1 R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE7H DAY OF SEPTEMBER, 2016 PRESENT THE HON'BLE MR. JUSTICE JAYANT PATEL AND THE HON’BLE MR. JUSTICE S.N.SATYANARAYANA S.T.R.P. NO.201 OF2015AND S.T.R.P. NO.229 OF2016BETWEEN: CANARA LIGHTING INDUSTRIES PVT. LIMITED MULKI KINNIGOLY, AIRPORT ROAD PUNAROR, MANGALURU-574 179 REPRESENTED BY SRI.AJEET KHARE THE DIRECTOR. ... PETITIONER (By SMT.VANI.H., ADV.) AND: THE STATE OF KARNATAKA DEPARTMENT OF FINANCE BY ITS SECRETARY VIDHANA SOUDHA AMBEDKAR VEEDHI BANGALORE-560 001. ... RESPONDENT (By SRI.T.K.VEDAMURTHY, AGA) THESE STRPs ARE FILED UNDER SECTION651) OF THE KARNATAKA VALUE ADDED TAX ACT, 2003 READ WITH SECTION92) OF THE CENTRAL SALES TAX ACT, 1956, AGAINST THE JUDGMENT
AND DECREE DATED3001.2015 PASSED IN STA NO.2124 AND21252013 ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL BENGALURU (CH4, 2 DISMISSING THE APPEALS FILED UNDER SECTION63OF THE KARNATAKA VALUE ADDED TAX. THESE STRPs COMING ON FOR ADMISSION, THIS DAY, JAYANT PATEL J, MADE THE FOLLOWING: FINAL ORDER
2. Mr.T.K.Vedamurthy, learned AGA waives notice of rule.
3. With the consent of learned advocates appearing on both sides, the petitions are finally heard.
4. The only question that may arise for consideration is that, if the material is supplied in response to the tender invited in the name of President of India, whether it has to be considered under the Central Government or not.
5. The short facts of the case appears to be that as per the petitioner, it had supplied material in response to the tender published by the Prasara 3 Bharathi, a statutory body, but the tender was in the name of President of India for procurement of certain material. As per the petitioner, it had supplied material and thereafter, declarations in Form-C and Form-D were filed. The returns were filed by the petitioner. However, in the re-assessment proceedings under the provisions of the Central Sales Tax Act, 1956 (for short ‘CST Act’) r/w the Karnataka Value Added Tax Act, 2003 (for short ‘KVAT Act’), exemption from tax was denied on the ground that the claim made in Form-D declaration was unavailable and the tax was levied with interest and the penalty was also levied.
6. The petitioner, being aggrieved by the order of the Assessing Authority, carried the matter in appeal before the first appellate authority. But, the first appellate authority found that Prasara Bharathi is not a Central Government Department and therefore dismissed the appeal. The petitioner further carried the matter before the Tribunal and the 4 Tribunal also found that Prasara Bharathi, though comes under the administration, control of the Central Government through Ministry of Broadcasting, it is not the Central Government itself and therefore, the Tribunal dismissed the appeal. In these circumstances, the present petitions are filed before this Court.
7. We have heard Smt.Vani H, learned counsel appearing for the petitioner and Mr.T.K.Vedamurthy, learned AGA appearing for the respondent.
8. In order to consider the question, we may find that the reference to Section 8(4) of the CST Act, would be relevant and the same reads as under: (1) xxxx (2) xxxx (3) xxxx “8. Rates of tax on sales in the course of inter-State trade or commerce- (4) The provisions of sub-section(1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods the prescribed authority in the prescribed manner- furnishes to 5 if the to goods are (a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or (b) the Government, not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorized officer of the Government: Provided that the declaration referred to in clause (a) is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit.” sold 9. The aforesaid proviso shows that, if the registered dealer files a declaration for the goods sold to the Government, the provision of sub-section(1) shall not apply to any sale in the course of inter-state trade or commerce. As we are not required to examine the other facet of Section 8 of the Act, we need not discuss the same, but suffice it to observe that by virtue of sub-section (4) of Section 8, if the declaration is filed for the goods sold to the Government, the benefit as contemplated under sub-section(4) of Section 8 should be made available. 6 10. Learned counsel appearing for the petitioner contended that though the tender was published through Prasara Bharathi, but it was in the name of the President of India and therefore, the declaration so filed cannot be said to be wrong nor it can be said that the goods were sold to any other person other than the Government. Whereas, learned AGA appearing for the respondent contended that Section 8(4) of the CST Act speaks for the word “Government” and not any other statutory body or any other independent body though may be under the control of the Central Government or any Government. He submitted that if it is a case that the goods sold to any other statutory body, the benefit of Section 4 would be unavailable. He submitted that lower authorities have rightly held that Prasara Bharathi is different that of Central Government or Union Government and hence, the benefit was not available to the petitioner for declaration so filed and hence the tax has rightly been assessed. 7 11. The word “Government” is not defined under the CST Act. Therefore, we may refer to Section 3(8)(a) of the General Clauses Act, 1897, which reads as under:
8) "Central Government" shall- (a) in relation to anything done before the commencement of the Constitution, means the Governor-General or the Governor General in Council, as the case may be; and shall include- (1) of section 124 of (i) in relation to functions entrusted under sub-section the Government of India Act, 1935, to the Government of a Province, the Provincial Government acting within the scope of the authority given to it under that sub-section; and (ii) in relation to the administration of a Chief Commissioner’s Chief Commissioner acting within the scope of the authority given to him under sub-section (3) of section 94 of the said Act; and Province, the 12. When General Clauses Act was enacted, the Constitution of India was not in force, but the Government of India Act, 1935 was in force and that is why the language used was Governor General or the Governor General in Council. A reference can 8 also be made to Article 299 of the Constitution, which reads as under: “299. Contracts: (1) All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorize. (2) Neither the President nor the Governor shall be personally liable in respect of any contract or assurance made or executed for the purposes of this Constitution, or for the purposes of any enactment relating to the Government of India heretofore in force, nor shall any person making or executing any such contract or assurance on behalf of any of them be personally liable in respect thereof.” 13. The aforesaid Article shows that for all contracts in exercise of the executive power for the Union or the State would be made by the President or the Governor of the State as the case may be. Hence, 9 when the contract is entered into or procurement of the material is by the President of India in case of Union Government or Governor of the State in the case of State of Karnataka, they are by the Central Government or Union Government and the State Government respectively.
