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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD DAY OF APRIL 2016 BEFORE THE HON’BLE DR. JUSTICE VINEET KOTHARI W.P.No.7807/2016 (K-VAT) CONNECTED WITH W.P.No.9958/2016 & W.P.Nos.20155-20175/2016 (T-RES) W.P.No.16280/2016 (T-RES) W.P.Nos.16561-16584/2016 (T-RES) W.P.Nos.19196-19202/2016 (T-RES)
IN W.P.No.7807/2016
BETWEEN:
M/S. RENUKAMBA (THE BLUE STAR BAR & RESTAURANT) A PARTNERSHIP FIRM REGISTERED UNDER THE INDIAN PARTNERSHIP ACT, 1932 MOHAMMED GHOUSE BUILDING NEAR CORPORATION BANK B.H. ROAD, SHIVAMOGGA-577201. REPRESENTED BY ITS MANAGING PARTNER SRI. P. VENKATESH SHETY AGED ABOUT 49 YEARS.
... PETITIONER (BY SRI. K.J. KAMATH, ADV., FOR M/S. KAMATH & KAMATH, ADVS.,)
AND:
THE STATE OF KARNATAKA THROUGH SECRETARY (FINANCE) VIDHANA SOUDHA BANGALORE-560001.
ASSISTANT COMMISSIONER OF COMMERCIAL TAXES LOCAL VAT OFFICE-220 SUVARNA KARNATAKA VANIJYA TERIGE BHAVAN, 100 FEET ROAD A BLOCK, 12TH CROSS, GOPALAGOWDA EXTN. SHIVAMOGGA-577201.
... RESPONDENTS (BY SRI. T.K. VEDAMURTHY, AGA)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO HOLD THAT THE NOTIFICATION DATED 28.02.2014 AT ANNEX-A IS DISCRIMINATORY IN NATURE AND AS SUCH QUASH THE SAME AS UN- CONSTITUTIONAL AND ETC.,
IN W.P.No.9958/2016 & W.P.Nos.20155-175/2016
BETWEEN:
M/S. SAPTAGIRY BAR AND RESTAURANT N.T. ROAD, SHIVAMOGGA-577202 REPRESENTED BY ITS PROPRIETOR SRI. S.M. VENKATESH AGED ABOUT 57 YEARS.
... PETITIONER (BY SRI. K.J. KAMATH, ADV.,)
AND:
THE STATE OF KARNATAKA THROUGH SECRETARY (FINANCE) VIDHANA SOUDHA BANGALORE-560001.
ASSISTANT COMMISSIONER OF COMMERCIAL TAXES LOCAL VAT OFFICE-220 SUVARNA KARNATAKA VANIJYA
TERIGE BHAVAN, 100 FEET ROAD A BLOCK, 12TH CROSS, GOPALAGOWDA EXTN. SHIVAMOGGA-577202.
... RESPONDENTS (BY SRI. T.K. VEDAMURTHY, AGA)
THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO HOLD THAT THE NOTIFICATION DATED 28.02.2014 [ANNEX-A] ISSUED BY R1 IS DISCRIMINATORY IN NATURE AND AS SUCH QUASH THE SAME AS UN-CONSTITUTIONAL AND ETC.,
IN W.P.No.16280/2016
BETWEEN:
VENKATESH S/O THIMMAPPA GOWDA AGED ABOUT 45 YEARS PROP. OF M/S. MAHALAKSHMI BAR AND RESTAURANT MAHALAKSHMINAGAR B.H. ROAD, BATWADI TUMKUR-572103.
... PETITIONER (BY SRI. K.J. KAMATH, ADV.,)
AND:
THE STATE OF KARNATAKA THROUGH SECRETARY (FINANCE) VIDHANA SOUDHA BANGALORE-560001.
THE COMMISSIONER OF COMMERCIAL
TAXES IN KARNATAKA
GANDHINAGAR
BANGALORE-560 009
THE LOCAL VAT OFFICER-175
MAIN ROAD
TUMKUR-570024.
