2021 (3) TMI 523 - HC - VAT and Sales Tax

Levy of enhanced checkpost penalty - Section 53(2)(b) of KVAT Act - Section 53(2)(c) and (d) of KVAT Act - penalty in respect of 12 goods vehicles, when the required documents were furnished for verification at the time of check of the goods vehicles and accepted by the three Commercial Tax Officers, Bangalore - HELD THAT - The provisions of Section 53(2)(d) of the Act are not applicable to the fact situation of the case as the same applies in case of an interstate sale - Similarly, it is also pertinent to mention here that the assessee had admitted the order passed by the Commercial Tax Officers under Section 53(2)(c) of the Act which was made in respect of 6 vehicles and had not preferred any appeal. While applying the provisions of Section 53(2)(b) of the Act in imposing the penalty, the Commercial Tax Officers had accepted the submission made by the appellant that the vehicles were stationed at Hebbagodi for weighment and further transportation to the end purchasers based on the sale invoices raised on the end purchasers dated 04.09.2008 and 05.09.2008 and have levied the penalty only in respect of 6 vehicles which had not reported at the entry check post and obtained the seal for violation of Section 53(2)(c) of the Act - so far as the applicability of the penalty under Section 53(2)(b) of the act is concerned, on the facts of the case, two views were possible. Therefore, in the fact situation of the case, it was not possible for the Additional Commissioner of Commercial Taxes namely the second Appellate Authority to invoke the provisions of Section 64(1) of the Act as the order passed by the Commercial Tax Officers could neither be said to be erroneous nor prejudicial to the interest of the revenue. The substantial questions of law filed in this appeal are answered against the respondents - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Section 53(2)(b), (c), and (d) of the Karnataka Value Added Tax Act, 2003.
2. Justifiability of invoking Section 64(1) of the Act by the Additional Commissioner of Commercial Taxes.
3. Applicability of penalty under Section 53(2)(b) in the given circumstances.

Analysis:

Issue 1: Interpretation of Section 53(2)(b), (c), and (d)
The case involved the appellant, a registered dealer in iron and steel, facing penalties under various sections of the Act during the transportation of goods. The Commercial Tax Officers initially levied penalties under Section 53(12) for lack of documents and failure to report at entry points. Subsequently, fresh penalty orders were issued for not reporting at entry points, leading to the invocation of Section 64(1) by the Additional Commissioner. The provisions of Section 53(2)(b), (c), and (d) were crucial in determining the penalties imposed. The judgment highlighted that Section 53(2)(d) was not applicable due to the interstate nature of the sale. The Commercial Tax Officers had accepted the appellant's explanation for vehicles stationed for weighment and transportation, leading to penalties only for vehicles not reporting at entry points. The interpretation of these sections was pivotal in the decision-making process.

Issue 2: Justifiability of invoking Section 64(1)
The appellant argued against the invocation of Section 64(1) by the Additional Commissioner, contending that the Commercial Tax Officers' decision was not erroneous or prejudicial to revenue. The appellant cited a previous case to support their stance. The Additional Government Advocate supported the Commissioner's decision, emphasizing the correctness of invoking Section 64(1) based on the facts of the case. The judgment analyzed the submissions from both sides and concluded that in this scenario, the invocation of Section 64(1) was not justified. The decision rested on the understanding that the Commercial Tax Officers' actions did not warrant such intervention under Section 64(1).

Issue 3: Applicability of penalty under Section 53(2)(b)
The judgment deliberated on the imposition of penalties under Section 53(2)(b) concerning the possession of prescribed documents during transportation. It was noted that two possible views existed regarding the penalty imposition, indicating that the Commercial Tax Officers' decision was not inherently flawed. As a result, the Additional Commissioner's decision to levy penalties under Section 53(2)(b) was deemed unwarranted. The judgment favored the appellant's argument, leading to the quashing of the impugned order and allowing the appeal.

In conclusion, the judgment provided a detailed analysis of the issues surrounding the interpretation of relevant sections of the Karnataka Value Added Tax Act, the justifiability of invoking Section 64(1) by the Additional Commissioner, and the applicability of penalties under Section 53(2)(b) in the given circumstances. The decision favored the appellant, highlighting discrepancies in the application of penalties and the lack of grounds for invoking Section 64(1).