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TMI Blog2021 (4) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter referred to as "the KVAT Act" and "CST Act" respectively for the sake of brevity). 4. That for the assessment years 2008-09 upto 2011-12, the appellant has filed its returns on its business turnover and paid the taxes accordingly. The appellant claimed deductions under the Rules while filing returns of turnover. It is the case of the appellant that it is engaged in the business of development of properties and construction of residential flats in apartments. The appellant being the owner of the land and developer had sub-contracted the construction work to sub-contractors with a pre-condition that it would supply cement and steel required for the construction in order to ensure good quality of construction. It is the case of the appellant that the respective orders, the appellant had sub-contracted construction work to various sub-contractors, for example, for the year 2008-09, the appellant had sub-contracted construction works to two sub-contractors namely M/s.Aura Engineers and Contractors (P) Ltd., and M/s. R.A.K. Construction, both being registered dealers under the KVAT Act. That payments were made to the sub contractors through banking transactions and the detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ples of natural justice as well as Section 69 of the KVAT Act insofar as the assessment year 2008-09 was concerned and that in respect of the other assessment years, the Prescribed Authority had failed to appreciate the case of the appellant regarding deductions as well as exemptions sought by the appellant. The first appellate authority accepted the contentions of the appellant/assessee and placing reliance on the judgment of the Hon'ble Supreme Court in the case of State of Andhra Pradesh and others vs. Larsen & Toubro Limited and others [(2008) 9 SCC 191] (Larsen and Toubro) granted relief to the appellant herein by holding that the assessment made by the Prescribed Authority was erroneous and the deductions with regard to the payments made by the assessee to the sub-contractors could be claimed by the assessee. 8. When the matter stood thus, in respect of the aforesaid four assessment years, notices were issued by the respondent under Section 64 of the KVAT Act seeking suo moto revision of the orders passed by the first appellate authority as well as the Prescribed Authority. 9. In response to the respective notices issued by the respondent/revisional authority, the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Bench of this Court in the case of Godrej Agrovet Limited vs. Additional Commissioner of Commercial Taxes, Zone II, Bangalore [(2011) 39 VST 20] to contend that when the first appellate authority followed the judgment of the Apex Court, it cannot be said that the said order is erroneous. It is bound by the order of the Tribunal as well as the order of the Apex Court and to maintain judicial discipline, it has to follow the said judgment and has given effect to it. But if the Revenue did not want to accept the said finding, it was always open to them to prefer an appeal against the said order before this Court. 13. Learned counsel for the appellant/assessee further emphasized that even if for a moment it is to be presumed that the initiation of suo moto proceedings was justified in the instant case, the exercise of such power was not in accordance with law. In that regard, he drew our attention to the operative portion of the impugned order of the respondent in each of the cases and contended that by merely making certain observations, the respondent/Authority could not have set aside the order of the first appellate authority as well as the Prescribed Authority and remanded the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no clarity on any specific aspect or finding given by the first appellate authority, it is always open to the revisional authority to issue notice and on seeking reply from the assessee to revise the said order. That in the instant case, that is precisely what has been done by the respondent/revisional authority as the said authority found the need to verify the issue with regard to the payments on purchases and sub-contract made to the sub contractors and a fresh assessment to be made. The appellant is not in anyway prejudiced as the matter has been remanded for a fresh re-assessment to be made under Section 39(1) of the KVAT Act. The appellant, therefore, can have no grievance with regard to the order made by the respondent/revisional authority. There is no merit in these appeals and the same be dismissed. 16. The detailed narration of facts and contention would not call for reiteration. We have perused the orders impugned in these appeals. 17. The common factor in all these cases which pertain to the assessment years 2008-09 to 2011-12 is with regard to the claim of deduction made by the appellant/assessee insofar as the payments made to the sub-contractors are concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o material on record, on the basis of which it can be said, the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. 19. Thus, there must be two circumstances which co-exist to enable the respondent to exercise power of revision under Section 64 of the KVAT Act, which is a suo moto revisional power. Firstly, the order passed by the first appellate authority or any other inferior authority not above the rank of the Joint Commissioner is erroneous. Secondly, the erroneous order must prejudice the interest of the Revenue. Therefore, the revisional authority has to first determine what is the erroneous order and thereafter determine as to whether the erroneous order has adversely affected the interest of the Revenue. Both the circumstances must co-exist before the revisional authority can initiate suo moto revisional proceedings. That, it is not sufficient to vest power in the respondent/authority to exercise suo moto revision merely because an order is erroneous. If an order is erroneous, but not prejudicial to the interest of the Revenue, the power of suo moto revision can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent/Authority to reconsider the same afresh in accordance with the observations made above and in particular to give a categorical finding as to whether the appellant/assessee is entitled to claim the deductions made on the payments to the sub-contractors during the respective years and to dispose of the revision in accordance with law. 23. As requested by learned counsel for the appellant, liberty is reserved to the appellant to raise additional contentions and place further material before the respondent/Authority. 24. It is needless to observe that the respondent/ Authority shall consider the contentions of the appellant/assessee and dispose of the revisions in accordance with law. 25. Since the appellant/assessee is represented by the learned counsel, the State and the appellant through its authorized representative may appear before the respondent/Authority on 26/04/2021 without expecting any fresh notices from the said Authority. 26. In the result, the impugned orders of the respondent/Authority are set aside and the appeals are allowed and disposed of in the aforesaid terms. Parties to bear their respective costs. In view of disposal of the appeals, all pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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