Case Law Details
Toyota Kirloskar Motor Pvt. Ltd. Vs State of Karnataka (Karnataka High Court)
Brief facts of the case are, assessee imported automobiles and made ‘High Sea Sales’ of 12 vehicles. It has claimed exemption under Section 5(2) of the Central Sales Tax Act, 1956 (‘CST Act’ for short) for the years 2009-10 and 2010-11. Before the Assessing Authority, the assessee produced various documents. The exemption was denied by the Assessing Officer on the premise that Bill of Lading was not endorsed by the assessee. The First Appellate Authority, confirmed the said order. On further appeal, the KAT limited the relief in respect of turnover of Rs.1,65,32,500/- as against Rs.18,16,99,863/-.
Settled position of law is, the Bill of Lading is only one of the ways to transfer the title and not the only way. It can be done either by handing over the Bill of Lading itself to the customers before the goods pass the customs barrier of India.
Admittedly, the appeal before the KAT was filed by the assessee. The question for consideration is, whether exemption could be denied for want of assessee’s endorsement on the Bill of Lading?
In our view, the KAT has rightly noted the correct position of law that Bill of lading is not the only way of transfer of title and it can also be done by even handing over the Bill of Lading to the customers. Further, on consideration of the Intelligence Report, KAT has satisfied itself that documents were available in respect of turnover of Rs.1,65,32,500/-. Denial of the exemption in respect of turnover of Rs.16,51,67,363/- being the remaining portion of the turnover was not the subject matter for consideration before the KAT. In view of the settled position of law, the order passed by the KAT is perverse and unsustainable in law.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
This petition by the assessee challenging the common order dated September 28, 2017 in STA No.406/2016 and 805/2016 passed by the Karnataka Appellate Tribunal, Bengaluru (‘KAT’ for short) has been admitted to consider either of the following two questions:
Whether Tribunal was right in disallowing the exemption under Section 5(2) of the CST Act to the extent of Rs.16,51,67,363/-, which represented high sea sales by the appellant-assessee on the ground that same was not supported by documentary evidence?
OR
Whether Tribunal was right in disallowing the exemption under Section 5(2) of the CST Act to the extent of Rs.16,51,67,363/-, which represented high sea sales despite assessee having tendered evidence before the authorities as regards said sales, which had been accepted by said authorities.”
2. Heard Shri. T. Suryanarayana, learned Senior Advocate for the assessee and Shri. Jeevan J.Neeralgi, learned AGA for the Revenue.
3. Suryanarayana submitted that this Court may consider the first question along with a point as to whether the Tribunal could exceed its jurisdiction in considering the point which was not for consideration before the Tribunal?
4. Brief facts of the case are, assessee imported automobiles and made ‘High Sea Sales’ of 12 vehicles. It has claimed exemption under Section 5(2) of the Central Sales Tax Act, 1956 (‘CST Act’ for short) for the years 2009-10 and 2010-11. Before the Assessing Authority, the assessee produced various documents. The exemption was denied by the Assessing Officer on the premise that Bill of Lading was not endorsed by the assessee. The First Appellate Authority, confirmed the said order. On further appeal, the KAT limited the relief in respect of turnover of Rs.1,65,32,500/- as against Rs.18,16,99,863/-.
5. Shri. Suryanarayana, placing reliance on Reckitt & Colman of India Ltd. Vs. Collector of Central Excise1 and Pathikonda Balasubba Setty Vs. Commissioner of Income-tax2 submitted that Tribunal’s powers are limited to passing orders on the subject matter of the appeal. He adverted to para 22 of the impugned order and pointed out that the KAT has recorded a specific finding that the claim of exemption was disallowed by the Assessing Officer and First Appellate Authority on the premise that there was no endorsement by the assessee on Bill of Lading. He argued that having so recorded, the KAT held a roving enquiry into the documents, which included an Intelligent Report by the Enforcement Officer and limited the exemption to Rs.1,65,32,500/- on the ground that documents were available only to that extent.
6. In substance, Shri. Suryanarayana’s argument is that the KAT has exceeded its jurisdiction in holding a roving enquiry by considering irrelevant material in limiting the relief.
7. Jeevan Neeralgi, learned AGA for the Revenue, adverting to para 26 of the impugned order submitted that the agreement was not signed by the proper person overseas. Therefore, the KAT having considered the material on record, has rightly limited the relief.
8. We have carefully considered rival contentions and perused the records.
9. At the outset, we may record that the KAT has noted in para 22 of the impugned order that the exemption was denied on the premise that Bill of lading was not endorsed by the assessee. Further, it is held in para 31 that the settled position of law is, the Bill of Lading is only one of the ways to transfer the title and not the only way. It can be done either by handing over the Bill of Lading itself to the customers before the goods pass the customs barrier of India. However, having examined the documents available in the Intelligence Report, the Tribunal has concluded that the necessary documents were available only to the extent of the turnover of Rs.1,65,32,500/- and the learned Advocate had not filed the documentary evidence in respect of the remaining portion of the turnover.
10. In Reckitt Colman, the Apex Court has held that it is beyond the competence of the Tribunal to make out a case in favour of the Revenue, which the Revenue had never canvassed and which the appellants had never been required to meet.
11. In Pathikonda Balasubba Setty, the Division Bench of this Court has held as under:
“The effect of these provisions is that the Appellate Tribunal’s powers are limited to passing such orders as they may think fit on the appeal. The expression “on the appeal” clearly and indubitably points to the conclusion that the powers of the appellate authority, the Tribunal, are limited to the subject-matter of the appeal.”
12. Admittedly, the appeal before the KAT was filed by the assessee. The question for consideration is, whether exemption could be denied for want of assessee’s endorsement on the Bill of Lading?
13. In our view, the KAT has rightly noted the correct position of law that Bill of lading is not the only way of transfer of title and it can also be done by even handing over the Bill of Lading to the customers. Further, on consideration of the Intelligence Report, KAT has satisfied itself that documents were available in respect of turnover of Rs.1,65,32,500/-. Denial of the exemption in respect of turnover of Rs.16,51,67,363/- being the remaining portion of the turnover was not the subject matter for consideration before the KAT. In view of the settled position of law, the order passed by the KAT is perverse and unsustainable in law.
14. In view of the above, the following:
ORDER
(a) Appeal is allowed.
(2) The orders dated 28.03.2014 and 18.09.2014 in DCCT (Audit)-2.3 DVO-02 passed by the Assessing Officer, order dated 21.09.2016 in CST-AP-No.246/15-16 passed by the First Appellate Authority and order dated 28.09.2017 passed by the Karnataka Appellate Tribunal are set-aside.
(3) The questions of law are answered in favour of the assessee and against the Revenue to the extent of granting of exemption under Section 5(2) of the CST Act.
No costs.
Notes:-
1 (1997)10 SCC 379
2 [1967] 65 ITR 252 (Mysore)
