2021 (9) TMI 262 - HC - VAT and Sales Tax

Court confirms ACAR jurisdiction, bars re-assessment beyond limitation periods, orders re-evaluation.

M/s. DELL India Private Limited (Now Part OF M/s. Dell International Services India Pvt. Ltd) Versus The State Of Karnataka Represented By The Commissioner Of Commercial Taxes Gandhinagar, Bangalore

M/s. DELL India Private Limited (Now Part OF M/s. Dell International Services India Pvt. Ltd) Versus The State Of Karnataka Represented By The ... Issues Involved:1. Jurisdiction and validity of the advance ruling by the Authority for Clarification and Advance Rulings (ACAR).2. Applicability of the advance ruling by ACAR based on changes in law or facts.3. Limitation period for re-assessment proceedings.4. Taxability of transactions under the Karnataka Sales Tax (KST) Act.Issue-Wise Analysis:1. Jurisdiction and Validity of the Advance Ruling by ACAR:The court examined whether the advance ruling dated 31.03.2006 by ACAR was without jurisdiction and non-est. It was noted that under Section 4 of the Karnataka Sales Tax Act, 1957, the Commissioner may constitute an Authority to clarify the rate of tax applicable or the exigibility of any transaction under the Act. The court highlighted that the order passed by ACAR is binding on all officers except the Commissioner, who has suo motu revisional powers under Section 22-A(2) of the KST Act. The court concluded that the ACAR's order dated 31.03.2006 was valid and had attained finality as it was not challenged by the respondent. Therefore, the first question of law was answered in the negative, affirming the jurisdiction and validity of the ACAR's ruling.2. Applicability of the Advance Ruling by ACAR:The court addressed whether there was any change in law or facts rendering the ACAR ruling inapplicable. It was found that the Assessing Authority's claim of examining voluminous transactions was factually incorrect, as only 0.11% of transactions were reviewed. Additionally, the Commissioner of Commercial Taxes had affirmed the ACAR's ruling even after considering the intercompany purchase agreement. Thus, the court held that there was no change in facts or law to render the ACAR ruling inapplicable, and the ruling remained binding.3. Limitation Period for Re-assessment Proceedings:The court analyzed the limitation period for re-assessment under Section 40 of the Act. It was noted that the re-assessment order dated 04.01.2012 was passed beyond the prescribed period for the tax periods April 2006 to December 2006 and April 2007 to December 2007. The court emphasized that a vested right had accrued to the petitioner under the unamended provision, which could not be taken away by retrospective amendments. Thus, the re-assessment proceedings for these periods were held to be barred by limitation, affirming the petitioner's vested rights.4. Taxability of Transactions under the KST Act:The court observed that the Assessing Authority had not examined individual transactions but based its decision on a small sample of 60 transactions out of 51,435. This approach was deemed impermissible. The Tribunal, being the final fact-finding authority, failed to independently analyze the transactions. Consequently, the court remitted the matter to the Adjudicating Authority to re-examine transactions beyond March 2007 and March 2008 in light of the ACAR ruling, while transactions for the period April 2006 to March 2007 and April 2007 to March 2008 were held final and barred from re-assessment.Conclusion:The court quashed the orders passed by the Assessing Authority, Appellate Authority, and the Tribunal. The Assessing Authority was directed to re-examine transactions beyond the barred periods in accordance with the ACAR ruling and relevant statutory provisions. The petition was disposed of accordingly.