2021 (8) TMI 400 - HC - VAT and Sales Tax

Validity of remand of matter to the AA to pass fresh order - validity of Section 39(1) of KVAT Act - case of Revision Petitioner is that the Karnataka Appellate Tribunal ought not to have remanded the matter to the AA without discussing the merits of the matter - HELD THAT - On cumulative consideration of the entire materials on record, there are sufficient force in the arguments put forth on behalf of the Revision Petitioner that Karnataka Appellate Tribunal ought to have recorded the reasons before remitting the matter to the AA as to how the answers recorded by the FAA is erroneous. On meticulous consideration of the order of the Karnataka Appellate Tribunal pointed out by the counsel for the Revenue, we failed to understand as to how the Karnataka Appellate Tribunal came to the conclusion that the matter needs to be remitted to AA for fresh consideration. On perusal of the order of the FAA, it is crystal clear that each and every one of the contentions of the Revision Petitioner and the Revenue has been dealt in detail by the FAA by assigning cogent and convincing reasons. As against the same, the order of the Karnataka Appellate Tribunal is silent on the vital aspect of the matter. It is settled principles of law that every decision is to be supported by reasons inasmuch as reasoning is the heart beat of every judgment. Without assigning any reasons as to how the order of the FAA is wrong, setting aside the order of the FAA and remanding the matter to AA by the Karnataka Appellate Tribunal, in our considered opinion has thus resulted in miscarriage of justice and error of jurisdiction which would entitle the Revision Petitioner to seek interference at the hands of this court. The matter requires to be reconsidered by the Karnataka Appellate Tribunal afresh in accordance with law. It is for the Karnataka Appellate Tribunal to pass order on merits after assigning proper reasons in that regard pointing out the errors committed by the FAA - Revision Petition is allowed.

Summary

Issues:
Challenge to order passed by Karnataka Appellate Tribunal regarding reassessment order for tax period, validity of remand to Assistant Commissioner of Commercial Taxes, legal infirmities in Karnataka Appellate Tribunal's order, justification of remand, sufficiency of reasons for remand, interference by the High Court, consideration of merits by Karnataka Appellate Tribunal, errors in FAA's order, setting aside of FAA's order, remand to Karnataka Appellate Tribunal, re-appreciation of materials by High Court.

Analysis:

1. Challenge to Karnataka Appellate Tribunal's Order: The Revision Petitioner, a Private Limited company, challenged the reassessment order by Assistant Commissioner of Commercial Taxes. The Karnataka Appellate Tribunal dismissed the appeals filed by the assessee and allowed the cross appeals by the revenue, remanding the matter back to the Assistant Commissioner for fresh orders. The Revision Petitioner contested the validity of this order before the High Court.

2. Validity of Remand: The Revision Petitioner argued that the Karnataka Appellate Tribunal erred in remanding the matter without discussing the merits and without showing how the FAA's order was erroneous. They contended that the matter was remitted without proper reasons, leading to a miscarriage of justice and an error of jurisdiction.

3. Legal Infirmities in Karnataka Appellate Tribunal's Order: The High Court analyzed the Karnataka Appellate Tribunal's order and found that it lacked reasoning for remitting the matter to the Assistant Commissioner. The Tribunal did not address the parties' contentions on merits but merely stated that the reassessment order was flawed without detailed explanation, leading to a flawed decision.

4. Interference by High Court: The High Court considered the arguments of both parties and concluded that the Karnataka Appellate Tribunal's order suffered from legal infirmities and required reconsideration. The High Court held that the matter needed to be re-examined by the Tribunal with proper reasons provided for any decision made.

5. Remand to Karnataka Appellate Tribunal: The High Court allowed the Revision Petition, setting aside the Karnataka Appellate Tribunal's order. The matter was remitted back to the Tribunal for fresh disposal in accordance with the law. The parties were directed to appear before the Tribunal, and the case was to be disposed of by a specified date.

6. Reconsideration by Karnataka Appellate Tribunal: The High Court emphasized the importance of proper reasoning in judicial decisions and directed the Karnataka Appellate Tribunal to pass orders on merits after identifying errors in the FAA's decision. The High Court's order aimed to rectify the procedural lapses and ensure a just and reasoned outcome in the reassessment matter.

This comprehensive analysis covers the legal issues, arguments presented, and the High Court's decision regarding the challenged judgment by the Karnataka Appellate Tribunal, providing a detailed understanding of the case.