Allowed

M/S Basaveshwara Stone Crushers (P) Ltd. v. State of Karnataka

Karnataka HC8 Sept 2022WP/251/2020

Case brief

AI extract

What is this about?

In a writ petition, the High Court of Karnataka allowed the claim to declare capital assets as excluded from 'goods' under Section 15 of the KVAT Act. The judgment quashed the re-assessment and recovery notices, directing respondents to grant composition scheme benefits.

What did the court decide?

Quashed re-assessment order, demand notice, and recovery notice; directed respondents not to withdraw composition scheme benefits.

M/S Basaveshwara Stone Crushers (P) Ltd… — Pension and Retirement Benefits | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 8^TH DAY OF SEPTEMBER, 2022

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BEFORE

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THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR WRIT PETITION No. 251 OF 2020 (T-RES)

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BETWEEN:

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M/S BASAVESHWARA STONE CRUSHERS (P) LTD. A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, NO.941, 2^ND FLOOR, MAGADI MAIN ROAD, TAVAREKERE, BANGALORE 562130. REPTD. BY ITS DIRECTOR SRI ANANDA SWAMY, S/O SRI DODDAIAH, AGED ABOUT 47 YEARS.

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…PETITIONER

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(BY SMT. VANI.H., ADVOCATE)

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AND:

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1 . STATE OF KARNATAKA DEPARTMENT OF FINANCE,

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REPTD. BY ITS PRINCIPAL SECRETARY, VIDHANA SOUDHA,

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BANGALORE 560001.

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2 . COMMISSIONER OF COMMERCIAL TAXES VANIJYA THERIGE KARYALAYA-I, GANDHINAGAR,

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BANGALORE 560009.

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3 . DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT) 6.5, DVO VAT 6, 3^RD FLOOR, 14^TH CROSS, KIABD BUILDING, IV PHASE, II STAGE,

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PEENYA, BANGALORE 560058.

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…RESPONDENTS

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(BY SRI. HEMA KUMAR., AGA)

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THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE WORD GOODS U/S 15 OF THE KARNATKAA VALUE ADDED TAX

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²

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ACT 2003 AND RULES FRAMED THERE UNDER DOES NOT INCLUDE CAPITAL ASSETS PURCHASED AND USED IN THE COURSE OF THE BUSINESS BY THE PETITIONER

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THIS W.P. COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:-

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ORDER

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In this petition, petitioner has sought for the following

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reliefs:-

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“ (i) Declare that the word ‘ good’ under Section 15 of the Karnataka Value Added Tax Act 2003 and rules farmed there under does not include ‘ capital assets’ purchased and used in the course of the business by the petitioner.

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(ii) Declare the denial of composition scheme under Section 15 of the Karnataka Value Added Tax Act, 2003 and rules framed thereunder to the stone crusher units receiving goods from outside the State as ultra vires the Constitution of India being volatile of Articles 14, 19 and Article 301 read with Article 304 of the Constitution of India, in so far as the petitioner is concerned;

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(iii) Issue a Writ of Certiorari or Writ in the nature of certiorari/quashing setting aside the Circular bearing No. 20/2013-14 dated: 18.12.2013 issued by the 2^nd respondent vide Annexure-E as ultra vires of the provisions of the Karnataka Value Added Tax Act.

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(iv) Issue a writ certiorari or directions in the nature of certiorari to quash the impugned re-

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³

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assessment order beraring CAS No. 255687825 dated: 22.01.2016 passed by the third respondent vide Annexure-F, the consequent demand notice in Form VAT 180 dated: 27.01.2016 vide Annexure-G for the year 2009-10 and the consequent recovery notice in Form VAT 350 dated: 04.12.2019 vide Annexure-H.

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(v) Issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ order or direction, directing the respondents not to withdraw the benefit of composition scheme.

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(vi) To pass any other appropriate order or direction as deems fit under the facts and circumstances.”

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Heard learned counsel for the petitioner and learned AGA for the respondents and perused the material on record.

