AI Structured Summary
Not yet generated for this judgment
Judgment
K.L. Manjunath, J.—According to the petitioner, the petitioner is a registered dealer under the provisions of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as the KVAT Act, for short) and has been selling the bakery products like toffees along with other articles such as toilet articles and cosmetics etc. in his shop as a retailer. According to the petitioner, petitioner''s business would fall u/s 15(1)(a) of the KVAT Act and based on the same, the taxes are paid at the rate of 1% on the total turn over.
The respondents on conduct of an inspection found that, the case of the petitioner would fall u/s 15(1)(c) of the KVAT Act and have called upon the petitioner to pay tax at the rate of 4% and a notice u/s 72 of the KVAT Act to levy penalty has also been issued and that the taxes at 4% has been collected peremptorily.
Questioning the legality and the correctness of the action initiated by the respondents by inspecting the premises and calling upon the petitioner to pay tax at 4% without following the procedure as contemplated u/s 39 of the Act, the present petition is filed praying to quash Annexure-B, C and E.
I have heard the learned Counsel for the parties.
According to the counsel for the petitioner, the petitioner is not manufacturing any bakery product and he is only a retail dealer. According to the petitioner, the petitioner purchases the bakery products and other products and sells in his retail shop and therefore, his case falls u/s 15(1)(a) of the Act. Therefore, the action taken by the respondents in collecting taxes peremptorily treating his case as one u/s 15(1)(c) of the KVAT Act and issuing notice u/s 72 of the KVAT Act is bad under law.
Learned advocate for the respondents submits that there is no difference between the dealer running sweet meet stall or the dealer running bakery either as a manufacture or a dealer. Even for the sake of argument, if the petitioner is considered as a retail dealer, then also the case of the petitioner falls u/s 15(1)(c) of the KVAT Act. However it is submitted that on inspection it is noticed that the petitioner is a manufacturer having a bakery unit. Therefore, he requested the Court to dismiss the petition.
In order to appreciate the rival contentions, it would be useful for the Court to refer Chapter-II, Section 15 of the KVAT Act, which reads as under:
Composition of Tax-(1) Subject to such conditions and in such circumstances as may be prescribed, any dealer other than a dealer who purchases or obtains goods from outside the State or from outside the territory, of India, liable to pay tax as specified in Section 4 and,
a) Whose total turnover in a period of four consecutive quarters does not exceed fifteen lakhrupees;or
b) Who is a dealer executing works contracts; or
c) Who is a hotelier, restaurateur, caterer; or
d) Who is a mechanised crushing unit producing granite metals;
May elect to pay in lieu of the net amount of tax payable by him under this Act by way of composition, an amount at such rate not exceeding five percent on his total turnover or on the total consideration for the works contracts executed or not exceeding two lakh rupees for each crushing machine per annums may as be notified by the Government as may be prescribed.
Without considering whether the case of the petitioner would fall u/s 15(1)(a) or 15(1)(c) as contended by the learned Counsel for the parties, it is noticed by this Court that before passing an order of re-assessment of tax, the procedure u/s 39 has to be followed by the authorities.
Unless the procedure u/s 39 has not been followed by issuing a notice to the petitioner calling upon him as to why an action should not be taken for re-assessment of the tax.
Since the said procedure is not followed, only on that ground, the writ petition is disposed of quashing the proceedings calling upon the petitioner to make payment thereby permitting the respondents to proceed with the matter and pass appropriate order after following the procedure contemplated u/s 39 of the KVAT act.
With the above observations, the writ petition is disposed of by granting liberty for the respondents to issue notice u/s 39 and take action in accordance with law. If the petitioner receives such notice, he is at liberty to raise all the contentions prevailing under the law. If any such contentions are urged, the respondents shall consider the same. Any payment to be made by the petitioner shall be subject to the order to be passed u/s 39 of the Act.