TMI Blog2010 (7) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, the writ petition is allowed. Annexure Z is quashed. The respondents are directed to permit the petitioner to file revised monthly returns for the relevant period in order to avail of the benefit and the respondents shall make necessary adjustments insofar as the tax liability of the petitioner is concerned. This shall be taken into account in any further proceedings that may be pending insofar as the petitioner is concerned. - Writ Petition No. 11375 of 2009 (T-RES) - - - Dated:- 19-7-2010 - ANAND BYRAREDDY, J. ORDER:- ANAND BYRAREDDY J. Heard the learned counsel for the petitioner and the respondent. The facts as are relevant for the disposal of this petition are as follows: The petitioner runs a cashew factory which was set up during the year 1999, in an industrial area notified by the Government of Karnataka, under its Industrial Policy Resolution of the year 1996. The commercial produc- tion of the unit was commenced on March 16, 1999. It is the claim of the petitioner that the petitioner was eligible for sales tax exemption and concession which was made available to new units under a Government order dated March 15, 1996. The petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claims that the petitioner was eligible to claim VAT exemption of the said amount for the assessment periods 2005-06 and 2006-07. The petitioner filed an application under section 18 read with rule 166 of the Karnataka Value Added Tax Rules, 2005 (hereinafter referred to as, the Rules , for brevity), seeking transitional relief on the stock in hand. The same was accepted and a certificate was issued granting rebate of sales tax paid on the goods held in stock. The value of rebate shown was at Rs. 7,10,678. The petitioner was granted liberty to claim that amount in six monthly instalments of Rs. 1,18,446. It is the petitioner's case that while filing the return, the petitioner was eligible to claim input-tax rebate as against the output tax payable as pro- vided under section 10 of the KVAT Act and was only liable to pay the net tax, if any. It is also the petitioner's case that the petitioner was eligible to claim input-tax rebate by virtue of the certificate issued under section 18 of the KVAT Act. It is the further case of the petitioner that the business of the petitioner is seasonal. The petitioner had therefore no occasion to pay output tax until February 2006. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cashew kernels should not be rejected in view of the restrictions provided under section 11(a)(i) and 11(a)(v) of the KVAT Act read with section 17 of the said KVAT Act and rules 131 and 132 of the KVAT Rules. The petitioner replied to this reiterating that there is no excess claim of input tax-credit and that at the time of filing return of turnover, the peti- tioner had not foreseen the subsequent consignment sales effected through its agents outside the State and that the proposition to disallow the claim includes the intra-State sales. The petitioner places reliance on a circular issued by the Commissioner of Commercial Taxes in No. KSA.CR. 105/ 2005-06, dated June 26, 2006, wherein all the officers of the Department were instructed not to levy penalty in cases involving trading in cashew. Therefore, the petitioner sought to justify its case. However, reassessment was completed without appreciating the claim of the petitioner and an additional tax liability of Rs. 7,29,955 along with penalty of Rs. 1,45,991 was sought to be imposed and the petitioner was placed on notice to pay taxes pursuant to the reassessment order. A detailed reply was filed to reiterate the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nput tax at the time of purchase and has paid output tax after deducting the input tax and has sought for grant of benefit of sales tax and VAT exemption extended to it by virtue of the entitlement certificate. Therefore, the petitioner contends that it is inexplicable that the respond- ents have taken the above stand. It is in this background that the petitioner is before this court. While reiterating the above contentions, the learned counsel for the 14 petitioner would contend that the respondents have misdirected them- selves in interpreting the provisions of the KVAT Act. Section 38(1) specifically provides that every dealer shall be deemed to have been assessed to tax based on the returns filed by it under section 35. An exception is carved out from such deemed assessment, in that, the cases which are notified by the Commissioner for production of books of account shall not be considered as having been assessed under the deeming provisions. The petitioner, who is a trader in cashew is one among the dealers whose books are required to be audited by the prescribed authority. According to the petitioner, the Commissioner of Commercial Taxes has notified a list of dealers enga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed by the petitioner in its return of turnover against the tax payable. It is contended that the respondents have assumed that the petitioner was making a dual claim of input-tax credits while the relief claimed by the petitioner is only in respect of credit to the taxes paid by the petitioner as against the taxes payable and nothing more. It is the petitioner's conten- tion that it is the inaction on the part of the respondents which has created a stalemate for the petitioner. It is pointed out that the first refund appli- cation was made by the petitioner as on June 10, 2006, on which date, the petitioner had lodged its claim for refund. If the respondents had acted prudently and had immediately communicated their view of the legal posi- tion, to the effect that the refund claim should have been made in the returns, the petitioner had enough time to file revised returns and make a revised claim for refund in the revised returns. However, the respondents had informed the petitioner to claim a set-off of the amount against tax payable by it in the subsequent months. It is with this bona fide impression that the tax paid by it in excess or the benefit under the entitlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner could have availed of from the month of April 2005 itself by filing the monthly returns in Form VAT 100. The petitioner had not availed of the same in the monthly return of April 2005 up to February 2006. It is only in the month of February 2006 that the petitioner had made a request to adjust the tax benefit which is impermissible in law. In terms of the notification, the dealer had to pay net tax payable and secure refund upon filing monthly return in Form VAT 100. There was no net tax liability, the dealer had to show the same as excess input tax, which is carried forward till the net tax liability arises. It is therefore contended that unless the dealer pays the net tax, the benefit could not be availed of under the entitlement certificate. The petitioner admittedly not having paid the net tax and having claimed refund, is not entitled for any benefit and therefore, the impugned order is in accordance with law. Under the KVAT Act, there is a provision under which, revised returns could be filed within six months. Even that opportunity has not been utilised by the petitioner. It is further stated that the petitioner was entitled for sales tax benefit for a period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regime and the unfamiliarity with the procedures contemplated which are not in pari materia with the KST Act was also a factor which would have to be taken into consideration. If the benefit due to the petitioner is not in dispute, the manner of claim as prescribed under the Act not having been followed, may be a good ground for the authorities to have denied the benefit. But in the opinion of this court, interest of justice would require that the respondents afford this benefit which has remained unavailed by the petitioner and for a fault not entirely of that of the petitioner. It is necessary that the petitioner be conferred the benefit of this unavailed portion by permitting the petitioner to file revised returns, even at this late point of time in order to enable the petitioner to claim the benefit. Accordingly, the writ petition is allowed. Annexure Z is quashed. The respondents are directed to permit the petitioner to file revised monthly returns for the relevant period in order to avail of the benefit and the respondents shall make necessary adjustments insofar as the tax liability of the petitioner is concerned. This shall be taken into account in any further proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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