Best Judgment Assessment Order withdrawn as Petitioner filed relevant returns in accordance with order of High Court
In Associate Decor Ltd. v. Assistant Commissioner of Commercial Taxes, Bengaluru [Writ Petition No. 45290 of 2019 (T-RES) dated July 02, 2021] Associate Decor Ltd. (Petitioner) has filed the current petition challenging the endorsement No. ACCT LGSTO-150/T.No.51/19-20 dated April 25, 2019 (impugned endorsement) which was issued by Assistant Commissioner of Commercial Taxes (Respondent). Along with that, the Petitioner has also sought for a direction that the Respondent to withdraw all the best judgment assessment orders passed during the period of September 2017 to December 2018.
The Competent Authority had passed best judgment assessment orders under Section 62(1) of the Karnataka Goods and Services Tax Act, 2017 (KGST Act) by raising tax demand on the Petitioner, pursuant to which, current accounts of the Petitioner were attached accordingly. The Hon’ble Karnataka High Court, on a writ petition W.P.No.40360-40364/2018 being filed by the Petitioner ordered the lifting of attachment of current account noting that if the Petitioner was to file its returns in respect of goods, the attachment would be released in favour of him.
Thereafter, the Respondent issued the impugned endorsement dated April 25, 2019 observing that though the attachment and garnishee notices were withdrawn, the best judgment assessment order still stood valid. The Petitioner has thereby come to the Court aggrieved by the same.
The Hon’ble Karnataka High Court observed that time to file the return was granted to the Petitioner, but this Hon’ble Court vide its order dated February 13, 2019 extended the time within which returns were to be filed. Though, according to Section 62(2) of the KGST Act, a period of 30 days is provided for filing of returns, however, the same was extended by the court vide its February 13, 2019 order.
Further noted, that the return filed by the Petitioner was in terms of Section 62(2) of the KGST Act and it is for this reason, the best judgment assessment orders which were passed under Section 62(1) of the KGST Act would stand withdrawn. The impugned endorsement is therefore set aside and the return filed by the Petitioner under Section 62(2) of the KGST Act is directed to proceed in accordance with law.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
1. The learned Government Advocate accepts notice for the respondents. With the consent of both parties, the matter is taken up for disposal.
2. The petitioner has sought for quashing of the endorsement dated 25-4-2019 vide No. ACCT LGSTO-150/T.No.51/19-20, vide Annexure-‘A’ issued by the first respondent, the demand in Form-‘F’ dated 21-12-2018 at Annexure-‘N’ and has sought for direction to the first respondent to withdraw all the best judgment assessment orders passed by him against the petitioner for the period September, 2017 to December, 2018 and alternative relief is also sought for.
3. The petitioner submits that there was an order of attachment passed pursuant to the best judgment assessment orders issued under section 62 of the Central Goods and Services Tax Act, 2017 (“CGST Act”, for short) for the period September, 2017 to December, 2018. It is submitted that the attachment orders came to be challenged in W.P.No.40360-40364/2018. This court by order dated 20-9-2018 ordered for lifting the attachment of current account of the petitioner, while in the same order, the court has noted the submission of the Additional Advocate General that if the petitioner were to file his return by 7-10-2018, attachment in respect of the goods would be released in favour of the petitioner. It is to be noticed that the petitioner subsequently, in order to file his returns made deposit of a sum of Rs. 2 Crores and had requested taking into account, the previous deposit made to enable filing of return. However, the amount that was to be appropriated towards KGST including Rs. 2 Crores deposited by the petitioner, the amount which ought to have been appropriated towards IGST has been wrongly appropriated towards KGST. This aspect of wrongful appropriation is not in dispute. In light of the same, it is submitted that returns could not be filed despite their intention to avail of the opportunity of filing return in terms of the submission of the State as contained in the order of 20-9-2018. Subsequently, this court in its order dated 13-2-2019 had directed refund to be made expeditiously so that the amounts could be transferred to the IGST account while so permitting in its order on 13-2-2019, the application for modification came to be to disposed off.
