Karnataka High Court
State Of Karnataka Through vs M/S Bharati Retail Limited on 17 January, 2025
Author: Krishna S Dixit
Bench: Krishna S Dixit
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STRP No. 67 of 2019
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF JANUARY, 2025
PRESENT
THE HON'BLE MR JUSTICE KRISHNA S DIXIT
AND
THE HON'BLE MR JUSTICE G BASAVARAJA
SALES TAX REVISION PETITION NO. 67 OF 2019
BETWEEN:
STATE OF KARNATAKA THROUGH
THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGE KARYALAYA,
P. KALINGARAO ROAD, 1ST MAIN ROAD,
GANDHINAGAR, BENGALURU - 560 009.
... PETITIONER
(BY SRI. ADITYA VIKRAM BHAT, AGA)
AND:
M/S BHARATI RETAIL LIMITED
(PASADENA NO. 18, ASHOKA PILLAR ROAD,
JAYANAGAR 1ST BLOCK, BANGALORE - 560 001
... RESPONDENT
(RESPONDENT SERVED AND UNREPRESENTED)
Digitally signed
by NANDINI D THIS STRP IS FILED UNDER SECTION 65(1) OF THE
Location: High KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
Court of JUDGMENT DATED 10.12.2018 PASSED IN STA.NO.641/2017
Karnataka
ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT
BENGALURU, ALLOWING THE APPEAL FILED AGAINST THE
ORDER DATED 28.09.2017 PASSED IN VAT:AP.12/2017-18, ON
THE FILE OF THE JOINT COMMISSIONER OF COMMERCIAL
TAXES, (APPEALS)-3 BENGALURU, PARTLY ALLOWING THE
APPEAL AGAINST THE RE-ASSESSMENT ORDER DATED
08.02.2017 ON THE FILE OF THE ASSISTANT COMMISSIONER
OF COMMERCIAL TAXES, (AUDIT)-3-8, BENGALURU
(HEREINAFTER REFERRED IN SHORT AS 'THE AA') UNDER
SEC.39(1), 36, 37 AND 72(2) OF THE ACT, LEVYING HIGHER
RATE OF TAX, PENALTY AND INTEREST FOR THE TAX PERIOD
APRIL 2014 TO MARCH 2015 AND ETC.
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STRP No. 67 of 2019
THIS PETITION, COMING ON FOR HEARING, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT
AND
HON'BLE MR JUSTICE G BASAVARAJA
ORAL ORDER
(PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)
The Revenue is invoking the revisional jurisdiction
vested under 65(1) of the Karnataka Value Added Tax Act,
2023 impugning the Karnataka Appellate Tribunal order
dated 10.12.2018, which has granted benefit to the
assessee by favouring his appeal in STA No. 641/2017.
2. The text of the operative portion of the above
order in Paragraph Nos. 30 & 31 is as under:
"➤ The Appeal in STA No. 641/2017 is allowed.
➤ The matter is relegated to the AA with a
direction to conclude reassessment afresh in
the light of the observation made in the
judgment passed in the W.P. No. 509-
511/2018 by the Hon'ble High Court at the
earliest after affording opportunity to the
appellant but not later than 3 months from the
date of service of the order.
➤ The Registrar of the Tribunal is directed to
comply with Regulation 53(b) of Chapter-IX of
Karnataka Appellate Tribunal Regulations 1979
by communicating this order to the persons
mentioned therein.
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➤ The office is directed to send back the records
to lower authorities immediately."
3. A Co-ordinate Bench of this Court vide order
dated 18.03.2020, admitted the petition with the following
substantial question of law:
"Whether the Tribunal erred in passing the
impugned order by arriving at a conclusion that
input tax credit is allowable in the hands of the
respondent even if the credit has been claimed
in returns filed for a month other than the
month in which the purchases were effected?"
Despite service of notice, the assessee in his wisdom has
chosen to remain unrepresented and that would not come
in the way of this Court assessing the cause on merits.
4. Having heard the learned Additional
Government Advocate appearing for the Revenue and
having turned the pages of the petition and also having
adverted to the Co-ordinate Bench decision in the case of
State of Karnataka v. Centum Industries Private
Limited - (2014) SCC OnLine Kar 12109, we are
inclined to allow the petition. Paragraph Nos.9 & 14 of the
decision read as under:
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"9. From a reading of the aforesaid provision
it is clear that, output tax is a tax payable by
any dealer on sale of goods made by him in the
course of his business. Input tax is a tax
collected by the registered dealer or payable
under this Act on the sale to him of any goods
for use in the course of his business. Sub-
section (3) of Section 10 provides for
calculating the net tax payable by the
registered dealer. It provides that, 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.
Therefore, it is clear the word "in that period"
specifies the period during which input tax is
paid and output tax is payable and the same
has to be accounted in accordance with the
provisions of the Act. Sub-section (4) makes it
clear that, for the purpose of calculating the
amount of net tax to be paid or refunded, no
deduction for input tax shall be made unless a
tax invoice, debit note or credit note, in relation
to a sale, has been issued in accordance with
Section 29.
14. In the instant case, the assessee paid
input tax for the month of June 2006. In the
returns filed in July 2006 he did not put forth
any claim. He also did not file any revised
return within 6 months putting forth the said
claim. That is the period prescribed under law
under Section 35 (1) and 35 (4) of the Act. It is
only in the return filed in the month of February
2007, after the expiry of the aforesaid period,
he put forth the said claim. Therefore, the
assessing authority as well as the first
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Appellate Authority rightly held that the claim
for input tax rebate put forth for the first time
in February 2007 for the period of June 2006
cannot be allowed. However, the Tribunal
without reference to the statutory provisions
proceeds on the assumption that allowing input
tax is a statutory promise made to the dealer
buying the goods from the registered dealer by
paying that tax mentioned in the tax invoice.
There is nothing in law stipulating that if input
tax is not claimed during the month succeeding
the month in which purchase is effected, the
dealer would forfeit his claim to claim input tax.
In coming to the said conclusion, the Tribunal
has not applied its mind to sub-section (3) of
Section 10 which is the provision which
determines the net tax payable by a registered
dealer in respect of each tax period in arriving
at tax liability the amount of output tax payable
by the assessee in that period less the input tax
deductible by him as may be prescribed in that
period and accounted for in accordance with
the provisions of the Act. If the assessee is not
putting forth a claim for input tax deduction in
the return filed in July 2006 nor as he put forth
such a claim in a revised claim which he could
have filed within 6 months there from his right
to claim input deduction is lost. He cannot for
the first time in the returns filed in February
2007 put forth a claim for input tax deduction
as the said return was not related to the tax
period during which the input tax was paid. In
that view of the matter, the Tribunal has not
applied its mind to the aforesaid provision and
ignoring the mandate of law has allowed the
said deduction erroneously. Therefore, the said
finding recorded by the Tribunal cannot be
sustained and accordingly it is hereby set aside.
The question of law raised is answered in
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favour of the revenue and against the
assessee."
5. The question of law framed in the petition on
the basis of which it had been admitted for consideration
has to be and accordingly answered in favour of the
Revenue and against the Assessee.
In the above circumstances, this petition is favoured
and the impugned order of the Tribunal is set at naught.
Registry to send copy of this judgment to the
respondent - assessee by Speed Post immediately.
Sd/-
(KRISHNA S DIXIT)
JUDGE
Sd/-
(G BASAVARAJA)
JUDGE
VP
