2018 (9) TMI 242 - HC - VAT and Sales Tax

Penalty u/s 53(12) of Karnataka Value Added Tax Act, 2003 - contravention of Section 53(2) of the said Act - principles of Natural Justice - Held that - Without establishing such allegations by holding the requisite enquiry in the matter, the Assessee could not obviously be saddled with the said penalty on the basis of such allegations - the matter deserves to be again looked into by the learned Tribunal, which as the final fact finding authority, can either itself hold such an enquiry or remit the matter to the concerned Assessing Authority in this regard - petition allowed by way of remand.

Summary

Issues:
1. Imposition of penalty under Section 53(12) of Karnataka Value Added Tax Act, 2003 for contravention of Section 53(2).
2. Allegation of non-compliance with relevant provisions.
3. Breach of principles of natural justice in penalty proceedings.
4. Violation of rules.
5. Allegations of fraud without proper enquiry.

Analysis:

1. The Assessee filed Revision Petitions against the Karnataka Appellate Tribunal's order upholding a penalty under Section 53(12) of the Karnataka Value Added Tax Act, 2003 for contravening Section 53(2) of the Act. The goods were in transit from Tamil Nadu to Delhi, passing through Karnataka, and a penalty was imposed for unclear seals on accompanying documents.

2. The Assessee's counsel argued that the seals were not under their control as they were affixed by Tamil Nadu authorities. The Assessee contended that all relevant documents accompanied the goods, and any unclear seals were not their responsibility. The Assessee claimed they were not given an opportunity to defend against the allegations during penalty proceedings.

3. The High Court found a breach of natural justice in the penalty proceedings and opined that the matter should be remanded to the Tribunal. It was noted that the imposition of penalties for unclear seals should be based on a proper enquiry and after affording the Assessee a reasonable opportunity to be heard. Allegations of fraud were mentioned, but without proper establishment through an enquiry, penalties could not be imposed.

4. Another issue raised was the violation of rules, which was not elaborated upon in detail within the judgment but was mentioned in passing.

5. The Court directed the matter to be reconsidered by the Tribunal, emphasizing the importance of satisfying the requirements of Section 53(2) before penalizing the Assessee. The Assessee was granted the liberty to present all contentions before the authorities, and the Tribunal was tasked with completing the enquiry within six months due to the age of the matter.