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TMI Blog2017 (5) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the petitioner to avail the alternative remedy, is not in the best interest of the petitioner. The constitutional issues have to be decided exclusively by the High Court. This is a case where alternative remedy has to be availed by the petitioner and accordingly, the writ petitions are not maintainable - petition dismissed being not maintainable. - WRIT PETITION Nos.46807 & 47320-30/2016 (T-RES) - - - Dated:- 22-2-2017 - MR. L. NARAYANA SWAMY J. Petitioner: (By Sri V Lakshminarayana Senior Counsel for Vani H Associates Advocates) Respondents: (By Sri T K Vedamurthy HCGP for R1 R2) ORDER The petitioner is aggrieved of the reassessment order passed by the first respondent under Section 39(1) of Karnataka Value Added Tax Act, hereinafter refer red to as `KVAT Act for short, and the consequent demand notice in Form VAT 180 even dated 30.6.2016 for the year 2011-12 vide Annexures-D E. The petitioner has prayed for quashing the reassessment order and the demand made and also for quashing the endorsement dated 5.8.2016 issued by the first respondent under Section 69 of KVAT Act and such other reliefs. 2. The case of the petitioner is that pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncidental to the services rendered by the petitioner, such as machinery, nuts, bolts, gaskets, flanges, fittings, painting and coating materials, pipeline supports, etc., vis- -vis the main SPM System and the submarine pipeline which were supplied by EIL for installation and commissioning by petitioner. Value of such goods supplied by the petitioner are of negligible value. It is settled law that no tax can be levied on the value of consumables which are used in the execution of works contract. There can be no tax levied on the machinery and tools deployed by petitioner in the execution of works contract since there is no transfer of property in goods. Further the terms at clauses 6, 7,8 9 in the agreement reflect the volume of services rendered by the petitioner and thus making the contract one relating to services. The petitioner has declared the entire receipt under the provisions of the Finance Act 1994 and has paid the applicable service tax to the credit of the Central Government. The first respondent has failed to appreciate the aforesaid fact and thereby there is no application of mind. The service contract falls outside the scope of levy of VAT under Section 3 of KVAT Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner. Thus the petitioner is demanded a sum of ₹ 11,30,25,059/-, ₹ 6,79,70,996/- and ₹ 1,13,02,507/- towards tax, interest and penalty by issue of demand notice in Form VAT 180 dated 30.6.2016. 6. The application filed by the petitioner dated 23.7.2016 for rectification under Section 69 of KVAT Act, which came to be rejected on the ground that there is no mistake apparent on record that require s rectification. It is stated that generation of e-Sugama forms is mandatory for transportation of any goods or machinery, tools etc and the same need not be for the purposes of sale. The first respondent failed to appreciate that the value mentioned therein could not be considered as the value of transfer of property in goods that is liable to be taxed. The first respondent has not given reasonable opportunity to the petitioner to furnish the detailed reconciliation statement and the books of accounts in support of the aforesaid contention. 7. It is stated, apart from hire charges petitioner has incurred labour charges for execution of work, payments to sub-contractors, engineering/consultation charges such as drawings, survey, etc., cost of consumables, expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Authority concluded re-assessment and passed order directing the petitioner to pay a sum of ₹ 19,22,98,562.00 as per Demand Notice. 10. It is contended that subsequent to award of contract by the main contractor, the petitioner Assessee has executed total work of around ₹ 115 crores. The petitioner filed monthly returns and declared turnover and does not declare taxable turnover. After noticing this discrepancy, the Assessing Authority took up the matter for reassessment. The Assessing Authority has categorically recorded the reason that the Company has transported various goods as per the corresponding delivery notes (E-sugam used for transporting the goods on line by the petitioner), these details are uploaded to the Department website by the petitioner company itself. The said value i.., ₹ 37,78,21,431/- is not reflected in Form VAT 100 nor in Form VAT 240 by the company. The clarification given by the petitioner to the proposition notice did not match in respect of purchases made by it. The petitioner has been given sufficient opportunity to reconcile the E-sugam use by them. Hence the contention of the petitioner that they could not reconcile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the order under Section 39(1) and left with no other alternative, the Assessing Authority initiated recovery proceedings and one mode of recovery by the Assessing Authority envisaged under Section 45(1) of the Act by issuing notice to the petitioner Bankers. The petitioner in the guise that it is paying service tax, petitioner is not liable to pay VAT is not correct in view of categorical documents produced by it before the Assessing Authority. The Assessment Officer has categorically recorded a finding that even in spite of crores of rupees project work has been done by the petitioner, which attracts tax under Section 4(1)(c) of the Act, still interim order is granted, which is not sustainable in law. Hence he prays for dismissal of the writ petition. 14. I have heard the learned counsel for the parties and perused the papers made available. It is contended on behalf of the petitioner that it has undertaken the service contract and service tax having been paid, petitioner is not liable to pay VAT. Th ere is no transfer of property in goods and materials were supplied by the main contractor and the petitioner has executed the contract work. The most of the materials p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffective alternative remedy is provided in the statute. This court in W P No.57922-933/2016 (T-RES) dispose d of on 10.11.2016 has observed a deterrent exercise of power under Article 226 of the Constitution when an efficacious alternative remedy is provided under the statute. Para-20 of the order is extracted for reference: 20. A lenient approach of the Court in this regard allowing writ petitions to be entertained against the assessment orders directly, is only likely to consume lot of precious public time of the Court, whereas, ultimately, after a detailed and time consuming analysis of facts, the Court may come to the conclusion that there is not even sufficient material before the Court to pronounce upon the individual contentions and factual issues raised before it. Therefore, this court is of the considered opinion that writ petitions against the assessment orders, where the concerned taxing law provides for appeal mechanism, cannot be usually entertained. 18. This court has also held in the above order that the contingencies like, question of validity and vires of the relevant statute or Rules or notifications involved, whether the assessee concerned ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal provisions, which the appellate authority can as well go into and decide. The provisions of the KVAT Act are upheld and vires of the provisions is not in challenge in the instant case. 21. It is the contention of the petitioner that it is a composite contract between the parties, service contract as well as works contract. The petitioner has made available Form VAT 100 and claimed nil turnover and claimed no liability to pay tax. The said averment has been disputed by the respondent on the basis of the registers and e-sugam forms and particulars submitted by the petitioner itself and came to the conclusion that the petitioner is amenable to VAT under the KVAT Act. It is also observed in the impugned order that the petitioner has not substantiated payment of service tax either by the petitioner or by its principal. So these disputed facts cannot be gone into under Article 22 6 of the Constitution of India. 22. Regarding availment of alternative remedy, the Hon ble Supreme Court has observed in Para-15 of the judgment in COMMISSIONER OF INCOME TAX OTHERS vs., CHHABIL DASS AGARWAL, reported in (2014) 1 SCC 603, which is extracted herein under: 15. Thus, while ..... X X X X Extracts X X X X X X X X Extracts X X X X
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