Iqbal Ahamed vs Deputy Commissioner of Commercial Taxes, Mangalore

Issue rule. These matters involving common questions are heard finally by consent.

The petitioners are registered dealers under the Karnataka Sales Tax Act, 1957 (''Act'' for short). They undertake and execute works contracts.

W.P. No. 42899 of 1999 relates to the assessment year 1996-97 and W.P. No. 27898 of 2001 relates to the assessment year 1997-98. The petitioners in the respective petitions have executed works contracts during those assessment years and opted for composition under Section 17(6) of the Act, by filing application in Form 8-A. However, sub sequently, they withdrew the option exercised by them for composition by filing revised returns with an application requesting the Assessing Authority to complete the assessment under Section 5-B of the Act.

In regard to the petitioner in W.P. No. 42899 of 1999, the Assessing Authority has rejected the request in the Proposition Notice dated 15-10-1999 (vide Annexure-C).

In regard to the petitioner in W.P. No. 27898 of 2001, the Assessing Authority has proceeded to pass an order of assessment dated 26-5-2001 (Annexure-C) rejecting the request of the petitioner and concluding the matter under Section 17(6) of the Act.

Feeling aggrieved, the petitioners have filed these petitions for quashing the Proposition Notice dated 15-10-1999 (Annexure-C in W.P. No. 42899 of 1999) and the assessment order dated 26-5-2001 (Annexure-C in W.P. No. 27898 of 2001). Petitioners have also sought a direction to respondents to assess the respective petitioners under Section 5-B of the Act in regard to the assessment years 1996-97 (in regard to petitioner in W.P. No. 42899 of 1999) and 1997-98 (in regard to petitioner in W.P. No. 27898 of 2001).

The matters are covered by the decision of the learned Single Judge of this Court in M/s. Mycon Construction Limited, Bangalore v State of Karnataka and Another, 1999(46) Kar. L.J. 21 (HC) and the decision of the Division Bench in State of Karnataka and Another v M/s. Mycon Construction Limited, Bangalore, W.A. No. 1391 of 1998, DD: 9-9-1998, where liberty was given to all assessees to opt afresh for regular assessment under Section 5-B notwithstanding the fact that they had earlier opted for composition under Section 17(6). But, in these cases, the Assessing Authority has held that the decision in M/s. Mycon Construction Limited''s case, supra, is inapplicable on the ground that the liberty to withdraw the option for composition is available only for cases relating to assessment year 1995-96 and earlier, and that the decision in Mycon''s case, supra, applied only to the petitioner in that case. But the Division Bench stated in Mycon''s case, supra, that the benefit will be available not only to the appellant in that appeal but to other assessees who were not before the Court. Further, in B.V. Subba Reddy v Deputy Commissioner of Commercial Taxes, Bijapur and Others, 2001(50) Kar. L.J. 164 (HC), this Court has held withdrawal of option and request for regular assessment under Section 5-B is possible even in regard to the assessment year 1997-98.

In view of the above, these petitions are allowed as follows:

(i) The Proposition Notice dated 15-10-1999 (Annexure-C in W.P. No. 42899 of 1999) in regard to assessment year 1996-97 and the assessment (composition) order dated 26-5-2001 (Annexure-C in W.P. No. 27898 of 2001) in regard to assessment year 1997-98 are quashed; and

(ii) The respondent is directed to proceed with the assessment under Section 5-B of the Act by accepting the request for withdrawal from the option exercised for assessment under Section 17(6).