2013 (9) TMI 1029 - HC - VAT and Sales Tax

input tax means the tax paid or payable under this Act by a registered dealer to another registered dealer on the purchase of goods in the course of business and includes the tax paid on the purchase of materials for the research and development in relation to any goods.

Summary

Issues:
Assessment year 2008-2009 and 2009-2010 - Unaccounted purchase of turnover, applicability of exemptions under KVAT Act, input tax rebate, and fresh assessments.

Analysis:
The case involved two assessment years, 2008-2009 and 2009-2010, where the respondent-assessee, a grocery merchant, had unaccounted purchases leading to a total taxable turnover exceeding Rs. 10 lakhs. The Department completed the assessment by adding the unaccounted turnover, and the assessee appealed to the first appellate authority, which modified the total taxable turnover. Subsequently, the second appellate authority granted a concession under sub-section (5)(n) of section 11 of the KVAT Act, exempting Rs. 10 lakhs and directed modification of the assessments. The Department, aggrieved by this decision, filed revisions. The main contention was whether the assessee was entitled to exemptions and input tax rebate under the Act.

The Government Pleader argued that exemptions under section 11 need not be extended to an assessee who did not file returns in accordance with the Act, citing a previous decision. On the other hand, the assessee's counsel highlighted the definition of "input tax rebate" under section 2(xxiii) and the special concession under section 11(3) for first-year businesses. The court examined the definition of "input tax" and the input tax credit available to the assessee on purchases under section 11(5)(n), emphasizing the necessity for registered dealers to comply with tax payment provisions.

The court noted that the dealer did not disclose the actual taxable turnover while filing returns, which was only revealed during scrutiny by the Department. This non-disclosure and non-payment of tax led to the conclusion that the assessee could not claim benefits under section 11(1). Additionally, the court discussed the exemption available to first-year businesses under proviso 3 to section 6(1) of the KVAT Act, granting exemption up to Rs. 10 lakhs in taxable turnover. For the second assessment year, the court held that the assessee was not entitled to input tax benefits or exemptions.

Based on the above analysis, the court directed the Department to proceed with fresh assessments for the years 2008-09 and 2009-10, disposing of the revision petitions accordingly.