2016 (5) TMI 296 - HC - VAT and Sales Tax

Imposition of penalty - Section 53(12) of the KVAT Act, 2003 - e-sugam number has not been generated by the consignee when the documents were produced for verification before the entry into the State of Karnataka and no proper reasons were mentioned for the same - Petitioner submitted that non-generation of e-sugam number before entering into the state of Karnataka was a bonafide error and a lapse of clerical nature. Revenue contended that petitioner had an effective and efficacious remedy available to him by way of filing an appeal against the impugned penalty order. Held that - the petitioner can still be permitted to file appropriate appeal against the impugned penalty order before the Joint Commissioner of Commercial taxes (Appeals) under section 62 ibid. It is further directed that if such appeal is filed by the petitioner within 30 (thirty) days from today, the said Appellate Authority shall decide the same on merits in accordance with law without raising objection as to the bar of limitation. The Petitioner will be entitled to raise all his objections and furnish the requisite explanation before the said Appellate Authority, whose powers undoubtedly are co-extensive with those of the Assessing Authority. The deposit of penalty under the impugned order will remain subject to the final order to be passed by such Appellate Authority. - Petition disposed of

Summary

Issues:
Challenge to penalty order under section 53(12) of the Karnataka Value Added Tax Act, 2003 for non-generation of e-sugam number before entry into Karnataka.

Analysis:
The petitioner challenged the penalty order imposed by the Commercial Tax officer for not generating the e-sugam number before entering Karnataka. The penalty of ?4,18,755 was imposed due to the absence of proper reasons for the non-generation of the e-sugam number. The petitioner filed a writ petition directly before the High Court instead of appealing before the competent authority.

The petitioner argued that the non-generation of the e-sugam number was a clerical error and should not have led to such a substantial penalty without providing an opportunity to explain. On the other hand, the Additional Government advocate contended that the petitioner had the option to appeal the penalty order and that no valid reasons were given for the lapse in generating the e-sugam number.

Referring to a Division Bench judgment, it was noted that the obligation to upload e-sugam numbers was introduced in 2010, and efforts were made to educate dealers on compliance. The Division Bench clarified that penalties should not be levied for non-uploading of notified goods by a certain date, but should be imposed for duplication or recycling of e-sugam numbers.

The High Court refrained from delving into the merits of the case due to the availability of an alternative appeal remedy against the penalty order. The petitioner was directed to file an appeal before the Joint Commissioner of Commercial Taxes within 30 days, with the assurance that the appeal would be decided on its merits without limitation objections. The deposit of the penalty remained subject to the final decision of the Appellate Authority.

The judgment concluded by disposing of the writ petition without costs, allowing the petitioner to pursue further remedies through a second appeal or revision petition under the KVAT Act, 2003.