Nandikeshwara Offset Prints vs Commissioner of Commercial Taxes, Vanijya Therige Karyalaya, Bangalore

N.K. Patil J.

The petitioner being aggrieved by the common order passed by the Karnataka Appellate Tribunal, Bangalore, in S. T. A. No. 590 of 2007 dated April 29, 2008, for the assessment year 2001-02, has presented this petition, raising the following substantial questions of law :

(a) Whether the activity of the petitioner in printing of packaging materials to the specification of customers amounts to works contract taxable u/s 5B of the Act or constitute sales taxable u/s 5(1) of the Act ?

(b) Whether, in the facts and circumstances of the case, the Appellate Tribunal is legally justified in summarily dismissing the appeal filed by the petitioner, without independent examination and application of mind of the contentions of the petitioner that its activity is one of works contract of printing falling u/s 5B read with entry 31 of the Sixth Schedule to the Act and not a sale taxable u/s 5(1) of the Act ?

(c) Whether the Appellate Tribunal is legally justified in confirming the levy of penalty of Rs. 36,000 u/s 12(4) of the Act without appreciating the fact that there was no suppression of turnover detected outside the books of account and that the determination of taxable turnover by the assessing authority was merely based on his best judgment and the opinion expressed by the inspecting authority ?

(d) Whether the penalty levied u/s 12A(1A) of the Act is legally justified in the facts and circumstances of the case ?

The brief facts of the case are that the petitioner is engaged in execution of the works contract of painting of packaging materials, etc., at Mysore. He submitted his returns for the assessment year 2001-02 disclosing the taxable turnover as "nil". The said return was accepted by the assessing officer and the assessment was concluded u/s 12C of the Karnataka Sales Tax Act, 1957 (for short, "the Act"), by order dated July 11, 2003. Be that as it may acting on the basis of the inspection report of the Assistant Commissioner of Commercial Taxes (Int.) Ill, Mysore, the competent authority visited the business premises on August 21, 2004, and found that the petitioner was not engaged in the works contract but engaged in the printing and sale of printed material. On the basis of the report submitted by the Vigilance Department of the Commercial Tax, the assessing officer reopened the matter and concluded the assessment order dated July 6, 2006 u/s 12A of the Act and also levied penalty u/s 12A(1A) of the Act, vide annexures A and C-1, respectively. Assailing the correctness of the said assessment and penalty orders, the petitioner filed an appeal before the Joint Commissioner of Commercial Taxes (Appeals), Mysore. When the said matter had come up for consideration, the Joint Commissioner of Commercial Taxes (Appeals), on July 4, 2007 in case No. KST AP. 95/2006-07, after appreciation of the oral and documentary evidence and other materials on record, allowed the appeal in part. Not being satisfied with the order passed by the Joint Commissioner of Commercial Taxes (Appeals), the petitioner herein filed an appeal before the Karnataka Appellate Authority, in S. T. A. No. 590 of 2007 for the assessment year 2001-02. When the said matter had come up for consideration before the Tribunal the Tribunal without conducting proper enquiry in strict compliance of the Act and Rules and without going through the order passed by the Joint Commissioner of Commercial Tax (Appeals), dismissed the appeal without assigning any valid reasons and without recording any reasons. In view of passing the non-speaking order, the petitioner herein felt necessitated to present this revision petition.

We have heard the learned counsel appearing for the petitioner and the learned Government Pleader appearing for the respondent.

After careful perusal of the common order passed by the Karnataka Appellate Tribunal, Bangalore, in S. T. A. No. 590 of 2007, it is manifest on the face of the record that the Tribunal has erred in passing the order impugned without going through the relevant material on record. It is significant to note that after careful perusal of the order impugned passed by the Tribunal that the first part of the order consists of the facts of the case and the second part does not contain any reasoning or finding as such for passing the said order. Except referring "since the FAA has already considered the amount raised which are perfectly within the framework of law, we do not find sufficient reasons to interfere with the orders of the FAA" nothing worthwhile is forthcoming. The said reasoning given by Tribunal cannot be sustained. The Tribunal must decide the matter with proper application of mind, strictly in consonance with the relevant provisions of the Act and Rules, with reference to the order passed by the Joint Commissioner of Commercial Tax (Appeals), Bangalore Bench B on July 4, 2007. Further it is significant to note that as a matter of fact, the assessing officer on July 6, 2006 has specifically referred that as per the inspection report, the investigating authorities have verified the details of the bank account, the receipts, the bill issues including the order forms including the books of account maintained with the assistance of the asses-see. It is the specific case of the petitioner that he has taken some works on contract basis and this aspect of the matter has not been looked into nor considered or decided in a proper perspective. Therefore, we are of the considered view that the order impugned passed by the Tribunal cannot be sustained and the same is liable to be set aside.

In the light of the facts and circumstances of the case as stated above, the instant revision petition is allowed in part and the impugned common order passed by the Karnataka Appellate Tribunal, Bangalore on April 29, 2008, in S, T. A. No. 590 of 2007 for the assessment year 2001-02 is hereby set aside and the matter is remitted back to the Karnataka Appellate Tribunal, Bangalore to reconsider the same and to pass appropriate order in accordance with law, after affording reasonable opportunity of hearing to both parties and to dispose of the same expeditiously, in strict compliance of the relevant provisions of the Act and Rules. All the contentions of both parties are left open to be urged before the jurisdictional appellate authority.