Case Law Details
Three 1st Enterprises Vs Commissioner of Commercial Taxes (Karnataka High Court)
In the case of Three 1st Enterprises Vs Commissioner of Commercial Taxes, the Karnataka High Court dealt with a petition challenging the validity of an inspection conducted by the Commercial Tax Officers on the petitioner’s business premises. The petitioner, M/s. Three 1st Enterprises, operates a Bar, Restaurant, and Lodging in Dharwad and is duly registered under the Karnataka Value Added Tax Act, 2003 (KVAT Act), among other applicable tax laws.
Incident: On October 3, 2013, the petitioner’s premises were visited by the Commercial Tax Officer (Enforcement-8) Hubballi and Commercial Tax Officer (Enforcement-10) Hubballi, who claimed to be acting under an assignment from the Joint Commissioner of Commercial Taxes (Enforcement) Hubballi. The officers demanded access to business records, suspecting the premises belonged to Trishul Bar and Restaurant. Despite the petitioner’s explanation that the premises were operated by M/s. Three 1st Enterprises, the officers did not provide the assignment note as requested, leading to a dispute and the eventual filing of a writ petition.
Petitioner’s Contention: The petitioner argued that M/s. Three 1st Enterprises and Trishul Bar and Restaurant are entirely separate entities and that the tax officers’ inspection was based on a misidentification. The petitioner contended that the officers acted beyond their authority, especially given their refusal to produce the assignment note. The petition sought to challenge the validity of the inspection and the subsequent demand for business records, arguing that the actions of the tax officers were unlawful.
Respondent’s Argument: The respondent, represented by the Additional Government Advocate (AGA), defended the actions of the tax officers. The AGA argued that the assignment note mentioned M/s. Three 1st Enterprises (Trishul Bar and Restaurant) as the entity to be inspected, justifying the officers’ actions. The AGA further noted that the petitioner had an alternative remedy under Section 62 of the KVAT Act, 2003, which should be pursued instead of the writ petition.
Court’s Observations: The Karnataka High Court carefully considered the arguments presented by both parties. The court noted that the dispute centered on a factual question regarding the identity of the business being inspected. As a general rule, the court observed that disputed questions of fact are not typically resolved in writ proceedings under Article 226 of the Constitution of India.
Given the availability of a statutory remedy under the KVAT Act, the court directed the petitioner to pursue this alternative remedy by filing an appeal with the jurisdictional Joint Commissioner of Appeals.
Conclusion: The writ petition was disposed of by the Karnataka High Court with the direction that the petitioner avail the statutory remedy as provided under the KVAT Act. The court also ordered that the time spent in these proceedings be excluded from any limitation period applicable to the statutory remedy. This case underscores the importance of pursuing alternative remedies before seeking judicial intervention in disputes involving factual questions.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
Sri. Narayan G. Rasalkar., learned counsel for the petitioner and Sri. Shivaprabhu S. Hiremath., learned AGA for the respondents have appeared in person.
2. The petitioner contends that it is a registered partnership firm and running a Bar, Restaurant and Lodging in the name and style of M/s. Three 1st Enterprises at P. B. Road, Dharwad. The firm is duly registered under the provisions of the Karnataka Value Added Tax Act, 2003, Central Sales Tax Act, 1956, and the Karnataka Tax on Entry of Goods Act, 1979 with effect from 01.04.2005 with TIN No.29360024161 and is borne on the files of the Local Vat Officer, 310, Dharwad.
On the 03rd day of October 2013, the Commercial Tax Officer, (Enforcement-8) Hubballi, and the Commercial Tax Officer (Enforcement-10), Hubballi, along with their Inspectors visited the place of business of the petitioner. After disclosing their identity, they claimed that they had jointly come for the inspection of the business premises of Trishul Bar and Restaurant as per the assignment of the Joint Commissioner of Commercial Taxes (Enforcement) Hubballi. The petitioner explained that the business place does not belong to Trishul Bar and Restaurant but belongs to M/s. Three 1st Enterprises. To ascertain the true position, the petitioner demanded a copy of the assignment. However, the officers neither showed the assignment nor furnished a copy of the same, and on the contrary, they threatened the petitioner with criminal prosecution and demanded the books of accounts. Hence, the petitioner furnished the purchase bills, sales register, and sales bills voluntarily which were rightly available on the table in an open space on the business premises. Aggrieved by the action on the part of the officers, the petitioner has filed the Writ Petition on several grounds set out in the Memorandum of Petition.
3. Learned counsel for the respective parties urged several contentions. Counsel Sri. Narayan G. Rasalkar., in presenting his arguments strenuously urged that the petitioner – M/s. Three 1st Enterprises and Trishul Bar and Restaurant are different entities. The Tax officers came with the assignment for the inspection of the business of Trishul Bar and Restaurant. He argued by saying that the petitioner had nothing to do with the Trishul Bar and Restaurant. He vehemently contended that the officer concerned had no authority to make a sudden visit; the action taken by the tax officials was untenable in law. Counsel, therefore, submits that an appropriate order may be passed.
By way of reply, the learned AGA justified the action of the Tax Officers. He argued by saying that, in the assignment note the trader’s name has been shown as M/s. Three 1st Enterprises (Trishul Bar and Restaurant). He argued by saying that the endorsement issued by the Commercial Tax Officer is just and proper. He vehemently contends that there is an alternative efficacious statutory remedy under Section 62 of the KVAT Act, 2003, and prayed for the dismissal of the writ petition.
Heard, the contentions urged on behalf of respective parties and perused the Writ papers with utmost care.
4. The facts are sufficiently stated and do not require reiteration. The petitioner contends M/s. Three 1st Enterprises and Trishul Bar and Restaurant are different entities. The Tax Officers could not have made a sudden visit. The objection is also raised about the authority of the Tax Officers to make a sudden visit. Several contentions are urged regarding the identity of the petitioner and that of the Trishul Bar and Restaurant. It is a disputed question of fact. In general, the disputed question of fact is not investigated in a proceeding under Article 226 of the Constitution of India. As far as the endorsement issued by the Commercial Tax Officer, seeking the production of books of accounts, the petitioner has an alternative efficacious statutory remedy before the jurisdictional Joint Commissioner of Appeals by filing an appeal as per the provisions of the Act. Hence, the petitioner is at liberty to avail the statutory remedy. The time spent before this court shall be excluded.
5. With the above observations, the Writ Petition is disposed of, directing the petitioner to avail statutory remedy as provided under law.
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