TaxTMI 
TaxTMI 
2014 (7) TMI 1346
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....reinafter referred to as 'AA') came to be quashed. While quashing the reassessment orders of AA, the FAA has set aside the orders of the levy of interest and penalty under Section 36 and under Section 72(2) of the Act. Further, the directions are given to refund the amount of tax, interest and penalty collected in pursuance of the impugned orders which are quashed. Having not been satisfied by the orders of the FAA, the appellant has preferred appeals before this Tribunal challenging the appellate order with respect to the one of the issues which has been answered against the appellant by the FAA namely the question of time limitation to pass orders for the impugned tax periods in view of the time-limit prescribed under Section 40(1) of the Act. Even though, the appellant succeeded before the FAA, in view of withholding of refund by the Commissioner of Commercial Taxes under Section 51(1) of the Act, which has been upheld by this Tribunal while disposing the Interlocutory Application No. 1 filed by the State in cross appeals granting stay for refund of tax vide order dated 30th March, 2012 in STA Nos. 768 to 780 of 2011, the appellant challenged this stay order of the Tribu....
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....he numbers, the Registry was directed to allocate STA Nos. to cross appeals and after allocation of the same, the appeals of the appellant and the cross appeals of the State have been heard on 10th June, 2014. 3. The brief facts involved in these appeals are alluded thus: (i) SAP India Private Limited i.e., the appellant is a dealer registered under the Act and also as an incorporated company under the Companies Act, 1956 with its registered-cum-corporate office located at Bangalore. (ii) The appellant is engaged in the business of sale of software and also into the provisions of training, maintenance and consulting services. (iii) The appellant has been subjected to audit by the AA for the tax periods of April 2005 to March 2006 after issuing the first proposition notice dated 23rd March, 2010 followed by the revised proposition notice dated April 19, 2010. The demand from the first proposition notice of Rs. 32,57,441/- of tax, penalty and interest has been raised for an amount of Rs. 30,19,65,840/- of tax, penalty and interest. This has been further revised by the 3rd proposition notice dated June 25, 2010 wherein, the AA had proposed to levy tax, pe....
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....tober, 2010 during personal hearing before the AA. Accordingly as per Rule 37 of KVAT Rules read with Section 40(1)(a) of the Act, the impugned order is not sustainable since the AA cannot reassess the turnovers for September 2005 or any tax period prior to September 2005 and hence to that extent impugned order in appeal should be set aside. The appellant urges to apply Section 40(1)(a) in such circumstances, otherwise the whole purpose of the KVAT Act, 2003 prescribing such period of limitation becomes redundant. It is also submitted that the provisions of Section 40(1)(b) providing a time-limit of three years cannot be invoked in the circumstances as no additional evidence of fact came to the knowledge of the AA during the reassessment proceedings. (v) It is the stand of the appellant that the books of account of the appellant further impugned periods of April 2005 to March 2006 and for also for the financial year 2006-2007 were examined by the Deputy Commissioner of Commercial Taxes (Investigation) which had led to the issuance of reassessment order under Section 39(1) of the Act for the periods of September 2006 to March 2007. (vi) The appellant submits that a....
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....ner of Commercial Taxes (Appeals-3), Bangalore and Another 2011(71) Kar. L.J. 647 (HC) (DB) : (2012) 55 VST 89 (Kar.) (DB), in W.P. Nos. 91 to 101 of 2011 lays down the certain guiding principles. (iv) The fifth and the last issue pertain to interest and penalty. This levy has been allowed by the FAA for the reason that issues at 3 and 4 are held in favour of the appellant and therefore there is no question of interest and penalty. In light of this cross-objection the orders of the AO may be upheld. 7. Perused the lower Court records. The common question of law and facts are involved in these appeals and cross appeals and hence, the same are clubbed together and disposed of by this common judgment. 8. After careful examination of the records, the following points arise for our consideration.- (1) Whether, the FAA is correct in holding that the reassessment of the AA is not barred by time limitation as per Section 40 of the Act? (2) Whether, the cross appeals of the State are justified in view of the detailed findings of the FAA on each of the issues raised in the appeal which is being contested in these cross appeals? (3) What order re....
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....er Section 38 or reassessment under Section 39 of an amount of tax due for any prescribed tax period shall not be made after five years after the end of the prescribed tax period: Provided that an assessment or reassessment relating to any tax period upto the period ending 31st day of March, 2007 shall be made within a period of eight years after the end of the prescribed tax period: Provided further that an assessment or reassessment relating to any tax period commencing from the 1st day of April, 2007 upto the period ending 31st day of March, 2012 shall be made within a period of seven years after the end of the prescribed tax period. (2) Notwithstanding anything contained in sub-section (1), if any tax is, not paid by a dealer who has failed to get registered though liable to do so or fraudulently evaded attracting punishment under Section 79, an assessment or reassessment may be made within eight years from the end of the prescribed tax period: Provided that an assessment or reassessment relating to any tax period upto the period ending 31st day of March, 2007 shall be made under this sub-section within a period of ten years after the end of ....
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....een raised in the cross appeal is that there is sale of software in the course of inter-State Trade and Commerce from Karnataka or there is intra-State sale in the State of Karnataka. This is based on the fact that AA has given finding that there is a unique number to each unique customer. The fourth issue which has been raised in the cross appeals is that the software implementation activity carried out by the appellant is in the nature of works contract. The last and fifth issue is with regard to the imposition of penalty and levy of interest. In this regard, the AA order when looked into simply reveals the fact that the AA in order to arrive at total turnover and taxable turnover has relied on the annual financial statements as evident from his finding recorded at page No. 3 of the reassessment order that since the figures for each month or tax period was not furnished, the receipts are considered for the month of March 2006, as this figures are as per the annual account furnished. This is totally incorrect and improper on the part of the AA. In view of the fact that the reassessment order has been passed for the tax period of March 2006 'alone' instead of passing orders....