2014 (1) TMI 778 - HC - VAT and Sales Tax

Jurisdiction under Section 59(4) - Whether the Commissioner of Commercial Taxes (Karnataka), Bangalore, invoking the jurisdiction under Section 59(4) of the Karnataka Value Added Tax Act, 2003, could invalidate the clarification issued in the petitioner s case, by the authority for Clarification and Advance Rulings, under Section 60, without having invoked the Revisional jurisdiction under Section 64(2) or the remedy of an appeal under Section 66 of the said Act - Held that - If M/s Commercial and Technical (CATS), Bangalore, a dealer, has obtained clarification under subsection (4) of Section 59, that cannot bind the petitioner since what is binding upon the petitioner is Annexure-C clarification of the Authority - The Commissioner appears to have misdirected himself without noticing the provisions of Section 60 of KVAT Act more appropriately sub-section 7 providing for remedial measures over the clarification Annexure - C hence the conclusion arrived at in the order Annexure-A is illegal and one without jurisdiction - It is elsewhere said that when a certain thing is permitted to be done, it must be done in that way or not at all and other methods of performance are necessarily forbidden - Decided in favour of assessee.

Issues:
1. Jurisdiction under Section 59(4) of the KVAT Act to invalidate a clarification issued by the Authority for Clarification and Advance Rulings without invoking Revisional jurisdiction or appeal.
2. Binding nature of clarifications issued under Section 60 of the KVAT Act.
3. Interpretation of Sections 59(4) and 60(7) in relation to the validity of clarifications.
4. Misdirection by the Commissioner in invalidating a clarification without following proper procedures.

Analysis:
1. The core issue in this case revolves around whether the Commissioner of Commercial Taxes could invalidate a clarification issued by the Authority for Clarification and Advance Rulings without utilizing the Revisional jurisdiction under Section 64(2) or the remedy of an appeal under Section 66 of the KVAT Act. The Court examined the provisions of Section 59(4) which empower the Commissioner to clarify the rate of tax payable under the KVAT Act for maintaining uniformity in assessments. It was established that the clarification issued by the Authority under Section 60 is binding unless invalidated through proper channels.

2. Section 60 of the KVAT Act establishes the Authority for Clarification and Advance Rulings to provide clarifications on tax rates and transactions. The judgment emphasized that the clarification issued by the Authority is final and binding on the registered dealer and the revenue unless challenged through revision or appeal as per the provisions of the Act. In this case, the Court reiterated the binding nature of the clarification issued to the petitioner by the Authority.

3. The Court further analyzed the provisions of Sections 59(4) and 60(7) to determine the validity of clarifications under the KVAT Act. It was clarified that the Commissioner's jurisdiction under Section 59(4) does not extend to annulling clarifications issued by the Authority, as Section 60(7) provides specific methods for annulling such clarifications. The judgment highlighted the importance of following the prescribed procedures for challenging or invalidating clarifications under the Act.

4. The Court found that the Commissioner had misdirected himself by invalidating the clarification without adhering to the provisions of Section 60 of the KVAT Act. It was concluded that the Commissioner's actions were illegal and lacked jurisdiction. The judgment emphasized the need for proper adherence to statutory procedures and highlighted that alternative relief sought by the revenue was not applicable in light of the illegal nature of the Commissioner's decision.

In conclusion, the Court allowed the petition, quashed the Commissioner's order, and upheld the petitioner's entitlement to the benefit of the clarification issued by the Authority for Clarification and Advance Rulings. The judgment underscored the importance of following statutory procedures and clarified the binding nature of clarifications under the KVAT Act.

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