Sri. Sanjay Aggarwal, Director vs. The State Of Karnataka
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Cause title — parties, addresses and appearances
ORAL ORDER
In this petition, petitioner seeks the following reliefs:
“(a) To quash the order passed by the 51st Additional City Civil and Sessions Judge, Bangalore in Crl.R.P.151/2018, dated 27.08.2018, as per Annexure-A.
(b) To quash the entire order passed by the First ACMM Court, Bangalore in C.C.No.35173/2014 dated 09.01.2018 (signed on 09.02.2018).
(c) To call for the records from the 51st Additional City Civil and Sessions Judge, Bangalore, in Crl.R.P.151/2018. (d) To call for the records from the First ACMM Court, Bangalore in CC No.35173/2014. (e) To grant any other relief deemed fit in the facts and circumstances of the case in the interest of justice and equity.” HC-KAR NC: 2025:KHC:22076
Heard learned counsel for the petitioner and learned Addl. SPP for respondent No.1 and learned AGA for respondent No.2 and perused the material on record.
A perusal of the material on record will indicate that petitioner is one of the Director of M/s. Sri. Radhakrishna Alloys (P) Ltd., Bengaluru. On 23.02.2012, FIR in Crime No.67/2012 was filed against various persons for the offences punishable under Sections 465, 468, 471 r/w 34 of IPC. In pursuance of the same, respondent No.1 – police authorities having conducted investigation have arraigned the petitioner as accused No.5 in the charge sheet by specifically stating that the petitioner being one of the Directors of the aforesaid company had not paid requisite VAT under the provisions of the Karnataka Value Added Tax (KVAT) Act, 2003 and in this context, it is relevant to state that except the allegations of non-payment of VAT by the petitioner being the Director of the aforesaid Company there are no other allegations made against the petitioner nor is the petitioner – accused No.5 sought to be proceeded against with for the alleged offences punishable under Sections 465, 468, 471 r/w 34 of IPC. HC-KAR NC: 2025:KHC:22076
Petitioner – accused No.5 filed an application seeking discharge from the proceedings, which was rejected by the Trial Court vide order dated 09.02.2018 and confirmed by the Revisional Court in Crl.RP.No.151/2018 by passing the impugned orders, which are assailed in the present petition.
Learned counsel for the petitioner submits that subsequently during pendency of present petition, the Joint Commissioner of Commercial Taxes has passed an order dated 17.11.2018 under Section 62(6) of the KV Act accepting payment of VAT by the petitioner and the Appellate Authority by order dated 18.05.2019 allowed the appeal filed by the petitioner thereby deleting tax, interest and penalty levied upon him vide re- assessment order dated 28.03.2018. The order dated 17.11.2018 passed by the Joint Commissioner of Commercial Taxes reads as under: “ORDER UNDER SECTION 62(6) OF THE KARNATAKA VALUE ADDED TAX ACT, 2003 This appeal is filed under section 62(1) of the Karnataka Value Added Tax Act, 2003 (herein afterwards referred to as 'Act) by M/s. Sri Radhakrishna Alloys Pvt. Ltd., Bangalore (herein afterwards referred to as ‘the appellant’) HC-KAR NC: 2025:KHC:22076 against the re-assessment order dated: 28.03.2018 passed u/s 39(1), 36(1) and 72(2) of the KVAT Act, 2003 by the Deputy Commissioner of Commercial Taxes, (Audit)-5.6, DVO-5, Bangalore (herein after called as “the respondent") for the tax periods April 2011 to March 2012. This appeal filed is filed in time and hence admitted.
In response to the notice issued, Sri K.J Kamath, Advocate of the appellant appeared before me and argued the case the lines of the grounds of appeal and the written submissions made at the time of hearing and requested to allow the appeals. Before I proceed to analyze the issue and give my findings, the facts of the case, grounds of appeal are as follow. FACTS OF THE CASE
1 The appellant is a Private Limited Company having manufacturing factory at Hindupur, Andhra Pradesh and the branch office at R.T. Nagar, Bangalore. Further, the appellant is also having depot at Gowribidanur, Chikkaballapura of business w.e.f.31.12.2012, the purchase turnover and input tax credit claimed by the appellant prior to de-registration in prior to 30.07.2014 becomes valid registered dealer purchases. Therefore, the appellant is entitled for input tax rebate on the said purchases as per the provisions of Section 10(2) of the KVAT Act, 2003 and hence, the said act of the respondent in disallowance of the said input tax needs to be deleted to meet the ends of justice and equity. HC-KAR NC: 2025:KHC:22076
Further, on verification of the CCT circular issued for reversal of input tax claimed with respect to the purchases from 92 bogus dealers is based on report of additional CCT/ENF/SZ/PA-60/2012-13 dated 06.09.2012, the said selling dealer is not a bogus dealer as per the list furnished in the said bogus dealer list. Further, the appellant effected purchase for the tax periods of Apr-11, May-11, Jun-11, Aug- 11, Sep-11 and Jan-12 during the year 2011-12, which is prior to the circular issued by the Commissioner. Hence, the input tax credit claimed related to M/s Sri. Rihant, TIN:29390759453 for the tax periods of Apr-11, May-11, Jun- 11, Aug-11 and Sep-11 at Rs.68,44,191-00, Rs.1,02,34,070- 00, Rs.83,42,560-00, Rs. 71,56,761-00 , Rs.60,60,523-00 and at Rs.2,52,735-00 respectively is to be allowed in the eyes of law.
