@JUDGMENTTAG-ORDER
B. Manohar, J.@mdashThe petitioner is a company incorporated under the Companies Act, 1956 and is a registered dealer under the provision of Karnataka Tax on Entry of Goods Act, 1979 (hereinafter referred to as ''KTEG Act'') filed this revision petition being aggrieved by the order dated 6-4-2010 passed by the Karnataka Appellate Tribunal dismissing the appeal and confirming the order passed by the First Appellate Authority as well as the Assessing Authority for the assessment year 1999-2000. The petitioner is engaged in the business of manufacture and sale of tractors. During the course of his business, he caused entry of various raw materials, component parts and inputs, which include tyres, tubes and flaps which are used as parts of tractors manufactured by the petitioner. The petitioner filed the returns on 29-4-2000 for the assessment year 1999-2000, declaring the total turnover and also taxable turnover and paid tax of Rs. 1,86,18,500/ The Assessing Authority after due verification of the books of accounts and documents held that the assessee is liable to pay tax of Rs. 73,30,625/-. Then only the assessee realized that he has remitted excess tax of 1,10,87,875/-. The assessee was under the impression that the raw materials, inputs component parts used for manufacturing of the tractors are taxable and accordingly paid the tax. Subsequently he came to know that the raw materials, inputs and parts of the tractors are the agricultural machinery and they are exempted from payment of entry tax. Since there is a dispute with regard to the fact whether the tractor is agricultural machinery or not? In view of that, he had paid the entry tax. He has filed a petition for refund of the excess tax paid by him. In the meantime, the Assessing Officer initiated the proceedings u/s 3-BB of the KTEG Act. The excess amount was confiscated on the ground that the said amount has been collected from the consumers and hence the assessee is not entitled for refund of the said amount. Holding that collection of tax is contrary to Section 3-A of the Act, the Assessing Officer issued show cause notice to the assessee. The assessee filed detailed objections to the said notice and also brought to the notice of the Assessing Officer that since there is a dispute with regard to the fact whether the tractor manufactured by the assessee is an agricultural machinery or not is pending consideration, he continued to pay the tax. The said dispute has been settled in a judgment reported in 106 STC 309 (Raja Motors v/s Additional Deputy Commissioner of Entry Taxes-Cum-Commercial Taxes, Assessments-III, Bangalore City) and this court held that the tractor is an agricultural machinery and is exempted from the tax. Further, the petitioner has contended that they have not collected any tax from their customers. Hence, they are entitled for the refund of the excess tax paid by them.
2. The Assessing Authority after considering the objections filed by the assessee held that no materials has been produced before the authorities to show that the assessee has neither collected any amount of tax under the Act nor passed on the burned of tax liability on the consumers and also held that collection of tax is contrary to Section 3-A of the Act. Hence, forfeited the excess amount paid by the assessee to the State Government by its order dated 30-05-2002. The assessee being aggrieved by the order dated 30-05-2002 filed an appeal before the Joint Commissioner of Commercial Tax (Appeals) (hereinafter referred to as ''First Appellate Authority'') in AP. 10/2002-03. The First Appellate Authority after considering the matter by its order dated 20-12-2002 dismissed the appeal holding that the assessee has failed to establish that they have not passed on the entry tax burden to their customers. Being aggrieved by the order passed by the First Appellate Authority, the assessee preferred STA No. 542/2003 before the Karnataka Appellate Tribunal. The Appellate Tribunal by its order dated 6-4-2010 dismissed the appeal and confirmed the order passed by the First Appellate Authority as well as the Assessing Authority. Being aggrieved by the order dated 6-4-2010, the assessee preferred this revision petition.
3. Sri. Rajesh Chander Kumar, advocate appearing for the petitioner contended that the order passed by the Karnataka Appellate Tribunal confirming the order passed by the First Appellate Authority as well as the Assessing Authority is contrary to law. The petitioner was under the impression that for bringing the raw materials, component parts and inputs for the purpose of manufacturing of tractors they are liable to pay tax, accordingly they paid the tax, since the issue whether the tractor is an agricultural machinery or not is pending consideration before this court. This court in RAJA MOTORS case has held that the tractor is an agricultural machinery falling under the purview Entry-3 of the II Schedule to the Act. Hence, the manufacturer of the tractors need not pay tax. The assessee has taken a specific contention and records have been produced before the authorities to show that while selling the tractors, they have not passed on the entry tax burden on their customers and assessee has not violated the provisions of Section 3-A of the Act. The question of unjust enrichment by the petitioner does not arise. The order of forfeiture passed u/s 3-BB of the Act is contrary to law.
4. On the other hand, Sri. T.K. Vedamurthy, learned High Court Government Pleader argued in support of the order passed by the Karnataka Appellate Tribunal and the authorities concerned. He contended that the petitioner has collected the tax in violation of Section 3-A of the Act. Further, no document has been produced to show that while selling the tractors the assessee has not passed on the entry tax burden on the customers. In view of that the excess tax paid by the petitioner has been forfeited Hence, the assessee is not entitled to the relief sought for by them and sought for dismissal of the petition.
5. We have carefully considered the arguments addressed by the learned counsel for the parties.
6. This revision petition has been filed along with the following substantial question of law.
a. Whether the Karnataka Appellate Tribunal was right in law in confirming the order dated 20/12/2002 of the JCCT (Appeals), Bangalore Division, Bangalore, thereby holding that the Petitioner had contravened the provisions of Section 3-A of the Karnataka Tax on Entry of Goods Act, 1979, resulting in forfeiture of tax wrongfully paid u/s 3-BB of the Act?
b. Whether the Karnataka Appellate Tribunal was right in law in confirming the order dated 20/12/2002 of the JCCT (Appeals), Bangalore Division, Bangalore, thereby forfeiting the tax that the Petitioner had wrongfully paid on raw materials, component parts and inputs caused entry into the local area and then used in the manufacture of tractors?
7. During the course of arguments, it was brought to the notice of the court that in respect of the very same revision petitioner for the assessment year 2001-02, similar order has been passed u/s 3-BB for violating Section 3-A by the MOTORS case, wherein this court has held that the raw materials, inputs and component pans have been used for manufacturing of the tractor which is an agricultural machinery falls under Entry-3 of the Second Schedule to the Act and cannot be taxed. Further no finding has been given whether the petitioner has passed on the entry tax burden on the consumers. The specific case of the petitioner is Assessing Authority, which was confirmed by the First Appellate Authority as well as the Karnataka Appellate Tribunal. The said order has been set aside by this court in CRP No. 955/2005 disposed off on 5-4-2007 and remanded the case to the Assessing Authority. The similar issue has been involved in this revision petition for the assessment year 1999-2000. Further, the Karnataka Appellate Tribunal as well as the authorities below have not taken into consideration the law laid down by this Court in RAJA hat necessary materials have been produced before the Assessing Authority, but the same is not considered. This Court in CRP No. 955/2005 in similar circumstances had set aside the order passed by the Appellate Tribunal as well as the authorities concerned and remanded the matter to the Assessing Authority to reconsider the same taking into consideration the materials produced by the petitioner and also taking into consideration the impact of Section 3-A for the purpose of passing order u/s 3-BB of the Act. The facts in the present case are similarly situated. Following the order made in CRP No. 955/2005, we pass the following:
ORDER
The revision petition is allowed. Without giving any finding, on the substantial questions of law, the order passed by the Appellate Tribunal as well as the authorities below are set aside and the matter is remanded to the Assessing Authority to reconsider the same afresh and pass orders in accordance with law.
