TaxTMI 
TaxTMI 
2021 (3) TMI 635
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....M/s ANS Constructions Ltd., vs. Deputy Commissioner 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 turnov....
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....e appellant, the Deputy Commissioner of Commercial Taxes 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....
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....le 163 for a period of not less than three years or under section 36 of the Karnataka 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 compu....
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....of the first appellate authority acting more loyal than the king, even though a claim had not been put forth by the assessee 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....
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....ding the input tax credit in terms of Section 10[3] and Section 10[4]. It is not in dispute that no input tax credit has been claimed by the petitioners in 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....
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....es the scheme of the KVAT Act and it also runs contrary to the object of the KVAT Act. 13. Another ground has been raised by the appellant - company stating that Entry 54 of List 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 ....
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.... learned counsel is that the learned Single Judge erred in placing reliance upon the judgment delivered in the case of Infinite Builders and Developers vs. Additional Commissioner of Commercial 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....
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....ection 35 of the KVAT Act. He has further argued that the registered dealer in the event of not claiming the input tax credit in the monthly returns, by filing annual statement in From VAT 240 is 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 i....
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....nvolved in the present case, the relevant provisions which are necessary to adjudicate the matter under KVAT Act and KVAT Rules are extracted hereunder, which read as under: "Section 2[28] of the Act defines "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 m....
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....her manufactured tobacco, on the maximum retail price indicated on the label of the container or pack thereof, after reducing from such maximum retail price an amount equal to the tax payable, where the total amount payable to the dealer as the consideration for sale of such goods exceeds five hundred rupees or any other higher amount as may be notified by the 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.- Deduc....
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....from all his types of business shall be reduced to the extent of the total turnover or total consideration in respect of each such type, for calculating the amount payable by way of composition for such type of business under sub-section (1); and (e) in respect of such type of business for which, he has not exercised his option or is not eligible, for composition under sub-section (1), then on the taxable turnover as determined from the balance total turnover after reduction 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 op....
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....b-section (2) of Section 9, shall furnish a return in such form and manner, including electronic methods, and shall pay the tax due on such return within twenty days after the end of the preceding month or any other tax period as may be prescribed. Provided that the specified class of dealers as may be notified by the Commissioner shall furnish particulars for preparation of the return in the prescribed form or submit the return in the prescribed form, electronically through internet in the manner specified in the said notification: Provided 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....
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....cribed. The tax on any sale or purchase of goods declared in turnover furnished becomes payable at the expiry of the period of 20/15 days without requiring issue of a notice for payment of such tax. The registered dealer is entitled to file returns within six months from the end of the relevant tax period. It is the deemed assessment based upon the returns filed by every registered dealer under Section 35 of the KVAT Act except in certain cases where the Commissioner may notify. 29. The statutory provisions as contained under Section 10(3) of the KVAT Act amended from time to time and the relevant statutory provisions prior to amendment and after the amendment are quoted as under: "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 A....
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....deduction at the time any return in respect of the sale is furnished, except such tax paid under sub-section [2] of Section 3." 30. The appellant company placing reliance upon Form VAT 240 was claiming input tax credit, whereas there is a period prescribed for claiming such input tax credit. Merely because the appellant company was under an obligation as it was having turnover of more than Rs. 100 lakhs to submit audited statement of accounts (Form VAT 240), it cannot get a new lease of life to claim input tax credit. 31. The learned Single Judge has placed reliance upon the judgment delivered in the case of Kirloskar Electricity Co.Ltd., vs. State of Karnataka and Another, reported in (2018)50 GSTR 385 (Karnataka) and has rightly arrived at a conclusion that a registered 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 ....
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....atement in Form VAT 240, which is certainly not a returns. 35. Learned counsel for the appellant has also placed reliance upon the judgment in the case of M/s Kirloskar Ferrous Industry Ltd., vs. Assistant Commissioner of Commercial Taxes, Koppal and Others, reported in 2013-VIL-70-KAR (WA.No.30124/2013(T-RES), decided on 17.7.2013). In the aforesaid case, the assessee was claiming input tax rebate based upon From VAT 240. The order of Commissioner of Commercial Taxes was under challenge. The learned Single Judge has dismissed the writ petition based upon the fact of an alternate remedy being available. The Division Bench has remanded the matter back to the assessing authority to decide the matter in accordance with law and therefore, this judgment again does not help the appellant. 36. Therefore, in the considered opinion of this Court, by no stretch of imagination it can be said that merely because the dealer has submitted audited statement of accounts in Form VAT 240 he is entitled for input tax credit. It is pertinent to note that Form VAT 240 is only the audited statement of accounts issued by the Chartered Accountant/Cost Accountant/Tax Practitioner and it can never be ....