IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF OCTOBER, 2019 BEFORE:
THE HON’BLE MRS. JUSTICE S.SUJATHA WRIT PETITION No.56151/2018 (T – RES) BETWEEN:
M/s. PAHARPUR COOLING TOWERS LTD., REP. BY ITS SENIOR EXECUTIVE-COMMERCIAL SRI B.N.BALAKRISHNA AGED ABOUT 51 YEARS “PAHARPUR HOUSE”, No.41 CUNNINGHAM CROSS ROAD BENGALURU-560052. …PETITIONER (BY SRI R.V.PRASAD, SENIOR COUNSEL A/W SRI HEMAKUMAR.K., ADV.) AND:
1. THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES [AUDIT] – 1.3, DGSTO – 1, 3RD FLOOR, TTMC BUILDING BMTC BUS STAND, YESHWANTHPUR BENGALURU-560022.
2. THE COMMISSIONER OF COMMERCIAL TAXES IN KARNATAKA VANIJYA THERIGE KARYALAYA 1ST MAIN, GANDHINAGAR BENGALURU-560009.
3. THE STATE OF KARNATAKA REP. BY ITS FINANCE SECRETARY VIDHANA SOUDHA BENGALURU-560001. …RESPONDENTS (BY SRI T.K.VEDAMURTHY, AGA.) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDER OF RE-ASESSMENT DATED 18.07.2018 PASSED BY THE RESPONDENT No.1 UNDER SECTION 39[1] OF THE ACT, PERTAINING TO THE ASSESSMENT PERIODS COMMENCING FROM APRIL, 2009 AND UP TO MARCH 2010 AND THE CONSEQUENTIAL NOTICE DEMAND, ALSO DATED 18.07.2018 [ANNEXURE-H AND H1]; AND ETC., THIS PETITION COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R The petitioner has assailed the order of re- assessment dated 18.07.2018 passed by the respondent No.1 under Section 39[1] of the Karnataka Value Added Tax Act, 2003 [‘Act’ for short] pertaining to the assessment period, April 2009 to March 2010 and the consequential notice of demand dated 18.07.2018.
2. The petitioner is a dealer registered under the provisions of the Act and is engaged in the execution of works of contract of construction, supply, erection and commissioning of cooling towers for power plants, steel plants etc. Apart from this, the petitioner is also engaged in trading of spare parts of cooling towers.
3. The petitioner being aggrieved by the order of re-assessment dated 29.04.2016 for the tax periods in question, approached this Court in W.P.Nos.35155- 166/2016 inter alia contending that the order of re- assessment has been passed in gross violation of the principles of natural justice inasmuch as reply dated 29.04.2016 filed by the petitioner had not been considered before passing of the order of re-assessment. The Writ Court dismissed the said writ petitions observing that the petitioner has a equally adequate and efficacious alternate remedy under the Act of filing appeal before the Appellate Authority to challenge the correctness of the order of re-assessment dated 29.04.2016.
4. Being aggrieved, Writ Appeal Nos.1929- 1940/2016 were preferred by the petitioner. The Division Bench of this Court vide order dated 21.07.2016, disposed of the writ appeals as under:
“(i) The impugned order dated 29.4.2016 Annnexure – D as per the declaration made by the respondent shall stand cancelled.
(ii) The matter shall stand restored to the file of the Assistant Commissioner of Commercial Taxes.
(iii) The appellant-petitioner or their representative shall remain present on 6th August 2016 at 11.00 a.m. for the purpose of hearing.
(iv) It would be open to the Assistant Commissioner of Commercial Taxes to pass a fresh order after considering the objections filed on behalf of the appellant dated 29.4.2016 and after hearing the representative of the appellant.
(v) The order of the learned Single Judge is set aside. The appeals are allowed to the aforesaid extent.”
5. Pursuant to which the Assessing Authority – respondent No.1 has issued notice under Section 39[1] of the Act relating to the tax periods in question, proposing certain additions to tax liability which was objected to, by the assessee in terms of the reply dated 15.02.2018. Again, a revised notice dated 11.06.2018 was issued by the respondent No.1 to which a detailed reply/objections was filed by the assessee. Finally, the Assessing Authority – respondent No.1 has passed an order under Section 39[1] of the Act, which is impugned herein.
6. Learned Senior Counsel Sri.R.V.Prasad representing the learned counsel for the petitioner on record would submit that the scope of remand passed by the Division Bench of this Court in W.A.Nos.1929- 1940/2016 was limited. It was not an open remand to enable the first respondent to issue a fresh notice rescinding the earlier notice. The order of re-assessment impugned is wholly without jurisdiction and accordingly deserves to be quashed. Learned Senior Counsel submitted that the order impugned is barred by limitation in terms of Section 40 of the Act. Reliance is placed on the following judgments:
[i] Jamsheed Hormunsji Wadia V/s. Board of Trustees, Port of Mumbai and Another; [2004] 3 SCC 214; and [ii] State of Kerala V/s. M.R.F. Limited, [2016] 90 VST 304 [Ker].
7. Learned Additional Government Advocate justifying the order impugned would submit that fresh/additional documents were placed by the assessee-petitioner before the Assessing Authority pursuant to the directions issued by this Court in W.A.Nos.1929-1940/2016 which necessarily required further adjudication on such material. Hence, fresh notice under Section 39 [1] was issued and after providing an opportunity of hearing to the petitioner an order has been passed under Section 39[1] of the Act which is well within the period of limitation.
