IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 04TH DAY OF APRIL, 2019 BEFORE THE HON’BLE MR. JUSTICE ASHOK G NIJAGANNAVAR CIVIL REVISION PETITION NO.185 OF 2011 (SC) BETWEEN:
M/s. Turel Sales Corporation, A Partnership Firm, Having its Registered Office at:
No.17, Curzon Road, Shivajinagar, Bengaluru -560 001. Represented by its Branch Manager, Mr. D.K. Sreedhar. ... Petitioner (By Sri.M. S. Bhagwat, Advocate) AND:
M/s. Sonal Garments, No.79, Industrial Suburbs, 2nd Stage, 40th Main, Yeshwanthpur, Bengaluru -560 022. …Respondent (Notice to respondent held sufficient v.o. dt.03.01.2012) This Civil Revision Petition is filed under Section 18 of KSCC Act, against the orders dated 08.04.2011 passed in S.C. No.2360/2009 on the file of the Court of IV –Additional Small Causes Judge, Bengaluru.
This Civil Revision Petition is coming on for hearing this day, the Court made the following:
ORDER This Civil Revision Petition is filed for setting aside the impugned order dated 08.04.2011 in Small Cause No. 2360/2009 passed by IV Additional Small Causes Court dismissing the suit of the plaintiff for recovery of money.
2. The facts briefly stated are that the petitioner who is the plaintiff before the trial Court had supplied machinery to the defendant/respondent on account of the representation made by the defendant/respondent, that Industry/Company was 100% export oriented unit, the Sales Tax was not charged. The defendant/respondent failed to furnish the EOU certificate. The petitioner was compelled to make the payment of Rs.99,974/- to the Department of Commercial/Sales Tax as the defendant/respondent failed to furnish the EOU Certificate. Thus the said amount was to be recovered from the respondent who was the purchaser of machinery from the plaintiff. Hence, the plaintiff/petitioner filed a suit for recovery of a sum of Rs.99,974/- which was the sales tax paid by the plaintiff on account of the default of the respondent in not producing the Export Oriented Unit (hereinafter referred to as EOU for brevity) Certificate.
3. On service of summons/notice, the defendant/respondent appeared through the counsel and filed the written statement.
4. The defendant has resisted the claim of the plaintiff on following grounds.
(1) The defendant is a company registered under Companies Act. Therefore, the suit of the plaintiff is not maintainable for want of statutory requirements.
(2) The defendant company has not represented to the plaintiff that it has acquired EOU Certificate to file tax exemption.
(3) The plaintiff has to prove that he had not charged sales tax while selling and delivering the machines to the defendant.
(4) The defendant had not represented to the plaintiff that he has got EOU Certificate. Therefore, the defendant is not liable to pay any amount to the plaintiff.
5. Based on the pleadings the following issues are framed.
(1) Whether plaintiff proves that on the representation made by the defendant as EOU it did not collect the tax?
(2) Whether defendant proves that suit is not maintainable?
(3) Whether plaintiff proves that it is entitled for relief as prayed?
(4) What order?
6. The plaintiff/petitioner was examined as PW1 and 15 documents were marked as Ex.P1 to Ex.P15. The defendant/respondent has not adduced any evidence. On appreciation of the oral and documentary evidence the trial Court has dismissed the suit of the plaintiff. Being aggrieved by the said judgment and decree the plaintiff/petitioner has filed the present revision petition.
7. There is no denial by the defendant regarding the supply of machines. The Ex.P1 and Ex.P2 are the two invoices cum delivery challans dated 15.03.2005 and 25.03.2005 respectively. These two documents clearly goes to show that the machines were supplied to the defendant company but no sales tax was charged. It is pertinent to note in Ex-P1 and P2 – there is specific mention “No Sales Tax (100% EOU)”. The main controversy is that the plaintiff was compelled to pay the sales tax of Rs.66,950/- and interest and the penalty charged by the Sales Tax Department, on account of the default committed by the respondent company in furnishing the EOU certificate. Ex.P6 is the assessment order dated 30.08.2006 issued by the Deputy Commissioner of Commercial Taxes. Ex.P7 is the notice under Section 12(A) of Karnataka Sales Tax Act dated 17.07.2009 and Ex. P8 is the proceedings of the Deputy Commissioner of Commercial Taxes dated 08.09.2009. This document discloses that the plaintiff firm had done Gross turnover of Rs.2,93,27,784/-. Less exemption of Rs.28,80,118/- towards 100% EOU under classification of taxable turnover Rs.1,18,90,308/- without EOU certificate. According to this document total tax payable is Rs.1,98,751/- and revised demand notice was issued to.
8. These documents clearly goes to show that after supply of machinery the Department of Commercial Taxes has issued assessment order, notice and proceedings and passed the order in respect of the amount to be recovered from the supplier of the machines, namely the plaintiff. Ex.P12 is the bank statement of Canara Bank for the period from 01.07.2005 to 31.07.2010. The entry on 11.07.2005 discloses that an amount of Rs.91,545/- was paid through cheque to DCCT i.e., Deputy Commissioner of Commercial Taxes. According to this document the plaintiff had paid Rs.91,545/- including interest as claimed in the legal notice at Ex.P10. The department was not given reply to Ex.P10 legal notice, wherein he has stated about the sale transaction regarding sewing machines with defendant and has claimed Rs.99,974/-. In the cross examination noting is elicited. The plaintiff has denied the suggestion that defendant had not represented about 100% EOU certificate to claim tax exemption. Further he has also denied the suggestion that the plaintiff firm is claiming the tax amount even after collecting the same from the defendant. It is pertinent to note that the plaintiff has led evidence and no evidence has been led by defendant except filing the written statement. Thus, the oral and documentary evidence placed on record confirms that the plaintiff had paid Rs.91,545/- to the Department of Commercial Taxes. As such, he is entitled to cover the same from the purchaser of the goods namely the defendant.
