2005 (6) TMI 539 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Authority to file an appeal by the State Representative.
2. Presumption of sale within the State under Section 28AA(4) of the Karnataka Sales Tax Act.
3. Levy of penalty under Section 28AA(5) of the Karnataka Sales Tax Act.
4. Disposition of cross-objections by the Karnataka Appellate Tribunal.
5. Applicability of Section 28AA(4) and (5) of the Karnataka Sales Tax Act.
6. Explanation to Section 28AA regarding the hirer of the vehicle.
7. Violation of principles of natural justice by not summoning books of account and officials for cross-examination.

Issue-wise Detailed Analysis:

1. Authority to File an Appeal by the State Representative:
The petitioner questioned the authority of the State Representative to file an appeal before the Karnataka Appellate Tribunal without being specifically empowered by the State Government. The Tribunal had previously interpreted that the terms "State" and "Government" in Section 22(1) of the Karnataka Sales Tax Act have a broader meaning, including all officers under the Act. However, the High Court disagreed, emphasizing that the right of appeal is a statutory right and must be exercised strictly as per statutory provisions. The court noted that the appeal should be filed only by an officer specifically empowered by the State Government. The State Government later ratified the State Representative's action post facto, which the court accepted as valid, thus resolving the procedural irregularity.

2. Presumption of Sale within the State under Section 28AA(4):
The petitioner contended that the check-post officer wrongly presumed the goods were sold within Karnataka because the transit pass was not surrendered at the exit check-post. The court noted that Section 28AA(4) creates a rebuttable presumption. The petitioner had presented evidence that the consignor was taxed for the same goods, indicating they were sold within the State. The court found that the check-post officer did not properly consider this rebuttal evidence and failed to conduct a factual inquiry. Thus, the court set aside the order under Section 28AA(4) and remanded the matter for reconsideration.

3. Levy of Penalty under Section 28AA(5):
The petitioner argued that the penalty under Section 28AA(5) was unjustified. The court clarified that Section 28AA(5) does not involve a rebuttable presumption but imposes a penalty for failing to surrender the transit pass. The court upheld the penalty, noting that the driver of the vehicle had indeed failed to surrender the transit pass, and the check-post officer had correctly followed the statutory procedure.

4. Disposition of Cross-Objections by the Karnataka Appellate Tribunal:
The petitioner claimed that the Tribunal failed to dispose of their cross-objections. The court observed that while the Tribunal did not specifically address the cross-objections, it had covered the issues raised therein while deciding the Revenue's appeal. The court deemed this a minor procedural irregularity that did not warrant setting aside the Tribunal's order.

5. Applicability of Section 28AA(4) and (5):
The petitioner contended that the proceedings under Section 28AA were void because the goods were imported and accounted for by the consignor before being transported. The court found that the petitioner, as the transporter, had not provided sufficient evidence to rebut the presumption of sale within the State. The court upheld the applicability of Sections 28AA(4) and (5) to the petitioner.

6. Explanation to Section 28AA Regarding the Hirer of the Vehicle:
The petitioner argued that the hirer of the vehicle should be deemed the owner under the Explanation to Section 28AA. The court noted that this issue was not raised before the lower authorities and thus could not be considered for the first time in the revision petition.

7. Violation of Principles of Natural Justice:
The petitioner claimed a violation of natural justice because the check-post officer did not summon the consignor's books of account and officials for cross-examination. The court held that it was the petitioner's responsibility to produce evidence to rebut the presumption and that the check-post officer was not required to collect evidence on behalf of the petitioner. The court found no violation of natural justice.

Order:
I. The revision petition is allowed in part.
II. The order under Section 28AA(4) is set aside and remanded for reconsideration.
III. Other legal issues are decided against the petitioner.
IV. Each party bears its own costs.