2009 (11) TMI 870 - HC - VAT and Sales Tax

Whether the Commissioner is justified in invoking section 22A(2) of the Act, when such a revisional power is also vested with the Joint Commissioner? Whether the Commissioner was justified in holding that the black pepper purchased by the appellant from the unregistered dealer from outside the State of Karnataka and purchases made within the State of Karnataka? Held that - As per section 21 as well as 22A of the Act, revisional powers can be exercised by both the authorities within a period of four years. When limitation is stipulated as four years, it is not for the Commissioner to direct the Joint Commissioner how he has to exercise his revisional power, when such power is vested in him under section 22A of the Act. In the circumstances, we are of the opinion that point No. 1 has to be answered against the assessee by holding that both the Joint Commissioner as well as the Commissioner of Commercial Taxes can exercise their powers under different provisions of law. So far as purchase of black pepper is concerned, the order of the Commissioner is mainly based on the note sheet maintained by the assessing officer while passing the order of assessment. Based on such note, the revisional authorities are not expected to reverse the findings of the assessing officer. It is for the assessing officer as well as the revisional authorities to find out whether the black pepper purchased by the assessee from the unregistered dealers from local or inter-State based on the accounts maintained and other documents. Appeal is allowed in part by answering the question of law and remanding the matter to the assessing officer to give his finding in regard to purchase of black pepper worth ₹ 77,35,310 is either from the local unregistered dealer or from the unregistered dealer outside the Karnataka State.

Summary

Issues:
1. Legality and correctness of the order passed by the Commissioner of Commercial Taxes dated August 22, 2006 in case Nos. KST/SMR.3, 4 and 5/1990-91.
2. Interpretation of the provisions of section 22A(2) of the Karnataka Sales Tax Act, 1957.
3. Justification of the Commissioner in holding that the black pepper purchased by the appellant was from local unregistered dealers within the State of Karnataka.

Analysis:

1. The court examined the legality and correctness of the order passed by the Commissioner of Commercial Taxes. The assessee, a dealer in spices, submitted returns for the assessment year 1987-88, which led to an assessment completed by the assessing officer under section 22A(2) of the Act. Subsequently, the Commissioner found that black pepper purchased by the assessee from local unregistered dealers was liable for purchase tax and turnover tax. The appeal challenged this order.

2. The first issue raised was the justification of invoking section 22A(2) by the Commissioner when the Joint Commissioner also had revisional powers under section 21. The court held that both the Joint Commissioner and the Commissioner of Commercial Taxes had concurrent powers to revise orders of assessment. The assessee's argument that the Commissioner should have directed the Joint Commissioner to exercise powers under section 21 was dismissed, as both officers could independently exercise revisional powers.

3. The second issue focused on the justification of the Commissioner's decision regarding the origin of the black pepper purchased by the appellant. The Government Pleader argued that the Commissioner rightly relied on the assessing officer's note sheet, based on documents produced by the assessee during assessment. The court emphasized that revisional authorities should not reverse the assessing officer's findings based on mere surmise. It concluded that the matter needed to be remanded to the assessing officer for proper findings on whether the black pepper was purchased from local unregistered dealers or from dealers outside Karnataka.

In conclusion, the court partially allowed the appeal, setting aside the orders of the Commissioner of Commercial Taxes and the assessing officer regarding the purchase of black pepper. The matter was remanded to the assessing officer for further examination.