- 1 - HC-KAR NC: 2025:KHC:49138 WP No. 22949 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF NOVEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 22949 OF 2022 (T-RES) BETWEEN: UNION OF INDIA REPRESENTED BY SECRETARY DEPARTMENT OF SPACE THROUGH LIQUID PROPULSION SYSTEM CENTRE VALIAMALA THIRUVANANTHAPURAM KERALA – 695 547 REPRESENTED BY ADMINISTRAION PERSONAL AND GENERAL …PETITIONER (BY SRI. KUMAR M. N., ADVOCATE) AND: 1. STATE OF KARNATAKA REPRESENTED BY ADDITIONAL CHIEF SECRETARY FINANCE DEPARTMENT, VIDHANA SOUDA, DR. AMBEDKAR VEEDI, BANGALORE – 560 001 2. JOINT COMMISSIONER OF COMMERCIAL TAXES DGSTO – 2, NO. 502, 5TH FLOOR, A BLOCK VTK – 2, RAJENDRA NAGAR KORAMANGALA, BANGALORE – 560 047 3. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES LOCAL VAT OFFICE, NO.45, B D A COMPLEX, INDIRANAGAR BANGALORE - 560 038 Digitally signed by CHANDANA B M Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:49138 WP No. 22949 of 2022 4. COMMERCIAL TAX OFFICER OFFICE OF THE COMMERCIAL TAX OFFICER, HOSUR ROAD, CHECK POST (INWARD), ATTIBELE, BENGALURU – 562 107 …RESPONDENTS (BY SRI. K. HEMA KUMAR, AGA) THIS W.P. IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT, THE PETITIONER IS NOT INTO BUSINESS AS DEFINED IN SECTION 2(2- B) OF THE KARNATAKA TAX ON ENTRY OF GOODS ACT,1979 AND NOT A DEALER U/S 2(4) OF THE KARNATAKA TAX ON ENTRY OF GOODS ACT, 1979 AND ETC., THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR ORAL ORDER In this petition, petitioner seeks for the following reliefs:- “a. Declare that, the Petitioner is not into business as defined in sections 2(2-b) of the Karnataka Tax on Entry of Goods Act, 1979 and not a dealer under section 2(4) of the Karnataka Tax on Entry of Goods Act, 1979. b. Consequently, issue a Writ of Certiorari quashing the Endorsement demanding Entry Tax amounting to Rs.46,70,210/- issued by the Commercial Tax Officer, Hosur Road, Check Post(in), Attibele bearing No.CTO/HRCP(IN)/SM/GCE 432/08-09 dated 27.05.2008 (Annexure-C) and Endorsement dated 10.07.2008 issued by the Assistant Commissioner of - 3 - HC-KAR NC: 2025:KHC:49138 WP No. 22949 of 2022 Commercial Taxes vide No.ACCT/LVO- 045/T.No.107/2008-09, (Annexure-H); c. Consequently, issue a Writ of Mandamus directing the Respondents to refund the tax amount which was paid on 14.06.2008 vide Annexure-F, release Order bearing No.CTO/HRCP(IN)/SM/GCE 432/08-09 with interest at the rate of 16% per Annum from the date of payment to till date of repayment. d. Pass such other order/s as deemed fit by this Hon’ble Court in the facts and Circumstances of the case, interest of justice.” 2. Heard learned counsel for the petitioner and learned AGA for the respondent and perused the material on record. 3. A perusal of the material on record will indicate that the petitioner is a constituent of Government of India, Department of Space, which had entered into a contract with M/s. ESAB AB, Sweden and placed a purchase order in the year 2008 and when the said equipment and conveyance were intercepted by the, Commercial Tax Officer, Hosur Road, Check Post (Inward), Attibele, Bengaluru-562 107, for the purpose of release of said equipment, goods and conveyance, the petitioner paid Rs.45,33,525/- under protest vide demand draft bearing No.034103 dated 13.06.2008. It - 4 - HC-KAR NC: 2025:KHC:49138 WP No. 22949 of 2022 is contended that subsequently, when the petitioner requested the said amount to be refunded on the ground that it is not a dealer within the Section 2(4) of the Karnataka Tax on Entry of Goods Act, 1979 (for short “the KTEG Act”), respondent No.3 issued the impugned endorsement dated 09.07.2008 rejecting the claim of the petitioner on the ground that the petitioner is a deemed dealer under the said Act and since it was liable to get itself registered and pay taxes, the claim of the petitioner cannot be entertained and as such, the petitioner is before this Court by way of the present petition. 