
and nothing survives in view of the fact that the petitioner
has compounded the offence which is forthcoming by the
records produced by him, which nowhere depicts that he had
- 13 -
NC: 2024:KHC-D:7032
paid such amount by way of any protest or taken any
defence anywhere stating that it was under duress.
13. The contention urged by learned counsel for the
petitioner cannot be accepted that the entire process
initiated by the respondent was in duress, or that he had
protested at any point of time. Under the circumstances,
petition would not merit consideration. The petition is liable
to be dismissed. Accordingly I proceed to pass the following:
ORDER
The writ petition is dismissed.
Sd/-
JUDGE
MRK
CT:BCK
