2015 (10) TMI 47 - HC - VAT and Sales Tax

Denial of input tax rebate - Karnataka VAT - Whether the assessee is entitled to claim input-tax rebate beyond the period of 6 months in a return filed for the said period on the ground that he has omitted to put forth the claim in the return filed for the relevant period - Held that - Output tax is a tax payable by any dealer on sale of goods made by him in the course of his business. Input tax is a tax collected by the registered dealer or payable under this Act on the sale to him of any goods for use in the course of his business. Sub-section (3) of section 10 provides for calculating the net tax payable by the registered dealer. It provides that, the net tax payable by a registered dealer in respect of each tax period shall be the amount of out put tax payable by him in that period less the input tax deductible by him as may be prescribed in that period and shall be accounted for in accord ance with the provisions of this Act. Therefore, it is clear the word in that period specifies the period during which input tax is paid and output tax is payable and the same has to be accounted in accordance with the provisions of the Act. Sub-section (4) makes it clear that, for the purpose of calculating the amount of net tax to be paid or refunded, no deduction for input tax shall be made unless a tax invoice, debit note or credit note, in relation to a sale, has been issued in accordance with section 29. Assessee paid input tax for the month of June 2006. In the returns filed in July 2006 he did not put forth any claim. He also did not file any revised return within 6 months putting forth the said claim. That is the period prescribed under law under section 35(1) and 35 (4) of the Act. It is only in the return filed in the month of February 2007, after the expiry of the aforesaid period, he put forth the said claim. There fore, the assessing authority as well as the first appellate authority rightly held that the claim for input tax rebate put forth for the first time in February 2007 for the period of June 2006 cannot be allowed. - If the assessee is not putting forth a claim for input tax deduction in the return filed in July 2006 nor as he put forth such a claim in a revised claim which he could have filed within six months therefrom his right to claim input deduction is lost. He cannot for the first time in the returns filed in February 2007 put forth a claim for input tax deduction as the said return was not related to the tax period during which the input tax was paid. In that view of the matter, the Tribunal has not applied its mind to the afore said provision and ignoring the mandate of law has allowed the said deduction erroneously. Therefore, the said finding recorded by the Tribunal cannot be sustained and accordingly it is hereby set aside. - Decided in favour of Revenue.

Summary

Issues Involved:
1. Denial of input-tax credit based on the timing of the claim.
2. Interpretation of statutory provisions regarding the filing and revision of returns.
3. Applicability of previous judgments to the current case.

Detailed Analysis:

1. Denial of Input-Tax Credit Based on Timing of the Claim:

The primary issue revolves around whether the authorities were justified in denying the input-tax credit to the assessee on the grounds that the claim was not made within the prescribed period. The Karnataka Appellate Tribunal had previously ruled in favor of the assessee, stating, "there is nothing in the law stipulating that if input tax is not claimed during the month succeeding the month in which purchase is effected, the dealer would forfeit the claim to input tax." The Tribunal allowed the input-tax credit, emphasizing that the input tax is a statutory promise made to the dealer.

2. Interpretation of Statutory Provisions Regarding Filing and Revision of Returns:

The judgment extensively discusses the relevant statutory provisions under the Karnataka Value Added Tax Act, 2003, particularly Sections 10 and 35. Section 10 deals with output tax, input tax, and net tax, specifying that the net tax payable by a registered dealer in respect of each tax period shall be the amount of output tax payable by him in that period less the input tax deductible by him "as may be prescribed in that period." Section 35 outlines the requirements for filing returns and the conditions under which revised returns can be filed. Specifically, it states that a revised return must be filed within six months from the end of the relevant tax period to correct any omissions or incorrect statements.

The court noted that the statute prescribes a specific period for filing returns and revised returns. It concluded that "if the returns are not filed within the said period, then the assessee would not be entitled to the benefit of setting off output tax against the input tax."

3. Applicability of Previous Judgments to the Current Case:

The assessee relied on a previous judgment, State of Karnataka v. K. Bond Polymers Pvt. Ltd., to argue that once input tax is paid, the assessee is entitled to the rebate of the tax against the output tax, regardless of when the claim is made. However, the court distinguished this case, stating that it dealt with a claim for refund and credit and debit notes, and "has no application to a case of setting off input tax against output tax under section 10 of the Act."

Conclusion:

The court concluded that the Tribunal erred in allowing the input-tax credit without considering the statutory provisions that mandate the timing for such claims. It held that "the claim for input tax rebate put forth for the first time in February 2007 for the period of June 2006 cannot be allowed." The court emphasized that the statutory provisions under Sections 10 and 35 must be adhered to, and the assessee's failure to file a revised return within the prescribed period resulted in the forfeiture of the input-tax credit claim. Consequently, the court set aside the Tribunal's order and ruled in favor of the Revenue. The question of law was answered in favor of the Revenue and against the assessee.