4. The learned Senior Counsel appearing for the petitioner submits that thereafter respondent authorities gave credit of the amount to the account of IGST and returns were filed within the time granted in terms of the order dated 13-2-2019. Such of the aspects are not in dispute. However, while the matter came to be finally disposed off on 12-4-2019, the petitions were dismissed “as having rendered infructuous.” While it is to be noted that in the relief sought for in the said writ petitions, the petitioner had also sought for liberty to prefer appeal for the tax period September, 2017 to January, 2018 (however the said period is to be construed as September, 2017 to December, 2018). Accordingly, liberty was sought to challenge the best judgment assessment orders as contemplated under section 62 of the Act.
5. The respondent no. 1 has issued endorsement dated 25-4-2019 observing that W.P.No.40360-364/2018 came to be dismissed on 12-4-2019 and though the attachment and garnishee notices were withdrawn, the best judgment assessment orders passed with respect to the tax period September, 2017 to December, 2018 were still valid and demands pursuant was required to be satisfied.
6. The learned Senior Counsel appearing for the petitioner submits that passing of the impugned endorsement at Annexure-‘A’ is without appreciating the developments in proper perspective insofar as observations made by this court in W.P.No.40360-364/2018 in its order of 20-9-2018 had in effect recorded the stand of the State that if the petitioner were to file the returns by 7-10-2018, the attachment would be lifted. In fact, it is submitted that if the return were to be filed by making necessary deposit within the period as the State had sought to permit as observed in the said order, return filed would be one filed under section 62 (2) of the Act and the order passed under section 62 (1) would stand withdrawn and the return filed would be subject to further consideration by the Assessing Officer as per law.
7. It is further submitted that while the writ petition came to be disposed off as having rendered infructuous by the order of 12-4-2019, though there was a relief seeking permission to file an appeal in the writ petition, in light of the stand that the petitioner could file his return by 7-10-2018, in effect, the question of seeking permission to file an appeal as sought for in W.P.No.40360-364/2018 in fact, did not arise and accordingly, dismissal of writ petition as infructuous could not be found fault with.
8. It is further submitted that the petitioner having filed the return within the period provided for and as extended by this court in the order dated 13-2-2019, had resulted in a return being filed within the time prescribed under section 62 (2) and upon return being filed under section 62 (2) the question of seeking to rely upon the orders passed under section 62 (1) which were the best judgment assessment order would not be correct.
9. The learned Government Advocate appearing for the State submits that in light of dismissal of the writ petition and the prayer sought for by the petitioner, technically the endorsement could not be found fault with.
10. Having heard both sides and noticing the observations made by the State in the order dated 20-9-2018 in W.P.No.40360-364/2018, it is clear that the time was in fact granted to the petitioner to file return within a specified time and the return to be filed within the said time referred to the return under section 62 (2) and in light of appropriation of tax paid under the wrong head, this court by its order of 13-2-2019 had further extended the time within which time returns were to be filed. If that were to be so, though the period of 30 days as provided under section 62 (2) in the peculiar facts of the case, in light of permission granted by the court in its order dated 13-2-2019, the petitioner could continue to file the return within the time granted by the Court and the return filed was a return as contemplated under section 62 (2) which is to be construed to be return filed within the time. If that were to be so, the return filed in terms of the order dated 20-9-2018 was a return in terms of section 62(2) and the best judgment assessment orders passed under section 62(1) would stand withdrawn viz., assessment orders dated 16-1-2018 (for September to November 2017), 16-2-2018 (for December 2017), 15-3-2018 (for January 2018), 21-5-2018 (for February and March 2018), 12-7-2018 (for April 2018) and 14-8-2018 (for May and June 2018) vide Annexure C1 to C10 and order dated 12-9-2018 (for July 2018), 10-12-2018 (for August to October 2018), 07-1-2018 (for November 2018) and 6-2-2019 (for December 2018) vide Annexure-D1 to D6.
11. Accordingly, the impugned endorsement is set aside and the return filed under section 62 (2) of the Act is directed to be proceeded with in accordance with law.