TaxTMI 
TaxTMI 
2019 (12) TMI 734
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.....13781 and 28178-28188/2017, the petitioner has challenged the re-assessment order dated 25.11.2016 passed by the prescribed authority under the provisions of the Act in addition to the other prayers sought. However, the prayers in clauses [d], [e], [f] and [g] are not pressed as having rendered infructuous. In W.P.No.32896/2016 the petitioner has challenged the reassessment orders as well as the demand notices dated 17.05.2016 and 18.05.2016 relating to the assessment years 2012-13 and 2013-14 respectively. Though the petitioner has sought for a direction to the respondent to allow the deduction of sub-contractor for the assessment year in question, the same is not pressed. Accordingly, the said prayer is dismissed as not pressed. 3. The fulcrum of dispute in these matters revolves around the interpretation of Sections 10[3] and 10[4] of the Karnataka Value Added Tax Act, 2003 ['Act' for short] inasmuch as the availment of input tax credit by the registered dealer based on the annual audit statement of accounts filed in Form VAT 240 notwithstanding no claim made in the return of turnover filed under Section 35 of the Act. 4. The petitioners are the dealers registered unde....
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.... KVAT Act relating to the period up to 2014-15. 8. Learned counsel for the petitioners argued that the amendment to Section 10[3] of the Act by Act No.5 of 2008 w.e.f., 01.08.2008 substituting the phrase "this Act" for the words "Chapter V" would indicate the entitlement of input tax credit by the registered dealer based on VAT Form 240. It was argued that the decision of the Authorities in rejecting the claim of input tax credit is contrary to Section 10[3] of the Act. Reliance was placed on the catena of judgments. 9. Learned Additional Government Advocate submitted that the writ petitions are not maintainable as the petitioners have not exhausted the alternative and efficacious remedy of statutory appeal available under the provisions of the Act. 10. Learned counsel inviting the attention of the Court to Section 35 of the Act, submitted that returns are required to be filed by every registered dealer and shall pay the tax due on such return within 20 days after the end of the preceding month or any other tax period as may be prescribed. Revised returns can be furnished under Section 35[4] of the Act wherein a time limit of 6 months is prescribed. In terms of Section 38[....
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....cribed authority may require any registered dealer.- (a) to furnish a return for such periods, or (b) to furnish separate branch returns where the registered dealer has more than one place of business. (4) If any dealer having furnished a return under this Act, other than a return furnished under sub-section (3) of Section 38, discovers any omission or incorrect statement therein, other than as a result of an inspection or receipt of any other information or evidence by the prescribed authority, [a] he shall furnish a revised return within the time prescribed for filing the return for the succeeding tax period; and [b] he shall furnish a revised return any time thereafter but within six months from the end of the relevant tax period, if so permitted by the prescribed authority." 13. Section 38 deals with the assessment of tax. In terms of the said provision, every dealer shall be deemed to have been assessed to tax based on the return filed by him under Section 35, except in cases where the Commissioner may notify the dealer of any requirement of production of accounts before the prescribed authority in support of a return filed for a....
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....Act was amended from time to time. Section 10[3] as it stood prior and after the amendments is quoted hereunder for ready reference: "SECTION 10[3] OF THE KVAT ACT PRIOR TO AMENDMENT Act No.5 of 2008: [3] Subject to input tax restrictions specified in Sections 11, 12, 14, 17, 18 and 19, the net tax payable by a registered dealer in respect of each tax period shall be the amount of output tax payable by him in that period less the input tax deductible by him as may be prescribed in that period and shall be accounted for in accordance with the provisions of Chapter V. Section 10[3] of the Act after its amendment by Act No.5 of 2008 w.e.f., from 01.08.2008: [3] Subject to input tax restrictions specified in Sections 11, 12, 14, 17, 18 and 19, the net tax payable by a registered dealer in respect of each tax period shall be the amount of output tax payable by him in that period less the input tax deductible by him as may be prescribed in that period and shall be accounted for in accordance with the provisions of this Act. SECTION 10(3) OF THE KVAT ACT AFTER ITS SUBSTITUTION IN 2015 w.e.f. April 1, 2015: 10. Output tax, input tax and net tax ....
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....is of which input tax credit claimed was pertaining to a month or a period prior to the relevant tax period has held that the claim of credit of input tax is indefeasible as was the case of CENVAT under Excise Law and such credit of ITC under VAT law which is equivalent to tax paid in the chain of sales of the same goods, cannot be denied on the anvil of machinery provisions. It is held that the input tax credit cannot be denied only because input tax credit claim is not made in respect of sale invoices which are not pertaining to same tax period, nor it can be denied on the ground that such claim is not made immediately in the month or months following the month of purchase of goods in question. The machinery provisions of filing of returns under Section 35 of the KVAT Act cannot defeat the substantial claim under Section 10[3] of the Act. The revenue is entitled only to verify that the sale invoices are genuine and valid and such input tax credit claim is not duplicate fictitious or bogus. Indeed, it was not in dispute the input tax credit was claimed in the returns filed by the registered dealer. 19. Pursuant to the said decision of Kirloskar Electricity Company, circular No.....