... RESPONDENTS (BY SRI. T.K. VEDAMURTHY, AGA)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO HOLD THAT THE NOTIFICATION ISSUED BY THE R-1 DATED 28.02.2014 [ANNEX-A] IS DISCRIMINATORY IN NATURE AND AS SUCH QUASH THE SAME AS UN-CONSTITUTIONAL AND ETC.,
IN W.P.Nos.16561-16584/2016
BETWEEN:
G. VENKATESH AGED ABOUT 58 YEARS, S/O. LATE M. GOVINDAPPA, PROP: OF M/S. NEO ALANKAR BAR AND RESTAURANT 240, K.R. HOSPITAL ROAD, MYSURU-570 001.
GOVINDARAJ H.T. AGED ABOUT 57 YEARS, S/O. H.G. THIMMAIAH, PROP: OF M/S. SANGEETHA BAR AND RESTAURANT, #196/1, 4TH MAIN, 16TH CROSS, VIDYARANYAPURAM, MYSURU-570 008.
SMT. ANNAPURNA N AGED ABOUT 53 YEARS, W/O. LATE B.N. HANUMANTHAIAH, PROP. OF M/S. NAVEEN BAR AND RESTAURANT, #474, CHAMARAJA DOUBLE ROAD, BESIDE HDFC BANK, MYSURU-570 024.
M. MOHAN KUMAR AGED ABOUT 40 YEARS, S/O. M. MALAIAH, PROP. OF M/S. NEW ASHWINI BAR AND RESTAURANT, #78, NEW KANTHARAJEURS ROAD, SHARADADEVINAGARA, MYSURU-570 022.
SRI. CHALUVANARAYANASWAMY ENTERPRISES PROP. OF M/S. TRINETHRA LODGING, BAR AND RESTAURANT, #10 & 20, MAHADESHWARA BADAVANE, MYSURU-570 002, DULY REPRESENTED BY ITS PARTNER SRI. G. OMKARA MURTHY, AGED ABOUT 48 YEARS, S/O. PUTTABASAVE GOWDA,
SUJAY KUMAR SINGH S AGED ABOUT 38 YEARS, S/O. M.B. SHAM SUNDER SINGH, PROP. OF M/S. BALAJI BAR AND RESTAURANT, #37/1, 37/2,-SHOP NO.5 AND 6, HARSHCHANDRAGHAT ROAD, KYATHAMARANAHALLY, K.N. PURA, MYSURU-570 019.
T. N. SUNANDA S. SHETTY AGED ABOUT 61 YEARS, W/O. LATE SHAMANNA SHETTY, PROP. OF M/S. MENAKA BAR AND RESTAURANT, #108, JAVA ROAD, MEDARA KERI ROAD, MYSURU-570 023.
T.N. SUNANDA S. SHETTY AGED ABOUT 61 YEARS, W/O. LATE SHAMANNA SHETTY, PROP. OF M/S. AKSHAYA BAR AND RESTAURANT,
AGRAHARA CIRCLE, MYSURU-570 024.
R. THIPPANNA AGED ABOUT 60 YEARS, S/O. R. THIPPANNA, PROP. OF M/S. SRI. MAHESHWARI BAR AND RESTAURANT, #2911, SHOP # 2, GROUND AND MEZANINE FLOOR, SUNDAR ARCADE, B.N. ROAD, LASHKAR MOHALLA, MYSURU-570 001.
SMT. JAYALAKSHMI AGED ABOUT 67 YEARS, W/O. S. PUTTASWAMY, PROP. OF M/S. BARREL HOUSE BAR AND RESTAURANT, #992, LOKANAYAKA NAGARA, HEBBAL MAIN ROAD, MYSORE-570 016.
S.R. RAJAN AGED ABOUT 59 YEARS, S/O. RAJA GOWDA, PROP. OF M/S. APOORVA BAR AND RESTAURANT, HEBBAL MAIN ROAD, HEBBAL, MYSURU-570 016.
