SAP India Private Limited vs The Deputy Commissioner of Commercial Taxes and Others

B.V. Nagarathna, J.—The petitioner has assailed notice dated 10-12-2013 (Annexure-A) and Corrigendum Notice dated 13-12-2013 (Annexure-A1) which have been issued under Sections 42 and 43 of the Karnataka Sales Tax Act, 1957 (hereinafter, referred to as the "Act"), as is evident from the Corrigendum Notification. Briefly stated, the facts are that the petitioner had assailed the reassessment proceedings before the First Appellate Authority and by order dated 30-10-2013 (Annexure-H), the appeal has been dismissed. In fact, this appeal was filed by the petitioner pursuant to the order passed by this Court on 13-4-2010 in W.P. No. 10179 of 2010 (SAP India Private Limited (formerly known as SAP India Systems Application and Products in Data Processing Private Limited), Wing A, Bangalore v. The Deputy Commissioner of Commercial Taxes, Audit-16, VAT Division-I, Bangalore 2014(78) Kar. L.J. 18 (HC)). As against the order dated 30-10-2013, which is passed u/s 20(5) of the Act, the petitioner has a remedy by way of an appeal before the Karnataka Appellate Tribunal u/s 22 of the Act. Of course, the Tribunal would entertain the appeal only if 50% of the disputed amount of tax is deposited before the Tribunal at the time of filing of the appeal.

The grievance of the petitioner is that there is sixty days time granted by the statute to file an appeal and also to seek stay of the demand made under the impugned order of the First Appellate Authority, but precipitative action has been taken by the Department by issuance of the impugned notices. By these notices, the Department intends to invoke the bank guarantee of Rs. 46,05,16,337/- given by the petitioners to the Department pursuant to the direction of this Court in W.P. No. 10179 of 2010. It is under these circumstances that the impugned notices have been assailed.

I have heard the learned Counsel for the petitioner and the learned AGA for the respondents who appears on advance notice and has accepted notice in these writ petitions.

Learned Counsel for the petitioner has drawn my attention to the order dated 30-10-2013 passed by the First Appellate Authority and also the order passed by this Court in W.P. No. 10179 of 2010, dated 13-4-2010 pursuant to which the appeal was filed before the First Appellate Authority as well as Section 22 of the Act. He contends that when the statute grants sixty days time to file the appeal against the order of the First Appellate Authority and also proviso to sub-section (5) of Section 22 of the Act, which relates to discretion that could be exercised by the Appellate Tribunal in an appeal to be filed by the petitioner against the order of the First Appellate Authority with regard to the stay of demand of 50% of the amount, these notices intending to encash the bank guarantee given by the petitioner would takeaway the statutory rights of the petitioner. Hence, it is contended that the impugned notices have to be quashed.

It is also brought to my notice that the Hon''ble Supreme Court has ordered for refund of amounts for the assessment year 2005-2006, in respect of the very same petitioner and till date, those amounts have not yet been refunded.

Per contra, learned Additional Government Advocate appearing for the respondent has supported the notices and has contended that when huge outstanding dues to the revenue were there, the Department was justified in seeking recovery of the said amount particularly, when the bank guarantees were furnished by the petitioner pursuant to the direction of this Court.

Having heard the learned Counsel on both sides and on perusal of the material on record, it is noted that the First Appellate Authority by its order dated 30-10-2013, has dismissed the appeal filed by the petitioner and as against that order, the petitioner has an appellate remedy u/s 22 of the Act. Such an appeal could be filed within sixty days from the date of communication of the order of the First Appellate Authority. That period has not yet lapsed. It is for the petitioner to avail of the appellate remedy within the prescribed period of limitation. As of today, the prescribed period of limitation has not yet come to an end. In case the petitioner intends to avail the appellate remedy, then the conditions for the entertaining of the appeal would have to be satisfied by the petitioner. If those conditions are fulfilled, the Appellate Tribunal would entertain the appeal and also consider the case of the petitioner under proviso to sub-section (5) of Section 22 of the Act. But in the instant case, notice of invocation of bank guarantee impugned in these writ petitions directly violates the right of the petitioner to file an appeal and seek an order under proviso to sub-section (5) of Section 22 of the Act.

In this regard, what is to be noted is that prior to the filing of the appeal before the First Appellate Court this Court by its order dated 13-4-2010 had stated that having regard to the nature of the controversy between the parties, the direction to deposit 50% of the disputed amount would be prejudicial to the petitioner. In that context, this Court had stated that as the petitioner had already deposited Rs. 19.05 Crores, additional sum of Rs. 18.18 Crores would have to be deposited. But the Court had directed that a sum of only Rs. 10 Crores be deposited and for the balance amount, bank guarantee ought to be furnished to the satisfaction of the authority. It is in compliance of that order that the bank guarantee of Rs. 46,05,16,337/- has been furnished by the petitioner, which the Department intends to invoke. Keeping these facts in mind, the only relief that can be granted to the petitioner at this stage is that incase the petitioner intends to avail of the appellate remedy u/s 22 of the Act, then 50% of the disputed amount would have to be deposited before the Tribunal by also keeping in mind the order passed by this Court in W.P. No. 10179 of 2010, disposed of on 13-10-2010 and seek a stay in respect of the balance disputed amount. Learned counsel for the petitioner states that the appeal shall be filed within the prescribed period of limitation along with the application to be considered on the proviso to sub-section (5) of Section 22 of the Act. Till that application is considered by the Tribunal, under proviso to sub-section (5) of Section 22 of the Act. Annexures-A and Al are kept in abeyance.

It is made clear that in case no appeal is filed by the petitioner within the prescribed period of limitation, seeking an order under proviso to sub-section (5) of Section 22 of the Act, then the respondents are at liberty to take action under Annexures-A and A1 impugned in these writ petitions. With the aforesaid observations and directions, the writ petitions are disposed of.