2016 (8) TMI 1346 - HC - VAT and Sales Tax

Filing of revised return - time limitation - assessee did not file revised return within the prescribed period of six months, but filed the revised return after the expiry of a period of six months - Held that - It is an admitted position that in the present case, the revised tax return was for claiming higher input-tax credit, but the net effect was not for additional tax liability and it was for refund of the amount. If the provision of section 35(4) of the KVAT Act is read and considered, it may be said that if the revised return is filed after the expiry of a period of six months, but is to be ultimately resulting into net additional tax liability even for a single rupee, the same can be accepted irrespective of the fact that the input-tax credit claimed is of the higher amount or not. The appeal before the Tribunal by the assessee was only for levying of the interest and penalty and not on the point as to whether on merits the revised return filed after the expiry of a period of six months, that too, not resulting into any additional tax liability, could be accepted or not. Hence, considering the peculiar facts and circumstances of the case, the contention that the simultaneous power could not have been exercised by the revisional authority, holds no merit and hence, not accepted. The contention that the revisional authority ought not to have exercised the suo motu power under section 64 when the appeal was pending before the Tribunal, does not deserve to be accepted, hence, the same is rejected. Appeal dismissed.

Issues Involved:
1. Acceptance of revised tax returns filed after the statutory period.
2. Authority and jurisdiction of revisional powers exercised suo motu.
3. Interpretation and application of Section 35(4) of the Karnataka Value Added Tax Act, 2003 (KVAT Act).
4. Impact of circulars issued by the Commissioner on revised tax returns.
5. Interaction between appellate and revisional jurisdictions under the KVAT Act.

Detailed Analysis:

1. Acceptance of Revised Tax Returns Filed After the Statutory Period:
The appellant-assessee filed revised returns after the statutory period of six months, claiming a substantial refund due to higher input-tax credit. The assessing authority rejected the revised returns, leading to demands, interest, and penalties. The first appellate authority accepted the revised returns despite the delay, directing recalculations. However, the revisional authority later set aside this acceptance, reinstating the original assessment orders. The Tribunal upheld the revisional authority's decision, emphasizing that the revised returns filed after six months without additional tax liability were unacceptable.

2. Authority and Jurisdiction of Revisional Powers Exercised Suo Motu:
The appellant argued that the revisional authority should not have exercised suo motu powers while the appeal was pending before the Tribunal. The court clarified that revisional powers under Section 64 of the KVAT Act could be exercised if the subject matter was different from the appeal pending before the Tribunal. Here, the Tribunal was only considering interest and penalty, not the acceptability of the revised returns filed after six months. Thus, the revisional authority's action was deemed appropriate.

3. Interpretation and Application of Section 35(4) of the KVAT Act:
Section 35(4) stipulates that revised returns must be filed within six months, unless permitted by the prescribed authority. The court noted that the revised returns in this case did not result in additional tax liability but instead claimed a refund, making them unacceptable under the statutory framework. The court referenced previous judgments, including Jones Lang Lasalle Property Consultant India (P.) Ltd. v. State of Karnataka, which supported the interpretation that revised returns resulting in net additional tax liability could be accepted even after six months.

4. Impact of Circulars Issued by the Commissioner on Revised Tax Returns:
The court examined the binding effect of the Commissioner’s circular dated July 7, 2008, which allowed acceptance of revised returns beyond six months only if they indicated additional tax liability. The court rejected the appellant's interpretation that input-tax credit adjustments should be considered as additional tax liability. The circular was deemed binding, and the revised returns claiming refunds without additional tax liability were found unacceptable.

5. Interaction Between Appellate and Revisional Jurisdictions Under the KVAT Act:
The court discussed the procedural aspects of filing cross-objections and the scope of revisional powers. It was emphasized that revisional powers under Section 64 could not be exercised if the matter was already under appeal, unless the subject matter was different and prejudicial to the revenue's interest. The court found that the revisional authority acted within its jurisdiction, as the appeal before the Tribunal did not cover the acceptability of the revised returns filed after six months.

Conclusion:
The court concluded that the revised returns filed after the statutory period without resulting in additional tax liability were rightly rejected by the revisional authority. The suo motu exercise of revisional powers was justified, given the distinct subject matter and the prejudicial impact on revenue. The appeals were dismissed, affirming the revisional authority's decision and reinforcing the statutory limits on filing revised returns under the KVAT Act.

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