TaxTMI 
TaxTMI 
TaxTMI 
2021 (3) TMI 635
X X X X Extracts X X X X
X X X X Extracts X X X X
....sioner of Commercial Taxes (Audit) and passed in WP.No.33372/2018 (M/s. Mangalore Force vs. the Assistant Commissioner of Commercial Taxes - Enforcement -02 & Anr.,). 3. The facts of WA.No.309/2020 are narrated as under: The facts of the case reveal that the appellant before this Court is a private limited company registered under the Companies Act and is engaged in the business of execution of civil works, Contract like construction of apartments and commercial complexes. The company is a registered dealer having TIN No.29420098042. The company is filing returns of turnover keeping in view the statutory provisions as contained under the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as the KVAT Act). 4. That in respect of financial year 2009-2010 the appellant - company had filed returns of turnover claiming the deduction allowable under the provisions of KVAT Act r/w the provisions of the Karnataka Value Added Tax Rules, 2005 (hereinafter referred to as the KVAT Rules). The appellant - company had claimed input tax rebate to the extent of Rs. 4,22,34,730.00. It has been further stated that keeping in view the turnover of the appellant - company as it exceeded Rs. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xes has correctly allowed the input tax rebate at Rs. 4,98,45,046.00 as reported in the audited statement of accounts in form 240 as against the input tax rebate of Rs. 4,22,34,730.00 as claimed in the returns of turnover. It has been further stated that the Deputy Commissioner of Commercial Taxes allowed the differential input tax rebate of Rs. 76,10,315.00 based on the said Form 240. 7. The appellant has further stated that the Commissioner of Commercial Taxes issued a notice on 26.12.2015 under Section 64(1) of KVAT Act calling upon the appellant to show cause as to why revisional proceedings should not be concluded to set aside the reassessment order passed by the Deputy Commissioner of Commercial Taxes to the extent of wrong allowance of input credit as per Form 240 and to demand payment of tax along with interest and penalty. The appellant had filed a detailed reply to the said notice on 11.01.2016 inter alia contending that all goods procured by payment of tax have been used in the execution of works contract and duly accounted in the books of accounts. It was further stated that there is no restriction under Section 10 or any other provision of the KVAT Act with respect of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a Sales Tax Act, 1957 (Karnataka Act 25 of 1957) for a period of not less than three years on the date of such audit or by a Chartered Accountant [or a Cost Accountant]. (2) Every other registered dealer who is required to have his accounts audited under sub-section (4) of section 31 shall have his accounts audited by a Chartered Accountant. (3) The audited statement of accounts shall be submitted in Form VAT 240 to the jurisdictional Local VAT officer or VAT sub-officer within six months after the end of the relevant year." 26. Thus, it is clear that only in certain cases exceeding the total turnover fixed under Section 31[4] accounts of the dealer has to be audited. In terms of Rule 34[3], this audited statement of accounts shall be submitted in Form VAT 240 to the competent authority within 9 months after the end of the relevant year. Form VAT 240 is only the audited statement of accounts issued by the Chartered Accountant/Cost Accountant/Tax Practitioner, as the case may be which would facilitate the assessment but the same would not be a construed as a return to compute the net tax liability under Section 10[3]. The substantive provision of the Act, Section 10[3] has to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee through the returns, the first appellate authority has ventured to allow the appeals and grant relief to the assessee, contrary to statutory provisions! 54. The Act specifically provides for the manner in which the extent of purchases made by an assessee from registered dealer and the claim for corresponding tax made at the time of purchase can be claimed by prescribing a specific mode and that is not complied by the assessee. Therefore, even assuming that the benefit of reduction of Section 3(2) tax liability as given by the appellate authority is not disturbed by the revisional authority, it cannot be a ground for extending such a benefit in respect of input tax rebate either by comparison or otherwise. 56.In so far as Mr Keshava Murthy's submission that in a best judgment assessment, where a return is not accepted and is based on the information as disclosed in the books of accounts etc., the claim in the returns or non-claiming in the returns cannot be of much significance, we find that claim for input tax credit can only be in specified form and not in a generalised form and therefore, the arguments cannot succeed. We have discussed this aspect elaborately as above. