@JUDGMENTTAG-ORDER
N. Kumar J.
1. By consent of the parties, the appeal is taken up for final disposal.
2. The assessee has preferred these revision petitions, challenging the order passed by the Karnataka Appellate Tribunal holding that the assessee is not entitled to the exemption claimed and consequently, upholding the penalties levied u/s 72(2) and 72(3) of the Karnataka Value Added Tax Act, 2003.
3. The assessee is a registered dealer and has two units working at Doddaballapur--Tractor and EPD Division, under the provisions of the Karnataka Value Added Tax Act, 2003 (for short, hereinafter referred to as, "the Act"). The said Act granted exemption on the goods sold by the registered dealer to any other registered dealer who is a unit located in any special economic zone established under authorization by the authorities specified by the Central Government in this behalf of who is an export oriented unit. Therefore, the assessee claimed exemption on sales effected to 100 per cent export oriented units situate within the State. The assessing officer rejected the claim of exemption on sales made to 100 per cent export oriented units on the ground that as per the provisions of the KVAT Act, 2003 and Rules, such exemptions are not available to the assessee. Besides levying tax, the assessing officer also levied penalty u/s 72(2) of the KVAT Act, 2003 at 20 per cent on tax liability and penalty u/s 72(3) of KVAT Act, 2003 since the returns filed by the assessee were incorrect and incomplete. Such orders were passed for all the 12 months under the KVAT Act, 2003 falling under financial year 2005-06.
4. Being aggrieved by the same, the assessee approached the Joint Commissioner of Commercial Tax (Appeals)--first appellate authority, by preferring an appeal, which came to be dismissed confirming the order of the assessing authority. Aggrieved by the said order, he preferred an appeal to the Karnataka Appellate Tribunal. In the meanwhile, the petitioner also preferred a writ petition before this court challenging the Constitutional validity of section 72(2) of the Act in W. P. No. 6493 of 2009. The writ petition came to be dismissed upholding the validity of the provision. However, it held, an examination of the provisions of section 72(2) indicates that before levy of penalty u/s 72(2) of the Act, an opportunity is a must and that too enabling the dealer to show cause in writing and therefore, imposition of penalty without giving any opportunity is bad and therefore, the portion of the order imposing penalty was quashed and the penalty as indicated earlier was ordered to be treated as a proposition notice and the assessee was permitted to file objections within six weeks from the date of the said order and thereafter, the assessing authority was directed to consider the case on the merits and pass appropriate orders.
5. In the meanwhile, the Karnataka Appellate Tribunal heard the learned counsel for the parties and confirmed the orders passed by the earlier authorities. It is in this background, the present revisions are filed.
6. Sri Sarangan, learned senior counsel appearing for the assessee, contended that, admittedly, under the provisions of the Karnataka Sales Tax Act, and the notifications issued under the said Act, the sale of moulded plastic components was exempted. from payment of sales tax. Therefore, the assessee was not in the habit of collecting any tax at all. However, when the said Act repealed and the Act came into force from April 1, 2005, the said concession is not available. There was no sufficient time to the assessee to know the change in the law and in the process, they have not collected the tax. Even otherwise, under the provisions of the Act, the assessee has to collect the tax, remit it to the Department and the customer who paid the tax is entitled to refund. Under these circumstances, though there is no exemption for payment of tax, the ultimate result is one and the same. In those circumstances, the authorities have not properly considered the contentions urged by the assessee and by cryptic orders, the contention of the assessee has been rejected. Therefore, a case for interference is made out. In so far as imposition of penalty is concerned, he submitted that, the Tribunal failed to take notice of the judgment of the learned single judge who had set aside the portion of the order where penalty was imposed, without giving any opportunity to the assessee to file objections and contest the matter and therefore, confirming of the order is erroneous illegal and liable to be quashed and requires interference.
7. Per contra, the learned counsel for the Revenue submitted that, when it is not disputed that the exemption granted under the Karnataka Sales Tax Act is not extended under the provisions of the Act, the claim for exemption was without any basis and therefore, all the three authorities have concurrently held that, the assessee is not entitled to exemption, that portion of the order do not call for any interference. In so far as penalty is concerned, he submits that, in the light of the judgment of the learned single judge, the Tribunal was not justified in affirming the penalty imposed by the authorities, it may be set aside and the matter may be remanded to the assessing authority who would consider the said question as directed by the learned single judge of this court.
8. From the aforesaid material and the rival contentions, it is not disputed that the exemption, which was granted under the Karnataka Sales Tax Act is not available under the Act. The tax is to be collected and paid from April 1, 2005. Once the tax is collected and paid to the Department, the person who paid the tax is entitled to refund. It does not absolve the assessee from collecting and paying the tax under the Act. When the provisions are clear, the short question was, whether the assessee is entitled to exemption or not ? The authorities on proper appreciation of the statutory provisions have categorically held that, such an exemption is not available to the assessee, no more was required to be done by the authorities in this regard. Therefore, we do not find any justification to interfere with the said finding, which is based on mere interpretation of the provisions of the Act and therefore, the said finding is confirmed.
9. It is brought to our notice that a beneficial circular has been issued by the Commissioner, how the question of penalty is to be imposed in the case of default especially keeping in mind, the change in the law and the jurisdiction, which came in the way of the assessee understanding the effect of change in law. Certainly, the assessing authority will take notice of the directions issued by the Commissioner to tide over the situation during this interregnum period while passing the final orders.
10. In so far as penalty is concerned, the learned single judge in the aforesaid writ petition has already quashed the findings recorded by both the authorities and remitted the matter back to the assessing authority for fresh consideration. It is unfortunate that the Tribunal has not noticed the said order of the learned single judge. Therefore, confirming the penalty as on the date of the order was passed is erroneous, illegal and without jurisdiction. Therefore, that portion of the order of the Tribunal is liable to be set aside and accordingly, it is set aside. Hence, we pass the following :
ORDER
(i) The revision petitions are allowed in part.
(ii) The order of the Tribunal affirming the penalty is hereby set aside and the matter is remitted back to the assessing authority for fresh disposal in accordance with law, and as per the directions already issued by the learned single judge of this court.
Rest of the order remains undisturbed.
Parties to bear their own costs.
