Belandur Krishnappa Srinivas Vs Commissioner of Central Tax & Anr. (Karnataka High Court)
Summary: Karnataka High Court partly allowed the writ petition filed by Belandur Krishnappa Srinivas challenging an order dated 30 November 2021 passed under Section 72 of the Finance Act, 1994 for the tax period 2014-15 to 2017-18. The impugned order was based on information received from the Central Board of Direct Taxes regarding the petitioner’s gross receipts.
The petitioner contended that notice had not been served and that the adjudication was completed merely on the basis of income-tax return information without examining whether, in relation to works contracts provided to third parties, the value of goods was liable to be excluded for service-tax purposes. The Revenue opposed interference on the ground that the writ jurisdiction had been invoked about five years after the impugned order and that the petitioner had failed to respond to the earlier notices.
The High Court noted that the assessment was premised on CBDT information and the petitioner’s failure to furnish details of sales/services. Taking into account its earlier intervention in similar circumstances in M/s. Karnataka Chinmaya Seva Trust Vs. Joint Commissioner of Central Tax, the Court set aside the order dated 30 November 2021 and restored the proceedings. The petitioner was permitted to file a response along with all documents before the Assistant Commissioner by 30 September 2026, subject to depositing 10% of the tax in demand by the same date, with such deposit being subject to the outcome of the restored proceedings.
Cases Discussed
- M/s. Karnataka Chinmaya Seva Trust Vs. Joint Commissioner of Central Tax — W.P. No. 11154/2023 and connected matters, decided on 03.07.2024 — Karnataka High Court referred to this decision as involving very similar circumstances where the Court had intervened to restore proceedings and provide the taxable person an opportunity to file a detailed response on terms.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
A short question is presented for consideration in this petition, which is filed challenging, rather belatedly, the order dated 30.11.2021 under Section 72 of the Finance Act, 1994 [Annexure–B]. The impugned order is for the tax period between 2014-15 and 2017-18, and this order is based on the information received from the Central Board of Direct Taxes on the gross receipts returned by the petitioner. The question is whether this Court must interfere with the impugned order to restore the proceedings for reconsideration.
2. Mr. Halesha R G, the learned counsel for the petitioner, submits that the petitioner was not served with the notice and the proceedings are concluded based on the information about the IT Returns filed by the petitioner for these assessment years without examining whether the services extended by the petitioner [Works Contract for the third parties] excludes the value of the goods, and the learned counsel submits that this would be significant because the service tax on the value of the goods is exempted subject to conditions. Mr. Aravind V. Chavan, the learned Standing Counsel for the respondents, submits that the petitioner has invoked this Court’s jurisdiction five years after the order and without responding to the notices caused prior to the impugned order.
3. The question presented is examined in the light of the fact that the impugned order is premised in the information received from the Central Board of Direct Taxes and the petitioner’s failure to provide the details of the sales/services as also the fact that in very similar circumstances, this Court has intervened to restore the proceedings with an opportunity to the taxable person to file a detailed response on terms.
4. In this regard, this Court could refer to the decision in M/s. Karnataka Chinmaya Seva Trust Vs. Joint Commissioner of Central Tax in W.P. No.11154/2023 and connected matters dated 03.07.2024. In the light of these circumstances, the petition is allowed in-part, and the impugned order dated 30.11.2021 [Annexure–B] is set aside. The petitioner is reserved with liberty to file a response with all the documents with the second respondent by 30.09.2026. The petitioner shall by this date also deposit 10% of the tax in demand subject to the outcome in the restored proceedings.
