TaxTMI 
TaxTMI 
2023 (1) TMI 341
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....ct has to be read into Section 10(3) of the K-VAT Act for the purpose of availing input tax credit? (c) Whether the Hon'ble Tribunal was right in holding that for the purposes of K-VAT Act, 'sale' will be deemed to have been completed at the time when invoice is issued by the selling dealer and not when the goods are accepted by the Petitioner after quality testing which is when 'sale' takes place in terms of the Sale of Goods Act, 1930? (d) Whether the Hon'ble Tribunal has erred in not setting aside the interest and penalty levied on the Petitioner? 2. Heard Shri. G. Shivadass, learned Senior Advocate for the Assessee and Shri. Jeevan J. Neeralgi, learned AGA for the Revenue. 3. The present appeal and other connected cases are being disposed of by this common judgment as they involve common question of law. Thus, the question that arises for consideration is, whether the assessees' are entitled to the benefit of input tax credit claimed by them after the time limit from the date of invoice under Section 10(3) of the K-VAT Act? 4. Briefly stated the facts of the case are, assessee, BEML (M/s. Bharat Earth Movers Ltd.), a Government....
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....holding thus: 1) Appeal is allowed in part. 2) It is held that the amendment to Section 10(3) of the Act by virtue of Karnataka Value Added Tax (Amendment) Act, 2015 (Karnataka Act No. 15 of 2015) is clarificatory in nature and thus thereby operates retrospectively. 3) It is further held that the crores appellant is entitled for the benefit of Twenty thousand input tax credit amounting to Rs. 20,26,34,785 (Rs.twenty-six lakhs thirty-four and seven hundred eight five) which is claimed within the period of six months as the said purchases are claimed in the returns within six months from the date of tax invoices as per substituted Section 10(3) of the Act which operates retrospectively'. 4) It is also held that the appellant is not eligible for the input tax credit amounting to Rs. 3,45,97,651/. as the same is availed beyond six months as it is not in accordance with Section 10(3) & Section 35(4) of the Act. 5) The prescribed authority has to examine whether there is any blameworthy conduct on the part of the appellant before invoking the provisions of Section 72(2) of the Act for the purpose of levy of penalty. 6) The interes....
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....tate of Karnataka v. K. Bond Polymers Private Limited, Bangalore 2012 (73) Kar. L.J. 429 (HC), and State of Karnataka Vs. M/s. Manyata Promoters Pvt. Ltd. 2015 VIL 486 KAR, the Division Bench of this Court considered that the substantive provision of Section 10(3) of the Act does not prescribe a time limit for availment of credit was the unanimous understanding of both the Revenue and the assessee for almost 10 years right from 2005 till 2014. 11. In addition to the authorities noted above, Shri. G. Shivdass has placed reliance on the following authorities also. • Sonal Apparels Pvt Ltd & Ors Vs. State of Karnataka (2017) 97 VST 488 (Kar) • Kirloskar Electric Co. Ltd. & Ors Vs. State of Karnataka 2018 VIL 36 KAR. 12. Shri. Jeevan J Neeralgi, learned AGA, for the Revenue contented that: • the input tax credit disallowance is in accordance with Section 10(3) and Rule 37(2) as well as Section 7 and Section 35 of the KVAT Act; • the amendment w.e.f. 01-04-2015 to Section 10(3) of the KVAT Act is prospective in nature and not retrospective. Now, the dealers are allowed to claim Input Tax Credit relating to a tax period even if it....
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....1-04-2005 to 31-03-2015 provided for Input Tax Credit claim during the tax period to which it related to, unless it was claimed correctly within six months by revising the return as provided under section 35(4) of KVAT Act, if not claimed in the same tax period. 17. Undisputed facts of the case are, the assessee in the present appeal and other connected cases, has claimed input tax credit for the tax period prior to the year 2015. The credit claimed was disallowed by the Revenue on the ground that the assessees have not claimed the input tax credit within the prescribed time limit under Section 10(3) of the KVAT Act. 18. Section 10(3) of the KVAT Act (prior to 2015 amendment) reads as follows: 10. Output tax, input tax and net tax. (3) Subject to input tax restriction 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. 19. Section 10(3) of the KVAT Act (After 2015 amendment) read....
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....y upto six months by revising the return under Section 35(4) of the KVAT Act, apparently drawing inspiration from the decision in Centum Industries case, is not relevant. It would not be possible to hold that Section 10(3) first restricts availment of credit to the same month as the month of purchase and then Section 35(4) goes on to permit the same by way of revision of return would be absurd construction. Such an interpretation would lead to the conclusion that the KVAT Act encourages availment of credit by the dealer without ensuring the eligibility for the same, as delay in availment would result in denial of credit altogether and thereafter rectifying any incorrect credit available by revising the return. Such a view could not have been the intention of the legislature as that would lead to a situation where filing of a revised return under Section 35(4) would become a rule, rather than an exception... ...Section 10(3) of the KVAT Act, prior to its amendment vide the Karnataka Value Added Tax (Amendment) Act, 2015, shall be read down to enable the petitioners to calculate the net tax liability by deducting the input tax paid on its purchases from its output tax liabil....
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....tput tax is payable and the same has to be accounted in accordance with the provisions of the Act; • the Hon'ble Single Judge has erred in holding that the un-amended Section 10 (3) did not prescribe any time limit for availing input tax credit; • Section 10(3) read prior to April 01, 2015, mandatorily requires dealers to avail input tax credit only in the month in which the invoice is issued, and it was only after the amendment that dealers were permitted to avail credit of tax paid on purchases effected preceding five tax periods. 29. In the Kirloskar Electric (stated supra), the Hon'ble Single Judge, referring to Collector of Central Excise, Pune v. Dai Ichi Karkaria Ltd. 1999 7 SCC 448, has held that: 28. The Input Tax Credit under VAT law is pari materia with the concept of CENVAT or MODVAT under Excise Law and dealing with a similar problem, the Hon'ble Supreme Court in the case of Collector of Central Excise, Pune Vs. Dai Ichi Karkaria Ltd. 1999 (112) E.L.T.353 (SC) held in paragraph 17 as under:- "17. It is clear from these Rules, as we read them, that a manufacturer obtains credit for the excise duty paid on raw materi....