- 1 - HC-KAR NC: 2025:KHC:47737-DB STA No. 18 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF NOVEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE B M SHYAM PRASAD AND THE HON'BLE MR. JUSTICE T.M.NADAF SALES TAX APPEAL NO. 18 OF 2025 BETWEEN: M/S ABHARANA JEWELLERS PVT LTD D.NO. 10-3-4 CORPORATION BANK ROAD UDUPI 576101 REPRESENTED BY ITS DIRECTOR MS. SUBHAS MADHUKAR KAMATH AGED 60 YEARS RESIDING AT 8-1-11B R T MARG KUNJIBETTU UDUPI 576101. …APPELLANT (BY SRI. PRASHANTH SABARISH SHIVADASS.,ADVOCATE) AND: JOINT COMMISSIONER OF COMMERCIAL TAXES (SMR)-3 VANIJYA TERIGE KARYALAYA-1 Digitally Signed by REKHA R Location : High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:47737-DB STA No. 18 of 2025 GANDHINAGAR BENGALURU 560 009 …RESPONDENT (BY SRI.ADITYA VIKRAM BHAT., AGA) THIS STA IS FILED UNDER SECTION 66(1) OF KARNATAKA VALUE ADDED TAX ACT 2003 AGAINST THE ORDER DATED 27.03.2025 PASSED IN ZAC/03/MNG/SMR-211/2024-25 ON THE FILE OF THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES, (SMR) -3, GANDHINAGAR, BENGALURU CONFIRMING THE REVISION PROCEEDINGS DATED 3.01.2025 IN ZAC/03/MNG/SMR-211/2024-25 PASSED BY THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES (SMR)-3 AND SETTING ASIDE THE ORDER DATED 7.12.2020 IN KVAT/AP-578-589/2014-15 PASSED BY THE JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS), MYSORE FOR THE TAX PERIODS 2011-12. THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD and HON'BLE MR. JUSTICE T.M.NADAF - 3 - HC-KAR NC: 2025:KHC:47737-DB STA No. 18 of 2025 ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE B M SHYAM PRASAD) The appellant is aggrieved by the Order dated 27.03.2025 in No.ZAC/03/MLN/SMR-211/2024-25, and this Order is by the Additional Commissioner of Commercial Taxes, [SMR-3], Gandhinagar, Bengaluru [ACCT] under Section 64[1] of the Karnataka Value Added Tax Act, 2003 [for short, 'the KVAT Act']. This Court has admitted the appeal on the following questions: [a] Whether the respondent could have issued the notice dated 03.01.2025 under Section 64(1) of the Karnataka Value Added Tax Act 2003 nearly ten years after the Appellate order dated 05.05.2015; [b] Whether the order bearing CAS No.347440141 AD SMR dated 27.03.2025 revising the Order passed by the First Adjudicating Authority dated 05.05.2015 is beyond the limitation period as - 4 - HC-KAR NC: 2025:KHC:47737-DB STA No. 18 of 2025 prescribed under Section 64 of the KVAT Act, 2003? Sri Prashanth Sabarish Shivadass, the learned counsel for the appellant, and Sri Aditya Vikram Bhat, the learned Additional Government Advocate for the respondent, are heard for disposal of the appeal. 2. The dispute relates to the tax period between April 2011 and March 2012. The assessment for this period is concluded with the reassessment order dated 05.02.2015, and the order-in-appeal in favour of the appellant is on 16.05.2015. The appellant is issued with the notice under Section 64[1] of the KVAT Act on 03.01.2025. The suo motu revision is because of the rate of tax for the relevant period, the alleged erroneous allowance of input tax credit and the prejudice to the Revenue. The appellant has responded to this notice underscoring the question of limitation as also the delay. - 5 - HC-KAR NC: 2025:KHC:47737-DB STA No. 18 of 2025 3. The ACCT has passed the impugned order dated 27.03.2025 referring to Section 64[1] and 64[3] of the KVAT Act and the decision of the division Bench of this Court in 'M/s. Abhiram Infra Projects Pvt. Ltd. v. Additional Commissioner of Commercial Taxes [Zone-3] and Another'1 opining that because the records have been called on 20.01.2018, the suo motu proceedings are started within four years and therefore there would be no impediment in concluding the suo motu proceedings. The ACCT has set aside the order-in-appeal dated 16.05.2015 [wrongly mentioned as order dated 07.12.2020 in the operative portion] restoring the reassessment order. 4. Sri Prashanth Sabarish Shivadass proposes to engage this Court on the second question viz., whether this Court should opine that the suo motu proceedings are started within four years because the records are called for on 20.01.2018, but 1 STA No.4/2023 disposed of on 27.09.2024 - 6 - HC-KAR NC: 2025:KHC:47737-DB STA No. 18 of 2025 the learned counsel emphasises that this Court must examine the first substantial question framed viz., whether the notice dated 03.01.2025 could have been issued in law nearly ten years after the appellate order dated 16.05.2015. Sri Aditya Vikram Bhat is heard in the light of the afore. 5. The undisputed fact is that even according to the ACCT the records are called for on 20.01.2018 but notice is issued under Section 64[1] only on 03.01.2025. There is a delay of over 8 years. Sri.Aditya Vikram Bhat, with the assistance of the office note, submits that though the records are called for in 2018, the reassessment file from the appellate authority is received in July 2021 and that the notice is issued only on 03.01.2025. The learned Additional Government Advocate is unable to bring on record any circumstance that would justify the first delay i.e., the delay between the date the letter is issued calling for records and the date on which the - 7 - HC-KAR NC: 2025:KHC:47737-DB STA No. 18 of 2025 file is received [02.01.2018 and 09.07.2021 respectively] nor the second delay between 09.07.2021 and 03.01.2025 [the date of notice under Section 64[1] of the KVAT Act]. This failure to offer an explanation, in this Court's opinion, would be material to assess whether there is a reasonable exercise of the suo motu power. 6. This Court must opine that when the delay is considered in the light of the fact that the dispute relates to the tax period between April 2011 and March 2012, the delay assumes greater significance rendering the continuance of the proceedings with issuance of notice on 03.01.2025 unreasonable, and therefore, the interference is justified. Though the ACCT is perhaps justified in opining that the proceedings are initiated within the time contemplated under Section 64[3][c] of the KVAT Act, it is not justified in overlooking the delay in this case as it renders the entire exercise arbitrary. The - 8 - HC-KAR NC: 2025:KHC:47737-DB STA No. 18 of 2025 second question is answered in favour of the appellant while observing that the question on limitation would not survive for consideration in this appeal. Hence, the following: ORDER The appeal is allowed and the ACCT's impugned order dated 27.03.2025 in No.ZAC/03/MLN/SMR-211/2024-25 under Section 64[1] of the KVAT Act is set aside. Sd/- (B M SHYAM PRASAD) JUDGE Sd/- (T.M.NADAF) JUDGE AN/-