Engineers India Limited V. Assistant Commissioner of Commercial Taxes (Enf.) and Deputy Commissioner of Commercial Taxes (Internal Audit and Inspection) and State of Karnataka Ministry of Finance and Commissioner of Commercial Taxes, State of Karnataka

WA/3127/2018

AI Insights

This case involves multiple writ appeals filed by M/s. Engineers India Limited, a government undertaking, against various orders related to the Karnataka Value Added Tax (KVAT) and Central Sales Tax (CST) assessments for a project with Mangalore Refinery and Petrochemicals Limited (MRPL). The primary legal issue was whether the materials used in the project were received by MRPL at its site in Mangaluru or by the assessee while the goods were in transit, which would affect the tax liability and the nature of the sales (inter-State or intra-State). The Assessing Officer (AO) had disallowed the assessee's claim of transit sales, leading to a significant reassessment of the turnover. The High Court of Karnataka, after considering the arguments and the legal framework, decided to dismiss the writ appeals, directing the assessee to pursue the matter through the appellate authority under the KVAT Act.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 805797 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 22-12-2022
• Assessment Year: misc
• Other Referred Cases: Engineers India Ltd. Vs. State of Andhra Pradesh and others
• Laws Referred To: Karnataka Value Added Tax Act, Central Sales Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEERALGI
• Assessee Lawyers: G SHIVDASS; PRASHANTH SHIVDASS; J RISHAB
• Keywords: Assessment Order; CST; Inter-state sale; KVAT; Transit sale; Writ Appeal
• Section: 4; 62

Judgement Text

" W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF DECEMBER, 2022 PRESENT THE HON’BLE MR. JUSTICE P.S. DINESH KUMAR AND THE HON’BLE MR. JUSTICE UMESH M. ADIGA WRIT APPEAL No.3127 OF 2018 C/W WRIT APPEALS No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 (T-RES) IN W.A. NO.3127 OF 2018 BETWEEN : M/S. ENGINEERS INDIA LIMITED A GOVERNMENT OF INDIA UNDERTAKING, MRPL PHASE-III REFINERY PROJECT KUTHETHOOR P.O. VIA KATILPALLA MANGALURU-575 030 REPRESENTED HEREIN BY ITS CHIEF GENERAL MANAGER (HR & LEGAL) MR.A. BHOWMIK ... APPELLANT (BY SHRI. G. SHIVDASS, SENIOR ADVOCATE FOR SHRI. PRASHANTH G. SHIVDASS AND SHRI. J. RISHAB, ADVOCATES) W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 2 AND : THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (ENF.)2 OFFICE OF JOINT COMMISSIONER OF COMMERCIAL TAXES (ENF.) WEST ZONE MANGALURU-575 001 ... RESPONDENT (BY SHRI. JEEVAN J. NEERALGI, AGA) . . . . THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO ALLOW THIS WRIT APPEAL AND SET ASIDE THE IMPUGNED ORDER DATED 01.10.2018 PASSED BY THE LEARNED SINGLE JUDGE IN WP NO.13274/2018 AND CONSEQUENTLY ALLOW THE WRIT PETITION BEARING WP NO.13274/2018. IN W.A. NO.3102 OF 2018 BETWEEN : M/S. ENGINEERS INDIA LIMITED A GOVERNMENT OF INDIA UNDERTAKING, MRPL PHASE-III REFINERY PROJECT KUTHETHOOR P.O. VIA KATILPALLA MANGALURU-575 030 HEAD-LEGAL & AUTHORIZED SIGNATORY MR. S.C. RAI PRESENTLY REPRESENTED HEREIN BY ITS CHIEF GENERAL MANAGER (HR & LEGAL) MR. A. BHOWMIK ... APPELLANT (BY SHRI. G. SHIVDASS, SENIOR ADVOCATE FOR SHRI. PRASHANTH G. SHIVDASS AND SHRI. J. RISHAB, ADVOCATES) W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 3 AND : DEPUTY COMMISSIONER OF COMMERCIAL TAXES (INTERNAL AUDIT AND INSPECTION) OFFICE OF DEPUTY COMMISSIONER OF COMMERCIAL TAXES VANIJYA THERIGE BHAVANA MAIDAN ROAD MANGALURU-575 001 ... RESPONDENT (BY SHRI. JEEVAN J. NEERALGI, AGA) . . . . THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO ALLOW THIS WRIT APPEAL AND SET ASIDE THE ORDER DATED 01.10.2018 PASSED BY THE LEARNED SINGLE JUDGE IN WP NO.16416-427/2017 AND CONSEQUENTLY ALLOW THE WRIT PETITION BEARING WP NO.16416-427/2017. IN W.A. NO.3114 OF 2018 BETWEEN : M/S. ENGINEERS INDIA LIMITED A GOVERNMENT OF INDIA UNDERTAKING, MRPL PHASE-III REFINERY PROJECT KUTHETHOOR P.O. VIA KATILPALLA MANGALURU-575 030 HEAD-LEGAL & AUTHORIZED SIGNATORY MR. S.C. RAI PRESENTLY REPRESENTED HEREIN BY ITS CHIEF GENERAL MANAGER (HR & LEGAL) MR.A. BHOWMIK ... APPELLANT (BY SHRI. G. SHIVDASS, SENIOR ADVOCATE FOR SHRI. PRASHANTH G. SHIVDASS AND SHRI. J. RISHAB, ADVOCATES) W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 4 AND : DEPUTY COMMISSIONER OF COMMERCIAL TAXES (INTERNAL AUDIT AND INSPECTION) OFFICE OF DEPUTY COMMISSIONER OF COMMERCIAL TAXES VANIJYA THERIGE BHAVANA MAIDAN ROAD MANGALURU-575 001 ... RESPONDENT (BY SHRI. JEEVAN J. NEERALGI, AGA) . . . . THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO ALLOW THIS WRIT APPEAL AND SET ASIDE THE ORDER DATED 01.10.2018 PASSED BY THE LEARNED SINGLE JUDGE IN WP NOS.16429-440/2017 AND CONSEQUENTLY ALLOW THE WRIT PETITION BEARING WP NOS.16429-440/2017. IN W.A. NO.3126 OF 2018 BETWEEN : M/s. ENGINEERS INDIA LIMITED A GOVERNMENT OF INDIA UNDERTAKING, MRPL PHASE-III REFINERY PROJECT KUTHETHOOR P.O. VIA KATILPALLA MANGALURU-575 030 REPRESENTED HEREIN BY ITS CHIEF GENERAL MANAGER (HR & LEGAL) MR. A. BHOWMIK ... APPELLANT (BY SHRI. G. SHIVDASS, SENIOR ADVOCATE FOR SHRI. PRASHANTH G. SHIVDASS AND SHRI. J. RISHAB, ADVOCATES) W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 5 AND : THE STATE OF KARNATAKA MINISTRY OF FINANCE REPRESENTED BY THE ADDITIONAL CHIEF SECRETARY VIDHANA SOUDHA BENGALURU-560 001 ... RESPONDENT (BY SHRI. JEEVAN J. NEERALGI, AGA) . . . . THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO ALLOW THIS WRIT APPEAL AND SET ASIDE THE ORDER DATED 1.10.2018 PASSED BY THE LEARNED SINGLE JUDGE IN WP NO.9629/2018 AND CONSEQUENTLY ALLOW THE WRIT PETITION BEARING WP NO.9629/2018. IN W.A. NO.3158 OF 2018 BETWEEN : M/S. ENGINEERS INDIA LIMITED A GOVERNMENT OF INDIA MRPL PHASE III, REFINERY PROJECT KUTHETHOOR P.O. VIA KATILPALLA MANGALURU-575 030 REPRESENTED BY ITS DEPUTY GENERAL MANAGER F & A MR. INDER CHAWLA S/O LATE MR. S.S. CHAWLA AGED 48 YEARS PRESENTLY REP. BY ITS CHIEF GENERAL MANAGER (HR & LEGAL) MR. ATANU BHOWMIK S/O MR. SRIPATI CHARAN BHOWMIK AGED ABOUT 52 YEARS ... APPELLANT (BY SHRI. G. SHIVDASS, SENIOR ADVOCATE FOR SHRI. PRASHANTH G. SHIVDASS AND SHRI. J. RISHAB, ADVOCATES) W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 6 AND : 1. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT)-3 DVO OFFICE OF DEPUTY COMMISSIONER OF COMMERCIAL TAXES VANIJYA THERIGE BHAVANA MAIDAN ROAD MANGALURU-575 001 2. MANGALORE REFINERIES AND PETROCHEMICAL LIMITED A GOVERNMENT OF INDIA UNDERTAKING, KUTHETHOOR P.O, VIA KATIPALLA MANGALORE-575 030 ... RESPONDENTS (BY SHRI. JEEVAN J. NEERALGI, AGA) . . . . THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER OF THE LEARNED SINGLE JUDGE DATED 01.10.2018 IN WP NO.46960/2016 AND WP NO.48536-546/2016 [T-RES] AND ALLOW THE SAME AS PRAYED FOR. IN W.A. NO.3159 OF 2018 BETWEEN : M/S. ENGINEERS INDIA LIMITED A GOVERNMENT OF INDIA UNDERTAKING MRPL PHASE III, REFINERY PROJECT KUTHETHOOR P.O., VIA KATILPALLA MANGALURU-575 001 NOW REPRESENTED BY ITS CHIEF GENERAL MANAGER (HR AND LEGAL) MR. ATANU BHOWMIK S/O MR. SRIPATI CHARAN BHOWMIK AGED ABOUT 52 YEARS ... APPELLANT (BY SHRI. G. SHIVDASS, SENIOR ADVOCATE FOR SHRI. PRASHANTH G. SHIVDASS, ADVOCATE) W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 7 AND : 1. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT)-2 DVO, OFFICE OF DEPUTY COMMISSIONER OF COMMERCIAL TAXES VANIJYA THERIGE BHAVANA MAIDAN ROAD MANGALURU-575 001 2. THE COMMISSIONER OF COMMERCIAL TAXES STATE OF KARNATAKA VANIJYA TERIGE KARYALAYA GANDHINAGAR BANGALORE-560 009 3. THE STATE OF KARNATAKA DEPARTMENT OF FINANCE VIDHANA SOUDHA AMBEDKAR VEEDHI BANGALORE-560 001 REPRESENTED BY ITS PRINCIPAL SECRETARY ... RESPONDENTS (BY SHRI. JEEVAN J. NEERALGI, AGA) . . . . THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER OF THE LEARNED SINGLE JUDGE DATED 01.10.2018 IN WP NO.13914/2018 [T-RES] AND ALLOW THE SAME AS PRAYED FOR. IN W.A. NO.1521 OF 2019 BETWEEN : M/s. ENGINEERS INDIA LIMITED A GOVERNMENT OF INDIA UNDERTAKING MRPL PHASE III, REFINERY PROJECT KUTHETHOOR P.O., VIA KATILPALLA MANGALURU-575 