2009 (3) TMI 968 - HC - VAT and Sales Tax

Is the Additional Commissioner justified in invoking section 22A(1) of the Act in view of the fact that the order under section 20 is subject-matter of appeal under section 22 filed before the Karnataka Appellate Tribunal? Held that - So far as the Karnataka Sales Tax Act, the appellant preferred second appeals against section 20 order under section 22 for all the three assessment orders. By virtue of the impugned order, the appeals filed under section 22 to the Tribunal by the appellants are jeopardised and the matters are made complicated. When there is a right to file cross-objections to an appeal filed by an assessee, if the Department has not preferred any appeal, there was no occasion for the revisional authority to invoke suo motu revisional power since the Tribunal can adjudicate all the issue involved. Section 22A(3) specifically bares exercise of SMR jurisdiction. The impugned order of the Additional Commissioner of Commercial Taxes, Zone I, Bangalore, in S.T.A. Nos. 851, 852 and 853 of 2008 under section 22A(1) of the Karnataka Sales Tax Act, 1957 dated January 29, 2009, is set aside. Appeal allowed.

Issues involved:
1. Jurisdiction of Additional Commissioner under section 22A(1) of the Act
2. Validity of SMR action during pendency of appeal under section 22
3. Enhancement of turnover and taxable turnover in fresh order of assessment
4. Treatment of undivided share of land and built apartment as works contract receipt
5. Withdrawal of deductions for KST RC purchases
6. Withdrawal of gross profit earned on labor
7. Consideration of gross receipts figures by assessing authority
8. Legality and sustainability of the order passed by the Commissioner

Analysis:

1. The appeal challenges the ex parte orders of the revisional authority under section 22A(1) of the Act. The court considers whether the Additional Commissioner was justified in invoking this provision when the order under section 20 was subject to appeal before the Karnataka Appellate Tribunal. The court emphasizes that the revisional authority's actions jeopardized the appeals filed by the appellant, and it was held that there was no occasion for the revisional authority to exercise suo motu revisional power when the Tribunal could adjudicate all the issues involved.

2. The court examines whether the Additional Commissioner was justified in initiating SMR action while the matter was subject to appeal under section 22, considering the restriction under section 22A(3)(b). The court holds that the revisional authority's actions complicated the matters and set aside the impugned order, allowing the Revenue to file cross-objections in the appeals pending before the Karnataka Appellate Tribunal.

3. The issue of enhancing the total turnover and taxable turnover in the fresh order of assessment is also raised. The court analyzes whether the Additional Commissioner was justified in bringing escaped turnover to tax through this process. Citing relevant case law, the court sets aside the order of the Additional Commissioner, emphasizing the need for proper legal justification in enhancing turnover figures.

4. The treatment of the sale of undivided share of land and built apartment as works contract receipt is also scrutinized. The court evaluates whether the Additional Commissioner was justified in presuming the sale consideration amount in this manner. The court's decision on this issue is not explicitly mentioned in the summary provided.

5. The withdrawal of deductions granted for KST RC purchases is examined by the court. The legality of withdrawing these deductions despite clear provisions under rule 6(4)(n) is questioned. The court's decision on the justification of this withdrawal is not explicitly stated in the summary.

6. The withdrawal of gross profit earned on labor is another issue raised in the appeal. The court considers whether the Additional Commissioner was justified in this action, referencing the Gannon Dunkerley case. The court's final decision on this matter is not explicitly outlined in the summary.

7. The consideration of gross receipts figures by the assessing authority is also analyzed. The court reviews whether the Additional Commissioner failed to appreciate the correct figures adopted by the assessing and appellate authorities. The court's final decision regarding this issue is not explicitly mentioned in the summary.

8. Lastly, the court evaluates the overall legality and sustainability of the order passed by the Commissioner. The court sets aside the impugned order of the Additional Commissioner, emphasizing the need for proper legal procedures and adherence to jurisdictional limitations.

In conclusion, the court allowed the appeal, highlighting various legal issues and providing detailed analysis on each point raised by the appellant challenging the ex parte orders of the revisional authority. The judgment emphasizes the importance of jurisdictional boundaries, legal justifications, and proper procedures in tax assessments and appeals.

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