9. As far as the maintainability of the suit is concerned the trial Court has observed in para -9 of its judgment as under:
“ 9. In that context I have keenly applied my mind, no doubt initially plaint was presented under order 34 of CPC under wrong notion, later through an amendment application plaintiff got corrected the provision and stated that it is a plaint under Order 37 Rule 2 of CPC. Now, the point is whether that amendment is enough to bring the suit within the purview of the said provision. As could be seen from the sub-rule (2) the said order applies to the suits based on Bill Of Exchange, Hundis, Promissory Notes and suits wherein Plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant with or without interest, arising out of written contract or on an enactment, where some sought to be recovered is fixed some of money or in the nature of debt other than a “penalty” or on guarantee, where the claim against the principal is in respect of debt or liquidated demand only. In the instant case having thoroughly examined the plaintiff claim I am unable to find on what basis out of the Rs.98,751/- levied by the DCCT the plaintiff has calculated and arrived Rs.99,974/-. No doubt the plaintiff furnishes some particulars by specifying the tax amount penalty and interest in para 4 on page 3 of the plaint, but it is not clear at what rate the said tax, penalty and interest are calculated. So, it is difficult to believe that towards tax defendant is liable to pay Rs.60,960/- towards penalty Rs.6096/- and towards penal interest Rs.32,918/-. At this juncture one cannot lost sight that amount levied by the DCCT is with respect to the entire volume of transactions, therefore it is for the plaintiff to show that amount stated by it, as described above, was liable to be paid by the defendant. Hence, it can be said that such things cannot be decided in summary proceedings.”
10. The claim of the plaintiff/petitioner is based on Exs.P6 to P9, pertaining Commercial Tax Department proceedings which compelled the plaintiff/petitioner to pay Sales Tax on account of the default committed by defendant/respondent in furnishing the EOU Certificate. The trial Court has held that if at all the plaintiff intends to recover the sales tax it has to approach the proper forum with material particulars and not the small cause Court under summary proceedings, where the scope of enquiry is very limited in view of the Order 37 of CPC. In the instant case, in view of Section -8 of the Small Causes Courts Act and Schedule, showing therein the pecuniary jurisdiction of Small Causes is Rs.1.00 lakh (now it is amended as Rs.2.00 lakhs as far as Small Causes Courts in Bengaluru City is concerned). There is no proper reasoning as to how the suit is barred in view of Order 37 (2)(b) of CPC is applicable. Thus, the finding given by the trial Court on maintainability is devoid of merits.
11. Even assuming that there is no specific evidence to show that the plaintiff has paid Rs.99,974/- towards the payment of Sales Tax to the Commercial Taxes Department, Ex. P6, 7, 8 and 9 discloses that the correspondence has been done with the plaintiff regarding the taxes to be recovered, regarding non furnishing of EOU Certificate and the payment was done as shown in the Ex. P12- Bank statement. But in the said bank statement, the entry dated 11.07.2005 disclose that an amount of Rs.91545. This entry alone cannot be considered as the basis. As there is no clear evidence to prove that the said amount of Rs.91545 was in respect of the transaction wit Defendant/Respondent alone.
12. Ex.P8-The proceeding of Deputy Commissioner of Commercial Tax dated 08.09.2009 which reads as under:
“The assessee dealer is a partnership firm, mainly dealing in Sewing machine, as a wholesaler. The assessment order for the year ending 31.03.2005, was concluded under section 12(2) of KST Act, 1957, vide G.O.No.FD 116 CSL 2006 (3) dated: 31-03-2006; on dated: 30-08-2006.
Thereafter, the assessee firm has filed letter of rectification vide dated: 04-02-2008, to re-consider for inter state sales covered by C-form, by filing the same. Further, the dealer also requested to consider the EOU turnover under KST.”
13. According to Ex.P8 the amount payable by the plaintiff was Rs.59,859/-. Under the clarification of turnover without EOV certificate @ 12%. As per Ex P1 and P2 invoice cum delivery challan the total price of the machinery is Rs.500008/-. Thus 12% of sale tax would be Rs.60000/- approximately.
14. According to the plaintiff he has paid a sum of Rs.91,545/- towards sales tax but as per Ex-P9 the Proceeding of Deputy Commissioner of Commercial Taxes dated 08.09.2009, the taxable amount shown under classification of taxable turnover is Rs.59,859/- only towards without EOU Certificate @12%. There is no mention about interest or penalty. Thus the amount payable by the defendant is only Rs.59,859/-. The plaintiff has issued legal a notice dated 18.11.2009 but there is no specific mention about the sales tax and interest or penalty payable by the defendant. In the cross examination the plaintiff has stated that the letter dated 03.12.2009 was sent through e-mail giving details of the amount payable. The said document is not exhibited. The defendant has not admitted the same.
15. On appreciation of oral and documentary evidence place on record, this court of the view that there are valid grounds to interfere and set aside the impugned order.
16. Accordingly, this petition allowed. The judgment and decree passed in S.C. No.2360/2009 dated 08.04.2011 is set aside. The suit of the Plaintiff/Appellant is partly decreed. The defendant is directed to pay a sum of Rs.59,859/- with the proportionate costs.
Sd/- JUDGE BVK