IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16th DAY OF OCTOBER, 2019 PRESENT THE HON’BLE MR.ABHAY S. OKA, CHIEF JUSTICE AND THE HON’BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT APPEAL NO.1430 OF 2019 & WRIT APPEAL Nos. 2886-2896 OF 2019 C/W WRIT APPEAL No. 1109 OF 2019 & WRIT APPEAL Nos. 1140-1150 OF 2019(T-RES) In W.A.No.1430/2019 & W.A.Nos.2886-2896/2019 BETWEEN:
SRI. RAMESH BEERANNA NAYAK S/O BEERANNA NAYAK AGED ABOUT 60 YEARS RESIDING AT FLAT NO.301 DIVYA ENCLAVE, JAIL ROAD MANGALURU – 575 003.
(BY SHRI, HEMAKUMAR.K, ADVOCATE) AND:
1. THE STATE OF KARNATAKA THROUGH ITS PRINCIPAL SECRETARY FINANCE DEPARTMENT VIDHANA SOUDHA BENGALURU – 560 001.
2. THE COMMISSIONER OF COMMERCIAL TAXES IN KARNATAKA ... APPELLANT VANIJYA THERIGE KARYALAYA 1ST MAIN, GANDHINAGAR BENGALURU – 560 009.
3. THE JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS) MYSORE DIVISION, SESHADRI HOUSE DIWAN’S ROAD MYSURU – 570 004.
4. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT)- 3, VANIJYA THERIGE BHAVANA MAIDAN ROAD MANGALURU – 575 001.
5. THE ASSISTANT COMMISIONER OF COMMERICIAL TAXES (ENFORCEMENT) VIVEKANANDA 4TH CROSS ROAD AJJARKKAD UDUPI – 560 002.
6. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT) -1 VANIJYA THERIGE BHAVANA MAIDAN ROAD MANGALURU – 575 001.
7. M/S. TECHNIP INDIA LITD., (FORMERLY KNOWN AS M/S. TECHNIP KT INDIA LTD.) C/O. MRPL, KUTHETHUR KATIPALLA, MANGALURU – 575 030. BY ITS ASSOCIATED VICE-PRESIDENT MR. AJAY AGARWAL.
... RESPONDENTS (BY SHRI, VIKRAM HUILGOL, HCGP FOR R-1 TO R-6 VIDE ORDER DATED 14.08.2019 SERVICE OF NOTICE TO R-7 IS DISPENSED WITH) THESE WRIT APPEALS ARE FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT, 1961, PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED: 29.10.2015 PASSED BY THE LEARNED SINGLE JUDGE OF THIS HON’BLE COURT IN W.P No. 44524/2015 AND CONNECTED MATTERS INSOFAR AS THE DIRECTION THEREIN THAT THE SIMPLE INTEREST AT THE RATE OF 6% PER ANNUM IS TO BE PAID FROM THE SALARY OF THE APPELLANT AND ETC.
In W.A.No.1109/2019 & W.A.Nos.1140-1150/2019 BETWEEN:
DR.S.G.SAVITHA D/O DR.S.V.GOVINDAPPA AGED ABOUT 46 YEARS RESIDING AT B-4, 218, MALAPRABHA BLOCK NGV KORAMANGALA, BENGALURU – 560 047.
... APPELLANT (BY MISS. VEENA J.KAMATH FOR SHRI, D.C.PRAKASH, ADVOCATES) AND:
1. THE STATE OF KARNATAKA THROUGH ITS PRINCIPAL SECRETARY FINANCE DEPARTMENT VIDHANA SOUDHA BENGALURU – 560 001.
2. THE COMMISSIONER OF COMMERCIAL TAXES IN KARNATAKA VANIJYA THERIGE KARYALAYA 1ST MAIN, GANDHINAGAR BENGALURU – 560 009.
3. THE JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS) MYSORE DIVISION, SESHADRI HOUSE DIWAN’S ROAD MYSURU – 570 004.
4. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT)- 3, VANIJYA THERIGE BHAVANA MAIDAN ROAD MANGALURU – 575 001.
5. THE ASSISTANT COMMISIONER OF COMMERICIAL TAXES (ENFORCEMENT) VIVEKANANDA 4TH CROSS ROAD AJJARKKAD UDUPI – 576 101.
6. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT) -1 VANIJYA THERIGE BHAVANA MAIDAN ROAD MANGALURU – 575 001.
7. M/S. TECHNIP INDIA LITD., (FORMERLY KNOWN AS M/S. TECHNIP KT INDIA LTD.) C/O. MRPL, KUTHETHUR KATIPALLA, MANGALURU – 575 030.
