High Court Of Karnataka
Federal Mogul Goetze (India) Ltd. vs. Assistant Commissioner of Commercial Taxes
Section 37, 35
Period July, 2005 to March, 2006
Dr. Vineet Kothari, J.
w.p. nos. 43037-43038 of 2017 (T-RES)
October  9, 2017
ORDER
1. The petitioner has filed these petitions against the Reassessment Order passed by the Respondent- Assistant Commissioner of Commercial Taxes, Audit- 5.2, VAT Division-V, 4th Floor, Vanijya Therige Karyalaya-II, Koramangala, Bengaluru-560047 on 22.8.2017, in pursuance of the directions of learned Single Judge given in the order dated 2.9.2010 in W.P.Nos.20781/2010 and 21811-21821/2010, directing him to accept the revised returns filed by petitioner-assessee for the period from July 2005 to March 2006, which were filed under Rule 131 of Karnataka Value Added Tax Rules, 2005 with additional tax liability disclosed by the assessee in such revised returns.
2. The submission made by Mrs. Vani.H, learned counsel for the petitioner-assessee is that the Respondent-Authority has accepted some of these monthly VAT revised returns and while rejecting some of them on the ground that such rejected revised returns did not indicate any additional tax liability and proof of payment thereof.
3. She submitted relying upon the Division Bench’s judgment of this Court in the case of Jones Lang Lasalle Property Consultant India (P.) Ltd. v. State of Karnataka [2016] 92 VST 214 (Kar.) that Division Bench has clearly laid down that even the reversal of input tax credit claimed by assessee resulted in an additional tax liability and the revised returns on the basis of such additional tax liability, disclosed were required to be accepted in terms of the Circular issued by the Commissioner on 7.7.2008.
4. Mrs. Vani. H has also submitted before the Court that in a series of objections/replies filed by petitioner-assessee, one of them being Annexure-F dated 29.6.2015, the assessee had produced the chart of tax liability for all the months from April 2005 to March 2006 and for the months of July 2005 to March 2006, there was substantial increase in the ‘Partial Rebate’ claimed by the assessee in the revised returns, which resulted in the additional tax liability of the assessee and therefore, all such revised returns from July 2005 to March 2006 were required to be accepted by the Assessing Authority and then separate assessment orders for each month were required to be passed because each month is defined as a Tax Period under the VAT law.
5. She submitted that, on the other hand, the Assessing Authority has made a cursory reference to the judgment of Division Bench on internal page-4 of the impugned order and later on by observing that he has considered all the submissions/replies/objections filed by the dealer, he has not cared to apply the binding judgment of Division Bench at all and has proceeded to pass impugned fresh orders, which is not sustainable and the same deserves to be quashed.
6. On the other hand, learned counsel for Revenue, Mr. T.K. Vedamurthy supported the impugned order and urged before the Court that additional tax liability as such was not disclosed in the revised returns and payment thereof was not made and therefore the Assessing Authority was justified in passing the impugned order. However, he submitted that Division Bench’s judgment of this Court does not appear to have been discussed in detail by the Assessing Authority.
7. Having heard learned counsel for the parties, this Court is satisfied that the impugned order deserves to be set aside and the present petitions deserve to be allowed. The Division Bench of this Court in the case of Jones Lang Lasalle Property Consultant India (P.) Ltd. (supra) had held as under:
‘On the plain and simple reading of the circular, it transpires that whenever the word is “any additional tax liability” it would mean “additional net tax liability” because the moment there is use of the word “additional”, it would mean that either the tax is already paid, but shortly paid or even after the credit of input tax, the further liability of the tax remains which is required to be paid by the return. The attempt to contend that it should be revised return only for the purpose of absolute additional tax liability and not to include the adjustments thereof with input credit, cannot be countenanced for the simple reason that whenever the matter pertains to payment of additional tax liability, it would always mean the credit or set off to be made of the tax already paid and the consequential amount of tax by way of additional tax liability. If the credit or adjustment is to be given to the amount of tax already paid, there is no reason why the credit of input tax should not be adjusted against the tax liability and thereafter to arrive at the additional tax liability. In our view, the interpretation put forward on behalf of the Revenue to the Circular dated July 7, 2008 cannot be accepted.’
8. Though the Assessing Authority has referred to the said Division Bench’s judgment, it appears that he has not fully understood the ratio of the same or has not carefully examined the facts of the case in the light of the aforesaid Division Bench judgment. The matter, therefore deserves to be remanded to the Assessing Authority for passing fresh orders for each month separately, accepting all the revised returns for the period July 2005 to March 2006 and after considering the case of assessee on merits, discussing the facts of the case each month, detailed objections of the assessee for each month separately in the light of the aforesaid Division Bench judgment of this Court.
9. This Court also takes exception to the pedantic approach of the Assessing Authority in not fully discussing the judgment of Division Bench and just a mention of it in the order, is not sufficient.
10. The judgments of Constitutional Courts have to be discussed in detail and if the Authorities below still have to take a different view in the facts of the case, they should record their own reasons in detail for doing so, so that the higher Appellate Authorities or the Constitutional Courts when dealing with their orders have an opportunity to see their appropriate application of mind to the judgments delivered by the Constitutional Courts. If that is not done, then it would be taken as utter disregard of the judgments of the Constitutional Courts and may even drag such Authorities in the realm of judicial indiscipline and consequential disciplinary action or even contempt action against them, if such casual references, not distinguishing the same with cogent reasons is found out.
11. For now, this Court is not making any further comments in this case with a note of caution to the Authorities of not only this Respondent- Department of Commercial Taxes, but for all other Government Departments, who are supposed to deal with the facts of each case before them in the light of the judgments cited before them and only with proper recording of reasons, they can either distinguish those judgments, otherwise, being bound they have to follow the same.
12. The judgments of the Constitutional Courts can be altered, modified or reversed only by the superior Constitutional Courts of larger strength or hierarchy, but they are not allowed to be casually referred and forgotten or not followed for good reason to be recorded by the Authorities below the Constitutional Courts. Otherwise the very purpose of maintaining the hierarchical judicial discipline will be lost.
13. The petitions are accordingly allowed and the impugned order Annexure-J dated 22.8.2017 is set aside. The Respondent-Authority is directed to pass fresh separate orders for each month or the Tax Period, recording its detailed reasons after accepting all the revised returns for the period July 2005 to March 2006 in the light of the judgment of Division Bench cited supra. Mere accepting the revised returns or taking them on record for consideration does not however mean that claims made therein have to be accepted as stated. The discretion is of Assessing Authority to discuss the facts of assessee’s case and then allowing or not allowing such claims of turnover, output tax liability or input tax credit.
14. The petitioner-assessee shall appear before the Assessing Authority in the first instance again on 23.10.2017 and thereafter the Assessing Authority may pass fresh orders also discussing all the reasons and objections of the assessee in detail and discussing the facts of the case within a period of six months from today.