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In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner submits that the subject goods are stone crushing machine and their accessories purchased in the course of inter-State trade and consequently, the petitioner would be entitled to the benefit of composition under Section 15 of the Karnataka Value

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Added Tax, 2003 (for short ‘the KVAT Act’) for payment of tax. It is submitted that despite that said goods being capital goods in use for the purpose of sale, the 3^rd respondent has proceeded to issue the impugned order under Section 39(1) of the KVAT Act rejecting the claim of the petitioner for the benefit of the composition scheme and as such, the petitioner is before this Court by way of the present petition. In support of her contentions, learned counsel for the petitioner has placed reliance upon the following decisions:-

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(i) The Commissioner of Commercial Taxes & Anr. Vs. Sri. Anantha Padmanabha Bhat – W.A.No.3957/2016 dated 06.12.2019 and

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(ii) State of Karnataka & Others vs. M/s. Ganapathi Stone Crushes – S.T.R.P.No.1/2021 dated 30.06.2022.

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Per contra, learned AGA submits that the said issue is pending before the Apex Court but he however submits that there is no interim order of stay passed by the Apex Court filed against the said orders.

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In Ganapthi Stone Crushers’ case supra , the

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Hon’ble Division Bench of this Court followed its earlier

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decision in Anantha Padmanabha Bhat’s case (supra), and held as under:-

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7. Undisputed facts of the case are, respondent owns a stone crushing unit. He has bought stone crushing machinery from outside the State by giving C-Form. His main business is not dealing in stone crushing equipments.

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8. In the case of Shri. Anantha Padmanabha Bhat Vs. Commissioner of Commercial Taxes and another, rightly relied upon by the KAT, this Court has held that the vitrified tiles used in the assessee’s restaurant was not sold by him in the regular course of business but used for the flooring of the restaurant. Hence, it had become part of the immovable property. It is held thus in that case:

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“7. Admittedly, the petitioner is running a restaurant only and is engaged in the business of serving vegetarian food and not engaged in the business of sale of Vitrified Tiles. In the restaurant, the Vitrified Tiles in question were not sold by him in the regular course of business, but were used only for the purpose of flooring of the restaurant premises. When so fixed in the floor, the Vitrified Tiles of-course became the part of the immovable property, and it is beyond the common sense and basic commercial prudence to even comprehend that the Vitrified Tiles fixed on the floor of the restaurant could be treated by an assessing authority as the 'goods in stock' dealt with by the assessee or sold in the course of regular course of business. The assessing authorities trained and well acquainted with the commercial terms, cannot be allowed to take such perverse views.”

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9. We are in respectful agreement with the view taken by this Court in Anantha Padmanabha Bhat’s case. It would be incongruous to construe the capital equipments purchased by the assessee for stone crushing as ‘goods in stock’.

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10. In view of the above, the question of law framed by this Court is answered in favour of the assessee and against the Revenue.

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11. Resultantly, this revision petition fails and it is accordingly dismissed . No costs.

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A perusal of the material on record discloses that the issue in controversy involved in the present case is squarely and directly covered by the decision of this Court in Sri.Anantha Padmanabha Bhat and M/s. Ganapathi Stone crushes cases’ (supra) and following the dictum laid down by this Court in the aforesaid decisions, I am of the considered opinion that the impugned order and impugned notices at Annexures-F, G and H respectively, deserves to be quashed.

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In the result, I pass the following:-

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ORDER

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(i) Petition is hereby allowed.

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(ii) The impugned re-assessment order at Annexure-F dated 22.01.2016 and demand notice at Annexure-G dated 27.01.2016 as well as recovery notice at Annexure-H dated 04.12.2019 are hereby quashed.

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(iii) The respondents are directed not to withdraw the benefit of composition scheme in favour of the petitioner and grant the benefit under the composition scheme in favour of the petitioner in accordance with law.

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Sd/JUDGE

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Srl.

M/S Basaveshwara Stone Crushers (P) Ltd. v. State of Karnataka

Case brief

What is this about?

What did the court decide?

M/S Basaveshwara Stone Crushers (P) Ltd. v. State of Karnataka

Case brief

What is this about?

What did the court decide?

What the court decided

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