Sales Tax Appeal Nos. 2570 to 2576 of 2012. Case: Manyata Promoters Private Limited, Bangalore Vs State of Karnataka. Karnataka Appellate Tribunal
| Case Number | Sales Tax Appeal Nos. 2570 to 2576 of 2012 |
| Judges | Niazahmed S. Dafedar, DJM and P. Puttaraju, CTM |
| Issue | Karnataka Value Added Tax Act, 2003 - Section 20; Special Economic Zones Act, 2005 - Section 51 |
| Citation | 2014 (78) KarLJ 412 |
| Judgement Date | January 23, 2014 |
| Court | Karnataka Appellate Tribunal |
Judgment:
P. Puttaraju, CTM, (At Bangalore)
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These seven (07) appeals are filed under Section 63 of the Karnataka Value Added Tax Act, 2003 (for short, 'the Act'). The same are directed against the appeal orders passed by the Joint Commissioner of Commercial Taxes (Appeals-I), Bangalore (hereinafter referred to as 'First Appellate Authority' or for short, as 'FAA') in Case Nos. VAT:AP:742 to 753/2011-12, dated 29th August, 2012, wherein the FAA has allowed the appeals in part and thereby allowing refund of tax amounting to Rs. 5,18,64,074/-. Thus, the FAA has modified the proceedings passed by the Assistant Commissioner of Commercial Taxes, LVO-020, Bangalore (hereinafter referred to as 'Assessing Authority' or for short, as 'AA'). While doing so, the FAA has restricted the refund of input tax to the extent of Rs. 83,88,057/-. The AA has allowed refund to the extent of Rs. 99,80,721/- which is modified by the FAA to Rs. 5,18,64,074/-. The appellant has prayed to allow the refund of input tax paid in full on the ground that the same are claimed in the returns and it is only the belated claim.
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Brief facts of the case:
(i) The appellants are developers of a Special Economic Zone located in Rachenahalli, Nagavara Outer Ring Road, Bangalore in terms of the order of the Development Commissioner, Cochin SEZ, Cochin, bearing No. 3/27/2006 Manyata/SEZ.CSEZ/2644, dated 23-4-2007 SEZ, Cochin.
(ii) As an SEZ Developer, the appellant is eligible for refund of input tax paid on purchases from local registered dealer and registered contractors and have filed monthly returns in Form VAT 100 during the financial year 2009-2010 before the jurisdictional LVO-020 as prescribed under Section 20 of the Act.
(iii) The concerned authority by his proceedings dated 26th May, 2011 has disallowed refund of input tax to a large extent. Aggrieved by the same, the appellant has filed appeals before the FAA who has allowed the appeals in part except for disallowing the refund with respect to the belated claims of input tax claims made in the monthly returns for the purpose of refund.
(iv) Being not satisfied by the impugned appellate order, the present appeals are filed before this Bench praying for, to quash the impugned appeal order and to allow refund in full.
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Grounds of appeal in gist:
(i) The appellant submits that the respondent's action of disallowing the refund of input tax credit beyond 6 months is entirely unsustainable and against the provisions of the Act when there is no specific provision under the Act to deny refund.
(ii) The appellant submits that the FAA failed to appreciate Section 10(4) of the Act. As per the appellant, the input tax credit can be claimed only when the input invoice is with the registered dealer and the tax period in which the date of input invoice falls, is not relevant for the claiming of the input tax credit.
(iii) The appellant submits that input tax credit is taken in the tax period during which the invoices of the vendors/suppliers are received and as consequently has fulfilled the requirements of Section 10(4) of the Act. Therefore, the input tax credit cannot be denied to them.
(iv) The appellant submits that the expression input tax is specified under Section 10(2) of the Act. Input tax, in relation to any registered dealer means the tax collected or payable under the Act on the sale to him of any goods for use in the course of business. Therefore, input tax would mean the sum total of the tax paid on purchase of eligible goods, by the dealer.
(v) The delay in claiming the input tax credit is due to the internal process which has to be followed in case of such 'big project' and leading to the accounting of the purchaser in the books of accounts some times belatedly. This is a normal practice in the industry all over the country. There is nothing wrong in accounting the bills of suppliers raised in the particular month, to be accounted in subsequent month subject to the actual receipt of the goods and on the completion of the inspection and clearance of such goods purchased. This has caused delay in accounting the tax invoices. Because of technical characteristics and the conditions prescribed in the purchase order, there is delay in claiming the input tax credit which is not a mistake and they are entitled for refund which has been curtailed by the FAA even though the FAA has allowed the appeal in part.