M.V. SUVARNA AGED ABOUT 74 YEARS, W/O. LATE M.V. ASUDEV RAO, PROP. OF M/S. CITY BAR AND RESTAURANT, #255, B. N. STREET, MANDI MOHALLA, MYSURU-570 001.
BHASKAR L PROP. OF M/S. YAJAMANA BAR AND RESTAURANT,
AGED ABOUT 45 YEARS, S/O. LATE M.N. LAKSHMI NARASIMAHIA, SARADADEVI NAGAR, MYSURU-570 020.
D. KRISHNA PROP. OF M/S. APOORVA BAR AND RESTAURANT, AGED ABOUT 52 YEARS, S/O. LATE DEVA GOWDA, #2768, 1ST MAIN, KANTHARAJE URS ROAD, SARASWATHIPURAM, MYSURU-570 009.
T. S. SWAMY AGED ABOUT 62 YEARS, S/O. SIDDHAGANGAPPA, PROP. OF M/S. PRIYADARSHINI BAR AND RESTAURANT, MARKET ROAD, CHIKMAGALUR-577 101.
M.K. SUNDARESH AGED ABOUT 62 YEARS, S/O. M.K. KRISHNA GOWDA, PROP. OF M/S. ASHA HOTEL BAR AND RESTAURANT, B. KANABUR VILLAGE, BALEHONNUR, CHIKMAGALUR DISTRICT-577 112.
S. NAGARAJU AGED ABOUT 70 YEARS, S/O. LATE SUBBHAI GOWDA, PROP. OF M/S. HULIYAMMA BAR AND RESTAURANT, #259, 2ND STAGE, KYATHAMARANAHALLI, GAYATHRIPURAM, MYSURU-570 019.
S. SATHISH AGED ABOUT 52 YEARS, S/O. LATE SUBBAIAH GOWDA, PROP. OF M/S. HOTEL SAMBRAMA BAR AND RESTAURANT, #27/1, RANATRASA BUILDING, NAZARBAD MAIN ROAD, MYSURU-570 010.
S. SIDDAIAH AGED ABOUT 80 UEARS, S/O. LATE SIDDHAIAH GOWDA, PROP. OF M/S. HARSHA BAR AND RESTAURANT, BOGADI 2ND STAGE, BOGADI GADDIGE ROAD, MYSURU-570 026.
C.G. GANGADHAR AGED ABOUT 48 YEARS, S/O. GUDDAIAH, PROP. OF M/S. HARSHITH BAR AND RESTAURANT, #73/3, MAHADESHWARA COMPLEX, NAZARBAD, MYSURU-570 001.
V. LOKESH AGED ABOUT 41 YEARS, S/O. LATE B. VENKATA GIRI, PROP. OF M/S. TRILOK BAR AND RESTAURANT, SIDDAPPA SQUARE, K.R. MOHALLA, MYSURU-570 004.
K.T. CHELUVEGOWDA AGED ABOUT 66 YEARS, S/O. THIMMAIAH GOWDA, PROP. OF M/S. KAVERI BAR AND RESTAURANT, #197/2, HEBBAL, MYSURU-570 016.
MICHAEL PINTO AGED ABOUT 69 YEARS,
S/O. LATE G.B. PINTO, PROP. OF M/S. AKSHAYA BAR AND RESTAURANT, SAINT ANTONYS BUILDING, MALLANDUR ROAD, VIJAYAPURA EXTENSION, CHIKAMAGALUR-577 101.
T.R. UMESH RAJ URS S/O. LATE T.N. RANGARAJ URS, AGED ABOUT 49 YEARS, PROP. OF M/S. J.P. BAR AND RESTAURANT, MARUTHI NAGAR, TEGUR GATE, K.M. ROAD, CHIKAMAGALUR-577 101. ... PETITIONERS (BY SRI.K.J. KAMATH, ADV.,)
AND
THE STATE OF KARNATAKA THROUGH SECRETARY (FINANCE) VIDHANA SOUDHA, BANGALORE-560 001.
