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of <h1>Court quashes order, remands for reevaluation under KVAT Act.</h1> <h3>Yakult Danone India Pvt Ltd Versus Authority For Clarification & Advance Rulings, Department of Commercial Taxes</h3> Yakult Danone India Pvt Ltd Versus Authority For Clarification & Advance Rulings, Department of Commercial Taxes - [2016] 87 VST 70 (Kar) Issues:Constitution of the Authority for Clarification & Advance Rulings under Section 60 of the KVAT Act.Analysis:The appellant, a manufacturer of a product 'Yakult,' believed it should be taxed under Entry 19 of the Karnataka Value Added Tax Act (KVAT Act) due to its similarity to 'lassi,' a milk product. The appellant sought clarification from the Authority for Clarification & Advance Rulings on the tax rate applicable to the product. However, the Authority ruled that the product falls under Section 4(1)(b)(iii) of the KVAT Act, subject to a 14% tax rate, leading to the appellant challenging this decision.A critical issue raised was the constitution of the Authority for Clarification & Advance Rulings under Section 60 of the KVAT Act. The appellant contended that the Authority, which issued the order dated 21.4.2012, consisted of only two members instead of the mandated minimum of three Additional Commissioners as per Section 60(1) of the Act. The appellant argued that this lack of proper constitution rendered the order invalid.The respondent tried to justify the two-member composition of the Authority by referring to Rule 165 (26-A) of the KVAT Rules, allowing the Chairman and the remaining member to function as the Authority in specific circumstances. However, the Court held that the Rules cannot override the Act's provisions, emphasizing that Section 60(1) clearly requires the Authority to have at least three Additional Commissioners. The Court found that the two-member composition did not meet the legal requirements.Consequently, the Court allowed the appeal, quashed the order dated 21.4.2012, and remanded the matter for reconsideration by a properly constituted Authority with at least three Additional Commissioners as mandated by the KVAT Act. The Court directed the reevaluation to be completed expeditiously within four months, without delving into the merits of the appellant's claim, leaving it for the reconstituted Authority to decide.In conclusion, the judgment focused on the procedural aspect of the Authority's constitution, highlighting the importance of adherence to statutory requirements for a valid decision-making process under the KVAT Act.
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