Aryan Build Estates Pvt. Ltd. V. The Assistant Commissioner of Commercial Taxes (Audit)-5.7 and The Commissioner of Commercial Taxes in Karnataka

WP/8705/2017

AI Insights

The case involves M/s Aryan Build Estates Pvt. Ltd., a registered dealer under the Karnataka Value Added Tax Act, 2003, challenging a Rectification Order dated 25.01.2017 which demanded a sum of Rs.18,29,953 for the assessment period 2012-13. The petitioner contested the order primarily on the grounds that the input tax credit, a vested right, was not properly considered, and the excess input tax credit was wrongly carried forward without adjustment against the output tax payable for the period. The respondents argued that the petitioner should have availed the alternate remedy of appeal. However, the court, referencing the Supreme Court's discretion under Article 226 despite the existence of an alternative remedy, decided to entertain the writ petition due to the apparent error on record and the time elapsed since the impugned order.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 819935 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 31-07-2021
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax Vs. Chhabil Dass Agarwal, M/s Kalyani Motors Pvt. Ltd Vs. Deputy Commissioner of Commercial Taxes, State of Gujarat Vs. Nishi Communication
• Laws Referred To: Karnataka Value Added Tax Act, 2003
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K HEMA KUMAR
• Assessee Lawyers: K M SHIVAYOGI SWAMY
• Keywords: Assessment Period; Input tax credit; Interest and Penalty; Legal Remedy; Rectification Order; Writ petition
• Section: 36

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 31ST DAY OF JULY, 2021 BEFORE THE HON'BLE MR. JUSTICE KRISHNA S.DIXIT WRIT PETITION NO. 8705 OF 2017 (T-RES) BETWEEN: M/S ARYAN BUILD ESTATES PVT. LTD., SY NO.12/7, BBMP NO.1769/12/7, THANISANDRA VILLAGE, BANGALORE-560 077 REPRESENTED BY ITS DIRECTOR SRI. H. M. PRASANNAKUMAR AGED 40 YEARS. ...PETITIONER (BY SRI. K. M. SHIVAYOGISWAMY, ADVOCATE) AND: 1 . THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT)-5.7, ROOM NO.508, ‘B’ BLOCK RAJENDRANAGAR, KORAMANGALA BANGALORE-560 047. 2 . THE COMMISSIONER OF COMEMRCIAL TAXES IN KARNATAKA COMMERCIAL TAXES BUILDING, GANDHINAGAR, BANGALORE-560 009. … RESPONDENTS (BY SRI. K. HEMAKUMAR, AGA) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED RECTIFICATION ORDER PASSED BY THE RESPONDENT AUTHORITY IN RELATION TO THE ASSESSMENT PERIODS FOR THE MONTHS OF MAY, DECEMBER-2012, JAN, FEB AND MARCH – 2013 IN SO FAR AS IT PERTAINS TO LEVY FO INTEREST AND PENALTY IS CONCERNED BEARING NO.T.NO. 1820/16-17 DATED 25.01.2017 VIDE ANNEX- E AND ETC. 2 THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDER, THIS DAY, THE COURT PRONOUNCED THE FOLLOWING: ORDER Petitioner, a Private Limited Company being a registered dealer under the provisions of Karnataka Value Added Tax Act, 2003, (‘Act’ for short) is knocking at the doors of Writ Court for assailing the Rectification Order dated 25.01.2017, a copy whereof is at Annexure-E, pursuant to which a notice of demand has been raised for a sum of Rs.18,29,953/-, concerning the assessment period 2012-13. 2. After service of notice, respondents having entered appearance through the learned Addl. Govt. Advocate, resist the Writ Petition making submission in justification of the impugned order and the reasons on which it has been constructed; the AGA also contends that petitioner has an alternate remedy of appeal and therefore, he should be delegated to the same; so contending, he seeks dismissal of the Writ Petition. 3 3. Having heard the learned counsel for the parties and having perused the Petition Papers, this Court is inclined to grant indulgence in the matter for the following reasons: (a) The vehement contention of learned AGA that the impugned order being appealable under the provisions of the Act, the petitioner should be relegated to the appellate remedy, does not impress this court; ordinarily, an aggrieved is expected to avail the alternate remedy is a norm evolved by the writ courts; however, it is not a Thumb Rule to be followed stricto sensu and invariable; the Apex Court in Commissioner of Income Tax Vs. Chhabil Dass Agarwal, (2014) 1 SCC 603 at para 11 has observed as under: “11… It is settled law that non-entertainment of petitions under writ jurisdiction by the High Court when an efficacious alternative remedy is available is a rule of self-imposed limitation. It is essentially a rule of policy, convenience and discretion rather than a rule of law. Undoubtedly, it is within the discretion of the High Court to grant relief under Article 226 despite the existence of an alternative remedy. However, the High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing the same unless he has made out an exceptional case warranting such interference or there exist sufficient grounds to invoke the extraordinary jurisdiction under Article 226.” 4 (b) The impugned order was made in January 2017; the Writ Petition was filed in February 2017; the matter is taken up for disposal today i.e., after about more than four years; the error on which certiorari is sought for is apparent on the record; a Co-ordinate Bench of this court in M/s Kalyani Motors Pvt. Ltd Vs. Deputy Commissioner of Commercial Taxes in W.P.No.60480/2016 (T-RES) disposed off on 24.09.2018 also supports this view; that being the position, petitioner need not be relegated to appellate remedy, where again time would be spent unnecessarily; therefore, the contention as to availability of alternate remedy does not avail to the respondents who happen to be the statutory authorities who are expected not to defeat a legitimate claim of a citizen on the technical ground of the kind taken now. (c) At the outset, it needs to be stated that there is no challenge to the Assessment Order and what is challenged is only the Rectification Order; the input tax credit is a vested right and not allowing a deduction for the credit is against the statutory scheme envisaged u/s 36 of the Act, as a proposition of law, cannot be faltered; the contention that the impugned Rectification Order concerning the assessment period 2012-13 to the extent it levies interest & penalty on 5 the alleged balance tax amount is unsustainable, has force inasmuch as the excess input tax credit appears to have been wrongly carried forward to the next tax period without giving credit to the output tax payable for the period in question; this apart, the excess input tax credit has not been adjusted for any subsequent tax liability; that being the position, the levy of interest & penalty cannot be sustained keeping in view the text & context of Section 36 of the Act. (d) It is apparent from the very impugned order itself that the credit was already available to the dealer arguably and the same could have been carried forward and be adjusted against the demand of tax due; the assertion of the petitioner in this regard is also supported by a Division Bench decision of Hon’ble Gujarat High Court in State of Gujarat Vs. Nishi Communication, wherein it has been observed as under: “In our view, if the credit was already available to the assessee and as the same could be carried forward, it could validly be adjusted against the demand of tax…” The fact matrix of the case of the petitioner aptly fits into the above observations, no difference having been pointed out despite lengthy argument of learned AGA. 6 In the above circumstances, this Writ Petition succeeds; a Writ of Certiorari issues quashing the impugned order and the consequent notice, as well; matter is remitted for fresh consideration in accordance with law, all contentions having been kept open. Time for compliance is sixty days. No costs. Sd/- JUDGE Snb/cbc "