THE COMMISSIONER OF COMMERCIAL TAXES IN KARNATAKA, GANDHINAGAR, BANGALORE-560 009.
THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT AND RECOVERY)-6, DVO, DEWANS ROAD, MYSORE-570 024.
THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT)-2, DEWANS ROAD, MYSORE-570 024.
THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT)-4, DEWANS ROAD, MYSORE-570 024.
THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES LVO-200, DEWANS ROAD, MYSORE-570 024.
THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES LVO-205, DEWANS ROAD, MYSORE-570 024.
THE COMMERCIAL TAX OFFICER V.S.O-222, TARIKERE-577 228, CHIKMAGALUR DISTRICT.
THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT)-1, DEWANS ROAD, MYSORE-570 024.
THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES LVO-250, MAIN ROAD, CHIKMAGALUR-577 101.
THE COMMERCIAL TAX OFFICER V.S.O.-193, MAIN ROAD, HUNSUR-571 105. ... RESPONDENTS (BY SRI. T.K. VEDAMURTHY, AGA)
THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO HOLD THAT THE NOTIFICATION DATED 28.02.2014 VIDE ANNEX-A IS DISCRIMINATORY IN NATURE AND AS SUCH QUASH THE SAME AS UN-CONSTITUTIONAL AND ETC.,
IN W.P.Nos.19196-19202/2016
BETWEEN:
C S SOMASHEKAR AGED ABOUT 50 YEARS PARTNER OF M/S SRIGANDHA BAR AND RESTAURANT S/O LATE SANNAPPA MALLANDUR ROAD, CHICKMAGALURU-577101
SMT. SHOBHA AGED 43 YEARS W/O LATE K.T. JAGANNATH PROP OF M/S MARUTHI BAR AND RESTAURANT, HOUSING BOARD COLONY, CHICKMAGALURU-577101
SMT. SHASHIKALA W/O LAXMANA AGED ABOUT 52 YEARS PROP OF M/S SRI. MYLARALINGESHWARA BOARDING AND LODGINGS, H.D.KOTE ROAD, GURUPURA VILLAGE, HUNSURA TALUK-571105
SMT. LAKSHMI DEVI W/O DHANANJAY AGED ABOUT 38 YEARS PROP OF M/S NISARGA BAR AND RESTAURANT, #1063/1149, KALYA GATE ,B.K. ROAD, MAGADI-562120
SMT. PUTTATHAYAMMA W/O LATE SRI. H. KRISHNE GOWDA AGED ABOUT 60 YEARS PROP OF M/S SOWMYA BAR NEHRU NAGAR, BELUR-573115 HASSAN DISTRICT
H.C.GANEHSA S/O CHANNAKESHAVAIAH H.V. AGED ABOUT 50 YEARS PROP OF M/S MY DREAM BAR AND RESTAURANT SALAGAME ROAD, OPPOSITE TO DOUBLE WATER TANK HASSAN-573201
SMT. SAVITHA VASUDEV W/O LATE SRIL. VASUDEV AGED ABOUT 55 YEARS PROP OF M/S SANTHOSH BAR AND RESTAURANT OLD BUS STAND ROAD, HASSAN-573201 ... PETITIONERS (BY SRI. K.J. KAMATH, ADV.,)
AND
THE STATE OF KARNATAKA THROUGH SECRETARY (FINANCE) VIDHANA SOUDHA BANGALORE-560 001
THE COMMISSIONER OF COMMERCIAL TAXES IN KARNATAKA, GANDHINAGAR, BANGALORE-560 009
THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT AND AIT) K.M. ROAD, JYOTHI NAGAR, CHICKMAGALURU -577102
THE COMMERCIAL TAX OFFICER V.A.T. SUB OFFICE,193, HUNSUR-571105
THE COMMERCIAL TAX OFFICER VAT SUB OFFICER-151 KALIDASA TRUST BUILDING, B.M. ROAD, CHANNAPATNA-562160
THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (VAT-AUDIT-5) MALNAD DIVISION SHIMOGA-577205
THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES LVO-240, SHARADA SAMUDAYA BHAVANA, SAHNKARMUTT ROAD, HASSAN-573201
ASSISTANT COMMISSIONER OF AGRICULTURAL INCOME TAX HASSAN-573201
THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT AND RECOVERY) HASSAN-573201 ... RESPONDENTS (BY SRI. T.K. VEDAMURTHY, AGA)
THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO HOLD THAT THE NOTIFICATION DATED 28.02.2014 (ANNEXURE-A) ISSUED BY THE R-1 IS DISCRIMINATORY IN NATURE AND AS SUCH QUASH THE SAME AS UN-CONSTITUTIONAL AND ETC.,