REPRESENTED BY ITS ASSOCIATED VICE-PRESIDENT MR. AJAY AGARWAL MANGALURU.
... RESPONDENTS (BY SHRI. VIKRAM HUILGOL, HCGP FOR R-1 TO R-6) ---
THESE WRIT APPEALS ARE FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT, 1961, PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED: 29.10.2015 IN WP NOS. 44524/2015 AND WP NOS. 45476-45486/2015 (T-RES) PASSED BY THE LEARNED SINGLE JUDGE IN SO FAR AS IT DIRECTS THE DEDUCTION OF INTEREST TO BE PAID TO M/S TECHNIP INDIA PVT.LTD., THE 7TH RESPONDENT, FROM THE SALARY ACCOUNT OF THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT)-3 (THE APPELLANT HEREIN) AND ETC.
THESE APPEALS COMING ON FOR PRELIMINARY HEARING THIS DAY, CHIEF JUSTICE DELIVERED THE FOLLOWING:
JUDGMENT These appeals are heard together in as much as the same are directed against common judgment and order.
2. With a view to appreciate the controversy in the appeal, a reference to a few factual details would be necessary. The seventh respondent is the writ petitioner. The writ petition filed by the seventh respondent was based on order at Annexure-E passed by the Joint Commissioner of Commercial Taxes (Appeals), Mysuru Division in exercise of powers under Section 62(6) of the Karnataka Value Added Tax Act, 2013 (for short ‘the said Act’). By the said order, twelve separate appeals preferred by the seventh respondent for different tax periods were allowed and the demand of tax, penalty and interest made in the reassessment order dated 24th November 2011 covering the tax periods mentioned in the said order was set aside. The prayer made in the writ petition filed by the seventh respondent was that a writ of mandamus be issued directing the fourth and sixth respondents in the writ petition (the Deputy Commissioner of Commercial Taxes) (Audit-3) and the Deputy Commissioner of Commercial Taxes (Audit-1) respectively) to refund amount of `5,90,88,920/- with interest and to release the Bank Guarantee furnished by the seventh respondent.
3. Perusal of the impugned order shows that it is based on a concession made by the learned Additional Government Advocate appearing for revenue. Paragraph 1 of the impugned order reads thus:
“Learned counsel for the Revenue does not dispute the fact that when Appeal No. KVAT/AP/387 to 398/2011-12 filed by the petitioner was allowed by order dated 12.06.2015, of the Joint Commissioner of Commercial Taxes (Appeals), Mysore Division, Mysore (Annexure-‘A’) under the Karnataka Value Added Tax Act, 2003 (for short, ‘KVAT Act’), the Revenue Authority being an officer of the Commercial Taxes was bound by ‘ KVAT Act’ to refund the amount within 35 days from the date of the order under Section 50, failing which, the Officer shall pay to the petitioner simple interest at the rare of 6% p.a. from the date immediately following the expiry of the said 35 days until the date of refund.
(Underline supplied) 4. On the basis of the aforesaid statement of the learned counsel appearing for the revenue recorded in Paragraph 2, a direction was issued against the fourth respondent in the writ petition to forthwith refund the amount together with simple interest at 6% p.a., to be paid from out of his salary. A direction was issued to release the Bank Guarantee furnished by the fourth respondent. In the third paragraph, a direction was issued to the revenue authority to refund the amount with simple interest at 6% p.a., on the said sum and also to return the Bank Guarantee to the seventh respondent herein by 30th October 2019.
5. The appellant has filed writ appeal No.1430 of 2019 and 2886 to 2896 of 2019 in his personal capacity. He was impleaded in his official capacity as the sixth respondent in the writ petition and the appellant in the writ appeal No.1109/2019 was the fourth respondent in the writ petition.
6. The learned High Court Government Pleader accepted that the refund along with interest as directed has been paid to the seventh respondent. It is not in dispute that a sum of Rs.7,69,358/- has been recovered by the State Government from the appellant in Writ Appeal No.1430/2019. However, as of today, no amount has been recovered by the State Government from the appellant in Writ Appeal No.1109/2019.
7. The submission of the learned counsel appearing for the appellant in these appeals is firstly that both of them were not made parties to the writ petitions in their individual capacity. Though paragraph 2 of the order contains a direction that the fourth respondent shall make refund together with simple interest at the rate of 6% p.a., from out of his salary, the submission is that as they were not impleaded in their personal capacity, there is no separate notice of the writ petition served to them and they could not defend themselves. Inviting our attention to the provisions of Section 50 of the said Act, it was urged that both the appellants are not liable to pay interest.
