Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2021 (10) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (10) TMI 888 - KARNATAKA HIGH COURTLevy of KST Act and KVAT Act on Liquor - right for disallowing the ITC claimed by the petitioner - tax can be levied on the entire sales turnover or not - eligibility for deduction under 3[2][f] of the KVAT Rules - levy of KVAT on the Value Addition or on the entire sales turnover - eligibility for tax deduction as per Rule-3 of the KST Rules - levy of entire sale value/total turnover and not on the value addition/taxable turnover - validity of conformation of order of the appellate authority and audit authority - violation of principles of natural justice - applicability of notification published in the Departmental Website - HELD THAT:- 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. There is no cavil with respect to the legal principle enunciated by the Hon’ble Apex Court in the Judgment of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS, [2015 (8) TMI 749 - SUPREME COURT] regarding the speech made by the Hon’ble Finance Minister in moving the Bill would be significant in interpreting the provision. But the input tax credit has to be determined as per section 10 of the KVAT Act. There was no bar for the assessee to collect the output tax in its entirety by its buyers. Giving interpretation of the said Rules vis-à-vis the exemption provision – Section 4 of the Act, has ruled that when a registered dealer sells to another registered dealer and the first registered dealer is exempted from payment of sales tax, the sale by the second registered dealer cannot be deemed to be sale at the first point and he cannot be subjected to sales tax. The crux of the controversy therein, relates to levy of single point tax, being at the first point of sale. With great respect, this judgment would be of no assistance to the assessee in the case on hand where the input tax credit has to be determined in terms of Section 10 of the KVAT Act. The substantial questions of law is answered in favour of the Revenue and against the assessee - revision petition is dismissed.
|