THESE WRIT PETITIONS COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT PASSED THE FOLLOWING:
O R D E R
The petitioners in the present cases have laid challenge to the Notification No.FD 21 CSL 2014(II) dated 28.02.2014 which is quoted below:- “In exercise of the powers conferred by sub-section (1) of Section 5 of the Karnataka Value Added Tax Act, 2003 (Karnataka Act 32 of 2004), the Government of Karnataka hereby exempts with effect from the First day of March, 2014, the tax payable under the said Act on the sale of liquor including beer, fenny, liqueur and wine by a dealer who is not a person holding licence in Form.-] (i) CL-9 for vending in the Bruhat Bangalore Mahanagara Palike area, City Municipal Corporation areas, City Municipal Council areas and Town Municipal Council or Town Panchayat areas issued under Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968; of
(ii) CL-4 or CL-6A of CL-7 issued under Karnataka Excise (Sale of Indian and Foreign Liquor) Rules, 1968.
Note: For amendment please see Notification No.FD 41 CSL 2014, Bangalore, dated 21st April, 2014 [Sl.No.198]
The petitioners have made following prayers in the writ petitions:-
(a) To hold that the Notification bearing No.FD 21 CSL 2014 (II) dated 28.02.2014 (Annexure-“A”) issued by 1st respondent is discriminatory in nature and as such quash the same as un-constitutional;
(b) the petitioners most respectfully pray that this Hon’ble High Court may be pleased to issue a Writ of Certiorari or a direction in the nature of a Writ of Certiorari quashing the impugned notice dated 30.12.2015 (in W.P.7807/2016), 17.02.2016 bearing reference No.ACCT/LVO-220/S/R/15-16 (in W.P.Nos.9958/2016 & 20155-20175/2016) issued by the 2nd Respondent under the KVAT Act, 2003. (Annexure – “B”).
(c) to kindly issue any other writ/(s), order/(s) or direction/(s) for granting any other relief/(s) this Hon’ble Court deems fit and proper in the facts Acts and circumstances of the case.
The learned counsel for the petitioners Mr. K.J. Kamath has brought to the notice of the Court that on 30.09.2015, a learned Single Judge has dismissed the bunch of similar writ petitions laying similar challenge to the same Notification dated 28.02.2014 against which the appeals have been preferred by these petitioners before the Division Bench of this Court.
He further submitted that later on in an identical writ petition filed by him namely W.P.No.16317/2016 (T-Res) (M. Srinivas Kumar vs. The State of Karnataka)., another learned Single Judge of this Curt passed the following order on 11.04.2016 placing the matter before the appropriate Division Bench which is seized of the appeals in W.A.No.4893/2016 and connected matters, after obtaining necessary orders from the Hon’ble Chief Justice.
“Since similar challenge has already been turned down by this Court and since a large number of appeals are pending before
the Division Bench against the said order, the petitioner would do well to join those appellants and pursue his case.
Accordingly, the petitioner is directed to file a second set of papers within a week.
The matter shall be placed before the appropriate Division Bench which is seized of the appeals in W.A.4893/2015 and connected matters, after obtaining necessary orders fro the Honourable Chief Justice.”
