M/s. Shivam Trading Company vs The Commercial Tax Officer, Bangalore

Jawad Rahim, J.—The petitioner an assessee under the Central Sales Tax Act engaged in business in the name and style of M/S. Shivam Trading Company, in this writ action has questioning the order passed by respondent u/s 53(12) of the Karnataka Value Added Tax Act, 2003 in No. CTO-ENF/22/NSR/K-128/12-13 dated 6.4.2013 levying penalty under the impugned order at Annexure-H. The petition has come up for hearing in ''B'' group after notice to the respondent who is represented by learned standing counsel Sri V. Girikumar.

Heard the counsel for both sides. Perused the records, from which the following contextual facts manifest:

The petitioner claims to be the purchaser of ghutka from one M/S. KAY Flavours Pvt. Ltd., Lucknow. The said purchase was documented under the two invoices i.e. Invoice No. 00603 dated 12.03.2003 for Rs. 13,05,600/- and invoice No. 13067 dated 12.03.2003 for Rs. 2,16,240/-. Both invoices were covered by single LR Bearing No. 33634116 dated 12.3.2013 of M/s. Safe Express Pvt. Ltd., covering the value of Rs. 15,21,840/-. The petitioner claims that it had generated two separate E-sugams before the commencement of the movement of the goods and one E-sugam bearing No. 10920295209 and another E-sugam No. 10210295331 dated 12.3.2013 were also available.

It is alleged that when the goods along with relevant documents entered the State of Karnataka it was first checked at Bagepalli check post and the officer in-charge verified the documents and the goods and being satisfied with the documents, permitted the petitioner to continue the transportation of the goods into the State of Karnataka. The petitioner submits, the respondent intercepted the vehicle while the goods were being unloaded at its premises. The petitioner claims to have produced the documents once again soon after the vehicle was intercepted on 19.3.2013 to the satisfaction of the respondent officer.

The respondent officer declined to accept the contention of the petitioner about the lawful transportation and has passed an order on the premise that at the time of checking the vehicle, the person in-charge has tendered only copy of invoice No. 00603/12.03.2013 for Rs. 13,05,600/-, but no E-sugam form was forthcoming. Non production of E-sugam form is held to be in contravention of the Notification No. Adcom (P & L) PA/CR-31/2011-12, Bangalore dated 23.12.2011 part-C, Sl. No. 13. It is also alleged that the said documents were not checked at the check post i.e. BRCP(IN) as per the provisions u/s 53(12)(c) and (d) of KVAT Act, 2003.

The second ground is that the numbers on the two invoice are of different series, though issued by the same consignor. To raise such ground reference is made by the respondent to the Sl. No. of one invoice of 13067 dated 12.3.2013 and another invoice No. 00603 dated 12.3.2013 issued by the same consignor namely M/S. Kay Flavours Pvt. Ltd., Lucknow.

Besides, the respondent has issued an order imposing penalty directing the petitioner to pay a sum of Rs. 2,48,064/- u/s 53(12) of the KVAT Act, 2003. Aggrieved by it, the petitioner is before this Court.

The petitioner''s counsel would submit that petitioner was bona fide transporting the product and had presented valid documents and the same was checked at the entry point at Karnataka and no contravention was found. He submits that respondent intercepted the vehicle at the premises of the petitioner on the presumption that the documents are not genuine and the two invoices are doubtful and levied penalty. In this regard the petitioner would also submits that as regard the doubt about the difference in the Sl. No. of invoices the petitioner has instruction to submit the consignor has more than one units from where the products is supplied depending upon its availability at each counter, and separate invoice books are maintained and used and therefore part of the consignment is from one unit and part of the consignment is from the another unit, though on the same day it was consigned. Thus, serial number depends on the book used. As regards non maintaining of E-sugam is concerned, he submits that E-sugam was generated before commencement of the journey and that is on record. It is the duty of the officer to verify it. If the authorities have not verified, the petitioner cannot be held responsible for such lapse.

Coming to the main grievance the petitioner has highlighted the facts that the respondent had issued a notice to the petitioner about the alleged contravention and simultaneously without waiting for reply had passed the impugned order at Annexure-H imposing penalty.

On perusal of records it is clear, in an instant case the officer has passed the impugned order on 6.4.2013 after collecting the penalty on 27.3.2013, but perused the impugned order imposing penalty later which is described as vitiated and being in contravention of Section 53(12) of this Act.

Learned standing counsel for the respondent would submit that at the time when the vehicle was intercepted no proper documents regarding consignment was produced. He submits that the vehicle did not carried E-sugam details.

The second ground urged is that the burden is on the petitioner to establish compliance of all requirements, that is invoices, generating E-sugam and payment of tax. He submits that none of these documents were available when the vehicle was intercepted and the petitioner voluntarily paid the penalty of Rs. 2,00,000/- and the petitioner cannot now question the validity of the impugned order. He submits that the petitioner''s vehicle was released after payment of penalty which itself shows acceptance of penalty imposed.

Though the learned standing counsel has taken such a stand to support the impugned order, it is material to note that the impugned order is passed under the provisions of Section 53(12) of the KVAT Act, 2003. The procedure contemplated therein has to be followed which envisages that the officer in charge of a check post or a barrier or any other officer in respect of any contravention of, or non-compliance with, the provisions of sub-section (2), for which sufficient cause is not furnished, levy a penalty which shall not be less than the amount of tax leviable. Therefore, it pre supposes that the notice need to be issued to show cause, and if it is found no insufficient cause regarding the alleged violation is shown, penalty could be imposed. In an instant case the officer has passed the impugned order on 6.4.2013 after collecting the penalty on 27.3.2013. Therefore, collection of penalty without an order u/s 12(c) of Section 53 of the Act, is illegal and can hardly be sustained. However, it is seen from the contention of respondent''s standing counsel that an appeal is provided u/s 62 of the Act, the petitioner needs to avail that remedy. However, in this writ action, the order passed by the respondent imposing penalty u/s 53(12)(c) shown to be illegal, Annexure-H is quashed.

The writ petition is allowed. Rule issued to the following effect.

Annexure-H is quashed declaring it to be illegal, and the respondent is directed to refund the penalty of Rs. 2,48,064/- deposited by the petitioner towards penalty in terms of Annexure-H within four weeks.

In the circumstances no order as to costs.