Writ Petition No. 15955 of 2019 · The High Court
Case Details
- 1 - NC: 2025:KHC:19005 WP No. 15955 of 2019 C/W WP No. 15956 of 2019 HC-KAR IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF JUNE, 2025 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 15955 OF 2019 (T-RES) C/W WRIT PETITION NO. 15956 OF 2019 (T-RES) IN WP No. 15955/2019 BETWEEN: M/S. JMC CONSTRUCTIONS PVT. LTD., SKS REFINERIES PVT. LTD., PREMISES, GBN ROAD, MADHUGIRI, TUMKUR-572 132, REP. BY AUTHORIZED SIGNATORY, MR. A. MADAN MOHAN, AGED ABOUT 31 YEARS, S/O. SRINIVASALU. …PETITIONER (BY SMT. MAMATHA ROY.,ADVOCATE) AND: 1. THE STATE OF KARNATAKA REPRESENTED BY ITS FINANCE SECRETARY, VIDHANA SOUDHA, BANGALORE-560 001.
Legal Reasoning
Digitally signed by VANAMALA N Location: High Court of Karnataka - 2 - NC: 2025:KHC:19005 WP No. 15955 of 2019 C/W WP No. 15956 of 2019 HC-KAR 2. THE COMMISSIONER OF COMMERCIAL TAXES VANIJYA THERIGE KARYALAYA, 1ST FLOOR, GANDHINAGAR, BANGALORE-560 009. 3. THE COMMERCIAL TAX OFFICER (AUDIT) MADHUGIRI, TUMKUR DISTRICT-572 132. 4. KMC-JMC (JV) HAVING OFFICE AT SHS REFINERIES PVT. LTD., PREMISES, GNB ROAD, MADHUGIRI-572 132 REP BY ITS AUTHORISED SIGNATURE.
Legal Reasoning
(BY SMT. JYOTHI M.M., HCGP FOR R1 TO R3; R4 IS SERVED) …RESPONDENTS THIS WP IS FILED UNDER ARTICLES 226 OF THE CONSTITUTION OF INDIA PRAYING TO-QUASH THE REASSESSMENT ORDER NO.325038537 DATED 14.02.2019 VIDE ANENXURE-C, PASSED BY THE R-3 UNDER THE KARNATAKA VALUE ADDED TAX ACT, 2003, FOR THE ASSESSMENT YEAR APRIL 2013 TO MARCH 2014; QUASH THE DEMAND NOTICE NO.102642114 DATED 14.02.2019 VIDE ANNEXURE-D ISSUED BY THE R-3, CALLING UPON THE PETITIOENR TO REMIT THE TAX, INTEREST AND PENALTY - 3 - NC: 2025:KHC:19005 WP No. 15955 of 2019 C/W WP No. 15956 of 2019 HC-KAR REASSESSED UNDER THE PROVISIONS OF THE KARNATAKA VALUDE ADDED TAX ACT, 2003, FOR THE ASSESSMENT YEAR APRIL 2013 TO MARCH 2014; QUASH TEH NOTICE DATED 03.04.2019 VIDE ANNEXURE-H ISSUED BY THE R-3 U/S 45 OF THE KVAT ACT ONLY IF RELATES ASESSMENT YEAR 2013- 14; QUASH THE CIRCULAR NO.21/2014-15 DATED 23.12.2014 VIDE ANNEXURE-E INSOFAR AS TI HOLDS THAT TAX DEDUCTED AT SOURCE UNDER THE PROVISIONS OF THE KVAT ACT IN THE HANDS OF THE MAIN CONTRACTOR CANNOT BE ADJUSTED AGAINST THE SUBCONTRACTOR'S LIABILITY. IN WP NO. 15956/2019 BETWEEN: M/S. JMC CONSTRUCTIONS PVT. LTD., SKS REFINERIES PVT. LTD., PREMISES, GBN ROAD, MADHUGIRI, TUMKUR-572 132. REP. BY AUTHORIZED SIGNATORY, MR. A. MADAN MOHAN, AGED ABOUT 31 YEARS, S/O. SRINIVASALU. (BY SRI. MAMATHA ROY.,ADVOCATE) ...PETITIONER AND: 1. THE STATE OF KARNATAKA REPRESENTED BY ITS FINANCE SECRETARY, - 4 - NC: 2025:KHC:19005 WP No. 15955 of 2019 C/W WP No. 15956 of 2019 HC-KAR VIDHANA SOUDHA, BANGALORE-560 001. 2. THE COMMISSIONER OF COMMERCIAL TAXES VANIJYA THERIGE KARYALAYA, 1ST FLOOR, GANDHINAGAR, BANGALORE-560 009. 3. THE COMMERCIAL TAX OFFICER (AUDIT) MADHUGIRI-572 132. 4. KMC-JMC (JV) HAVING OFFICE AT SHS REFINERIES PVT. LTD., PREMISES, GNB ROAD, MADHUGIRI-572 132. (BY SMT, JYOTHI M.M., HCGP FOR R1 TO R3) ...RESPONDENTS (ANNEXURE-D) THIS WP IS FILED UNDER ARTICLES 226 OF THE CONSTITUTION OF INDIA PRAYING TO-QUASH THE REASSESSMENT ORDER NO.320038521 DATED 14.02.2019 (ANNEXURE-C) PASSED BY THE R-3 UNDER THE KARNATAKA VALUE ADDED TAX ACT, 2003, FOR THE ASSESSMENT YEAR APRIL 2014 TO MARCH 2015; QUASH THE DEMAND NOTICE NO.155642109 DATED 14.02.2019 ISSUED BY THE R-3, CALLING UPON THE PETITIONER TO REMIT THE TAX, INTEREST AND PENALTY REASSESSED UNDER THE PROVISIONS OF THE KARNATAKA VALUE ADDED TAX ACT, 2003, FOR THE ASSESSMENT YEAR APRIL 2014 TO MARCH 2015; QUASH THE NOTICE NO. CTO(A)/M. GIRI/121/2018-2019, DATED 03.04.2019 (ANNEXURE- H) ISSUED BY THE R-3 U/S 45 OF THE KVAT ACT; QUASH THE CIRCULAR NO.21/2014-15 DATED 23.12.2014 (ANNEXURE-E) INSOFAR AS IT HOLDS THAT TAX DEDUCTED AT SOURCE UNDER THE PROVISIONS - 5 - NC: 2025:KHC:19005 WP No. 15955 of 2019 C/W WP No. 15956 of 2019 HC-KAR OF THE KVAT ACT IN THE HANDS OF THE MAIN CONTRACTOR CANNOT BE ADJUSTED AGAINST THE SUBCONTRACTOR'S LIABILITY. THESE PETITIONS, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE B M SHYAM PRASAD ORAL ORDER The petitioner in these writ petitions is aggrieved by the third respondent's reassessment orders dated 14.02.2019 [Annexure-C in each of the