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TMI Blog2009 (4) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Commercial Taxes, Zone 1, Bangalore, issued a notice under section 22A(1) of the Karnataka Sales Tax Act proposing to revise the order of appeal on the ground that the order of the appellate authority was erroneous and was prejudicial to the interest of the Revenue. The appellant filed a reply to the said notice. The revisional authority however, confirmed the proposals made in the said notice. Aggrieved by the order of the revisional authority dated February 4, 2009 the present appeal is filed seeking deletion of the penalty. It is contended on behalf of the appellant-assessee that it being a licence holder, it was paying royalty on its business of extracting or excavating rough granite to the Deputy Director, Department of Mines and Geology, Kanakapura. According to the appellant it had entered into an agency agreement with Prabhath Granite Pvt. Ltd., No. 18, K.H. Road, Bangalore27 and appointed Prabhath Granite Pvt. Ltd., as its agent. Therefore, Prabhath Granite Pvt. Ltd., as agent of the appellant was extracting and selling granite blocks from the quarry over which the appellant had licence. As per the terms and conditions of the agency agreement, Prabhath Grani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sional authority was wrong in rejecting the finding given by the assessing authority to the effect that Prabhath Granite Pvt. Ltd., had extracted, transported and sold the rough granite blocks by using form 39. The appellant contends, the appellate authority was right in concluding that the assessing authority ought to have re-assessed the appellant under section 12A of the KST Act instead of assessment under section 12(3) of the KST Act. It is submitted that the revisional authority was not justified in concluding that appellant had sold the entire granite to Prabhath Granite Pvt. Ltd., and it is not the agent; that the revisional authority was not justified in holding the agency agreement as a created document. Therefore, it has wrongly treated the appellant as the first seller of rough granite blocks and has taxed it erroneously. The revisional authority has no jurisdiction to estimate the turnover of the stones in the revisional order without proposing the same in the notice. The revisional authority stepped into the shores of the assessing authority and re-assessed the whole thing, which is contrary to the procedure. When once the order of the appellate authority is set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the appellate authority, the assessing authority ought to have established whether the appellant had extracted the stones or authorised somebody to extract the same and held that the assessing authority failed to establish who has paid royalty for all the years and also failed to establish the aspect of removal of stones and sale of the same to Prabhath Granite Pvt. Ltd., by the appellant and ultimately held that the stones extracted and sold were accounted by Prabhath Granite Pvt. Ltd., as an agent and not as a first purchaser. The revisional authority sent notice under section 22A(1) of the Act on the ground that there was evidence that the appellant-assessee had not filed the monthly statements and returns and section 12 covers not only registered dealer but every dealer who is liable to get himself registered under section 10(2) of the Act. He also opined that the assessment under section 12(3) was correctly passed as section 12A deals with assessment of escaped turnover under certain circumstances as mentioned in the said provision. In para 4 of the revisional authority's order, the revisional authority has discussed in detail why the appellate authority was not just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicating compliance of the terms and conditions of the alleged document like payment of security deposit and amount of commission paid, etc., is forthcoming. In the balance sheet produced by Prabhath Granite Pvt. Ltd., for the relevant years there is no indication of commission business being carried by the said concern for the appellantassessee. Both the parties were required to declare the income from such agency transaction before the income-tax authorities but such material is not forthcoming. The revisional authority was therefore, justified in coming to a conclusion that the said document was created at the stage of revision only to avoid tax consequences. At para 5 of the order, the revisional authority has, in detail, discussed how the appellate authority was not justified in setting aside the order of assessment. The revisional authority was justified in saying that the present assessee being an independent partnership firm had to maintain proper accounts for the payment of royalty, commission, etc., and in the absence of agency agreement before the appellate authority, the appellate authority had no basis or foundation to arrive at a conclusion in favour of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions and after hearing the appellant, the impugned order was passed by the revisional authority. The basis for intending to reopen the order passed by the appellate authority would not mean that the revisional authority has concluded the matter, but, on the other hand, it is necessary that the notice issued by the revisional authority must indicate the reasons for issuing such a notice or otherwise, the assessee would not be in a position to reply to the show-cause notice. With regard to the assessment the revisional authority was justified in opining that the assessing authority had erred in assessing the assessee at lower turnover and therefore he directed the assessing authority to issue revised demand notice as indicated in the proposition notice of the revisional authority. It is also found that the assessee did not dispute the said proposal except as to the liability in terms of the alleged agency agreement. The authority was also justified in saying that there is violation of section 12B(1) for having transacted the business in taxable goods without registration and payment of taxes. Imposition of penalty equally applies to deemed registered dealer also. Therefore, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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