2011 (2) TMI 1331 - HC - VAT and Sales Tax

Summary

Issues:
Assessment under Karnataka Sales Tax Act, 1957 - Reopening of assessment for assessment year 2003-04 based on availability of original application form 8AA - Validity of revisional authority's decision under section 22A - Composition scheme for payment of tax - Deemed permission if certificate not issued within 30 days of application - Dispute regarding availability of original application form.

Analysis:
The appeal before the High Court was against the order passed by the revisional authority under section 22A(1) of the Karnataka Sales Tax Act, 1957. The assessee, a registered dealer under the Act, had filed returns for the assessment year 2003-04 and opted for a composition scheme by applying tax at four per cent on the declared value. Subsequently, a notice was issued seeking documentary evidence for a specific turnover related to a labor contract and the application for opting the composition scheme. The Joint Commissioner accepted the tax payment on labor receipts under the composite scheme. However, the Additional Commissioner initiated suo motu proceedings to review the order, citing the unavailability of the original form 8AA in the records.

The Additional Commissioner rejected the assessee's plea and passed an order deeming the Joint Commissioner's decision prejudicial to revenue. The assessee filed an application seeking revision of the order under section 25A, which was also rejected. The High Court noted that the assessee had regularly filed applications for composition tax subsequent to the disputed period, and the Xerox copy of the application was available in the department's records. The court emphasized that the unavailability of the original application after five years could not be a valid reason to set aside the assessment order accepting the composition tax paid by the assessee.

The High Court found that the revisional authority was unjustified in interfering with the Joint Commissioner's order. Consequently, the appeal was allowed, the impugned order was set aside, and the original order was restored. The court directed each party to bear their costs.