14. The petitioner, during the course of hearing, has produced the tender documents. As per the said tender documents the name of the purchaser is mentioned as the President of India. Even in the notice inviting tender, it has been mentioned under the head ‘Description’ as under: “Sealed tenders are hereby invited for and on behalf of the President of India from reputed firms for the work of Supply, Installation, testing and Commissioning of Moving Lighting Grids and Dimmer Console at DDK Chennai.” (Emphasis Supplied) 15. The aforesaid shows that for the procurement of the material, the tenders were invited for and on behalf of the President of India and the 10 name of the purchaser in the tender document was President of India. In our view, it can be said that it was for and on behalf of the Union Government through President of India and the paying authority may be the Chief Engineer of All India Radio or may be Prasara Bharathi. But, once the procurement of material was in the name of the President of India and in response to that tender the petitioner has supplied the material, it can be said as goods sold to the Central Government.
16. However, learned AGA contended that these tender documents were not produced before any of the authority and he submitted that the said documents are coming on record for the first time. Therefore, the authority had no occasion to examine as to whether these tender documents ever exist or not, nor it was verified at the relevant point of time. He submitted that mere documents produced for the first time, this Court may not finally rule as to whether the petitioner would be entitled to the benefit 11 of sub-section(4) of Section 8 of the CST Act, as if the material goods sold to the Government or not.
17. In our view, the question can be examined from two angles. One is to examine as to who could be said as falling within the meaning of the word “Government” and the second is, the verification thereof. As observed by us herein above, if the procurement or the supply of material is in the name of the President of India, it is a supply to the Government. On the aspect of verification thereof, the matter can be relegated to the first Assessing Authority and if it is found that the procurement was in the name of the President of India and in response to the said tender the goods are sold by the petitioner to the President of India, may be through Prasara Bharathi or any other organization or authority, then the petitioner would be entitled to the benefit of Section 8(4) of the CST Act. Once the entitlement of the benefit is found, the assessment would be different, but suffice it to observe that it is only after 12 the verification, a consequential order may be required to be passed by the Assessing Authority.
18. Learned AGA appearing for the respondent submits that the matter be remanded to the Tribunal for reconsideration instead of Assessing Authority.
19. Considering the facts and circumstances of the case, if the Tribunal finds as prima facie observed by us earlier that it was a case of goods sold to the President of India, then also, the matter will have to be remanded by the Tribunal to the Assessing Authority instead that if the matter is remanded by us to the Assessing Authority, that could be a better course since the Assessing Authority would be in a position to examine and may also call for other documents, if required for verification or otherwise. Hence, we find that the matter should be relegated to the first Assessing Authority. 13 20. In view of the aforesaid observation and discussion, the question formulated earlier is answered in the affirmative, inasmuch as, if the goods are supplied or procured in the name of the President of India or supplied in response to the tender published in the name of the President of India, it has to be treated as goods sold to the Government (Union Government) and the benefit of Section 8(4) of the CST Act would be available to the petitioner. The point of law is decided accordingly. However, on the aspect of verification thereof, the matter will have to be remanded to the Assessing Authority.
21. Hence, the impugned orders passed by the Assessing Authority and confirmed thereof by the first appellate authority as well as by the Tribunal are quashed and set aside with the direction to the *assessing authority that the reassessment proceedings shall stand restored. The Assessing Authority shall get the record, verify and after giving *corrected vide Court Order dated 18.08.2017 14 an opportunity to the petitioner to produce additional documents in support of its contention, it shall pass appropriate orders taking into consideration the observations made on the point of law by this Court in the present order. The said exercise may be completed preferably within a period of four months from the date of receipt of certified copy of the order of this Court.
22. The revision petitions are allowed to the aforesaid extent. Considering the facts and circumstances of the case, no order as to costs. Rule made absolute accordingly. Sd/- JUDGE Sd/- JUDGE TL