2025 (3) TMI 1097 - HC - VAT / Sales Tax

Issuance of personal cheque to the extent of refund wrongly availed to the officer of LVO-540 by the then consultant - order passed by predecessor can be altered in the order passed by the Successor in a different direction or not - proceedings instituted pursuant to a notice under section 64 (1) of the KVAT issued in contravention of Rule 154 of the KVAT Rules 2005 can be sustained or not - Validity of consideration of total turnovers as per erroneous monthly returns filed in form VAT-100 in the absence of the books of account ACCT Bidar - Validity of disallowance of deduction claimed towards labour like charges - HELD THAT - The indulgence in the matter declined broadly agreeing with the submission of learned AGA. Firstly the questions of law are haphazardly framed and they lack coherence both in terms of law and language. Secondly these questions are not of law inasmuch as to answer them turning the pages of statute book would not come to aid. Despite taking through the Paper Book of the appeal it is not shown which finding in the impugned order is perverse that is to say contrary to evidence borne out by record or which of the observations in the impugned order are made without evidentiary basis. The vehement submission of the learned counsel appearing for the assessee that his client was not given a reasonable opportunity to produce relevant evidentiary material such as books of accounts is liable to be rejected inasmuch as despite granting opportunity the assessee failed to avail the same. The vehement submission of learned counsel for the appellant that for the fraud committed by the Tax Consultant the assessee should not be made to suffer is too broad a proposition to accept. Ordinarily as rightly submitted by learned AGA Tax Consultant is an Agent of the assessee notwithstanding the professional elements involved in the Act. It is not that the assessee had not put his signatures to the Returns and Records filed before the Revenue in a normative way. The last contention of the appellant s counsel that the respondent had approached the matter with prejudicial mind is too farfetched a submission. Why a high functionary of the State who acts quasi-judicially in deciding the tax liability of the assessee should be presumed to be prejudicial remains unanswered. Such a contention cannot be countenanced without laying foundational basis. A perusal of the impugned order in the light of other material accompanying the appeal memo leaves no manner of doubt that the respondent has judiciously considered all contentions of the assessee as reflected in the impugned order. Conclusion - i) The questions presented were not coherent questions of law. The appellant failed to demonstrate any perverse findings or observations in the impugned order without evidentiary basis. ii) The argument that the appellant was not given a reasonable opportunity to present evidence noting that the appellant did not avail the opportunity provided rejected. iii) The argument that the tax consultant s fraudulent actions should absolve the appellant of responsibility highlighting that the consultant acted as the appellant s agent rejected. iv) There are no basis for the claim that the respondent acted with a prejudicial mind noting the lack of foundational evidence for such a contention. Appeal dismissed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

1. Whether the consultant issued a personal cheque for a wrongly availed refund.

2. Whether a successor can alter an order passed by a predecessor in a different direction.

3. Whether proceedings initiated under Section 64(1) of the Karnataka Value Added Tax Act, 2003, in contravention of Rule 154 of the KVAT Rules 2005, can be sustained.

4. Validity of considering total turnovers based on erroneous monthly returns without the books of account.

5. Validity of disallowance of deductions for labor and similar charges in the absence of books of account, and the application of a standard deduction of 30% as per rule 3(2)(m) of the KVAT rules 2005.

6. Validity of disallowance of input tax credit due to non-submission of documentary evidence and the levy of VAT with interest and penalty.

7. Validity of demanding a refund with interest and penalty based on an invalid form filed by the tax consultant.

ISSUE-WISE DETAILED ANALYSIS

1. Consultant's Personal Cheque for Refund

The Court did not find this issue to be a question of law requiring statutory interpretation. The appellant failed to demonstrate how this issue was relevant to the legal framework or how it affected the impugned order.

2. Alteration of Orders by Successor

The Court found no legal basis to support the claim that a successor cannot alter an order made by a predecessor. The appellant did not provide evidence of any statutory provision or precedent to support this argument.

3. Proceedings under Section 64(1) and Rule 154

The Court noted that the appellant failed to demonstrate how the proceedings contravened Rule 154. The appellant did not provide sufficient evidence or legal argumentation to substantiate the claim that the proceedings were unsustainable.

4. Consideration of Total Turnovers

The Court observed that the appellant did not produce the books of account despite being given the opportunity. The respondent authority's reliance on the returns filed was deemed appropriate given the lack of evidence from the appellant.

5. Disallowance of Deductions for Labor Charges

The Court upheld the respondent's decision to disallow the deductions due to the absence of books of account. The appellant's failure to provide evidence at both the initial and appeal stages justified the standard deduction application.

6. Disallowance of Input Tax Credit

The Court agreed with the respondent's disallowance of input tax credit due to the appellant's failure to submit relevant documentary evidence. The levy of VAT with interest and penalty was considered justified under the circumstances.

7. Demand for Refund Based on Invalid Form

The Court found the appellant's argument that the tax consultant's actions should not affect the assessee to be unconvincing. The consultant acted as the agent of the assessee, and the responsibility for the inflated figures ultimately rested with the appellant.

SIGNIFICANT HOLDINGS

The Court emphasized that the questions presented were not coherent questions of law. The appellant failed to demonstrate any perverse findings or observations in the impugned order without evidentiary basis.

The Court rejected the argument that the appellant was not given a reasonable opportunity to present evidence, noting that the appellant did not avail the opportunity provided.

The Court dismissed the argument that the tax consultant's fraudulent actions should absolve the appellant of responsibility, highlighting that the consultant acted as the appellant's agent.

The Court found no basis for the claim that the respondent acted with a prejudicial mind, noting the lack of foundational evidence for such a contention.

In conclusion, the appeal was dismissed as devoid of merit, with costs made easy.