M/S Yojaka (INDIA) Private LTD vs. The State Of Karnataka - Karnataka High Court, 02 February 2023

Cause title — parties, addresses and appearances

- 1 - WP No. 1460 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF FEBRUARY, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 1460 OF 2023 (T-RES) BETWEEN: M/S YOJAKA (INDIA) PRIVATE LTD, REP BY ITS MANAGING DIRECTOR JAGADISH BOLOOR D NO.3-2843 ABCO TRADE CENTRE N H 17 KOTTARA CHOWKI MANGALORE-575006. …PETITIONER (BY SMT. VANAJA M R.,ADVOCATE) AND: 1. THE STATE OF KARNATAKA FINANCE DEPARTMENT II FLOOR, VIDHANA SOUDHA BENGALURU-560001 (REP BY ADDL CHIEF SECRETARY). 2. UNION OF INDIA MINISTRY OF FINANCE NEW DELHI-110001 (REP BY ITS SECRETARY). 3. THE GOODS AND SERVICES TAX COUNCIL JANPATH CONNAUGHTA PLACE NEW DELHI-110001 (REP BY SPECIAL SECRETARY). 4. THE PRINCIPAL COMMISSIONER OF CENTRAL TAX NO.1 QUEENS ROAD VASANTHNAGAR Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - WP No. 1460 of 2023 BENGALURU-560001. 5. THE DEPUTY COMMISSIONER OF COMMERCIAL TAX GOVT OF KARNATAKA VANIJYA THERIGE KARYALAYA 1ST MAIN ROAD, GANDHINAGAR BANGALORE-560009. 6. COMMISSIONER CITY MUNICIPAL COUNCIL UDUPI. 7. THE DY. COMMISIONER COMMERCIAL TAX AUDIT-1 MANGALORE. …RESPONDENTS (BY SRI.K. HEMAKUMAR., AGA FOR R1, R5 & R7; SRI. MADANAN PILLAI, CGC FOR R2; MS. PREETHA MAHADEVAN FOR R3 & R4; NOTICE TO R6 IS DISPENSED WITH) THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE PROVISIONS OF GST ACT IS INAPPLICABLE IN THE PETITIONER CASE FOR THE PERIOD APRIL 2017 TO JUNE 2017 IN RESPECT OF WORKS CONTRACT WHERE PROVISIONS OF SERVICE ARE MADE PRIOR TO 01.07.2017 IS SO FAR AS PETITIONER IS CONCERNED AND FURTHER THE R5 HAS NO JURISDICTION TO EITHER ISSUE NOTICE OR PAS ASST. ORDER DATED 31.03.22 ANNEXURE-F OR TO TAKE ANY COERCIVE STEPS LIKE ISSUING NOTICE FOR COLLECTION OF DEMAND TO THE PETITIONER BANK (MANAGER, CANARA BANK) TO PAY RS.76,01,123 DATED 23.05.22 ANNEXURE-J AND FILE CRIMINAL CASES MIS.CASE NO.561/22 AGAINST ALL THE DIRECTORS OF THE PETITIONERS COMPANY FOR COLLECTION OF DEMAND ANNEXURE-K AS STATED ABOVE SAME IS POSTED TO 27.01.23 AGAINST THE PETITIONER UNDER THE PROVISIONS OF KVAT OR GST ACT. - 3 - WP No. 1460 of 2023 THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:

ORDER

The petitioner, apart from impugning the provisions of Goods and Services Act 2017 [for short, ‘GST Act’] certain other provisions of the GST Act is impugned for declaration that the provisions of the GST Act would not apply for the present case, has called in question the order dated 31.03.2022 [Annexure -F] under Section 39(1) read with Sections 72(2) and 36(1) of the Value Added Tax Act 2003 [for short, ‘the VAT Act’]. The order dated 31.03.2022 is for the period of assessment between April 2017 and June 2017. 2. However, after being heard for some time, Smt.M.R.Vanaja, the learned counsel for the petitioner, submits that the petitioner would request for leave to confine this petition to the challenge to the order dated 31.03.2022. In fact, both Sri.V.Madan Pilai and Ms. Preetha Mahadevan, who

- 4 - appear for the other respondents, submit that if the petitioner’s grievance is confined only to the reassessment order dated 31.03.2022 and this Court were to decide on the merits of such impugned order, the petition could be disposed of. As such, Smt.Vanaja, the learned counsel for the petitioner and Sri Hema Kumar K., the learned Additional Government Advocate, are heard for final disposal of the petition.

It emerges from the records that the petitioner has not participated in the re-assessment proceedings which has resulted in the order dated 31.03.2022. Smt. Vanaja submits that the petitioner is served with notice prior to the reassessment under Section 39(1) of the VAT Act, but the petitioner did not participate in the proceedings because the petitioner’s representatives were under the bona fide belief that as the reassessment was proposed on the receipt of Escalation Charges there would be no

- 5 - order of re-assessment. Smt. Vanaja also submits that it is indisputable that Escalation Charges would not be exigible under the VAT Act, but the reassessment is framed without considering whether the Escalation Charges would be exigible for the purposes under the VAT Act.

Sri K. Hema Kumar the learned Additional Government Advocate, submits that if the petitioner does not deny receipt of notice as contemplated under Section 39(1) of the VAT Act, it cannot complain about lack of opportunity and there cannot be any reason for interference by this Court. However, Sri K. Hema Kumar does not contest the petitioner’s contention that the amount received as Escalation Charges would not be exigible under the VAT Act has not been examined. It remains salient with this that the fulcrum of the petitioner’s case for the reassessment has not been considered.

Sri K.Hema Kumar, at this stage, submits that if this Court is inclined to interfere with the impugned order on the ground that any crucial aspect is not considered and that must be considered for a valid reassessment, this Court could consider disposing of this petition restoring the proceedings but observing that the petitioner should not be at liberty to raise ground of limitation as the reassessment order is within the limitation and this Court’s interference is at the petitioner’s instance on the ground that this salient has not been considered.

On a careful consideration of these submissions, and when it remains undisputed that the seventh respondent could not have decided on reassessment without considering the petitioner’s case that the amount received as Escalation Charges would not be exigible under the VAT Act, this Court is of the considered opinion that the petition must

- 7 - succeed to this limited extent with the impugned order dated 31.03.2022 being quashed and the proceedings restored to the seventh respondent for reconsideration with liberty to the petitioner to file detailed objections but without raising question of limitation as the impugned order is within time. This Court must observe that all questions are left open for consideration by the seventh respondent. Hence, the following: ORDER

a) The petition is allowed in part. The petition for the different relief/s other than the relief as against the challenge to the reassessment order dated 31.03.2022 is dismissed. The petition is allowed as against the order dated 31.03.2022 and consequentially it stands quashed. All the subsequent recovery proceedings, including the

- 8 - proceedings before the juri ictional magistrate, stand quashed. b) The proceedings are restored to the seventh respondents for reframing the reassessment with due opportunity to the petitioner who shall be at liberty to a detailed response. c) The petitioner shall appear before the seventh respondent without further notice on 06.03.2023. d) As the reassessment order dated 31.03.2022 is quashed, it is observed that there cannot be any precipitation until the reassessment is framed once again. JUDGE SA ct:sr