petitions] under the Karnataka Value Added Tax Act, 2003 [for short, 'the KVAT Act'] relevant to the period between April 2013 and March 2014 and between April 2014 and March 2015 and the consequential demand notices while calling in question the Circular dated 23.12.2014 [Annexure-E]. The third respondent admittedly has passed such reassessment orders relevant to the period between [i] April 2012 and March 2013, [ii] April 2013 and March 2014 and [iii] - 6 - NC: 2025:KHC:19005 WP No. 15955 of 2019 C/W WP No. 15956 of 2019 HC-KAR April 2014 and March 2015, and the petitioner has successfully challenged the reassessment order relevant to the period between April 2012 and March 2013 with a Division Bench of this Court allowing the writ appeal filed by the petitioner as against an order of a Co-ordinate Bench of this Court in W.A.No.100235/2018 [T-RES]. The Division Bench's conclusion in its material part reads as under: "61. In the instant case, the accretion of goods and/or transfer of property occurring to the employer on the submission of the running account (RA) bills by the main contractor, we conclude that the taxable event occurred on the presentation of the RA bills by the main contractor only and satisfaction of the Bills by the employer to the main contractor in lieu of the RA bills. It is a fact that no bill has been raised by the sub-contractor as against the employer nor is it the case of the Revenue that the employer has made any payments to the sub-contractor. It is not the case of the Revenue that accretion of goods - 7 - NC: 2025:KHC:19005 WP No. 15955 of 2019 C/W WP No. 15956 of 2019 HC-KAR or transfer of property to the employer has occurred in the hands of the sub- contractor/the petitioner herein. Had such a case being demonstrated that the accretion of goods and transfer of property in favour of the employer had been at the hands of the sub-contractor, then in the light of the law laid down by the Hon’ble Apex Court in the case L & T, the taxable event would have been at the hands of the sub- contractor. It is also not the case of the Revenue that the Main Contractor can step into the shoes of the Owner. We conclude so in the light of the provisions of sections 6 & 7 of the Act. We make it clear that the conclusion in respect of the taxable event will not exempt the dealer from submitting his returns or circumscribe the rights of the Revenue to seek for accounts and details as enabled under the Act. 62. In the instant case, the facts are peculiar. The execution of the contract is undoubtedly by the petitioner who again is admittedly is a sub- contractor. The RA bills or the running account bills have admittedly been raised by the main contractor and payments in lieu of the running bills are - 8 - NC: 2025:KHC:19005 WP No. 15955 of 2019 C/W WP No. 15956 of 2019 HC-KAR made in favour of the main contractor only and TDS is at the hands of the main contractor only and consequently the accretion of goods to the employer happened at the hands of the main contractor only. That being the case, the taxable event happened at the hands of the main contractor only. In that view of the matter, the accretion of goods and transfer of property being the taxable event, the same was at the hands of the main contractor and TDS has been suffered in the hands of the main contractor and there being no taxable event in the hands of the sub-contractor, we are of the considered view that in the light of the law laid down by the Hon’ble Apex Court as stated supra,
Decision
the writ petition requires to be allowed." It is undisputed that in the light of these findings, the writ petition in WP No.15955/2019 relevant to the year between April 2013 and March 2014 and the writ petition in W.P.No.15956/2019 relevant to the year between April 2014 and March 2015 are allowed. Hence, the following: - 9 - NC: 2025:KHC:19005 WP No. 15955 of 2019 C/W WP No. 15956 of 2019 HC-KAR ORDER The petition is allowed, and third respondent's reassessment orders dated 14.02.2019 [Annexure-C] under the Karnataka Value Added Tax Act, 2003 relevant to the period between April 2013 and March 2014 and between April 2014 and March 2015 and the consequential demand notices are quashed Sd/- (B M SHYAM PRASAD) JUDGE SA ct:sr