Greenply Industries Limited vs Commissioner of Commercial Taxes

N. Kumar, J.—The assessee has preferred this appeal challenging the order passed by the Additional Commissioner of Commercial Taxes, Zone 1, Bangalore, who has exercised its revisional jurisdiction u/s 64(1) of the Karnataka Value Added Tax Act, 2003 (for short, hereinafter referred to as, "the Act") in setting aside the order of the Appellate Commissioner and restoring the original order. The assessee is a private limited company having a manufacturing unit at Nagaland. Its branch offices are at Bangalore and other places in the State. It is in the manufacture of plywood. It is carrying on business for over 15 years. The assessee secured goods by way of stock transfer from its manufacturing unit to its branches. On November 8, 2008, plywood worth Rs. 11,00,846 was earned in goods vehicle bearing No. AP 16 IV 6655 from Assam, Nagaland to the consignee, Bangalore branch of the assessee. It was intercepted at Urvesi Theatre, Lalbagh Road at 5 a.m. The driver of the vehicle handed over eight documents which are clearly set out in the Mahazar drawn at the time of interception. On the ground that the said documents did not satisfy the requirement of section 53(2) of the Act, notice came to be issued proposing to levy a sum of Rs. 3,27,205.10 as penalty for contravention of provisions of section 53(2) of the Act. The assessee gave his reply. Not being satisfied with the said reply, the check-post officer imposed penalty of Rs. 2,18,150. Aggrieved by the said order, he preferred an appeal to the joint Commissioner of Commercial Taxes (Appeals), who allowed the appeal and set aside the order of the check-post officer.

Consequent to that, the Department was bound to refund the penalty of Rs. 2,18,150 which the assessee has paid. It was not paid. Therefore, the assessee got issued legal notices dated April 24, 2009 and May 27, 2009 calling upon the first respondent-Commissioner to refund the same. But the amount was not refunded. He was constrained to file a Writ Petition in W. P. No. 19066 of 2009 which came to be allowed on July 9, 2009 Greenply Industries Ltd. Vs. Commissioner of Commercial Taxes, Karnataka Bangalore and Others, after hearing both the parties and directing the second respondent-Joint Commissioner of Commercial Taxes to refund the amount within a week from the date of the order or initiate such action as is permissible, in accordance with law over the said order. Costs was quantified at Rs. 5,000 payable by the Department and to be recovered from the salary of the first respondent, i.e., Commissioner of Commercial Taxes. All the three respondents in the said writ petition preferred an appeal challenging that portion of the order imposing cost and making the first respondent, the Commissioner, liable to pay said amount in Writ Appeal No. 3426 of 2009. After hearing the parties, the writ appeal came to be dismissed confirming the order. Thereafter the Commissioner of Commercial Taxes in his individual capacity filed writ appeal before this court in W. A. No. 5195 of 2009 which also came to be dismissed by this court on February 11, 2010 B.A. Harish Gowda Vs. Greenply Industries Ltd., In terms of the order passed by the learned single judge the penalty paid was refunded with interest and cost. It is thereafter the present proceedings is initiated suo motu by virtue of the power conferred on the Additional Commissioner of Commercial Taxes u/s 64(1) of the Act.

The Mahazar drawn by the check-post officer showing the production of documents by the driver of the lorry shows the following documents were produced:

(a) Lorry challan No. 92778/October 27, 2008.

(b) Transit pass issued from Commercial Tax Department, Palamneer.

(c) Declaration form of CT Department, West Bengal check-post.

(d) Assam general sales tax form.

(e) Transit pass issued by Orissa check-post.

(f) Forest Department, Nagaland, certificate and transit pass issued by Shivasagar, Girisala.

(g) Form ST 2

(h) Certificate issued from Nagaland for transporting the plywood sheet from Nagaland to Bangalore with consignor as M/s. Greenply Industries to M/s. Greenply Industries, Bangalore.

When the check-post officer was not satisfied with these documents he proceeded to pass the order imposing penalty. The Commissioner after carefully going through the said documents was satisfied that the said documents satisfied the requirement u/s 53(2) of the Act and the levy of penalty u/s 53(12) of the Act was erroneous. Therefore, he set aside the order.

Now production of the said documents is not in dispute. The revisional authority has set aside the said order solely on the ground that only xerox copies of the said documents were produced as it is inadmissible in evidence and therefore, it is infraction of law which cannot be cured. In the reply filed to the notice issued by the check-post officer, it is clearly stated they are in possession of the original, they will produce the same. The section as such does not prescribe that the original documents have to be carried along with goods. If there is any doubt about the genuineness of the xerox copies which are carried with the goods, it is open to the authorities to call upon the assessee to produce the originals and satisfy themselves about the genuineness of the documents. The assessee was ready and willing to produce all the originals. It would not amount to infraction of law as held by the original authority.

From the aforesaid material, we are satisfied that the assessee is carrying on business over the last 15 years. It is a case of stock transfer. The aforesaid eight documents clearly and equivocally establish the said fact. Check-post authority did not call upon the assessee to produce originals. According to him, the said documents did not constitute valid documents as required under law, which order has been set aside by the appellate authority which has found fault with the original authority. It only shows the Department instead of encouraging bona fide transaction and honest tax-payers, are harassing them. More so in this case because when they did not promptly repay the amount collected as penalty, when the appellate court set aide the order, inspite of the legal notice issued by the assessee he had no other option except to approach this court. This court after being satisfied with the fact that, i.e., authorities are not acting in accordance with law and they have not discharged their statutory liability, issued a writ of mandamus directing refund and also fixing the liability on the Commissioner of Commercial Taxes who is the head of the Department who was expected to take appropriate action against assessing officials in his Department, violating the orders passed by the appellate authority under the Act. There was nothing wrong in this court fixing the responsibility on the Commissioner, as this court cannot find out who in the hierarchy in the office is responsible for this delay and latches in performing statutory duty. This court can only proceed against the head of the Department. Rightly the learned single judge, though directed the second respondent-Additional Commissioner to make refund, imposed cost on the Commissioner who did not discharge his duties as the head of the institution in efficiently running the administration. The authorities have a right to challenge the order of the learned single judge by preferring an appeal to this court. The appeal was filed by the Commissioner in his capacity as Commissioner challenging the order of the learned single judge, which came to be dismissed. After failing in his efforts to get the order of the learned single judge set aside, he made one more attempt to challenge the very same order on the ground that he was not heard by filing independent writ appeal in his individual name. Rightly, the said appeal also came to be dismissed. The power conferred u/s 64(1) of the Act is vested with the higher authorities like the Additional Commissioner in order to save public revenues. The condition precedent for exercising that power is not only the order sought to be revised is erroneous it should be prejudicial to the Revenue. It is clear case of picking holes where none exists. It is clear case of abuse of the power to wrack vengeance.

The assessee by approaching this court, was exercising his constitutional right. He committed no crime. He cannot be punished for approaching court and for being successful. This tendency is to be curbed. The authorities should learn the culture of accepting the decisions of the courts, after it became final, and not to harass the successful litigants. In the circumstances of the case, it is a fit case to levy cost on these respondents and the said amount shall be recovered from the persons who are concerned in creating the situation of this nature. Accordingly, we pass the following order:

ORDER

(a) Appeal is allowed. Impugned order is set aside.

(b) The respondents shall pay cost of Rs. 10,000 to the petitioner.