8. Learned High Court Government Pleader has supported the orders of the Court.
9. We have perused the impugned order. Paragraph 1 of the impugned order refers to the concession of the learned Additional Government Advocate that the revenue authority being an officer of Commercial Taxes was bound as per the said Act to refund the amount within 35 days from the order dated 12th June 2015, failing which, the officer shall pay to the petitioner simple interest at the rate of 6% p.a., from the date immediately following the expiry of the said 35 days until the date of refund. There was no specific concession by the learned Additional Government Advocate that it was the fourth respondent in the writ petition who was liable to pay interest in terms of Section 50 of Karnataka Value Added Tax Act (for short ‘KVAT Act’). In second paragraph, a direction was issued to the fourth respondent in the writ petition to refund the amount. Further direction was issued to the fourth respondent to refund the amount and to pay simple interest at the rate of 6% p.a., from out of his salary. No reasons have been assigned by the learned single Judge as to why fourth respondent in the writ petition was personally liable to pay interest from out of his salary. Therefore, it was necessary for the writ petitioner to implead the appellant in writ appeal No.1430/2019 in his individual capacity so that notice could have been issued to the said officer and he could have been heard by the learned single Judge on the liability to pay interest from his salary. Perusal of the third and last paragraph of the impugned order shows that there was a direction issued to the revenue authority to refund the amount with simple interest at 6% p.a. The direction in the third paragraph is not against any individual officer. It is against the revenue authority. Thus, there is an apparent inconsistency between the directions contained in Paragraphs 2 and 3 of the impugned order. In fact the State Government implemented the directions contained in Paragraph 3 by paying the refund amount with interest to the writ petitioner.
10. If the learned single Judge was of the view that a particular officer was liable in accordance with Section 50 to personally pay interest, firstly, that officer ought to have been made a party in his individual capacity. Secondly, from the impugned order, it appears that no adjudication was made by the learned single Judge on the issue which officer was liable to pay interest in terms of Section 50 of the KVAT Act. The order passed is based on the concession made by learned Additional Government Advocate. Though the direction contained in Paragraph 2 has been issued, in fact, the direction in Paragraph 3 was against the revenue authority and therefore, the State was bound by the said direction. Perhaps the State correctly understood the said direction in Paragraph 3 and therefore, made the refund along with 6% interest to the writ petitioner. In any case, the appeal preferred by the State against the impugned order was dismissed.
11. Therefore, in our view, the direction issued in Paragraph 2 of the impugned order will have to be set aside for the reasons recorded above on the ground that specific notice of writ petition ought to have been served to the fourth respondent in the writ petition in his personal capacity before directing him to pay interest from out of his salary. As stated earlier, we clarify that the direction issued to refund the amount with simple interest is not against any individual officer and as done rightly by the State, the same will have to be implemented by the State.
12. As far as the appellant in the writ appeal No.1430/2019 (Ramesh Beeranna Nayak) is concerned, the interest amount recovered from him will have to be refunded by the State Government. The said amount will have to be repaid with interest at the rate of 6% p.a., from the date on which it was recovered from the appellant.
13. As far as the appellant in Writ Appeal No.1109/2019 (S.G.Savitha) is concerned, so far, no amount has been recovered by the State against him.
14. We must make it clear that if according to the State Government, the appellants or one of them are personally liable to pay interest in view of the statutory provisions, the State Government is free to initiate appropriate proceedings in that behalf.
15. We dispose of the said appeal by passing the following order:
i) Paragraph 2 of the impugned order dated 29th October, 2015 is hereby quashed and set aside;
ii) As held earlier, the direction contained in Paragraph 3 of the impugned order is against the revenue authority which is binding on the State Government and the said direction is not against any specific officer;
iii) The State shall refund amount of Rs.7,69,358/- to the appellant (Ramesh Beeranna Nayak) in writ appeal No.1430/2019 within a period two months from the date on which a copy of this Judgment is made available. The State shall also pay interest at the rate of 6% p.a., on the said amount from the date on which the said amount was recovered from the said appellant till the date of payment or realization;
iv) As observed earlier, if permissible in law, it will be always open for the State Government to initiate proceedings for recovery of the amount of interest against the appellants;
v) We also make it clear that the direction issued against the State Government to return the Bank Guarantee is maintained.
vi) Appeals are allowed in above terms.
Sd/- CHIEF JUSTICE Sd/- JUDGE bnv