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TMI Blog2022 (3) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest and penalty under Sections 36(1) and 72(2) of the Karnataka Value Added Tax Act, 2003, when the respondent himself has accepted that he has understated his liability to tax on the sale of Nutralite during the year 2007-08?" 2. The respondent is a dealer registered under the provisions of the Act and is a distributor of various products, including Table Margarine manufactured by M/s Zydus Wellness under the brand name "Nutralite". The respondent purchases Nutralite from M/s Pioneer Marketing and sells the same to its customers. During the tax periods 2007-2008, both M/s Pioneer Marketing and the respondent had paid tax under the Act at the rate of 4% on the sale of Nutralite, based on the understanding that the said product is class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as preferred this revision petition. 4. Learned AGA appearing for the revision petitioner - State submitted that the Tribunal failed to appreciate the vital aspect of levy of interest and penalty under Sections 36(1) and 72(2) of the Act respectively. The respondent having accepted short payment of tax on the sale of Nutralite has challenged the denial of input tax credit to the entire extent of 12.5% as claimed and the levy of interest and penalty. In such scenario, the Tribunal ought not to have set aside the order of imposing interest and penalty which indeed is in conformity with the provisions of the Act. Learned AGA further submitted that the Tribunal has passed the order dated 26.4.2018 on the Sales Tax Rectification Applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deny the claim of input tax credit of 12.5% as claimed by the assessee. In other words, the reassessment order passed allowing the input tax credit of 4% on the purchase of Table Margarine made by it from M/s Pioneer Marketing confirmed by the first appellate authority, has been upheld. Having regard to these aspects, the Tribunal observed that there was no understatement of output tax liability and overstatement of entitlement to input tax credit by the assessee in the return filed and accordingly, set aside the levy of penalty and interest. Further, liberty was reserved to the revenue to levy interest and penalty, if any violation of the provisions of Sections 36 and 72(2) of the Act was found after recomputing the total and taxable turno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al having modified the rate of tax from 12.5% to 5.5% in terms of the order passed in Rectification Application following the decision of this Court in M/s Pioneer Marketing, supra, it cannot be gainsaid that there is no understatement of output tax liability or overstatement of entitlement to input tax credit by the appellant in the return filed. Further, no ground is made out by the Revenue for imposing such interest and penalty in the given facts and circumstances of the case. As such, we find no exception with the view taken by the Tribunal. The petition is wholly misconstrued and is bereft of merits. Accordingly, we answer the question of law against the Revenue and in favour of the assessee. 9. In the result, Sales Tax Revision Petit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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