WIPRO LIMITED INFOTECH GROUP REPRESENTED BY ITS REGIONAL FINANCE MANAGER, SRI. B.C. SHASHIDHARA Vs. THE STATE OF KARNATAKA REPRESENTED BY DEPUTY COMMISSIONER OF COMMERCIAL TAXES (RECOVERY-I)

JUDGEMENT

(1.) THE petitioner a public limited company incorporated under the Companies Act, 1956 and a registered dealer since 1981 engaged, inter alia, in the manufacture and marketing of computer hardware and software, received a purchase, order stipulating "all inclusive" price from customers in relation to the products dealt with by it, during the assessment year 2001 -02, whence invoices were raised using "Symix Accounting System" developed by Symix India Corporation Limited, though incorporated a particular code to calculate the tax at the applicable rate, after apportioning the basic price nevertheless the rate of tax was calculated at 4% instead of 2%, by mistake, and that in the return for the year 2001 -02, Rs. 4,20,77,954 was declared as "CST Collected", are the statement of facts in the petition.

(2.) THE Deputy Commissioner of Commercial Taxes(Transition -I), Mysore, the Assessing Authority issued a penalty notice dated 23.5.2005 pointing out that the petitioner -Assessee company collected Rs. 4,20,77,954 from the customers towards 'CST' at the rate of 4% as verified from the books of accounts and in respect of which exemption when claimed was allowed, in other words, petitioner having collected Rs. 97,91,629.00 representing the excess 2% of tax in contravention of Section 18 of the Karnataka Sales Tax Act, 1957 (for short "K.S.T. Act, 1957") was liable for penalty and hence the Assessing Authority invoked Section 9(2) of the Central Sales Tax Act, 1956 (for short "C.S.T. Act, 1956") read with Section 18 -A of the K.S.T. Act, 1957 and issued the penalty notice dated 23.5.2005. Thereafter, by an order dated 25.10.2005 Annexure -"A", the Assessing Authority imposed a penalty of Rs. 9,79,163.00 representing 10% of Rs. 97,91,629.00 the excess tax collected. That order when carried in appeal registered as CST/AP. 13/2005 -06 before the Joint Commissioner of Commercial Taxes, Mysore Division, Mysore, was dismissed by order dated 28.1.2006 Annexure -"B" Aggrieved by the said order, petitioner preferred STA. No. 260/06 before the Karnataka Appellate Tribunal at Bangalore, which when clubbed with STA. Nos. 259 and 261/06 was dismissed by a common order dated 19.12.2008, impugned herein. Hence, this petition.

(3.) THERE is no dispute that Sub -section 2 of Section 9 of the C.S.T. Act, 1956 empowers the authority to impose and collect penalty while Section 18 -A of the K.S.T. Act, 1957 provides for penalty for collection in contravention of Section 18, which mandates that a registered dealer shall not collect any amount by way of tax at a rate or rates exceeding the rate or rates at which he is liable to pay tax under the Act. Section 18 -A of the K.S.T. Act, 1957 makes it abundantly clear that where any amount is calculated by way of tax or purporting to be by way of tax from any person by any dealer in contravention of Section 18, whether knowingly or not, such dealer shall pay the entire amount so collected, to the assessing authority within twenty days alter the close of the month in which such amount was collected, notwithstanding that the dealer is not liable to pay such amount as tax or that only a part of it is due from him as tax under the Act.