From the verification of the returns filed by M/s SMS Enterprises ΤΙΝ:29690562184, it is noticed that the said dealer has filed returns during the year 2011-12 from Apr-11 to Sep-11 by declaring the output tax of Rs. 1,01,52,157-00 and the input tax of Rs.95,36,303-00. The details of returns of as available in VAT soft EFS and the purchase turnover effected by the appellant from the said selling dealer are as under: Month Ret Date OP Tax IP Tax Tax Payable Sales turnover Purchase Turn over declared by the appellant Difference Apr-11 20/05/2011 1129313 440647 8000 19964858 0 19964858 May-11 09/06/2011 2335435 2327507 7928 44891383 3021729 41869654 HC-KAR NC: 2025:KHC:22076 Jun-11 13/07/2011 1536796 1533216 3580 29024792 0 29024792 Jul-11 20/08/2011 3765953 3762543 3410 63849723 0 63849723 Aug-11 20/09/2011 967758 964308 3450 13511737 0 13511737 Sep-11 20/10/2011 416902 508082 -91180 3915661 0 3915661 Total 10152157 9536303 -64812 175158154 3021729 172136425
From the analysis of above facts, it is noticed that the enforcement authorities have reported the purchase turnover of for the tax period May 2011 during the year 2011-12 for Rs.30,21,739-00 from M/s SMS Enterprises TIN 29690562184 and claimed corresponding input tax of Rs.1,43,892-00. However, the said selling dealer has declared the corresponding taxable turnover of Rs.4,48,91,383-00 by declaring output tax of Rs.23,35,435-
Thus, it is evident that the taxable sales turnover and the output tax declared by the said M/s SMS Enterprises TIN:29690562184 in their monthly returns is more than the purchase turnover and the input tax credit claimed by the appellant.
Further, from the verification of the registration and de-registration details of the said selling dealer is deregistered w.e.f. 30.09.2011 for the reason of "Oct-11 to till dated returns not filed. Hence de-registered w.e.f 30.09.2011 by the concerned LVO has de-registered the said case w.e.f 30.09.2011 and approved on 07.02.2013. The said details of de-registration of the said selling dealer as per VAT soft EFS are as under. HC-KAR NC: 2025:KHC:22076 For Official Use Only
Ack. No: 79162959 Ack. Date: 01/02/2013 Initiated By: Officer Reason For Deregistration: OCT-2011 TO TILL DATE RETURNS NOT FILED HENCE D-REGD W.E.F.30/09/2011 Approved By: SMP0105 Approved Date: 07/02/2013 Verified By: Gangadhararai Verified Date: 02/02/2013 Assign Date for Verification 01/02/2013 Effective Date of Deregistration: 30/09/2011 Officer Note:
Inspector Note: R.C.May be cancelled from September 2011. From the above, it is evident that the selling dealer has been de-registered w.e.f. 30.09.2011 and accordingly becomes registered dealer for the year 2011-12 till 30.09.2011. Therefore, the input tax claimed by the appellant related to the said registered selling dealer for the tax periods from May-11 during the year 2011-12 has to be allowed. Because, the appellant purchased the goods from the said selling dealer for the month of May-2011 at Rs.30,21,729-00. Wherein, the selling dealer declared the total taxable sales turnover of Rs.4,48,91,383-00 by declaring output tax of Rs.23,35,435-00. Further, Since, the said dealer in de- registered with effect from 30.09.2011 being bogus dealer/non-filer, the purchase turnover and input tax credit claimed by the appellant prior to de-registration i.e., prior to 30.09.2011 becomes valid registered dealer purchases. Therefore, the appellant is entitled for input tax rebate on the said purchases as per the provisions of Section 10(2) of the KVAT Act, 2003 and hence, the said act of the respondent in HC-KAR NC: 2025:KHC:22076 disallowance of the said input tax needs to be deleted to meet the ends of justice and equity.
Further, on verification of the CCT circular issued for reversal of input tax claimed with respect to the purchases from 92 bogus dealers is based on report of additional CCT/ENF/SZ/PA-60/2012-13 dated: 06.09.2012, the said selling dealer is a bogus dealer in serial no.
However, the appellant effected purchase for the tax period of May-11 during the year 2011-12, which is prior to the circular issued by the Commissioner. Hence, the input tax credit claimed related to M/s SMS Enterprises TIN:29690562184 for the tax period of May-11 at Rs.30,21,729-00 by claiming input Rs.1,43,892-00 is to be allowed in the eyes of law. ORDER
The appeal filed by the appellant for the tax periods of the financial 2011-12 is "Allowed".