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....However, in order to ensure that the Act does not fall foul of the prohibition placed by the Constitution of India on double taxation, the provisions of the Act permit a dealer to deduct the amount of tax paid by him on his purchases while calculating his net tax liability. If the interpretation afforded by the Revenue to the meaning of Section 10(3) were to be accepted, the petitioners would be deprived of the benefit of availing credit of tax paid on their purchases, it would result in tax being levied under the provisions of the same Act on the same commodity at multiple stages. Xxxx A case can be found in favour of the petitioners in the alternative as well. In that, it is not in dispute that from the inception of the KVAT Act, Section 10(3) was consistently interpreted by the Revenue to mean that a dealer is permitted to deduct the input tax paid on his purchases irrespective of the month in which the purchases were effected. Based on the understanding that Section 10(3) did not require dealers to avail credit only in the month in which the purchases were effected. They were held entitled to avail such credit, as long as the claim of input tax credit was supp....
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....the relevant paragraphs which reads thus: "12. It is contended on behalf of the assessee that, once input tax has been paid, by virtue of Section 10 the assessee is entitled to the rebate of the tax against the output tax notwithstanding the fact that such a claim is not put forth in the returns filed within the aforesaid period. He is entitled to claim such rebate even after the said period, as no period of limitation is prescribed. Once payment of input tax is admitted, the assessee is entitled to the benefit of setting off the input tax against the output tax. If the said interpretation were to be accepted it would render the period prescribed under the Act meaningless. When in the statute a specific period is prescribed for filing of the return under Section 35(1) of the Act and when a provision is made under Section 35(4) of the Act for filing of a revised return again prescribing a time limit, when in sub-section (3) of Section 10 it is categorically stated that the input tax shall be accounted in accordance with the provisions of this Act, the assessee would not be entitled to the benefit conferred on him under sub-section (4) of Section 10, if it is not accounted f....
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....t the assessee. " 24. Section 31[4] of the Act reads thus: "[4]. Every dealer whose total turnover in a year exceeds one hundred lakh rupees shall have his accounts audited by a Chartered Accountant or a Cost Accountant or a Tax Practitioner subject to such conditions and such limits as may be prescribed and shall submit to the prescribed authority a copy of the audited statement of accounts and prescribed documents in the prescribed manner. Provided that every dealer whose total turnover for the year ending Thirty First day of March, 2010 exceeds forty lakh rupees shall have his accounts audited." 25. Rule 34 of the Rules provides for audit and submission of accounts. The said rule is extracted hereunder for ready reference: "34. Audit & submission of accounts. - (1) Every registered dealer who is, not a company defined under the Companies Act, 1956 (Central Act 1 of 1956) or a company incorporated outside India and required to have his accounts audited under sub-section (4) of section 31 shall have his accounts audited by a Tax Practitioner enrolled under rule 163 for a period of not less than three years or under section 36 of the Karnat....
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....led any revised return in respect of the period from April 2005 to March 2006 nor claimed any input credit return, but, on the other hand only filed nil tax liability return. The assessee persisted and did not file any revised return or anything at all even after inspection, notice etc. In this view of the matter, there was nothing at all before the assessing authority to provide any input tax deduction in favour of the assessee for the entire period from April 2005 to March 2006. So it is urged by the appellant/assessee that even long after the expiry of the period in which the revised return could have been filed, the fact remains that there is no response by filing any revised returns. In such a position, we are of the view that the first appellate authority did go out of its duties and responsibilities and acted out of its jurisdiction to entertain a claim for deduction of input tax rebate in favour of the assessee by accepting some material, purporting it to be based on the books of accounts and the purchase invoices etc and in granting reliefs to the assessee. We find, it is a case of the first appellate authority acting more loyal than the king, even though a claim had not b....
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.... the revenue also loses revenue unless it adheres to the requirements of the statutory provision. It is for this reason we are not impressed by the submission on behalf of the assessee that there was no need for taking a technical approach or hyper technical approach and if the appellate authority had taken a pragmatic and plausible view, the revisional authority should not have disturbed the same or interfered with the same, is not accepted." 28. In the judgments referred to by the learned counsel for the petitioners discussed supra, the claim of input tax credit was made in the subsequent months/belatedly in the returns filed. In the present case, it is not in dispute that no such claim of input tax credit is made by the assessee in filing the monthly returns but the same is claimed on the basis of audited statement of accounts, Form VAT 240 - certificate issued by the Chartered Accountant/Cost Accountant/Tax Practitioner within a period of 9 months after the end of the relevant year. 29. Return is the basis on which the computation of tax liability has to be made including the input tax credit in terms of Section 10[3] and Section 10[4]. It is not in dispute that no input ....