ABDUL GAFOOR Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) ALL these petitions are by dealers under the Karnataka Sales Tax Act, 1957 (for short, "the Act"), who are aggrieved by the orders passed by the Commercial Tax Officers at check-posts and the Commercial Tax Officer, Mobile Squad, who had occasion to intercept the goods vehicles carrying the goods taxable under the Act. In all these instances, the respondent-officers having passed orders in exercise of the power under Section 28-AAA of the Act for effecting compulsory purchase of the goods in question at the price as declared in the supporting documents and the petitioners having been deprived of such goods and in the light of the orders being entitled to receive only the price as had been indicated therein, are before this court challenging the legality of these orders, while also questioning the constitutional validity of the very provision, namely, Section 28-AAA of the Act, which reads as under: 28-AAA. Power to purchase in case of undervaluation of goods to evade tax.-(1) Where in respect of goods liable to tax under this Act, carried in a goods vehicle or boat or held in stock by any dealer or on his behalf by any other person or held in custody of any transporter, the assessing authority or any officer empowered under Section 28 or 28-A, has reason to believe that the value shown in the document accompanying the goods in transit or the purchase invoice, is lower than the prevailing market price or fair market value or MRP by a difference of thirty per cent or more, such authority or officers, for reason to be recorded in writing, may purchase such goods. (2) The power under Sub-section (1) shall not be exercisable unless the person or dealer being dispossessed of such goods, is afforded reasonable opportunity of being heard. (3) The price payable for purchase of such goods shall be the total price as mentioned in the invoice, challan, delivery note, stock transfer memo, or any other related document plus the cost of transportation of the goods incurred up to the time of purchase, if any. (4) In determining whether or not the price shown in the invoice, challan, delivery note, stock transfer memo, or any other related document involves undervaluation, in the case of owner of the goods other than an owner carrying on business in packaged goods, the authority exercising the power under Sub-section (1) shall apply the prevailing market price or fair market value and in the case of an owner carrying on business in packaged goods, shall apply the maximum retail price. (5) Any person objecting to an order affecting him under this section by,- (i) Any officer below the rank of Joint Commissioner, may appeal to the Joint Commissioner ; (ii) A Joint Commissioner of Commercial Taxes, may appeal to the Appellate Tribunal ; (6) Such appeal shall be dealt with as if it were an appeal filed under Section 20 or Section 22, as the case may be, and all the provisions of that section shall mutatis mutandis apply to such appeal. (7) The authority or officer purchasing goods in exercise of the powers of Sub-section (1) subject to provisions of Sub-section (6), shall dispose of the goods in public auction within thirty days from the date of such purchase and for value not less than the price paid to the owner of the goods. The sale proceeds so realised should forthwith be paid into the Government treasury. Explanation.-For the purposes of this section, (i) 'Prevailing market price' shall mean the published wholesale price in force in the market at about the time proceedings are taken to purchase such goods ; (ii) 'Fair market value' shall mean the price at which the goods are generally bought or sold in the market by dealers in such goods at about the time proceedings are taken to purchase such goods ; (iii) 'MRP' or 'Maximum Retail Price' shall mean the price marked on the package in which the goods are contained ; (iv) 'Published' shall mean published in any newspaper, journal or periodical or notified by a market committee or any such authority.

(2.) THE respondents had been put on notice, having entered appearance through Ms. Niloufer Akbar, learned Additional Government Advocate, appearing for the department, and have also filed statement of objections and additional statement of objections.

(3.) ONE another reason is that as the petitioners had also impugned the validity of the orders and even a cursory scrutiny into the legality and correctness of these orders has revealed that they are suspect and if the orders themselves are not sustainable, the question of examining the constitutional validity of the provisions of Section 29-AAA of the Act does not arise in these petitions.