030 W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 8 NOW REPRESENTED BY ITS CGM (HR AND LEGAL) MR. ATANU BHOWMIK S/O MR. LATE MR. SRIPATI CHARAN BHOWMIK AGED ABOUT 54 YEARS ... APPELLANT (BY SHRI. G. SHIVDASS, SENIOR ADVOCATE FOR SHRI. PRASHANTH G. SHIVDASS AND SHRI. J. RISHAB, ADVOCATES) AND : THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT)-2 OFFICE OF DEPUTY COMMISSIONER OF COMMERCIAL TAXES VANIJYA THERIGE BHAVANA MAIDAN ROAD MANGALURU-575 001 ... RESPONDENT (BY SHRI. JEEVAN J. NEERALGI, AGA) . . . . THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO PERUSE THE SAME AND SET ASIDE THAT PART OF THE CONDITION DIRECTING THE APPELLANT TO DEPOSIT 30% OF THE DEMAND AMOUNT WITHIN A PERIOD OF FOUR WEEKS, PASSED BY THE LEARNED SINGLE JUDGE DATED 25.04.2019 IN WP NO.18883/2019 (T-RES) AND ALLOW THE ABOVE APPEAL. THESE WAs, HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 28.09.2022 COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THIS DAY, P.S.DINESH KUMAR J., PRONOUNCED THE FOLLOWING:- W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 9 JUDGMENT These intra-court appeals by the unsuccessful writ petitioner are directed against the order dated October 1, 2018 passed by the Hon’ble Single Judge in W.Ps. No. 46960/2016 and 48536-546/2016 and connected matters. 2. For the sake of convenience, parties shall be referred as per their status in writ petition. 3. Brief facts of the case are, petitioner/assessee is a Government of India undertaking engaged in the business of construction and project engineering, consulting services. It is registered under KVAT Act1 and CST Act2. During the A.Y.3 2009-10, the assessee executed contract for M/s MRPL4 which is Phase III turnkey project 1 Karnataka Value Added Tax Act 2 Central Sales Tax Act 3 Assessment Year. 4 Mangalore Refinery Petro-Chemicals Limited, Mangalore. W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 10 involving design, engineering, procurement, supply, construction, installation, testing, commissioning and project management services for setting up PFCCU5, SRU6, SPM7 and PPU8. Assessee filed returns under the KVAT Act disclosing sales of Rs.72.01 Crores and filed revised returns showing sale of Rs.95.76 Crores; and claimed exemption from payment of tax. 4. The AO9 disallowed10 petitioner’s claim of transit sales while re-computing the turnover from Rs. 435.93 Crores to Rs. 117.39 Crores. Assessee challenged the same before this Court in W.P. No. 11151/2016. Allowing the writ petition, this Court directed the respondent to reconsider the matter afresh after giving opportunity of hearing to the 5 Petrochemical Fluidized Catalytic Cracking unit 6 Sulphur Recovery Unit 7 Single Point Mooring 8 Poly Propylene Unit 9 Assessing Officer 10 Vide order dated 02.02.2016 W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 11 assessee. Pursuant thereto, assessee filed its reply dated March 10, 2016, wherein the modus of transaction were reiterated. 5. The AO proceeded to pass the order impugned in the writ petition holding that the assessee had made frantic efforts to twist and bend the language of statute. In substance, Revenue held that the goods purchased under different Invoices on different dates from different parties were transmitted to MRPL under a single invoice showing the description of goods as supply of items for the project. Feeling aggrieved, assessee challenged AO's order in the instant writ petitions. By the impugned common order, the Hon'ble Single Judge has dismissed the writ petitions reserving liberty to the assessee to avail remedy of appeal under Section 62 of the KVAT Act. W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 12 6. Shri. Shivdass, learned Senior Advocate for the assessee submitted that the assessee is essentially engaged in design, engineering, supply construction, installation, testing, commissioning and project management services. It had entered into an agreement with MRPL for construction of certain engineering project. For the purpose of construction, materials are procured from various places from outside the State and such sales are inter-State sales. The Assessing Authority without proper application of mind has held that the assessee had procured the goods in the course of inter-State trade as a Contractor to fulfil its obligations. He strenuously contended that the material was delivered to the MRPL and therefore, the sale is an inter-State sale. In support of this W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 13 contention, he placed reliance on Engineers India Ltd., Vs. State of Andhra Pradesh and others11. 