Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

Centum Electronics Limited (earlier Solectron Centum Electronics Ltd.) Versus State of Karnataka

2016 (6) TMI 903 - KARNATAKA HIGH COURT

Refund of tax deposited - Continuation of exemption after migration from KST Act to KVAT Act, 2003 w.e.f. 1.4.2005 - a tax holiday of ten years was to be granted to information technology units from the date of commencement of commercial production. - refund was denied on the ground that if the unit collects any amount by way of tax, it shall become ineligible for exemption. - Held that:- The notification providing for such ineligibility was under the KST Act, which was followed in the case .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e for the purpose of Central sales tax, but the substantive provisions of the CST Act were to be followed. - The finding given by the Tribunal with regard to ineligibility of the assessee/petitioner for being granted exemption only because it had collected tax, cannot bejustified in law. - As we have already noted above, the procedure under the KVAT Act was to be followed for Central sales tax also and thus, the refund given to the petitioner/assessee was fully justified and ought not to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

et Saran and Mrs. S. Sujatha, JJ. K. P. Kumar, Senior Counsel assisted with V. S. Arbatti for the petitioner. K. M. Shivayogiswamy, Additional Government Advocate, for the respondent. JUDGMENT These are forty seven revision petitions filed by the assessee against the order of the Tribunal dated August 13, 2013, whereby the orders of the first appellate authority, as well as the assessing authority, have been confirmed. The brief facts of this case are that the petitioner is a company engaged in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e policy of the State Government, a tax holiday of ten years was to be granted to information technology units from the date of commencement of commercial production. The petitioner- company has admittedly been granted the eligibility certificate under the said Policy and thus, was governed by the said notifications dated August 21, 1997. The procedure for grant of exemption had been provided for in the notifications issued under the KST Act, wherein it had been provided that "if an informa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion. There is no dispute that the petitioner-company was subjected to Karnataka sales tax for sales within the State of Karnataka and for inter State sales, Central sales tax was leviable. The procedure adopted for implementation of the notifications for both the Acts was the same and the petitioner had been granted such exemption under both the Acts, with regard to which also there is no dispute. With effect from April 1, 2005, the KVAT Act, 2003 came into force in place of the KST Act. For co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

net tax was to be deposited by the assessee with the Government, which was to be refunded. This would clearly mean that the provision in the earlier notification dated August 21, 1997 providing for ineligibility of a unit from exemption in case tax was collected by it, would not be applicable after the issuance of the notifications dated April 18, 2005. By the other notification of the same date, i.e., April 18, 2005, issued under the CST Act, with regard to grant of exemption, there was no cond .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the KST Act or CST Act. The dispute did not arise even after the issuance of the notification dated April 18, 2005, because for the purpose of the KVAT Act as well as the CST Act, the assessee started following the procedure as was prescribed in the notification dated April 18, 2005 relating to the KVAT Act, (which was the same as prior to April 1, 2005, where the assessee was following the procedure provided in the notification dated August 21, 1997issued under the KST Act) for the purpose of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of payment of tax and thereafter claiming refund was continued to be allowed to the assessee under the KVAT Act, but was denied to it under the CST Act, primarily on the ground of the condition in the earlier notification dated August 21, 1997 issued under the KST Act, which provided that if the unit collects any amount by way of tax, it shall become ineligible for exemption. For the tax period after April 1, 2007, though the petitioner-assessee continued to deposit the tax so collected under t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

said period, which was by way of an order passed by the assessing officer on April 8, 2009. For the tax period after April 1, 2007, the net tax, which the assessee claimed to be refunded/ payable to it, was forfeited. The petitioner-assessee, thereafter, filed appeals against the orders requiring it to deposit the refunded tax amount, as well as for non-refund of the net tax which the assessee claimed was payable to it. By a common order dated January 28, 2012, the Assistant Commissioner of Comm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

espondent, and perused the record. Although these petitions were admitted on two questions of law, but learned counsel for both the parties have stated that the only question required to be answered in these petitions, would be the following: "Whether the Tribunal below is justified in coming to a conclusion that the petitioner is not entitled to collect CST and consequently not entitled to the tax refund mechanism as envisaged under Notification No. FD 56 CSL 2005(1) dated April 18, 2005 i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d thereafter, under the KVAT Act. It has been submitted that the condition that in case the unit collects tax, it would become ineligible for grant of exemption as provided in the notification dated August 21, 1997 under the KST Act, was applicable for both, i.e., the Karnataka sales tax as well as the Central sales tax, up to 2005 and thereafter, with effect from April 1, 2005, when the notification dated April 18, 2005 issued under the KVAT Act itself provided for collection of tax and then cl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

provision was made with regard to deduction of input tax on export and inter-State sales. The submission, thus, is that since by virtue of sub-section (2) of section 9 of the CST Act, the procedure prescribed for assessment, re-assessment, collection, etc., of Central sales tax was to be as per the KVAT Act (earlier KST Act) and in the said Act, the procedure for inter-State sales had also been provided for, and the notification dated April 18, 2005 issued in the case of KVAT Act was to apply f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lowed, but it is contended that even the Department accepted the returns of the petitioner-assessee for the tax period April 1, 2005 to March 31, 2007 and had allowed refund as claimed under the said procedure, both under the KVAT Act as well as the CST Act. Learned counsel has thus submitted that the denial of refund of Central sales tax after April 1, 2005, merely on the ground that the unit would become ineligible in case it had collected tax, and solely on the ground that such was the condit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

