TMI Blog2021 (10) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... le 3(2)(f) relates to the dealer where the exempted goods under section 5 of the KVAT Act are sold and such amounts are liable for deduction. Admittedly, liquor is not exempted under section 5 of the KVAT Act in the hands of the assessee herein. There is no cavil with respect to the legal principle enunciated by the Hon ble Apex Court in the Judgment of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS, [2015 (8) TMI 749 - SUPREME COURT] regarding the speech made by the Hon ble Finance Minister in moving the Bill would be significant in interpreting the provision. But the input tax credit has to be determined as per section 10 of the KVAT Act. There was no bar for the assessee to collect the output tax in its entirety by its buyers. Giving interpretation of the said Rules vis- -vis the exemption provision Section 4 of the Act, has ruled that when a registered dealer sells to another registered dealer and the first registered dealer is exempted from payment of sales tax, the sale by the second registered dealer cannot be deemed to be sale at the first point and he cannot be subjected to sales tax. The crux of the controversy therein, relates t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les of natural justice? 10. Whether on the facts and circumstances of the case the petitioner was right in relying on the notification published in the Departmental Website? 11. Whether on the facts and circumstances of the case the Tribunal was right in overlooking the order of the learned Single Judge in the case of M.Madhav Gowda V/s. State of Karnataka? 2. The assessee is a registered dealer under the KVAT Act. The assessee is carrying on the business of liquor in the name and style of M/S Sri Giri Bar and Restaurant in the urban area, having CL-9 licence. The tax on liquor was levied for the tax periods in question at 5.5% with effect from 01.03.2014 as per Entry 59A inserted to the Third Schedule of the KVAT Act. The Prescribed Authority concluded the re-assessment order under Section 39[1] of the KVAT Act levying tax on the entire turnover. 3. Aggrieved by the order passed by the Authority, the assessee preferred appeal under Section 52 of the KVAT Act. The First Appellate Authority dismissed the appeal against which the assessee preferred appeal before the Tribunal. 4. The main ground urged before the Tribunal was that the liquor cannot be brought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts of goods which are exempted under Section 5 are sold from the total turnover. Applying the said Rule, the tax under the VAT Act could be levied only on the value addition not on the total turnover. Learned Senior Counsel referring to the judgment of the Co-ordinate Bench in STRP No.101/2018 [D.D 08.04.2021] submitted that this issue inasmuch as Rule 3[2][f] of the Rules has not been addressed. Hence, the matter requires to be considered by this Court notwithstanding the identical substantial questions of law are answered in the said judgment. In support of his contentions, learned Senior Counsel has placed reliance on the following judgments: 1. Cycle Hatt of Jaipur V/s. The Board of Revenue for Rajasthan, Jaipur at Ajmer and Others [AIR 1977 RAJ172] 2. Sri. M.Madhava Gowda V/s. Under Secretary to Government and Another [W.P.No.27825/2014 C/w. W.P.Nos.14620-14624/2014 and 13078- 13082/2014, D.D. 30.09.2015] 3. Heaven Inn [Bar Attached] V/s. State of Karnataka Through Secretary [Finance] and Another [2016-VIL- 429-KAR] 4. M/s.Prathul Automobiles Pvt. Ltd., V/s. The Asst. Commissioner [CT]-II, Hyderabad 8. Learned counsel for the Revenue referri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 restrictions 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 deductible by him as may be prescribed in that period and shall be accounted for in accordance with the provisions of Chapter V. (4) For the purpose of calculating the amount of net tax to be paid or refunded, no deduction for input tax shall be made unless a tax invoice, debit note or credit note, in relation to a sale, has been issued in accordance with Section 29 or Section 30 and is with the registered dealer taking the deduction at the time any return in respect of the sale is furnished, except such tax paid under subsection (2) of Section 3. (5) Subject to input tax restrictions specified in Sections 11,12, 14, 17, 18 and 19, where under sub-section (3) the input tax deductible by a dealer exceeds the output tax payable by him, the excess amount shall be adjusted or refunded together with i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een confirmed by the Division Bench of this Court in Writ Appeal No.1425 of 2016 and connected matters (HEAVEN INN supra). In view of the aforesaid decisions, the controversy now rests in a narrow compass. 17. As regards the applicability of section 10 of KVAT Act to determine the input tax, the issue is no more res integra in view of the Co-Ordinate Bench ruling of this Court in STRP.No.101/2018. It is well settled that under Section 10 of the KVAT Act, net tax has to be computed after deducting the input tax from the output tax and its value addition when there is an input credit. It is observed as under: 7. Thus, it is evident that the dealer is supposed to pay net tax to the Government on its sales and net tax for the purposes of this Act, means the difference between the output tax and input tax , which is the amount of net tax. Input tax is levied only in case of sale of taxable goods through a dealer. In the instant case, the KSBCL is exempt from tax and therefore, the petitioner does not pay any tax on the purchases made by it and there is not Input tax in the hands of the petitioner. Thus, the petitioner has no Input Tax in its hands. The petitioner therefore, can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods in the hands of KSBCL is purchased by the assessee could not be a ground to claim deduction under Rule 3(2)(f). Such transaction would not certainly fall within the ambit of Rule 3(2)(f). Hence, we find no merit in the arguments of learned Senior Counsel. 21. There is no cavil with respect to the legal principle enunciated by the Hon ble Apex Court in the Judgment of Commissioner, Central Excise and Customs, Kerala Others vs. Larsen and Toubro Ltd., Others, reported in AIR 2015 SC 3600, regarding the speech made by the Hon ble Finance Minister in moving the Bill would be significant in interpreting the provision. But the input tax credit has to be determined as per section 10 of the KVAT Act. There was no bar for the assessee to collect the output tax in its entirety by its buyers. It is submitted that the assessee has collected the tax only on value addition. Be that as may, collection or not collection the tax would not be a ground to determine the input tax credit. We are not convinced with the arguments that no machinery and procedure has been prescribed in making the assessment as contended by the assessee. The scheme of the KVAT Act provides the machinery an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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