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n any of the return filed during the relevant tax periods, merely on the audited statements filed by the Chartered Accountant/Cost Accountant/Tax Practitioner, no input tax credit can be allowed. If such an argument if accepted, filing of monthly returns would be an empty formality making the provisions of Section 35 to 56 as well as Section 72 of the Act redundant. The arguments of the learned counsel that the amendment brought to Section 10[3] with effect from 01.08.2008 substituting the words under the provisions of "the Act" for the words "Chapter V" implies to allow input tax credit on the basis of Form VAT 240 even in the absence of claim of input tax credit in the return filed by the assessee is wholly misconceived. By giving such an interpretation, the entire gamut of taxation mandating the strict adherence of filing returns, the foundation for assessment to determine the net tax liability gets uprooted, effacing Chapter V and the penal provision under Section 72 disturbing the scheme of the Act which is not the intent and object of the amendment brought to Section 10[3] of the Act with effect from 01.08.2008. In my considered opinion, the amendment would suggest strict com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st II of VII Schedule to the Constitution provides for levy of tax on sale or purchase of goods and the said entry contemplates levy of tax at single point and there is no provision for double levy of tax on the sale of goods. Originally the Sales Tax Act provided for levy of tax at the first point of sale and exempted the levy at subsequent points. However, there was lot of revenue loss on account of the value addition made to the goods and therefore, the Scheme of VAT Act provided for levy of tax at each point of sale, but to avoid violation of constitutional provisions the scheme provided for set off of input tax paid on previous purchases. It is contended that if the input tax paid by the registered dealers is not allowed to be set off on technical grounds, such an act would be ultra vires the Constitution since it amounts to double levy of VAT on the sale of same goods and it also results in cascading effect. It is also argued that keeping in view the statement of objects and reasons of KVAT Act, the order passed by the learned Single Judge denying input tax credit on technicalities results in levy of VAT on subsequent purchases, thus negates the set off scheme contemplated un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ercial Taxes, reported in (2014) 68 VST 24, which has got no application to the facts and circumstances of the present case. It has been further argued that in the aforesaid case the Division Bench had no occasion to consider the claims made in Form VAT 240 in compliance with the provisions of Section 31 of the VAT Act at the time of reassessment and that judgment was delivered prior to the amendment by Act No.5 of 2008. It has also been argued that the learned Single Judge has erred in holding that Form VAT 240 cannot replace the returns and it will result in discrimination amongst the dealers. It has been argued that the statue provides submission of audited statements in Form VAT 240 only in respect of those dealers having turnover more than Rs. 100 lakhs and therefore, as there is a special provision for dealers having turnover of more than Rs. 100 lakhs, the learned Single Judge could not have held that it will create two classes of tax payers under the KVAT Act. 18. It has also been argued by the learned Single Judge has not taken into account the subsequent judgments delivered in the case of Sonal Apparel Pvt.Ltd., vs. State of Karnataka, reported in 2016(85) KLJ 1 and Kirl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not entitled to claim the same on the basis of the annual statement in Form VAT 240. He has placed reliance upon the judgment delivered in the case of Osram Surya (P) Ltd., vs. Commissioner of Central Excise, Indore, reported in (2002) 9 SCC 20. 22. The learned Government Advocate for the State has also argued that all the registered dealers are not required to file Form VAT 240 and dealers having turnover of more than Rs. 100 lakhs are required to file Form VAT 240 and in case based upon Form VAT 240 input tax credit is allowed, it will result in discrimination and that is not the intent of the legislation. He has stated that the order has been passed by the Commissioner of Commercial Taxes strictly in consonance with the statutory provisions governing the field. Hence, the question of granting relief to the appellant in respect of the input tax credit based upon Form VAT 240 does not arise. 23. Learned Government Advocate for the State placing reliance upon the judgment delivered in the case of Osram Surya (P) Ltd., (supra) contended that the statue fixing a time limit for enforcement of a right does not amount to taking away the right. In the present case also there is a time....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es "Return" as under: "Return" means any return including a revised return prescribed or otherwise required to be furnished by or under this Act;" "Tax period" is defined under Section 2[33] of the Act as under: "Tax period" means such periods as may be prescribed;" Section 3. Levy of tax.