The respondent is directed to delete the tax, interest and penalty levied vide re-assessment order dated 28.03.2018 passed under section 39(1), 36(2) and 72(2) of the KVAT Act 2003 and to issue the revised demand
accordingly in term of this order.
Dictated to the Stenographer, transcript edited and signed b 17th day of November-2018.” HC-KAR NC: 2025:KHC:22076
The order dated 18.05.2019 passed by the Appellate Authority is as under: “PROCEEDINGS OF THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT 5.6) DGSTO-5, KORAMANGALA, BENGALURU. (In pursuant to the order passed by the JCCT(Appeal-5) order dtd. 17/11/2018)
Present: Dr. H.R. Shivakumar Deputy Commissioner of Commercial Taxes, (Audit-5.6), DGSTO-5, Bangalore -47. Dated: 18.05.2019
Name & Address of the Dealer M/s. Sri.Radhakrishna Alloys Pvt.Ltd. No.43/1, 8th Cross, 4th Main, 2nd Block, R.T.Nagar, Bangalore–560
Bangalore Office: 641, Puspanjali complex, 3rd Floor, 80 feet Road, 4th Block, Koramangala, Bengaluru -34. 2. TIN 29260734256
GSTSO GSTSO 183, Chickaballapur
Nature of Business Dealer in iron and steel and scrap
Period of Assessment April 2011 to March 2012
Date of original order 28.03.2018
Books Produced JCCT (Appeal-5) order
Represented by Sri. Sanjay, Accounts Manager
CAS No. 284447222.01
Demand No. 111580800.1 HC-KAR NC: 2025:KHC:22076 M/s Sri Radhakrishna Alloys Pvt. Ltd, No. 43/1, 8th Cross, 4th Main, 2nd Block, R.T.Nagar, Bangalore- 560032 is a Private Limited Company registered under the KVAT Act 2003. The said assessee company is dealing in purchase and sale of iron and steel and also manufacturing activity and have a registered office at Bangalore as noted above. They have their factory at Plot No.52, APIIC growth Centre, Thumukunta Checkpost, Hindupur A.P. They have also a Depot at Shop No.2, Opp. Aruna Saw Mill, B.H.Road, Gowribidanur- 561208, wherefrom the sales and purchases are effected in the state. The company has been a registered dealer under the provisions of the KVAT Act, 2003 holding TIN 29260734256 and is on the files of GSTSO 183, Chickaballapur. The re-assessment order in respect of the above asses company for the tax periods falling in the financial year 2011-12 under section 39(1) and Read With Section 36(1) and 72(2) of the KVAT Act, 2003 was concluded on 28-03- 2018 vide CAS No. 284447222, wherein levied the tax of Rs.73,69,391/- Penalty at Rs.7.36,839/- and interest of Rs.87,91,229/- and the total liability at Rs.1,68,97,559/- vide demand No.111580800. On receipt of this order, the assessee company has preferred an Appeal before the JCCT (Appeals-5), Bangalore as per the appeal order No.VAT:AP:07/2018-19 dated 17-11- 2018 vide CAS No. 206757353APP. Wherein the appellate has passed the following order: HC-KAR NC: 2025:KHC:22076
The contentions of the appellant regarding levy of interest and penalty are acceptable for the reasons as stated above i.e., when the disallowance of the input tax credit as claimed by the appellant is not in order, the consequential levy of interest and also penalty is also not in order. Therefore, the act of the respondent in levy of consequential interest and penalty on the net additional tax liability as determined by the respondent for disallowance of input tax credit related to bogus dealer purchases as claimed by the appellant for the reasons as stated in the said re-assessment order needs to be set side.
In view of the reasons, the re-assessment order dated: 28.03.2018 passed the respondent is here by set aside to meet the ends of justice and equity.
Hence, the following order: ORDER
The appeal filed by the appellant for the tax periods of the financial year 2011-12 “ Allowed.”
The respondent is directed to delete the tax, interest and penalty levied vide re-assessment dated: 28.03.2018 passed under section 39(1), 36(2) and 72(2) of the KVAT Act 2003 and to issue the revised demand notice
accordingly in term of this order In view of the order passed by the JCCT (Appeal-5), the tax payable for the period 2011-12 is re computed as below. xxxx” HC-KAR NC: 2025:KHC:22076
As stated supra, the only allegation made against the petitioner is regarding non-payment of KVAT, which has attained finality vide aforesaid order dated 18.05.2019. Under these circumstances, the question of continuing the impugned proceedings qua the petitioner would not arise.
In the result, I pass the following: ORDER
(i) The petition is hereby allowed.
(ii) The complaint dated 10.11.2011 is hereby quashed. The order dated 27.08.2018 passed in Crl.RP.No.151/2018 by the LI Addl. City Civil & Sessions Judge, Bengaluru (CCH-52) and the order dated 09.01.2018 (Signed on 09.02.2018) passed in C.C.No.35173/2014 by the I Addl. Chief Metropolitan Magistrate, Bengaluru, are hereby quashed. (S.R.KRISHNA KUMAR) JUDGE
SV List No.: 1 Sl No.: 1
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.