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2011 DIGILAW 661 (KAR)

State of Karnataka v. Kotak Mahindra Prime Ltd.

2011-07-01

RAVI MALIMATH, V.G.SABHAHIT

body2011
ORDER V.G. Sabhahit , J.—This appeal is filed by the Revenue being aggrieved by the order passed by the Karnataka Appellate Tribunal wherein the appeal filed by the respondent challenging the order passed by the revisional authority has been allowed by holding that the respondent therein is entitled to the transitional relief permissible under section 18 of the Karnataka Value Added Tax Act, 2003 and thereby set aside the order passed by the revisional authority dated March 24, 2007 and restored the order dated August 1, 2005 passed by the Assistant Commissioner of Commercial Taxes under rule 166(7) and the respondent was granted benefit of adjustment of the amounts as indicated in form VAT 270 dated August 3, 2005 issued therein. The material facts of the case necessary for the disposal of this appeal are as follows : The respondent herein is a registered dealer under the Karnataka Value Added Tax Act, 2003 (hereinafter called "Act"). An application was filed claiming benefit under section 18 of the Act contending that the applicant had paid sales tax as well as value added tax on the vehicles purchased and leased for the period from April 1, 2004 to March 31, 2005 and wherefore, in view of the transitory provision under section 18, the applicant is entitled to benefit of the said provision. The assessing officer, after verification of the copy of the assessment order of the years 2003-04 and 2004-05, the annual accounts of the year 2004-05, the stock statement and purchase invoice copies, granted the relief available under section 18 of the transitional provisions under rule 166(7) of the Karnataka Value Added Tax Rules, 2005 by order dated August 1, 2005. Thereafter, suo motu revisional powers were exercised under section 63A of the Act by the Joint Commissioner of Commercial Taxes, Bangalore, and by order dated March 24, 2007, the revisional authority held that the order passed by the assessing officer granting benefit under section 18 of the Act is liable to be set aside and the assessee is not entitled to the benefit under section 18 of the Act. Being aggrieved by the said order passed by the Joint Commissioner of Commercial Taxes (Administration), Divisional VAT Office 1, Bangalore, appeal was filed before the Karnataka Appellate Tribunal by the assessee and the Tribunal, by order dated February 19, 2009, held that the order passed by the revisional authority is erroneous as the benefit under section 18 had been rightly granted to the assessee by the assessing officer and the order passed in review by the revisional authority is liable to be set aside and accordingly, set aside the order passed by the Joint Commissioner of Commercial Taxes dated March 24, 2007 and restored the order passed by the assessing officer granting benefit under section 18 of the Act. Being aggrieved by the same, the Revenue has preferred this appeal contending that the respondent is not entitled to the benefit of section 18 of the transitional provisions of the Act. 2. We have heard the learned Government Advocate appearing for the revision-petitioner and the learned counsel appearing for the respondent. The learned Government Advocate submitted that section 18 is not applicable to the respondent as the respondent is not manufacturing or reselling the vehicle but is only leasing the vehicle which is deemed to be a "sale" and multi-point revision tax has been imposed under the Act and therefore, the question of giving any deduction does not arise. He further submitted that even assuming that section 18 is applicable, since there is no resale of the vehicle and there is only lease, having regard to the provisions of section 11 of the Act, the provision of section 18 would not be applicable and the revisional authority, after detailed reasoning, has held that the respondent is not entitled to the benefit under section 18 of the Act and the order of the Tribunal setting aside the said order and restoring the benefit granted by the assessing officer is erroneous. 3. The learned counsel appearing for the respondent submitted that admittedly, the respondent-assessee has paid sales tax and also value added tax under the Act in respect of vehicles purchased and leased during the period from April 1, 2004 to March 31, 2005 and since in view of the transitional provision applicable for the said period, an application was filed claiming benefit of section 18 of the Act wherefore the assessing officer was justified in allowing the application by granting the benefit. As the said benefit was available only for a limited period from April 1, 2004 to March 31, 2005, the assessee had been paying both sales tax and value added tax for the subsequent period, and has not claimed any benefit subsequent to the period March 31, 2005 and therefore, the order passed by the Tribunal restoring the order passed by the assessing officer by setting aside the order of the revisional authority, was justified. 4. We have given careful consideration to the contentions of the learned counsel appearing for both the parties and scrutinized the material on record. 5. The material on record would clearly show the fact that the respondent -assessee has paid sales tax on the vehicles purchased and has also paid value added tax on the lease transaction which is deemed to be a "sale" under the Act is not in dispute. However, application of the assessee was filed claiming benefit under section 18 of the transitional provision for the period from April 1, 2004 to March 31, 2005. The material on record would clearly show that in the absence of the dispute on the said facts, having regard to the documents produced by the respondent-assessee and the copy of the order of assessment for the year 2003-04 and 2004-05, annual accounts for the year 2003-04, stock statement and purchase invoice copies, the assessing officer passed the order granting benefit under section 18 of the Act and the same was reversed by the reviewing authority by holding that the respondent is not entitled to the said benefit, which has ultimately been set aside by the Tribunal. Though it is argued by the learned counsel appearing for the Government Advocate that VAT is a multiple point tax and therefore, section 18 is not applicable, the said contention cannot be accepted in view of the fact that the application made by the assessee which has been considered by the assessing authority, the revisional authority and the Tribunal is only regarding the benefit claimed by the assessee under section 18 of the Act providing for transitional provisions covering relief on tax paid on stock in hand relating to goods purchased on or after first day of April, 2004, which reads as under : 18. Transitional provisions.--Transitional provisions covering relief on tax paid under the Karnataka Sales Tax Act, 1957 (Karnataka Act, 25 of 1957) on stock in hand relating to goods purchased on or after first day of April, 2004 and used for manufacture or resale, at the date of commencement of this Act, shall be as prescribed. 6. Admittedly, the assessee-respondent has paid tax under the Sales Tax Act for the purchase of the vehicle on lease and also value added tax has been paid for the period from April 1, 2004 to March 31, 2005 and therefore, the fact that the transaction in question is covered by the transition provision, cannot be disputed. It is clear from the order passed by the Tribunal which is a final authority on the question of fact that the Tribunal has assigned cogent reasons for restoring the order of the assessing officer by setting aside the order passed by the revisional authority which was impugned before the Tribunal. Following the decision of the honourable Supreme Court in Jilubhai Nanbhai Khachar, etc. etc. Vs. State of Gujarat and another, etc. etc., AIR 1995 SC 142 , the concept of ownership as an exclusive right to the owner to transfer part of the right has been dealt with and regarding the multi point tax levied under the Act, the Tribunal has rightly proceeded that, since admittedly the assessee has paid tax under the Sales Tax Act and also under the KVAT in respect of the transactions pertaining to the period from April 1, 2004 to March 31, 2005, having regard to the documents verified by the assessing officer, the assessee would be entitled to the benefit of transitional provisions under section 18 and therefore, the order passed by the Tribunal on the question of fact about application of section 18 to the transactions for the period from April 1, 2004 to March 31, 2005 is justified and does not suffer from any perversity or arbitrariness as to call for interference in this revision petition wherein only the question of law can be considered and in the absence of any arbitrariness or perversity in the consideration of the material on record, we hold that the appeal is devoid of merit and pass the following order : The revision petition is dismissed.