(vi) The appellant highlights Section 4 of the Sale of Goods Act, 1930 and submits that the goods gets transferred only after due inspection and clearance. For this reason, the purchase or sale has to be considered only when the goods are cleared by the technical personnel and then only the same would be accounted for.
(vii) The appellant submits that in view of the binding decisions of this Tribunal in various cases, input tax credit has to be allowed even after six months and refund has to be granted, when it has been claimed duly by the appellant. In this regard, the appellant highlights the fact that this Tribunal has relied on the decision of the Hon'ble Apex Court in Formica India Division, Bombay; Burma Trading Corporation Limited v Collector of Central Excise and Others, 1995 Supp. (3) SCC 552: 1995(77) ELT 511 (SC) and also the decisions of the Hon'ble Madras High Court in Commissioner of Central Excise, Salem v Chemplast Sanmar Limited, 2009(239) ELT 398 (Mad.) and Hon'ble Delhi High Court in Northern India Motor Company v Commissioner of Value Added Tax, Department of Trade and Taxes, New Delhi, (2009)25 VST 466 (Del.), in order to allow input tax credit when claimed beyond six months. The following case-laws of this Tribunal are cited in this regard:
(a) M.S. Penna Cement Industries Limited, Bellary v State of Karnataka, 2009(67) Kar. L.J. 241 (Tri.) (DB);
(b) Centum Industries Private Limited, Bangalore v State of Karnataka, 2011(71) Kar. L.J 341 (Tri.) (DB);
(c) Primacy Industries Limited, Manipal v State of Karnataka, 2011(72) Kar. L.J. 166 (Tri.) (DB) and other various decisions of this Tribunal.
(viii) The appellant submits that as per Section 20(2) of the Act, tax paid on purchase of input tax by a registered dealer who is a developer of any special economic zone shall be refunded or deducted from the output tax payable by such dealer, subject to such conditions and in the manner as prescribed. Because the word "shall" has been used by the Legislature, the refund of input tax credit is mandatory requirement. For this, the appellant has cited the decision of the Hon'ble Apex Court rendered in Hemalatha Gargya v Commissioner of Income Tax, Andhra Pradesh and Another, (2003)9 SCC 510: (2003)259 ITR 1 (SC), wherein it is held that, the use of the word "shall" in a statute means that the statutory provision is mandatory. Apart from the above case-law, the appellant has relied on Belapur Sugar and Allied Industries Limited v Collector of Central Excise, Aurangabad, AIR 1999 SC 1692: (1999)4 SCC 103: 1999(108) ELT 9 (SC).
(ix) The appellant further submits that in the absence of a dear provision in the statute, it is not for the Courts to import any specific period of limitation, by implication. In this regard, the appellant has relied on the decision of the Hon'ble Apex Court in the case of Collector of Central Excise, Jaipur v Raghuvar (India) Limited, AIR 2000 SC 2027: (2000)5 SCC 299: 2000(118) ELT 311 (SC). The appellant submits that relying on Section 35(4) of the Act by the FAA to disallow the claim of refund for the reason that input tax credit is claimed beyond six months is bad in law. The appellant submits that it is only for the purpose of filing the revised returns, the said Section 35(4) is applicable and the said provision is not at all applicable for the purpose of disallowing input tax credit thereby the refund of tax.
(x) The appellant further submits that the department has effected refund of input tax credit, under Section 20 of the Act in respect of the tax periods comprised in the period of April 2007 to March 2009, without considering the element of the credit pertaining to the period of over six months. The appellant submits that with the law related to refund of input tax credit to SEZ Developers not having undergone any change, it would be unfair to bring in the concept of credit claimed over six months, to be denied, as this would go against the fundamental principle of consistence and uniformity. In this regard, the appellant has relied mainly on the decisions rendered under Central Excise Act specifically Union of India and Others v Kaumudini Narayan Dalal and Another, (2001)10 SCC 231: (2001)249 ITR 219 (SC); Berger Paints India Limited v Commissioner of Income Tax, Calcutta, AIR 2004 SC 1743: (2004)266 ITR 99 (SC): (2004)12 SCC 42 and Indian Oil Corporation Limited v Collector of Central Excise, Baroda, (2007)13 SCC 803: 2006(202) ELT 37 (SC).
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Heard the learned Counsel for the appellant and additional written submission also submitted along with ruling copies. The learned State...
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