Case Note & Summary
The petitioner, E. Ramamurthy, was a dealer engaged in the extraction and sale of iron ore. He died on 05.08.2006, after the relevant assessment period, and his son and legal heir, R. Praveen Chandra, was brought on record. For the assessment period covering May, June, July, August, October, November 2005 and February, March 2006, the assessee had exported iron ore worth over Rs. 43 crores. However, for export sales amounting to Rs. 9,70,80,387/-, the assessee did not furnish the required declaration in Form-H under the Central Sales Tax Act, 1956 (CST Act) to substantiate the claim that these sales were exempt from tax as export sales. The assessee had shown these sales as export sales in the returns filed. The assessing authority imposed a penalty under Section 9(2) of the CST Act read with Section 63 of the Karnataka Value Added Tax Act, 2003 (KVAT Act) for non-furnishing of Form-H. The assessee appealed to the Karnataka Appellate Tribunal, which upheld the penalty. The assessee then filed revision petitions under Section 65(1) of the KVAT Act before the High Court. The High Court allowed the revision petitions, holding that the penalty was not justified. The court reasoned that the assessee had actually exported the goods, and the failure to furnish Form-H was due to the death of the assessee and the subsequent inability to obtain the declaration from the foreign buyer. The court noted that the assessee had shown the sales as export sales in the returns, indicating no intention to evade tax. The court set aside the order of the Tribunal and the penalty imposed, directing the assessing authority to treat the sales as export sales and allow the exemption.
Headnote
A) Central Sales Tax - Export Sales Exemption - Form-H Declaration - Penalty - The assessee exported iron ore but failed to furnish Form-H declarations for certain export sales due to the death of the assessee and inability to obtain the declaration from the foreign buyer - The Tribunal upheld the penalty imposed under Section 9(2) of the CST Act read with Section 63 of the KVAT Act - Held that the penalty was not justified as the assessee had exported the goods and the failure to furnish Form-H was due to circumstances beyond his control, and the assessee had shown the sales as export sales in the returns (Paras 1-4).
Issue of Consideration
Whether penalty can be imposed under Section 9(2) of the Central Sales Tax Act, 1956 read with Section 63 of the Karnataka Value Added Tax Act, 2003 for non-furnishing of declaration in Form-H to substantiate export sales exemption, when the assessee had exported the goods and the failure to furnish Form-H was due to the death of the assessee and subsequent inability to obtain the declaration from the foreign buyer.
Final Decision
The High Court allowed the revision petitions, set aside the order of the Karnataka Appellate Tribunal dated 07.08.2014 and the penalty imposed, and directed the assessing authority to treat the sales as export sales and allow the exemption.
Law Points
- Penalty for non-furnishing of Form-H declaration
- Export sales exemption under CST Act
- Section 9(2) of CST Act
- Section 63 of KVAT Act
- Reasonable cause for non-compliance
Case Details
2015 LawText (KAR) (08) 8
T.N. Keshava Murthy (for petitioner), T.K. Vedamurthy (HCGP for respondent)
E. Ramamurthy (deceased) by his legal heir R. Praveen Chandra
State of Karnataka, rep. by the Commissioner of Commercial Taxes
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Nature of Litigation
Revision petitions under Section 65(1) of the Karnataka Value Added Tax Act, 2003 against the order of the Karnataka Appellate Tribunal upholding penalty for non-furnishing of Form-H declarations.
Remedy Sought
The assessee sought setting aside of the Tribunal's order and the penalty imposed for non-furnishing of Form-H declarations.
Filing Reason
The assessee failed to furnish Form-H declarations for certain export sales of iron ore, leading to imposition of penalty under Section 9(2) of the CST Act read with Section 63 of the KVAT Act.
Previous Decisions
The assessing authority imposed penalty; the Karnataka Appellate Tribunal upheld the penalty.
Issues
Whether penalty under Section 9(2) of the CST Act read with Section 63 of the KVAT Act is justified when the assessee had exported the goods but failed to furnish Form-H declarations due to the death of the assessee and inability to obtain the declaration from the foreign buyer.
Submissions/Arguments
The assessee argued that the goods were actually exported and the failure to furnish Form-H was due to the death of the assessee and subsequent inability to obtain the declaration from the foreign buyer, and that the sales were shown as export sales in the returns.
The respondent argued that the penalty was rightly imposed as the assessee failed to furnish the required declaration in Form-H.
Ratio Decidendi
Penalty under Section 9(2) of the CST Act read with Section 63 of the KVAT Act cannot be imposed for non-furnishing of Form-H declarations when the assessee had actually exported the goods and the failure to furnish the declaration was due to circumstances beyond the assessee's control, such as the death of the assessee and inability to obtain the declaration from the foreign buyer, and the assessee had shown the sales as export sales in the returns, indicating no intention to evade tax.
Judgment Excerpts
These revision petitions have been filed by the assessee challenging the order dated 07.08.2014 passed by the Karnataka Appellate Tribunal whereby the Tribunal has upheld the imposition of penalty for non-furnishing of declaration in Form-H under the Central Sales Tax Act, 1956 to substantiate its claim that certain items in question which were sold for export would be exempted from payment of tax.
The brief facts of the case are that the petitioner-E.Ramamurthy, who was doing business of extraction and sale of iron ore, died on 05.08.2006, which was after the relevant assessment period and thus, his son and legal heir R.Praveen Chandra was brought on record.
For the relevant assessment period the assessee had exported iron ore to the tune of over Rs.43 crores. However, for the export of iron ore amounting to Rs.9,70,80,387/-, the relevant declaration in Form-H had not been furnished, although in the returns filed by the assessee, such sales had been shown as export sales.
Procedural History
The assessing authority imposed penalty under Section 9(2) of the CST Act read with Section 63 of the KVAT Act for non-furnishing of Form-H declarations. The assessee appealed to the Karnataka Appellate Tribunal, which upheld the penalty. The assessee then filed revision petitions under Section 65(1) of the KVAT Act before the High Court of Karnataka.
Acts & Sections
- Central Sales Tax Act, 1956: Section 9(2)
- Karnataka Value Added Tax Act, 2003: Section 63, Section 65(1)