8. I have carefully considered the rival submissions of the learned counsel for the parties and perused the material on record.
9. It cannot be disputed that the directions issued by this Court in W.A.Nos.1929-1940/2016 lays down limit; it is certainly not an order of open remand. The Assessing Authority was competent to exercise the jurisdiction within the ambit of the order of remand. It is beneficial to refer to the judgment of the Hon’ble High Court of Kerala in the case of M.R.F Limited., supra, wherein it is held thus:
“8. It is settled principle that where the order of remand lays down limits for the enquiry to be made by the lower court, that court ought to confine to questions which fall within those limits. The exercise of jurisdiction by the lower court to which an order of remand is made depends on specifications of the order of remand. It is not open to any of the parties or to the court below to enlarge the scope of the remand order. To do otherwise would be destructive of all tenets of judicial discipline and will strike at the root of the efficacy and binding nature of an order of a superior court. Even when a matter is remitted to High Court by the Supreme Court, if the High Court assumes wider field of jurisdiction than one which has been permitted by the Supreme Court through the order of remand, and thereby enters into examining the whole controversy afresh and as if all contentions of all parties are open before it, such a view would not be countenanced. See: Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai [AIR 2004 SC 1815]. The law laid through that precedent is authority for the proposition that when an order of remand is made by the superior court for the purpose of considering certain aspects, the court to which the case is remitted cannot assume a wider field of jurisdiction than the one which is permitted by the superior court through the remand order. The court below is bound by the order of remand and cannot examine the whole controversy afresh, as if all the contentions of all the parties were open before it. Such an approach by a court below would not be countenanced. That was a case where the Apex Court was dealing with the effect of an order of remand made by it to a High Court. For further support, see Budhilal v. Jagannathdas [AIR 1963 MP 344] rendered holding that when limits for enquiry are laid down by an order of remand, the court to which the case is remanded would have no jurisdiction to enter into questions falling outside those limits.”
10. Similarly, it would be opt to refer to the judgment of the Hon’ble Apex Court in the case of Jamsheed Hormunsji Wadia supra, wherein it is observed thus:
“22. We have set out in the earlier part of this judgment, the order of remand dated 31.10.1995 made by this Court. A careful reading of the judgment of the High Court and the order of remand passed by this Court together significantly reveals that none has cast any reflection much less any adverse one on the report of Kirloskar Consultants and the decision of the Board based thereon. The only consideration which prevailed with the High Court and this Court was one of reasonability and the need for striking a balance before taking a long leap in the direction of an upwards revision of rates. The stand throughout taken by the Board has to be appreciated. It has been agreeable to every reasonable suggestion made by the Court and has never treated the issue as to revision of rent as a matter of its prestige or with the ego of a landlord. This Court made a remand to the Division Bench of the High Court persuaded by the consideration that there were a few aspects of paramount significance which needed the attention of the Division Bench of the High Court. The fact remains that in the quest for an amicable, and if not so, then at least a reasonable resolution of the dispute, the Division Bench of the High Court as well as this Court have proceeded on an assumption that for the future, the settlement whether mutual or by dictum of the Court, shall centre around the Compromise Proposals. This Court wanted the Court to be assured for itself and the lessees to be satisfied for themselves that the Compromise Proposals were not just an arrow shot in the dark but were capable of being illuminated by assigning reasons. At the same time, though all the lessees were to be treated alike so far as laying down of common standards governing different classes of leases was concerned, care had also to be taken to redeem the grievances of certain individual lessees who could make out a case for further legitimate reduction in rates on account of peculiarities attaching with the land or lease held by them. Later, while delivering the 2000 judgment, which is impugned herein, the Division Bench certainly assumed a wider field of jurisdiction than the one which had been permitted by this Court and entered into examining the whole controversy afresh and as if all the contentions of all the parties were open before it, which view of the High Court, in our opinion, cannot be countenanced on a reading as a whole of the order of remand passed by this Court along with the judgment of the Division Bench which was impugned then.”
11. In the light of these judgments, it is clear that when an order of remand is made by the Division Bench of this Court directing the petitioner-assessee to remain present before the Authority on 06.08.2016 at 11.00 a.m., and the Assistant Commissioner of Commercial Taxes – Assessing Authority to pass a fresh order after considering the objections filed on behalf of the assessee dated 29.04.2016 and hearing the representative of the assessee, the same cannot be enlarged to usurp jurisdiction than the one permitted under the remand order. It is not in dispute that the petitioner had appeared before the respondent- Authority on 06.08.2016 as directed by this Court. The Assessing Authority is bound by the order of the remand and ought to have acted accordingly. Issuing fresh notices and thereafter deciding the matter expanding the directions of the order of remand was not called for.
12. Hence, on this ground, the order of re- assessment passed under Section 39[1] of the Act dated 18.07.2018 at Annexure-H cannot be sustained and accordingly is quashed. The proceedings are remanded to the Assessing Authority – respondent No.1 to re-do the assessment strictly in terms of the directions issued by the Division Bench of this Court in W.A.Nos.1929- 1940/2016 dated 21.07.2016 in an expedite manner in any event not later than two weeks from the date of receipt of certified copy of the order.
With the aforesaid observations and directions, writ petition stands disposed of.
Sd/- JUDGE NC.