2016 (7) TMI 366 - HC - VAT and Sales Tax

Demand of purchase tax - Section 14 of the Karnataka Sales Tax Act - Held that - The impugned order dated 18/04/2011 passed by the learned Single Judge in W.P.Nos.10618/2011 & 11656-662/2011, Assessment order dated 30.10.2010 as per Annexure-L, demand notice dated 2.11.2010 vi de Annexure-K and the attachment orders dated 10.1.2011 as per Annexures-A to C under Section 1 4 of the Karnataka Sales Tax Act, issued by the respondent No.5/appellant No.5 are hereby set aside and the matters stand remitted back to the appellant No.3 for reconsideration afresh, with a direction to pass appropriate orders, in accordance with law.

Summary

Issues:
1. Liability of purchase tax amount demanded by respondent No.5/appellant No.3.
2. Exoneration of petitioner/respondent No.1 from tax arrears by the learned Single Judge.
3. Appeal against the order passed by the learned Single Judge.
4. Submission of communication not brought to the notice of the learned Single Judge.
5. Request for remittance of the matters back to appellant No.3 for reconsideration.

Analysis:

1. The petitioner/respondent No.1 filed writ petitions seeking a declaration that he is not liable to pay the purchase tax amount demanded by respondent No.5/appellant No.3. The petitioner claimed to have paid all amounts due, including the purchase tax, to respondent No.3 and handed over possession of the factory. However, respondent No.5/appellant No.3 issued a notice demanding payment of the purchase tax. The learned Single Judge allowed the petitions, exonerating the petitioner from the tax arrears, which led to the appeal by respondent Nos. 1, 2, and 5/appellant Nos. 1 to 3.

2. The learned Single Judge, in the impugned order, absolved the petitioner from the liability towards tax arrears based on the admission of respondent Nos. 1 and 3. This decision was challenged by the appellants, leading to the appeals before the High Court.

3. The appeals raised the issue of a communication, Annexure-E, not brought to the notice of the learned Single Judge. The appellants argued that if this communication had been considered, the writ petitions should not have been allowed. Consequently, the appellants requested the court to set aside the impugned order and remit the matters back to appellant No.3 for reconsideration, ensuring principles of natural justice are followed.

4. Considering the submissions made by the parties, the High Court allowed the writ appeals filed by the appellant Nos. 1 to 3. The impugned order, assessment order, demand notice, and attachment orders issued by respondent No.5/appellant No.5 were set aside. The matters were remitted back to appellant No.3 for fresh consideration, with directions to hear the parties, including appellant No.2 and respondent Nos. 1 and 2, in compliance with the principles of natural justice.

5. The High Court directed appellant No.2 and respondent Nos. 1 and 2 to file fresh detailed written submissions before appellant No.3 and appear before the authority on a specified date. The court left the contentions raised by all parties in the appeals open for further consideration during the fresh hearing before appellant No.3.