- (1) The tax shall be levied on every sale of goods in the State by a registered dealer or a dealer liable to be registered, in accordance with the provisions of this Act. (2) The tax shall also be levied, and paid by every registered dealer or a dealer liable to be registered, on the sale of taxable goods to him, for use in the course of his business, by a person who is not registered under this Act. Section 4. Liability to tax and rates thereof.- (1) Every dealer who is or is required to be registered as specified in Sections 22 and 24, shall be liable to pay tax, on his taxable turnover, (a) in respect of goods mentioned in.- (i) Second Schedule, at the rate of once per cent; (ii) Third Schedule, at the rate of five and one half per cent; and (iii) Fourth Schedule, at the rate of twenty per cent. (b) In respect of.- (i) declared goods as specified in Section 14 of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Commissioner. (6) Where tax in respect of his purchase of goods is collected in accordance with sub-section (5).- (a) a registered dealer whose sale of such goods is not liable to tax under sub-section (5), shall be eligible for refund or adjustment of any amount of tax collected on his purchase, which is in excess of the tax payable on his turnover relating to sale of such goods, and the burden of proving that the tax has been collected and paid in accordance with the said sub-section shall be on the dealer; (b) a person who is not a dealer liable to get registered under the Act, may claim refund of any amount paid by the selling dealer in excess of the tax payable on the consideration paid by him to such conditions as may be prescribed. Section 14. Special rebating scheme.- Deduction of input tax shall be allowed on purchase of goods, specified in clauses (5) and (6) of sub-section (a) of Section 11, to the extent of the input tax charged at a rate higher than four per cent or any lower rate as may be notified by the Government. Section 15. Composition of tax.- (1) Subject to such conditions and in such circumstances as may be prescribed, any dealer other than a d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eduction as specified in clause (d), he shall be liable to tax as specified under Section 4. (3) Any dealer eligible for composition of tax under subsection (1) many report, to the prescribed authority, the exercise of his option and he shall pay such amount due and furnish a return in such manner as may be prescribed. (4) Any dealer opting for composition of tax (under this section) shall not be permitted to claim any input tax on any purchases made by him. (5) Notwithstanding anything contained in (sub-section( 1)).- (a) a dealer executing works contracts and who purchases or obtains goods from outside the State or from outside the territory of India shall be eligible to opt for composition under sub-section (1), and if the property in such goods (whether as goods or in some other form) is transferred in any works contract executed by him, the dealer shall be liable to pay tax on the value of such value shall be deducted from the total consideration of the works contracts executed on which an amount as notified is payable under sub-section (1) by way of composition in lieu of the tax payable under the Act; (b) in the case of a dealer executing works contracts and opting....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d further that the specified class of dealers as may be notified by the Commissioner shall pay tax payable on the basis of the return, by electronic remittance through internet in the manner specified in the said notification. (2) The tax on any sale or purchase of goods declared in a return furnished shall become payable at the expiry of the period specified in sub-section (1) without requiring issue of a notice for payment of such tax. (3) Subject to such terms and conditions as may be specified, the prescribed 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 ther....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder: "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 (1) and [2] ..................... (3) Subject to input tax restrictions specified in Section 11, 12, 14, 17,18 and 19, the net tax payable by a registered Dea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stered dealer is not entitled to claim input tax credit on the premise that the registered dealer has not claimed such input tax credit in that particular period. The statutory provisions under the KVAT Act are very clear and no statutory provision entitles a dealer to claim input tax credit based upon Form VAT 240. 32. Learned counsel for the appellant has drawn the attention of this Court towards the judgment delivered in the case of Eicher Motors Ltd., vs. Union of India, reported in 1999(106) ELT 3 (SC). The aforesaid case was a case relating to the Central Excise Act, 1944. This Court has carefully gone through the aforesaid case and it is certainly distinguishable on facts as under the KVAT Act there is a period prescribed for claiming input tax credit and the appellant wants to claim input tax credit dehors the statutory provisions, that too, after the limitation is over based upon Form VAT 240, which is certainly not a return. 33. Reliance has also been placed upon a judgment delivered in the case of the Collector of Central Excise, Pune vs. Dai Ichi Karkaria Ltd., reported in 1999 (112) ELT 353 (SC). Again, it is a case under the Central Excise Act, 1944 r/w Central Exci....