TaxTMI 
TaxTMI 
2021 (10) TMI 888
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....e petitioner? 3. Whether on the facts and circumstances of the case the Tribunal was right in coming to the conclusion that tax can be levied on the entire sales turnover? 4. Whether on the facts and circumstances of the case the petitioner is eligible to claim the deduction under 3[2][f] of the KVAT Rules? 5. Whether on the facts and circumstances of the case the KVAT has to be levied on the Value Addition or on the entire sales turnover? 6. Whether on the facts and circumstances of the case the petitioner is eligible for the tax deduction as per Rule-3 of the KST Rules? 7. Whether on the facts and circumstances of the case the Tribunal was right in levying the tax on the entire sale value/total turnover and not on the value addition/taxable turnover? 8. Whether on the facts and circumstances of the case the Tribunal was right in confirming the order of the appellate authority and audit authority? 9. Whether on the facts and circumstances of the case the Tribunal was right in coming to the conclusion that there is no violation of principles of natural justice? 10. Whether on the facts and circums....
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....2005 to 2014. Entry 59A was introduced for the first time with effect from 01.03.2004 whereby liquor was made exigible to tax at 5.5.%. Placing reliance on the budget speech of the State Government, it was submitted that the State intended to levy tax to capture value addition, the same has been confirmed by the Division Bench ruling of this Court in the case of Heaven Inn [Bar Attached] V/s. State of Karnataka and Others [2016-VIL-429-KAR]. However, the Authorities have denied the input tax credit for the reason that no input tax was paid by the assessee and also relying on the notification dated 28.02.2014 issued under Sub-section [1] of Section 5 of the KVAT Act by the Government of Karnataka ignoring the intention of the legislature to levy tax only on 'value addition'. 7. Nextly, it was argued by the learned Senior Counsel that no separate mechanism is fixed to capture value addition. The only mechanism would be Rule 3 [2] [f] of the Karnataka Value Added Tax Rules. Referring to this Rule, learned Senior Counsel submitted that the taxable turnover has to be determined by allowing the deduction of "all amounts of goods which are exempted under Section 5 are sold" from....
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....ted under Section 5 of the Act by the purchaser of the assessee would not be made applicable to seek deduction from the total turnover to determine the taxable turnover. 10. We have considered the submission made by learned counsel for the parties and perused the records. 11. Entry 59A of the Third schedule to the KVAT Act reads thus: 59-A Liquor including beer, fenny, liqueur and wine 12. Section 10 of the KVAT Act reads thus: 10. Output tax, input tax and net tax.- (1) Output tax in relation to any registered dealer means the tax payable under this Act in respect of any taxable sale of goods made by that dealer in the course of his business, and includes tax payable by a commission agent in respect of taxable sales of goods made on behalf of such dealer subject to issue of a prescribed declaration by such agent. (2) Subject to input tax restrictions specified in Sections 11,12,14, 1[17 and 18], input tax in relation to any registered dealer means the tax collected or payable under this Act on the sale to him of any goods for use in the course of his business, and includes the tax on the sale of goods to his agent who purchases such goo....
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....(1) of Section 5 of the KVAT Act read with section 21 of Mysore General Clauses Act, 1899, amends the notification dated 28.2.2014 with immediate effect. In the said notification, liquor licensee subjected to Value Added Tax with effect from 1.3.2014 are specified as under:- 1. CL-9 Bar and Restaurant in urban areas 2. CL-4 Clubs in the entire State 3. CL-6A Star Hotels in the entire State 4. CL-7 Lodging Houses in the entire State 16. In terms of the said notification, the assessee, CL-9 licence holder, running Bar and Restaurant in urban area is liable to pay VAT at 5.5% as per Entry No.59-A on liquor including beer, fenny, liqueur and wine. Some of the assessees including the assesee herein had challenged the constitutional validity of Entry No.59A of III Schedule to KVAT and the notification dated 28.2.2014 issued by the Government of Karnataka in exercise of power under section 5(1) of KVAT Act in Writ Petition No.27825 of 2014 and connected matters. The said batch of matters were dismissed by the learned Single Judge by order dated 30.09.2015 upholding the validity of said entry and the notification impugned therein, the same has been co....
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....f) is the mechanism available to determine the value addition which is exigible to tax referring to the Budget Speech and the decision of this Court in HEAVEN INN supra. 19. Three essential conditions of Rule 3(2)(f) are : (1) there must be goods exempt under section 5 of the KVAT Act; (2) sale of such exempted goods; (3) All amounts relating to the said exempted goods sold to be deducted for determining the taxable turnover. All these conditions must be fulfilled in the hands of the assessee. 20. Rule 3 of the Rules deals with determination of turnover. As per Rule 3(1), the total turnover of a dealer has to be determined as set out in clauses (a) to (g) with explanations thereof. Sub-Rule (2) of Rule 3 has to be read conjointly with sub-Rule 3(1) since the taxable turnover has to be determined by allowing deductions from the total turnover. Thus it cannot be gainsaid that Rule 3(2)(f) relates to the dealer where the exempted goods under section 5 of the KVAT Act are sold and such amounts are liable for deduction. Admittedly, liquor is not exempted under section 5 of the KVAT Act in the hands of the assessee herein. Merely for the reason t....