Gayathrimata Industry vs The Additional Commissioner of Commercial Taxes, Zone-I

K.L. Manjunath, J.—Assessees'' have filed these appeals challenging the legality and correctness of the order passed by the Additional Commissioner of Commercial Taxes, Zone-I, Bangalore, exercising powers u/s 64(1) of the Karnataka Value Added Tax Act, 2003. Questions of law involved in all these appeals are one and the same. Therefore, by consent of the learned Counsel for the parties, these appeals are taken up together for hearing and disposal.

The short question arises for consideration in these appeals is, whether the appellant-assessee who has supplied RCC poles and PCC poles to the Hubli Electricity Supply Company (A Government Company) and transported the same to the place of customer is liable to pay value added tax on the transportation charges.

According to the learned Counsel for the appellant, it is a post sale expenditure which does not attract the payment of value added tax in the hands of the assessee. He further contends that though relief was granted to the assessee by the Appellate Authority, the Additional Commissioner ignoring the circular issued by the Commissioner of Commercial Taxes has wrongly came to the conclusion that the order of the Appellate Authority is prejudicial to the interest of the revenue and reversed the findings of the Appellate Authority.

The Additional Commissioner does not dispute the issuance of a circular by the Commissioner of Commercial Taxes excluding the freight/transportation charges from assessable turnover liable to taxes. According to the Additional Commissioner the said circular has no statutory force and not binding upon him.

The revisional powers exercised in the instant case by the Additional Commissioner of Commercial Taxes could have been exercised by the Commissioner of Commercial Taxes also. Instead of the Additional Commissioner exercising the revisional powers, if the same had been exercised by the Commissioner, the appellant contend that the Commissioner could not have overlooked the circular issued by him. He further contends that if the Additional Commissioner was of the opinion that the issuance of circular by the Commissioner of Commercial Taxes is bad in law, he could have brought to the notice of the Commissioner for withdrawal of such circular and further submits that till today the aforesaid circular has not been withdrawn and the same is acted upon by the Commissioner. Therefore he submits that the order of the Revisional Authority has to be set aside and the matter to be reconsidered afresh in the light of the circular issued by the Commissioner of Commercial Taxes and also the judgments of this Court in Radhakrishna Agencies Vs. The Commissioner of Commercial Taxes and Others, and State of Karnataka v. Larsen and Toubro Limited 2011 (70) Kar. L.J. 285 (HC) (DB).

This is a legal position and this cannot be disputed by the learned Government Advocate. In the circumstances, we are of the opinion that without answering the question of law framed in these appeals the matter requires to be re-examined by the Assessing Officer afresh in accordance with the law by giving a reasonable opportunity to the appellants. In the circumstances, we set aside the order passed by the Revisional Authority, so also by the Appellate Authority and the order of assessment. The appeals are allowed accordingly. It is submitted by the Counsel for the appellant that in STA Nos. 517 to 519 of 2010 the appellants have paid excess Court fee and a memo has been filed to that effect. Therefore, the registry is directed to find out the actual Court fee payable by the appellants and if the appellants have paid the excess Court fee, the same shall be refunded to the appellants in the concerned appeals.