Sales Tax Appeal No. 493 of 2012 [C.H.-3]. Case: Bhagavathi Sannidhi Estates Private Limited Vs State of Karnataka. Karnataka Appellate Tribunal

Case NumberSales Tax Appeal No. 493 of 2012 [C.H.-3]
CounselFor Appellant: Sri A. Satyanarayan, Advocate and For Respondents: Sri R.C. Yadavannavar, State Representative
JudgesNiazahmed S. Dafedar, DJM and P. Puttaraju, CTM
IssueKarnataka Sales Tax Act, 1957 - Section 10; Karnataka Tax on Entry of Goods Act, 1979 - Section 14(1); Karnataka Value Added Tax Act, 2003 - Section 22
Citation2013 (77) KarLJ 99
Judgement DateMay 30, 2013
CourtKarnataka Appellate Tribunal

Judgment:

P. Puttaraju, CTM

  1. This appeal is filed under Section 14(1) of the Karnataka Tax on Entry of Goods Act, 1979 (hereinafter referred as 'the Act') contesting the appeal order passed by the Joint Commissioner of Commercial Taxes (Appeals-I), Bangalore (for short, 'the FAA') in Case No. KTEG.AP. 60/2010-11, dated 25th January, 2012, wherein the FAA has upheld the order of the Assistant Commissioner of Commercial Taxes (Inv.), Enforcement, South Zone, VTK-2, Bangalore (for short, 'the AA') dated 25th October, 2010. The AA has levied tax and also has imposed penalty and interest. The appellant had filed bearing W.P. No. 36933 of 2010 (T-Res) before the Hon'ble High Court of Karnataka challenging the orders of the AA and the Hon'ble High Court has with specific observation has directed the appellant to approach the FAA and FAA has been directed to pass appropriate orders within a time-limit. Accordingly, the impugned order has been passed by the FAA upholding the orders of the AA. The FAA has come to the conclusion that the appellant is liable for payment of entry tax and penalty has been reduced to Rs. 25,000/-. Aggrieved by this order, the present appeal has been filed before us. The relevant facts and grounds of the appeal in brief are stated as thus:

    (i) The appellant has established the company with the main object of constructing commercial complex on their land located at Marthahalli, Bangalore for own use and also for leasing out to IT Units.

    (ii) The appellant has registered himself as a Private Limited Company with TIN bearing No. 29240805271 under Karnataka Value Added Tax Act, 2003. Apart from the same, the appellant is also registered under the Act.

    (iii) For the purpose of commercial complex, the appellant has imported five lifts from outside the country vide invoice dated 22-4-2008. This fact is not disputed by the appellant.

    (iv) The appellant has transferred two lifts to another concern namely M/s. Silicon Builders Private Limited, Sadashivanagar, Bangalore which is stated to be sister concern of the appellant. But there is no documentary evidence being adduced for the same.

    (v) The appellant relying on State of Tamil Nadu v. Board of Trustees of the Port of Madras 1999 (46) Kar. L.J. 370 (SC): (1950-2004) 1 SCST 464: (1999) 114 STC 520 (SC) decision rendered by the Constitution Bench challenges the levy of entry tax on two lifts on the ground that the appellant is not doing business and the activity of constructing commercial complex on their own land and leasing out for IT Units does not constitute business and therefore does not come under the ambit of statutory provision of defining dealer and business to warrant exigibility to tax under the Act as done by the respondent.

    (vi) The appellant submits that all these facts have been narrated and also has pressed the issue of non-applicability of statutory provisions to the AA at the time of inspection. Inspite of this, the AA has levied tax ignoring the issues raised by the appellant and the FAA also has upheld the orders of the AA on the ground that the appellant has registered himself as contractor at the time of transferring lifts to its own concern. This finding of the FAA is against the true facts of the case and submits that by floating the law declared by the Apex Court cited supra has affirmed the orders of the AA.

    (vii) The appellant heavily relies on the meaning of "carrying on business" as interpreted by the Apex Court and contends that the activity carried out by the appellant is not business and the appellant cannot be treated as dealer for the purpose of the Act. In addition to the Apex Court decision, the appellant relies on the decision of the Hon'ble High Court in the case of Kwality Biscuits (Private) Limited, Bangalore v. State of Karnataka 2011 (71) Kar. L.J. 16 (HC) (DB). As per the appellant, the mere registration without proper knowledge and under wrong advice would not create tax liability on lifts imported for own use nor would deter the appellant from availing the benefit envisaged under the Act and the law declared by...

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