2019 (12) TMI 1056 - HC - VAT and Sales Tax

Court upholds decision on demand notice for tax reassessment on purchased goods for restaurant

The Commissioner Of Commercial Taxes In Karnataka, Bengaluru Versus Sri Anantha Padmanabha Bhat

The Karnataka High Court upheld the Single Judge's decision to set aside a demand notice for reassessment of tax on purchased goods for a restaurant. The ... Demand of tax - dealer - petitioner runs a vegetarian restaurant and purchased Vitrified Tiles - stock in trade or not - purchase for other purposes - Rule 135 of the Karnataka Value Added Rules, 2005 - HELD THAT:- There are no error committed by the learned Single Judge in passing the impugned order. The order is in accordance with law and on facts. When admittedly, the writ petitioner is running a restaurant, the goods purchased by him namely, the Vitrified Tiles are for the purpose of flooring of the hotel. Therefore, consequently the said tiles form part of the immoveable property. Therefore, it cannot be said that he is a dealer so far as Vitrified Tiles are concerned. Under these circumstances, there are no good ground to interfere. Appeal dismissed - decided against appellant. Issues: Misreading of law leading to setting aside demand notice for reassessment of tax on purchased goods for a restaurant.In this judgment by the Karnataka High Court, the issue at hand was the appeal against an order passed by a Single Judge in writ petitions related to the demand notice issued to a restaurant owner for reassessment of tax on purchased goods. The appellants contended that the Single Judge misread the law and wrongly set aside the demand notice, arguing that the restaurant owner was liable to satisfy the notice. The respondent was unrepresented during the proceedings.Upon hearing the arguments, the High Court found no merit in the appeal. The restaurant owner had purchased Vitrified Tiles for his hotel during the tax period, leading to the reassessment notice demanding a specific sum for the year 2010-2011. The investigating authorities had observed the purchases and issued the notice. The Single Judge, in accordance with Rule 135 of the Karnataka Value Added Rules, 2005, determined that the purchased tiles were for the flooring of the restaurant and not for regular business purposes covered under the rule. As the restaurant owner was not acting as a dealer for the tiles, the notice was found to be incorrectly issued.The High Court upheld the Single Judge's order, stating that it was in line with the law and facts of the case. Since the purchased tiles were for the restaurant's flooring and became part of the immovable property, the restaurant owner could not be considered a dealer for those specific goods. Therefore, the appeal was dismissed. However, the High Court set aside the costs imposed by the Single Judge, deeming them incorrect.