2021 (10) TMI 29 - HC - VAT and Sales Tax

Court emphasizes exhausting statutory remedies; appeal dismissed, liberty granted for statutory remedy.

M/s. R.K. Kathare & Sons Versus State Of Karnataka

The High Court dismissed the appeal, emphasizing the importance of exhausting statutory remedies. The appellant was granted liberty to pursue the ... Validity of re-assessment order - failure to account for the purchases alleged to have been made from the State of Rajasthan - Section 64(1) of the KVAT Act - HELD THAT:- The fact remains that in furtherance to the orders of the Revisional Authority as per Annexures-A & B, the Prescribed Authority has passed the reassessment order on 05.07.2021 for the A.Y. 2013-14 and 2014-15 as per Annexures-Q & R. The direction issued by the Revisional Authority has thereby stood complied. The appellant-assessee has participated in the reassessment process. The appellant-assessee has not filed any appeal against the said reassessment order as provided under the Act. The present appeal is u/S.66(1) of the KVAT Act, 2013 challenging the orders of the Revisional Authority at Annexures-A & B. The Hon’ble Apex Court in the case of Assistant Commissioner (CT) LTU, Kakinada & Others Vs. M/s. Glaxo Smith Kline Consumer Health Care Ltd. [2020 (5) TMI 149 - SUPREME COURT] has held that wherever the statutory remedy of appeal is provided, an aggrieved person must exhaust such remedy. In view of the changed facts and circumstances of the case namely the Prescribed Authority having complied with the direction issued by the Revisional Authority by passing orders as per Annexures-P & Q, no purpose would be served in entertaining the present appeal insofar as challenge to the orders of the Revisional Authority dated 2.11.2020 as per Annexures-A and B - Appeal disposed off. Issues:1. Revisional power under Section 64(1) of the Karnataka Value Added Tax Act, 2003.2. Reassessment orders for Assessment Years 2013-14 and 2014-15.3. Challenge to orders of Revisional Authority and Prescribed Authority.4. Compliance with direction issued by Revisional Authority.5. Exhaustion of statutory remedy of appeal.Issue 1: Revisional power under Section 64(1) of the Karnataka Value Added Tax Act, 2003:The appellant-assessee filed an appeal under Section 66(1) of the KVAT Act, challenging orders passed by the Additional Commissioner of Commercial Taxes exercising revisional power under Section 64(1) against the orders of the First Appellate Authority and the Prescribed Authority. The Revisional Authority set aside the previous orders and remitted the matter to the Prescribed Authority for re-assessment under Section 39(1) of the KVAT Act.Issue 2: Reassessment orders for Assessment Years 2013-14 and 2014-15:The appellant, a partnership firm engaged in trading, was subject to reassessment for allegedly failing to account for purchases from the State of Rajasthan. The Prescribed Authority passed reassessment orders under Sections 39(1), 36, and 72(2) of the KVAT Act, leading to demand notices. The First Appellate Authority partly allowed the appeal against these orders. Subsequently, the Revisional Authority initiated proceedings and set aside the previous orders for re-assessment.Issue 3: Challenge to orders of Revisional Authority and Prescribed Authority:The appellant challenged the orders of the Revisional Authority, arguing that the Revisional Authority deviated from the proposed course of action outlined in the notice. The appellant cited a decision of a Co-ordinate Bench to support their argument. The Government Advocate contended that the orders had been implemented, making them non-amendable. The appellant's participation in the reassessment process was noted, and the appellant sought to challenge the reassessment order in the present appeal.Issue 4: Compliance with direction issued by Revisional Authority:Following the orders of the Revisional Authority, the Prescribed Authority completed the reassessment process and issued orders accordingly. The appellant participated in the reassessment process and provided necessary information. The appellant's subsequent participation in the process was acknowledged, emphasizing the importance of exhausting statutory remedies.Issue 5: Exhaustion of statutory remedy of appeal:The High Court emphasized the need to exhaust statutory remedies, citing a Supreme Court decision. Given the compliance with the Revisional Authority's direction and the completion of reassessment, the Court found no purpose in entertaining the current appeal challenging the Revisional Authority's orders. The appellant was granted liberty to avail the statutory remedy of appeal against the Prescribed Authority's orders.In conclusion, the High Court disposed of the appeal, reserving liberty for the appellant to pursue the statutory remedy of appeal against the Prescribed Authority's orders, emphasizing the importance of exhausting statutory remedies in such matters.