9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (2) TMI 1077 - HC - VAT and Sales TaxWhether the Commissioner of Commercial Tax was justified in coming to the conclusion that when once the contractor has submitted himself for composition cannot withdraw the same subsequently? Whether the amendment made to rule 8B(1) of the KST Rules is prospective and whether the same was in force on the date of withdrawal of the application by the appellant? Held that - In view of the above binding judgment of of this court in Subba Reddy s case 2004 (12) TMI 664 - KARNATAKA HIGH COURT the argument advanced by the learned counsel for the petitioner-appellant does not hold water and is liable to be rejected and accordingly it is rejected. Hence, question No. 1 formulated hereinabove is answered in the negative in favour of the Revenue and against the assessee. Rule 8B(1) of the Rules which has come into effect from June 8, 2001 is also applicable to the period anterior to the same, since the said addition is clarificatory in nature. Accordingly, question No. 2 is answered against the assessee and in favour of the Revenue.
Issues Involved
1. Whether the Commissioner of Commercial Tax was justified in concluding that a contractor who has opted for composition cannot subsequently withdraw the same. 2. Whether the amendment made to Rule 8B(1) of the Karnataka Sales Tax (KST) Rules is prospective and whether it was in force on the date of withdrawal of the application by the appellant. Detailed Analysis Issue 1: Justification of Composition Opt-Out Restriction The appellant, a P.W.D. contractor, initially opted for the composition method under Section 17(6) of the Karnataka Sales Tax Act, 1957. The assessing officer levied a 4% tax on the appellant's earthen work receipts, rejecting the claim for exemption of labor-related receipts. The appellant challenged this, and the Joint Commissioner of Commercial Taxes (Appeals) allowed the appeal, reducing the tax liability significantly. However, the Additional Commissioner, exercising suo motu revisional powers, later allowed the appellant to opt out of the composition method and assessed under Section 5B, further reducing the tax liability. The Commissioner of Commercial Taxes, in turn, revised both the orders of the Joint Commissioner and the Additional Commissioner, restoring the original assessment by the Deputy Commissioner. The Commissioner concluded that once the contractor opts for composition, they cannot subsequently withdraw. This decision was based on the precedent that the option for composition, once exercised, is irrevocable, as affirmed by the Division Bench in the case of Karnataka State Construction Corporation Limited v. State of Karnataka [2004] 138 STC 75 (Karn). The court upheld the Commissioner's decision, stating that the appellant, having voluntarily opted for the composition method, cannot later seek to revert to regular assessment under Section 5B. The court emphasized that the composition method is an alternative taxation method chosen by the assessee, and once chosen, it cannot be undone. Issue 2: Prospective Application of Rule 8B(1) Amendment The amendment to Rule 8B(1) of the KST Rules, effective from June 8, 2001, stated that an application for composition, once filed, cannot be withdrawn. The appellant argued that this amendment should not apply retrospectively to the assessment period of 1997-98. The court noted that the amendment was clarificatory in nature and aimed to remove any ambiguity regarding the irrevocability of the composition option. The court held that even though the amendment came into effect in 2001, it was applicable to the period anterior to its enactment because it clarified the existing provisions of Section 17(6) of the Act. The court referenced the principle that procedural amendments, especially those clarifying existing law, can apply retrospectively. The court found that the appellant, having accepted the benefits of the composition method initially, could not claim the right to withdraw retrospectively. The court also highlighted that the rule-making authority intended to prevent any ambiguity by explicitly stating the irrevocability of the composition option. Conclusion The court dismissed the appeal, affirming that: 1. The appellant could not withdraw from the composition method once opted. 2. The amendment to Rule 8B(1) was clarificatory and applicable retrospectively, reinforcing the irrevocability of the composition option. The substantial questions of law were answered in favor of the Revenue and against the assessee.
|
