By TIOL News Service

BANGALORE, OCT 26, 2017: THE High Court of Karnataka, in a recent order, expressed its displeasure with an order of re-assessment passed by the revenue authorities in a matter involving State Value Added Tax. The Court was piqued by the fact that the revenue authorities had followed a decision of the Division bench of the same High Court, but instead of providing elaborate reasons to establish the applicability of such precedent onto the present case, had made only a passing reference to it. Thus, the High Court sternly held that departmental authorities following or differing in opinion with any decision of any Constitutional court, were obliged to record cogent reasoning, reflecting the train of thought that led to either conclusion. It also held that omission to do so by the authorities would amount to violation of hierarchical judicial discipline, inviting possible disciplinary action or contempt action against them.

With such observations, the High Court remanded the matter back to the Assessing authority concerned, for de novo proceedings. Facts of the case - The assessee company was aggrieved by an order of re-assessment passed by the revenue. Such order was passed in pursuance of the directions of the Single Judge of the High Court, directing the revenue to accept the revised returns filed by the assessee under Rule 131 of the Karnataka Value Added Tax Rules, 2005 with additional tax liability disclosed by the assessee in such revised returns. The assessee claimed that the revenue authority accepted some of these monthly revised returns while rejecting some of these returns on grounds that such rejected revised returns did not indicate any additional tax liability and proof of payment thereof. The High Court held that - ++ though the Assessing Authority has referred to the said Division Bench's judgment, it appears that he has not fully understood the ratio of the same or has not carefully examined the facts of the case in the light of the aforesaid Division Bench judgment. The matter, therefore deserves to be remanded to the Assessing Authority for passing fresh orders for each month separately, accepting all the revised returns for the period July 2005 to March 2006 and after considering the case of assessee on merits, discussing the facts of the case each month, detailed objections of the assessee for each month separately in the light of the aforesaid Division Bench judgment of this Court. ++ this Court also takes exception to the pedantic approach of the Assessing Authority in not fully discussing the judgment of Division Bench and just a mention of it in the order, is not sufficient.

++ the judgments of Constitutional Courts have to be discussed in detail and if the Authorities below still have to take a different view in the facts of the case, they should record their own reasons in detail for doing so, so that the higher Appellate Authorities or the Constitutional Courts when dealing with their orders have an opportunity to see their appropriate application of mind to the judgments delivered by the Constitutional Courts. If that is not done, then it would be taken as utter disregard of the judgments of the Constitutional Courts and may even drag such Authorities in the realm of judicial indiscipline and consequential disciplinary action or even contempt action against them, if such casual references, not distinguishing the same with cogent reasons is found out. ++ this Court is not making any further comments in this case with a note of caution to the Authorities of not only this Respondent– Department of Commercial Taxes, but for all other Government Departments, who are supposed to deal with the facts of each case before them in the light of the judgments cited before them and only with proper recording of reasons, they can either distinguish those judgments, otherwise, being bound they have to follow the same. ++ the judgments of the Constitutional Courts can be altered, modified or reversed only by the superior Constitutional Courts of larger strength or hierarchy, but they are not allowed to be casually referred and forgotten or not followed for good reason to be recorded by the Authorities below the Constitutional Courts. Otherwise the very purpose of maintaining the hierarchical judicial discipline will be lost.

(See 2017-TIOL-2236-HC-KAR-VAT)