The Karnataka High Court has held that the District Magistrate is empowered to attach the property and not the Commissioner of Bengaluru Mahanagara Palike Commissioner (BBMP)in order to recover the sales tax dues.
The single bench of Justice S.P Sandesh has observed that the Commissioner of BBMP, has no authority to attach the property as ordered by the Special JMFC (Sales Tax) Court and it ought to be enforced under Section 421(1)(b) of Cr.P.C, through the collector of the District.
The petitioner/assessee, a proprietorship concern has been engaged in the catering business. the department held that the petitioner is liable to pay Sales Tax at the rate of 12% on the sale of food articles and accordingly levied a tax of Rs.35,25,376/- under the Karnataka Sales Tax Act, 1957.
Counsel for the petitioner has contended that the firm is not earning any profit on the sale of food in the Canteens such sale is exempted. If the goods are not liable to be taxed under the Act, such goods are brought under Section 8 of the K.S.T. Act and such goods are exempt from payment of tax.
In view of the order passed under Section 12(3) of the KST Act, the respondent/department has issued the demand notice in Form 6 and demanded the amount for the assessment year 2001-2002. The department has granted 21 days time to pay the arrears of tax. On account of nonpayment, a petition was filed under Section 13(3)(b) of the KST Act to recover the said amount. In order to recover the amount, the Special JMFC (Sales Tax) Court issued an order through the Commissioner, BBMP to attach and affect encumbrance of the amount.
Counsel for the petitioner has urged that the Special JMFC (Sales Tax) Court ought not to have issued the order of attachment of property through BBMP Commissioner. Section 421 of Cr.P.C., for Warrant for levy of fine, particularly, clause (b) of Section 421, wherein, it is specifically mentioned issue a warrant to the Collector of the District, authorizing him to realize the amount as arrears of land revenue from the movable or immovable property or both, of the defaulter.
On the other hand, a Government Pleader appearing for the department has submitted that when the amount was not paid, the order was passed by the Special JMFC (Sales Tax) Court, Bengaluru.
The High Court held that there is no dispute with regard to the fact that the recovery proceedings are initiated based on the order.
“When the petition is filed before the learned Special JMFC (Sales Tax) Court invoking Section 421 of Cr.P.C., issued the warrant and the same is as per Section 421(2) of Cr.P.C., which says only the District Magistrate is empowered to attach the property not the Commissioner, BBMP. When such being the case, the order requires interference of this Court since the Commissioner of BBMP., has no authority to attach the property as ordered by the Special JMFC (Sales Tax) Court and the same can be enforced under Section 421(1)(b) of Cr.P.C, through the collector of the District. Hence, it requires the interference of this Court,” the Court said.
M/s. PRASHANTHI AFFILIATES vs THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES
CITATION: 2022 TAXSCAN (HC) 121
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