2003 (6) TMI 461 - HC - VAT and Sales Tax

Summary

Issues:
Violation of statutory procedure under section 28A(4) of the Karnataka Sales Tax Act, 1957 by the Commercial Tax Officer.

Analysis:
The petitioner, a registered dealer under the Karnataka Sales Tax Act, filed a writ petition to challenge the order passed by the Commercial Tax Officer levying a penalty for not producing original documents for transportation of goods, as required under section 28A(4) of the Act. The petitioner argued that the order was passed in violation of the statutory procedure, which mandates providing a reasonable opportunity of being heard for a period of not less than ten days when the goods' destination is over one hundred kilometers away. The petitioner contended that the Commercial Tax Officer did not wait for the stipulated ten days before passing the impugned order, thereby violating the legislative mandate.

The petitioner's case was supported by the fact that the goods in question were being transported from Ludhiana to Bangalore through a public transporter, and only xerox copies of the documents were produced during inspection at the check-post. The Commercial Tax Officer issued a show cause notice on May 9, 2003, giving the driver ten days to explain. However, the officer proceeded to pass the penalty order on May 15, 2003, before the expiration of the prescribed ten-day period. The learned Government Advocate did not dispute the facts or the statutory provisions cited by the petitioner.

The judgment highlighted the constitutional provision under Article 265 of the Indian Constitution, which prohibits the collection or levy of tax except by the authority of law, encompassing both substantial and procedural law. The court held that the penalty imposed in this case was in clear violation of the law set by the legislature. The judgment emphasized that penalty falls under the broader definition of "tax" in the constitutional context. Consequently, the impugned order levying the penalty was quashed, and the petitioner or the driver was given the opportunity to file a show cause within a week. The respondent was directed to consider the explanation and pass an appropriate order within two weeks. The petitioner was also granted the option of a personal hearing if requested.

In conclusion, the High Court allowed the writ petition, quashing the penalty order imposed by the Commercial Tax Officer. The court directed the respondent to consider any show cause filed by the petitioner or the driver and to pass an order in accordance with the law within the specified timeline. A carbon copy of the order was to be supplied to the petitioner's counsel upon request.