4. Learned AGA submits that there is no merit in the petition and that the same is liable to be dismissed. He further submits that in the absence of challenge to the penalty order, the present petition is not maintainable. 5. By way of reply, learned counsel for the petitioner submits that no penalty order has been passed against the petitioner sofar. 6. Before adverting to the rival contentions, it would be necessary to extract the impugned endorsement, which reads as under: - 5 - HC-KAR NC: 2025:KHC:49138 WP No. 22949 of 2022 “GOVERNMENT OF KARNATAKA DEPARTMENT OF COMMERCIAL TAXES ACCT/LVO-045/T.No.107/2008-09 Office of the Asst. Commr. Of Cmml. Taxes, LVO-045, DVO-4, Indiranagar, BDA Complex, Bangalore, dt: 09/07/2008 ENDORSEMENT M/s. Liquid propulsion Systems Centre (LPSC), Government of India, Department of Space, 80 Feet Road, HAL 2nd stage, Bangalore-38 are hereby informed that, you have imported Friction Stir Welding machine from M/s.ESAB AB Welding Equipment Sweden worth Rs.23,35,10,516-00 and discharged the Entry tax of Rs.45,33,525-00 through DD Bearing No.034103 dt,13/06/2008 to the Commercial Tax Officer Hosur Road Check post (Inward), Attibele, Bangalore. You are deemed to be a dealer under the provisions of KTEG Act-1979 U/s. Explanation – III to section 2(4) of the said Act (a copy of the same is enclosed). It may please be noted that Friction Stir Welding Machine are schedule goods namely Machinery under the KTEG Act-1979 and it is taxable @ 2% vide Notification No.FD 11 CET 2002, dt:30/03/2002. You are liable to pay tax on the entry of the above goods into the local area. Your are also liable to get yourself registered under the provisions of the section 4 of the said Act (the copy of the Section-4 is enclosed) you are hereby requested to get yourself registered at this office WITHIN SEVEN DAYS from the date of receipt of this Endorsement, failing which penal provisions under the KTEG Act-1979 will be invoked. - 6 - HC-KAR NC: 2025:KHC:49138 WP No. 22949 of 2022 Sd/- Asst. Commr. Of Comml. Taxes, LVO-045, Bangalore” 7. As can be seen from the impugned endorsement, respondent No.3 has come to the erroneous conclusion that the petitioner is a deemed dealer under the provisions of the KTEG Act without appreciating that the petitioner is a constituent of Government of India and that the petitioner cannot be considered as a dealer nor be made liable to pay entry tax as per the provisions of the KTEG Act. It is also not in dispute that the petitioner has discharged the entire entry tax in a sum of Rs.45,33,525/- on 13.06.2008 by way of demand draft. 8. Under these circumstances, I am of the considered opinion that the impugned endorsement being illegal, arbitrary and contrary to the provisions of the KTEG Act, particularly when the petitioner is a constituent of Government of India, Department of Space and not carrying on any business, the question of the petitioner being liable not only to get registered but also to pay entry tax as a dealer would not arise under the facts and circumstances of the instant case. Accordingly, the petition deserves to be allowed by - 7 - HC-KAR NC: 2025:KHC:49138 WP No. 22949 of 2022 quashing the impugned endorsement at Annexure-H and by issuing further directions for refund of the amount back to the petitioner. 9. In the result, I pass the following: ORDER (i) The petition is allowed. (ii) The impugned endorsement at Annexure-H dated 10.07.2008 issued by respondent No.3 is hereby quashed. (iii) The petitioner shall appear before respondent No.4 - Commercial Tax Officer or any other equivalent Officer on 15.12.2025 and submit an application/representation for refund of the amount paid by the petitioner. (iv) Upon petitioner submitting such application/representation along with documents filed by the petitioner, respondent No.4 or such equivalent officer shall consider the same and provide sufficient opportunity and proceed further in accordance with law. Sd/- (S.R.KRISHNA KUMAR) JUDGE BMC; List No.: 2 Sl No.: 27 Page No.7 is retyped and replaced and page No.8 has been deleted vide Chamber order dated 07.02.2026