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Sri. Anantha Padmanabha Bhat Versus Commissioner of Commercial Taxes in Karnataka, Bengaluru and Commercial Tax Officer (Audit) , Bengaluru

2016 (7) TMI 546 - KARNATAKA HIGH COURT

Entitlement of composition scheme - conditions and restrictions imposed under Rules 135 and 144 of the KVAT Rules, 2005 - they were "goods in stock" - demand of regular tax on the sales/turnover as per Section 3 of the KVAT Act, 2003. - Held that:- Rule 135(2) of the KVAT Rules, 2005 clearly talks only about goods in the stock which clearly refers to the goods dealt by the assessee in the regular day-to-day business for which he is registered by the Department. These Rules do not intend to cover .....

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nds complied with in the present case, as it is not the case of the Revenue that the Vitrified Tiles purchased by the assessee from the State of Gujarat in this case, were sold in the course of his business. Therefore, the question of violation of condition as specified under Rule 135(2) of the KVAT Rules, 2005 does not arise in the present case. - Demand set aside - Decided against the revenue with cost of ₹ 10,000/- to be paid by the respondent assessing authority to the assesse. - .....

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of the Karnataka Value Added Tax Act, 2003. 2. The petitioner admittedly runs a restaurant serving vegetarian food in Bangalore and opted to pay tax at the composite concessional rate of 4% under Composition Scheme as enacted under Section 15(1) of the Act with effect from 1.4.2015. The impugned re- assessment notice Annexure-A dated 15.6.2015 and consequent order passed vide Annexure-E dated 17.10.2015 and Annexure-F dated 20.10.2015 were based on the ground that during the course of inspectio .....

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under Section 15(1) of the KVAT Act, 2003 and therefore liable to pay the regular rate of tax on the sales/turnover as per Section 3 of the KVAT Act, 2003. 3. The learned counsel for the petitioner submitted that, despite a representation made to the said authority that the Vitrified Tiles were purchased from the State of Gujarat upon payment of Central State Tax, since the said goods were purchased in the course of inter-State trade and were used for laying the floor of the restaurant run by t .....

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eme did not apply to the present case and the benefit of Composition Scheme could not be denied on this ground while invoking the powers of re-assessment under Section 39(1) of the KVAT Act, 2003. 4. On the other hand, learned counsel for the Revenue urged that, any goods purchased from outside the State and lying in stock disentitled the assessee from availing the benefit of the Composition Scheme enacted under Section 15(1) of the Act and since it is a concessional scheme and a concession give .....

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sment proceedings and separate tax rates on goods sold were applicable. He therefore prayed that present petition deserves to be dismissed. He also submitted that the validity of Section 15(1) of the Act has been upheld by this Court in the case of New Taj Mahal Café v. State of Karnataka [Writ Petition No. 10135 of 2006, dated 26-3-2009] and the Writ Appeals are pending before the Division Bench. 5. I have heard the learned counsel and perused the records. 6. This Court is not presently .....

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05. Rule 135 of the KVAT Rules, 2005 reads thus: "135. Conditions of scheme: A dealer opting to pay tax by way of composition under Section 15, shall satisfy the following conditions: (1) He shall be a dealer registered under the Act or a dealer who has made an application for registration under the Act. (2) He shall not have any goods in stock which are brought from outside the State on the date he opts to pay tax by way of composition and shall not sell any goods brought from outside the .....

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eyond the common sense and basic commercial prudence to even comprehend that the Vitrified Tiles fixed on the floor of the restaurant could be treated by an assessing authority as the "goods in stock" dealt with by the assessee or sold in the course of regular course of business. The assessing authorities trained and well acquainted with the commercial terms, cannot be allowed to take such perverse views. 8. It is this kind of impractical and hyper technical approach of the assessing a .....

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over and to avoid the hassles of assessment of tax on each item of goods and there is no doubt that certain conditions for availing such benefit can be imposed by legislation or even by the sub-ordinate legislation in the Rules enacted for that purpose. The validity or reasonableness of those conditions is neither in question before this Court nor this Court is called upon to decide the same. But, the question is only as to whether the so called reason assigned in the impugned notice and the re .....

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