2008 (7) TMI 900 - HC - VAT and Sales Tax

Reassessment order passed under section 12A of the Karnataka Sales Tax Act of 1957 - whether the order passed by the assessing officer under section 17(6) of the Act in the absence of permission under clause (ii) of sub-section (6) of section 17 of the Act is legal and valid.? Held that - It is an undisputed fact that the assessee opted to avail composite tax benefit under section 17 of the KST Act. No doubt, the petitioner has filed application before the assessing officer within the stipulated period seeking permission to avail of the benefit of payment of composite tax on its total turnover. The said application was not considered by the assessing officer by passing an order. Therefore, reliance is placed by the assessing officer upon rule 8B that application filed by the assessee cannot be permitted to be withdrawn on the basis of amended rule which came into force on June 8, 2001. Finding recorded by the assessing officer and the appellate authorities is not only erroneous but also suffers from error in law and the conclusions arrived for the assessment year is totally inapplicable to the fact-situation. The assumption of the assessing officer and appellate authorities that the assessee has opted to avail of the benefit under section 17(6)(ii) of the Act is a non-existing fact as there is no permission granted in this regard by the assessing officer. Therefore, the impugned orders of the assessing officer as well as the appellate authorities are liable to be set aside.

Summary

Issues:
Challenge to the correctness of the order passed by the Karnataka Appellate Tribunal rejecting the appeal in relation to the reassessment order under section 12A of the Karnataka Sales Tax Act of 1957 for the year 1996-97 based on various grounds.

Analysis:
The petitioner challenged the order passed by the Tribunal, arguing that the levy of turnover tax by way of composition under section 17(6) of the Karnataka Sales Tax Act was improper as there was no permission granted by the assessing officer to opt for payment of tax on the total consideration for the works contract. The petitioner filed an application seeking permission to pay composition tax under rule 8B of the Karnataka Sales Tax Rules, but no order was passed on it. The petitioner contended that the reassessment order for payment of composite tax at four percent under section 17(6) of the Act was contrary to the law as no permission was granted. The assessing authority's decision was deemed erroneous and legally flawed, leading to the appeal.

The Assistant Government Advocate (AGA) defended the impugned order and the reasoning behind it, stating that the petitioner had indeed applied to avail of the composite tax benefit under section 17(6) of the Act. The AGA argued that the assessing officer correctly relied on the Supreme Court's decision in a similar case to reject the petitioner's contention. The AGA maintained that the questions of law raised did not warrant interference with the findings of fact by the assessing officer and the appellate authorities. The AGA's position was based on the undisputed facts of the case and the legal precedent cited.

Upon careful examination of the orders by the first appellate authority and the Tribunal, the Court found in favor of the petitioner. It was established that the assessing officer did not grant permission for the petitioner to avail of the composite tax benefit under section 17(6)(ii) of the Act. The Court emphasized that without such permission, the petitioner could not be denied the benefit of paying tax under section 5B. The Court concluded that the assessing officer and the appellate authorities had erred in assuming that the petitioner had opted for the benefit under section 17(6)(ii) when no permission had been granted. Consequently, the impugned orders were set aside, and the matter was remitted back to the assessing officer for re-examination within a specified timeframe.

In summary, the Court allowed the revision petition, set aside the orders of the appellate authorities and the assessing officer, and directed a re-examination of the petitioner's claim in accordance with the law.