2004 (6) TMI 602 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the revisional authority under Section 21(2) of the Karnataka Sales Tax Act.
2. Validity of the assessment orders passed by the assessing authority following the Supreme Court's directions.
3. Applicability of the Supreme Court's decision in Premier Breweries' case to the present case.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Revisional Authority under Section 21(2) of the Karnataka Sales Tax Act:
The core issue is whether the revisional authority had the jurisdiction to revise the assessment orders for the years 1986-87 to 1993-94. The revisional authority invoked Section 21(2) of the Karnataka Sales Tax Act, which allows the Joint Commissioner to revise any order passed by a subordinate officer if it is "erroneous and prejudicial to the interest of the Revenue." The court noted that the Joint Commissioner can exercise this power only if the order in question is both erroneous and prejudicial to the revenue. The court emphasized that the error must be factual or legal and not based on guesswork or suspicion.

2. Validity of the Assessment Orders Passed by the Assessing Authority Following the Supreme Court's Directions:
The respondent company had previously challenged the reassessment orders and the constitutional validity of Section 5(3-D) of the Karnataka Sales Tax Act. The Supreme Court had directed the assessing authority to reframe the assessment orders by investigating the facts and determining the contract's ingredients and the parties' intentions. The assessing authority complied with these directions and passed fresh assessment orders. The court held that the assessing authority's orders, which followed the Supreme Court's guidelines, could not be deemed erroneous. The court stated, "The directions issued by the apex Court are binding on the assessing authority and the same requires to be obeyed by him in view of article 141 of the Constitution of India."

3. Applicability of the Supreme Court's Decision in Premier Breweries' Case to the Present Case:
The revisional authority revised the assessment orders based on the Supreme Court's decision in Premier Breweries' case, arguing that the orders were erroneous and prejudicial to the revenue. However, the court found that the Premier Breweries' case did not provide the revisional authority with the jurisdiction to revise orders that were passed in compliance with the Supreme Court's directions in the respondent's own case. The court held, "In our view, the law laid down by the apex Court in Premier Breweries' case [1998] 108 STC 598 case would not give jurisdiction to the revising authority to revise an order of assessment passed by the assessing authority by following the directions and guidelines issued by the Supreme Court in assessee's own case."

Conclusion:
The Karnataka High Court dismissed the revision petitions filed by the State of Karnataka, upholding the Karnataka Appellate Tribunal's decision to set aside the revisional authority's orders. The court concluded that the revisional authority had no jurisdiction to revise the assessment orders that were passed following the Supreme Court's directions. The court stated, "Therefore, since one of the ingredients of section 21 of the Act is absent in these proceedings, the revisional authority could not have invoked his revisional powers to revise the order of assessment passed by the assessing authority for the assessment years 1986-87 to 1993-94." Consequently, the petitions were dismissed.