He therefore submitted that the same order may be passed by this Court in the present writ petitions also.
Mr. T.K. Vedamurthy, learned Additional Government Advocate appearing for the Revenue, however, submitted that the present writ petitions have been unnecessarily filed and they deserve to be dismissed in the light of the judgment of the learned Single Judge dated 30.09.2015, against which an appeal is already said to be pending before the Division Bench. He also submitted that the question of validity of the aforesaid Notification dated 28.02.2014 is already a
subject matter of consideration before the Division Bench and as far as Annexure-B-notice given in the prescribed FORM VAT 150 to the present assessees is concerned, the present writ petitions are premature and assessees should raise all the objections on factual aspects of the matter before the Assessing Authority himself. He therefore urged that the writ petitions deserve to be dismissed.
I have heard the learned counsels.
This Court respectfully agrees with the submission at bar by the learned Additional Government Advocate for the Revenue and having gone through the detailed judgment of the learned Single Judge dated 30.09.2015 (Sri. M.Madhava Gowda vs. Under Secretary to Government and others) and other connected cases, dismissing similar writ petitions, this Court is of the opinion that the present writ petitions also deserve to be dismissed for the same reasons and in the light of the observations made by the learned Single Judge in the judgment dated 30.09.2015 and the
relevant operative portion of the said judgment of learned Single Judge relying upon various decisions of the Hon’ble Supreme Court is also quoted for ready reference:- “47. At this juncture, it would be appropriate to note that licence fee fixed for a dealer holding licence in Form No.9 and operating in urban areas is `6.00 lakhs, whereas licence fee prescribed for a similar licence holder who is running Bar and Restaurant business in rural area is `2.00 lakhs though both the class of licence holders run the same business. This exemption is extended to Bar and Restaurants operating in rural areas considering the fact of no value addition between the price at which liquor is purchased and sold to customers in rural areas. However, a Hotel, Boarding House and Lodge holding licence in Form CL-7 though located in rural area, liquor is served only to the residents of the Hotel and their guests who obviously would come from far off places. The customers of this category are affordable class who are willing to pay more for the comfort with varying degree of facilities. Hence, it enables the dealer to fix
the rates of liquor without any restriction. Thus, the Legislature with the sole intention of capturing substantial value addition taking place on liquor consumed in the premises of a Boarding House and Lodge, has brought this class of dealer under the net of tax, but Bar and Restaurants located in rural area which do not have the advantage of catering to the class of customers of economic superiority are exempted. Thus, the impugned notification dated 28.02.2014 which exempts liquor sold by dealers holding licence in Form No.CL-9 operating in rural areas in comparison with liquor sold by a person operating a Boarding House and Lodge in a rural area holding licence in Form No.CL-7 would form separate class of dealers. The State Legislature in its economic wisdom of taxation having chosen to provide for levy of tax on liquor sold by certain licence holders, considering the potential for tax collection on the huge value addition while exempting others whose sale price is regulated by the MRP indicated on the label of the container cannot be construed as discriminatory. The classification of dealers based on value addition criteria for the purpose of tax levy and exempting the dealers
based on area criteria cannot be held to be discriminatory. 48. In view of the aforesaid discussion, this Court is of the considered view that contentions raised by the petitioners are without merit and they are hereby rejected. Hence, I proceed to pass the following:- ORDER (1) Writ petitions are hereby dismissed. (2) Rule discharged. (3) Costs made easy.”
This Court is not inclined to adopt the course of action suggested by the learned counsel for the petitioners that the matter should be allowed to be placed before the Division bench along with W.A.No.4893/2015 and connected matters by filing a second set of papers in the present cases. It is needless to say that if the petitioners assessees want to file appeal against this order passed by Single Judge, they are free to do so in accordance with law.
Therefore, respectfully agreeing with the observation of the learned Single Judge in the judgment
dated 30.09.2015, the present writ petitions are also dismissed. No order as to costs.
Sd/- JUDGE
PMR