7. In substance, Shri. Shivdass's argument is, the goods were received in the transit sale by M/s. MRPL. 8. Shri. Jeevan Neeralgi, learned AGA for the State, arguing in support of the impugned order submitted that the matter involves appreciation of various facts and therefore, appeal is the right remedy. With regard to the authority cited by Shri. Shivdass, Shri. Neeralgi submitted that the Andhra Pradesh High Court had exercised its jurisdiction to entertain the petition and examined the facts of that case. He urged that this Court may relegate the assessee to exhaust the appeal remedy without venturing into examining the facts of the case. 11 2018 SCC Online Hyd 786 W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 14 9. We have carefully considered rival contentions and perused the records. 10. The issue involved in this case is, whether the material used in the project was received by the MRPL at its site in Mangaluru or by the assessee whilst the goods were in transit. Before the AO, assessee had sought to cross-examine the Transport Companies who had transported the goods from various places to Mangaluru. The Assessing Authority has recorded a finding that the different Transport Companies had expressed differently to support the claim of the assessee. 11. The Assessment orders show that the assessee has taken a specific contention that the goods were received by MRPL. The AO has placed reliance on Clause 1.0.30.0 and 1.0.50.0 of the W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 15 Agreement defining the lump sum price and scope of Contract and come to a conclusion that the assessee had purchased the goods in the course of inter-State sale for which C-Form declarations were issued and the transaction ended with money consideration. 12. The Hon'ble Single Judge has taken note of one of the Assessment Orders extracted in para 6 of the impugned order and held that entertaining the writ petitions prematurely would cause serious prejudice not only to the assessee but also to the Revenue, who will loose their chance to argue before the two appellate forums provided in the Act and accordingly relegated the assessee to the Appellate Authority. 13. In our considered view, the matter requires appreciation of evidence with regard to facts of the case and that can be done before the W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 16 Appellate Authority. We may also record that in some writ petitions the assessee has challenged the show cause notices. It is appropriate for the assessee to submit reply to the notices and invite Assessment orders. 14. It is settled that ordinarily writ petition shall not be entertained, where there exist an alternative and efficacious remedy. (See: Commissioner of Income Tax and others Vs. Chhabil Dass Agarwal12) 15. So far as the authority cited by Shri. Shivdass is concerned, the Andhra Pradesh High Court has exercised its discretion to entertain the petition. We are of the view that in the light of facts involved in this case, this is not a fit case to exercise the extraordinary and discretionary jurisdiction of this Court under Article 226 of the 12 2014(1) SCC 603 (para 15) W.A No.3127/2018 C/W W.As No.3102/2018, 3114/2018, 3126/2018, 3158/2018, 3159/2018, 1521/2019 17 Constitution of India. Hence, we are at one with the Hon'ble Single Judge on this point. 16. Resultantly, these appeals must fail and they are accordingly dismissed. No costs. Sd/- JUDGE Sd/- JUDGE SPS "