TaxTMI 
TaxTMI 
2021 (4) TMI 133
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....e facts giving rise to filing of this petition briefly stated are that petitioner is a partnership firm engaged in the manufacture and sale of machine components, jigs and fixtures, in the name and style of M/s Dynatech Tools and Devices. The petitioner is an assessee under the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as KVAT Act). The petitioner had filed returns in Form VAT 100 disclosing the total and net output turnover under the KVAT Act and admitted net output tax after claiming the benefit input tax credit on the local Registered Dealer purchases. 3. The case of the petitioner was taken up for audit and the assessing officer has verified the books of accounts produced by the petitioner as well as the claim of inp....
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....rtion. Not only additional demand was created but also levied penalty under Section 72(2) of the KVAT Act. 6. Against the order passed by the assessing officer dated 30.4.2011, the petitioner preferred appeals before the first appellate authority and the first appellate authority, namely Joint Commissioner of Commercial Taxes affirmed the order passed by the assessing officer vide order dated 5.12.2015. Thereafter, second appeals were preferred before the Karnataka Appellate Tribunal (hereinafter referred to as 'the Tribunal') and the Tribunal has dismissed the appeals by order dated 4.1.2018. In the aforesaid factual background, this petition has been preferred raising the following substantial questions of law:- 1) Whether the T....
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....ealers, on job work by collecting labour charges. The assessing officer has restricted input tax credit proportionately on job work by applying the formula prescribed under Rule 131 of the KVAT Rules. 10. To decide the controversy, it is necessary to take note of Section 17 of the KVAT Act and Rule 133 of the KVAT Rules, which are reproduced as hereunder: "Section 17. Partial rebate.- Where a registered dealer deducting input tax.- (1) makes sales of taxable goods and goods exempt under Section 5, or (2) in addition to the sales referred to in clause (1), despatches taxable goods or goods exempted under Section 5 outside the State not as a direct result of sale or purchase in the course of inter-State trade, or (3) puts to use the ....
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.... deduction of input tax in respect of capital goods shall be allowed to a dealer registered under the Act where the taxable turnover of the dealer is less than the limit specified in sub-section (2) of section 22 during the year in which the capital goods are purchased. (e) The deduction shall be claimed by the dealer in his monthly return. Provided that any balance of deduction of input tax in respect of capital goods purchased prior to the first day of April, 2006 and in respect of which input tax rebate has already been granted in Form VAT 175, shall be claimed by the dealer in his return for the month of April, 2006. (2) Where there is a change in use of the capital goods, after taking deduction of input tax, and the dealer....
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....ork and that since job work is out of the purview of the provisions of the KVAT Act and Rules, the same is not covered under Section 17 of the KVAT Act and hence Rule 131 cannot be applied. 13. We have carefully perused the findings arrived at by the Tribunal in respect of the aforesaid issue. By a bare reading of Sections 12 and 17 of the KVAT Act, it is crystal clear that when the goods are partly used in their business of taxable goods and partly used for any other purpose (other than sale, manufacturing, processing, packing or storing of goods), then the apportionment has to be done keeping in view the formula prescribed under Rule 131 of the KVAT Rules. 14. In the present case, the petitioner has purchased capital goods from local Re....