2011 (7) TMI 1076 - HC - VAT and Sales Tax

Whether the respondent herein is entitled to the transitional relief permissible under section 18 of the Karnataka Value Added Tax Act, 2003? Held that - 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 is dismissed.

Summary

Issues:
- Appeal by Revenue against Karnataka Appellate Tribunal's order granting transitional relief under section 18 of Karnataka Value Added Tax Act, 2003 to the respondent.
- Dispute over entitlement to transitional relief under section 18 for tax paid on vehicles purchased and leased during a specific period.
- Assessment of whether the respondent, a registered dealer, qualifies for transitional relief under the Act.
- Review of orders passed by assessing officer, revisional authority, and Karnataka Appellate Tribunal regarding the benefit under section 18 of the Act.

Analysis:
The judgment involves an appeal by the Revenue challenging the Karnataka Appellate Tribunal's decision granting transitional relief under section 18 of the Karnataka Value Added Tax Act, 2003 to the respondent. The respondent, a registered dealer, filed an application claiming benefit under section 18 for tax paid on vehicles purchased and leased between April 1, 2004, and March 31, 2005. The assessing officer initially granted the relief, but the revisional authority later reversed this decision. The Tribunal, in its order, reinstated the benefit granted by the assessing officer, leading to the Revenue's appeal.

The key contention raised by the Revenue was that section 18 does not apply to the respondent as the respondent is not involved in manufacturing or reselling the vehicles but only in leasing them, which is considered a "sale" under the Act. The Revenue argued that since there is no resale of the vehicles, section 18 should not be applicable. However, the respondent contended that they had paid both sales tax and value added tax for the specified period, making them eligible for the transitional relief under section 18.

Upon careful consideration of the arguments presented, the Court examined the material on record. It was noted that the respondent had indeed paid sales tax on the purchased vehicles and value added tax on the lease transactions during the relevant period. The Court emphasized that the application made by the respondent pertained to the transitional provisions of section 18, which cover relief on tax paid on stock relating to goods purchased after April 1, 2004. The Tribunal's decision to reinstate the benefit under section 18 was supported by cogent reasons and did not exhibit any perversity or arbitrariness.

The Court referred to the Supreme Court's decision in Jilubhai Nanbhai Khachar v. State of Gujarat to address the concept of ownership and the applicability of multi-point tax under the Act. Ultimately, the Court upheld the Tribunal's decision, stating that the respondent was entitled to the benefit of transitional provisions under section 18 based on the verified documents and transactions. As a result, the Court dismissed the Revenue's revision petition, ruling that the appeal lacked merit.

In conclusion, the judgment clarifies the application of section 18 of the Karnataka Value Added Tax Act, 2003, in the context of transitional relief for tax paid on goods purchased during a specific period, highlighting the importance of factual verification and adherence to statutory provisions in tax matters.