continue even after April 1, 2005, as exemption itself contemplates that there would be no collection or payment of tax. He has, thus, justified the passing of the order of the Tribunal, as well as the authorities below, whereby the petitioner-assessee has been directed to deposit the amount of tax refunded to it for the tax period April 1, 2005 to March 31, 2007, and also the order denying the benefit refunded to the assessee after April 1, 2007. The relevant extracts of the two notifications d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

se of the powers conferred by section 19C of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957) read with sub section (2) of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), the Government of Karnataka, hereby- (i) exempts the tax payable under the said Central Sales Tax Act, 1956 in respect of goods manufactured and sold in the course of inter-State trade or commerce by new information technology industrial units which are eligible and opted for tax exemption under Notificati .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

x Act, 2003 (Karnataka Act No. 32 of 2004), the Government of Karnataka hereby exempts with effect from the first day of April, 2005, the net tax payable by a new industrial unit under the said Act, on the sale of goods manufactured by it, subject to the following conditions and procedure, namely:- (1) The industrial unit is eligible for tax exemption on sale of goods manufactured by it, under the notification issued by the Government under the provisions of the Karnataka Sales Tax Act, 1957 (Ka .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the jurisdictional authority. (4) The industrial unit shall be refunded, such net tax paid within thirty five days after the end of the month to which the return relates, if it is furnished within the time specified under section 35 of the said Act or within fifteen days from the date of filing of the return, if it is filed after the time specified, in the manner prescribed under the said Act by the jurisdictional authority and interest shall be paid for any delay in the refund, as specified un .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on availed by the units under the notifications issued under the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957) together with the quantum of tax exemption availed under the notifications issued under (sub-section (5) of section 8 of the Central Sales Tax Act, 1956) shall not exceed the ceiling mentioned in the notifications issued under the Karnataka Sales Tax Act, 1957. Whereas, the Karnataka Sales Tax Act, 1957 has been replaced by the Karnataka Value Added Tax Act, 2003 (Karnataka A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ndition that the aggregate of any tax exemption availed by the units under such notifications together with the quantum of tax exemption availed under any notification issued under the Karnataka Value Added Tax Act, 2003 shall not exceed the ceiling mentioned in the notifications issued under the Karnataka Sales Tax Act, 1957." The relevant section 10, sub-clauses (1) to (3) and section 20(1) of the KVAT Act, 2003, are reproduced below: "10. Output tax, input tax and net tax.-(1) Outpu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nder this Act on the sale to him of any goods for use in the course of his business, and includes the tax on the sale of goods to his agent who purchases such goods on his behalf subject to the manner as may be prescribed to claim input tax in such cases. (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 de .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pect of- (a) any goods sold in the course of export out of the territory of India; or (b) any goods taxable under the Act, sold in the course of inter- State trade or commerce; shall be deducted as provided under section 10, subject to such conditions as may be prescribed from output tax payable by such dealer." The relevant sub-section (2) of section 9 of the CST Act is reproduced below: "9. Levy and collection of tax and penalties.-(1) . . . (2) Subject to the other provisions of thi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ral sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, provisional assessment advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

provision for all or any of the matters specified in this sub-section." The sole ground for denying the benefit to the assessee under the CST Act after April 1, 2005 by the authorities below is that it had become ineligible, as it had collected tax and then claimed refund. From a perusal of the two notifications dated August 21, 1997 and the other two notifications dated April 18, 2005, it would be clear that the procedure for grant of exemption had undergone a sea change after April 1, 20 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

under the KST Act, there was a specific condition that if the unit (exercising the option for tax exemption) collects any tax, it shall become ineligible for tax exemption. But the same was applicable only up to April 1, 2005. If such condition was to continue after April 1, 2005, then the procedure for grant of exemption, which was provided in the notification dated April 18, 2005 under the KVAT Act, which was that the output tax is to be collected and input tax is to be deducted, and net tax .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f exemption is granted for Karnataka value added tax even when the assessee collects tax, then the same cannot be denied to the same assessee under the CST Act, as admittedly, the procedure provided under the general sales tax law of the State (which presently would be KVAT Act), would be applicable for the purpose of Central sales tax, but the substantive provisions of the CST Act were to be followed. In view of the aforesaid, in the facts of the present cases, the finding given by the Tribunal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd refund was actually granted to the assessee, which means that the Department itself had understood the notifications in the same manner as had been understood by the assessee. The subsequent revision by the Joint Commissioner, by invoking the provisions of section 63A of the KVAT Act, only for the purpose of the CST Act on the ground that assessee had collected tax, cannot be justified, inasmuch as the same benefit had been granted, and is being continued to be granted, to the assessee after .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version