Sri Saideepa Jewellery Works vs State of Karnataka

Dilip B. Bhosale, J.—Heard the learned Counsel appearing for the parties.

These revision petitions arise from the order passed by the Karnataka Appellate Tribunal at Bangalore in Sales Tax Appeals filed by the petitioner against the orders passed by First Appellate Authority, which confirmed the orders passed by the Assessing Authority. In all these petitions, the petitioner is common and the assessment orders from which the revision petitions arise, are for the assessment years 2005-2006 to 2009-2010.

The petitioner is the partnership firm, which runs its business in the name and style of "Sri Saideepa Jewellery Works" at Davangere. The premises of the petitioner was inspected/searched on 12-11-2009 and in the course of the inspection, it was revealed/noticed that the petitioner firm had recorded details of sale transactions on loose slips, spread over several years and that those transactions were not declared to the department. In view thereof, the Inspecting Authority passed protective assessment order u/s 38(5) of the Karnataka Value Added Tax Act, 2003 (for short, ''the Act''), directing the petitioner to pay tax along with interest of Rs. 65,335/- for the period between 2005-2006 to 2009-2010.

It is against this backdrop and against the order of the Assessing Authority, the petitioner filed appeal u/s 62 of the Act before the First Appellate Authority. The appeal was also dismissed, affirming the finding recorded by the Assessing Authority. Against the order of the First Appellate Authority, the petitioner filed appeals before the Karnataka Appellate Tribunal at Bangalore u/s 63 of the Act. The Tribunal also affirmed the orders passed by the Authorities below. These revision petitions are directed against the order passed by the Appellate Tribunal.

The principal contention urged by learned Counsel appearing for the petitioner was that the proceedings against the petitioner were without jurisdiction since there was no authorisation as contemplated u/s 52 of the Act. He invited our attention to the memorandum of appeals filed before the First Appellate Authority and also before the Tribunal to contend that though such ground was raised, it was not examined and hence the orders passed by the Authorities are liable to be set aside on this ground alone. In short, he submitted that the order passed by the Assessing Authority and confirmed by the First Appellate Authority and the Tribunal are without jurisdiction, since the inspection/search was conducted by Inspecting Authority without authorisation. He further submitted that the authorisation, though was demanded by the petitioner, was not furnished to him either at the time of inspection or thereafter.

We have examined the contention urged by learned Counsel for the petitioner in the light of the provisions of the Act, in particular, Section 52 thereof.

Section 52 provides for production of inspection of documents and powers of entry, search and seizure. Our attention was invited to subsection (1) of Section 52. Sub-section (1)(l) provides that any officer authorised by the Commissioner to exercise all or any of the powers specified below either generally or specifically in this behalf shall have the power to issue an protective assessment as specified in sub-section (5) of Section 38. Sub-section (1) confers several powers on such officer who has been authorised by the Commissioner. In the present petitions, we are concerned with the power conferred u/s 52(1)(l) of the Act.

Our attention was invited by learned Counsel appearing for the respondent-State to the observations made in the Protective Assessment order u/s 38(5) of the Act dated 11-2-2010 passed by the Assistant Commissioner of Commercial Taxes (Enforcement-2). There is specific reference in the order to the Assignment Note No. 878863, dated 12-11-2009 issued by the Joint Commissioner of Commercial Tax (Enforcement), Bellary, which according to the respondent is the authorisation as contemplated by Section 52(1) of the Act. We have also perused the order passed by the Appellate Authority, in particular, paragraph 9 thereof. The Appellate Authority has also made reference to assignment note dated 12-11-2009 authorising Assistant Commissioner of Commercial Taxes to inspect the business premises of the petitioner. It is against this backdrop, we asked learned Counsel for the respondent to produce the authorisation u/s 52 of the Act. She accordingly placed English translation of the original order issued by the Commissioner of Commercial Taxes (Karnataka) authorising four Officers viz., Deputy Commissioner for Commercial Taxes, Assistant Commissioner for Commercial Taxes, Commercial Tax Officer and Commissioner Office (a) Intelligence and Coordination Branch Officers and (b) Investigation Branch Officers. A copy of the authorisation was also furnished to the Advocate for the petitioner. From perusal of the copy of the authorisation, learned Counsel appearing for the petitioner could not and did not dispute the same, though he submitted that a copy of the authorisation was never made available to the petitioner nor was it furnished to the petitioner at the time of inspection. It is in this backdrop, we do not find any substance in the principle contention advanced by learned Counsel for the petitioner and hence the ground of challenge/question of law raised in the revision petitions in respect of authorization is devoid of any merits. Next, he submitted that even while conducting the search and seizure, no procedure as contemplated by law was followed by the concerned Officer when the books of accounts were seized. Though he made such submission, he could not and did not point out from the material on record as to why, according to the petitioner, the procedure was not followed. As a matter of fact, our attention was invited to para 10 of the order passed by the First Appellate Authority to contend that the books of accounts were not available at the time of inspection. It would be relevant to reproduce the relevant observations at paragraph 10, which read thus:

....

In the absence of books of account the Inspecting Authority had every reason to believe that there would be evasion of tax on the transactions contained in the loose slips and as such he has culled out the turnovers from those loose slips and brought the same to tax. There is no forceful seizure of the loose slip by the Inspecting Authority as there is no search of the business premises by the Inspecting Authority as is evident from the statement recorded by the appellant himself. Even if it presumed that there is illegal seizure of the loose slips, then the information contained therein could be adopted for the purposes of quantification of taxes and such seizure would not be in violation of Article 20(3) of the Constitution as held by the Hon''ble Supreme Court in their decision in Dr Partap Singh and Another Vs. Director of Enforcement, Foreign Exchange Regulation Act and Others, and also the judgment of the Hon''ble High Court of Karnataka in Sapthagiri Enterprises v. The Commercial Tax Officer (Int. III), North Zone, Belgaum and Another, 1991(1) Kar. L.J. 488 : (1999) 116 STC 220 (Kar.).

....

Even at the appellate stage the appellant has failed to produce the books of account to prove that whatever transactions are recorded in the loose slips are accounted in the books of account and same is reflected in the returns filed in Form VAT 100 filed for relevant tax periods. The appellant has only made an attempt to find fault with the Inspecting Authority by casting shadow on his negative attitude in not co-operative with the Department by producing the books of account and participating in the proceedings initiated by the Inspecting Authority u/s 52 of the KVAT Act, 2003. Under the circumstances, I hold that the Inspecting Authority is vested with the powers to not only inspect the business premises of the appellant but also to pass protective assessment orders.

The observations made by the Appellate Authority clearly demonstrate that there was no question of seizure of books of accounts in the course of conducting search of the premises. He also submitted that no appropriate opportunity was given to the petitioner to meet the case made out against him by the concerned authority. We are not in agreement with the submission advanced by learned Counsel appearing on behalf of the petitioner. From the material on record and in particular, the orders passed by the authorities below, it is clear that fair opportunity was given to the petitioner to meet the case based on the search/seizure conducted by the officer authorised u/s 52 of the Act. We find no substance in the petitions. No question of law is either raised or involved in the petitions. Hence, the revision petitions are dismissed.