2018 (9) TMI 808 - HC - VAT and Sales Tax

Condonation of delay in filing appeal - petition was dismissed mainly on the ground of delay - Levy of tax - activity of mine raising, extraction of ores and transportation - pure labor contract - KVAT Act - Held that - The fact remains that when the right of the parties are involved, this Court exercising powers under Sec. 226 and 227 of Constitution of India can condone the delay . It is relevant to note that the rights of the parties involved in respect of reassessment order which amounts to ₹ 26,15,74,320/-, the appellate Court cannot dismiss the appeal on the ground of technicality. Substantial justice has to be done to the parties - When cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. Admittedly, in the present case, the delay is 288 days after deducting 210 days of delay, it would be 78 days in filing the appeal. The present petitioner explained the delay on the ground of illness and has made out exceptional category to exercise the power under Article 226 of the Constitution of India. Delay condoned - matter is remanded to appellate authority to decide the appeal on merits - appeal allowed by way of remand.

Summary

Issues:
Challenge to re-assessment order under KVAT Act for assessment period April 2010 to March 2011 and subsequent demand notice; Appeal dismissal by Appellate Authority on the ground of delay.

Analysis:
The petitioner challenged the re-assessment order passed by the 1st respondent under Section 39(1), 36, and 72(2) of the KVAT Act for the assessment period April 2010 to March 2011. The petitioner contended that their activities did not fall within the purview of the KVAT Act as they were engaged in mine raising, extraction of ores, and transportation, without any trading activity in Karnataka. The petitioner had consistently filed monthly returns declaring a tax liability of 'NIL'. Despite this, the 1st respondent proceeded with reassessment, leading to a demand notice and subsequent appeal before the 4th respondent. The 4th respondent dismissed the appeal on the ground of delay, prompting the petitioner to file the present writ petition.

The arguments presented by the learned counsels focused on the dismissal of the appeal by the Appellate Authority on the basis of delay. The petitioner's counsel contended that the dismissal was erroneous and should have been decided on merits, while the respondents' counsel justified the dismissal citing the provisions of Section 62(3) of the Karnataka Value Added Tax, 2003. The appellate authority's power to condone delay was limited to 30+180=210 days, beyond which they had no jurisdiction to entertain the appeal.

The High Court, after careful consideration, noted that the petitioner's main contention was their non-liability to pay any tax under the KVAT Act. The Court emphasized that substantial justice must prevail, especially when a significant amount of tax liability was at stake. Referring to past judgments, the Court highlighted the exceptional circumstances under which delays in appeals could be condoned, especially when there was a failure of justice or gross injustice. The Court cited a Division Bench judgment and subsequent cases where delays were condoned in similar circumstances.

Considering the explanation provided by the petitioner for the delay and the precedent set by previous judgments, the High Court allowed the writ petition, condoned the delay of 78 days in filing the appeal, and remanded the matter to the appellate authority to decide on merits without being restricted by the limitation period. The Court directed the Joint Commissioner to proceed with the appeal on merits and pass an appropriate order within four weeks, restraining the implementation of the assessment order until the appeal's disposal.