2016 (2) TMI 95 - HC - VAT and Sales Tax

Exclusion of cost of land from the Sales Consideration / Value of the Works Contract - The assessing authority did not accept the land cost at 45%, but instead assessed it at 40% and assessed the tax. The assessee challenged the assessment order by filing the appeals, where it claimed the land cost to be 50% of the sale consideration, instead of 45% as had been claimed in the returns. - Karnataka Value Added Tax Act, 2003 (KVAT) Held that - according to the petitioner, the claim is exclusion of land cost and as once the authority has accepted it to be higher than 50%, no tax could be levied on such amount which was beyond 50% of the sale consideration. We are unable to accept such submission made by the learned counsel for the petitioner as nothing more than what is claimed by the assessee in its return can be given by the authorities, and if it is permitted, then the assessing authority or the appellate authorities would be given unfettered powers to grant any such relief which may not even have been claimed by the assessee in its returns. The Act provides for filing a revised return under Section 35(4) of the Karnataka Value Added Tax Act, 2003. If the assessee fails to avail the benefit of filing revised return, then it is only the return which is filed, which has to be considered by the assessing officer or other authorities and nothing more than what is claimed in the return that can be granted by the authorities in favour of the assessee. - Decided against the assessee.

Summary

Issues:
Challenge to Tribunal's order dismissing appeals based on land cost assessment at 45% instead of 50%. Interpretation of whether benefit beyond what is claimed in returns can be granted by authorities.

Analysis:

1. Assessment of Land Cost: The case involves a builder and civil works contractor challenging the assessment of land cost by the assessing authority at 40% instead of the claimed 45% of the sale consideration. The first appellate authority upheld the 45% claim made in the returns. The assessee then appealed to the Tribunal seeking a land cost allowance of 50%. The Tribunal dismissed the appeals, leading to the revision petitions.

2. Legal Questions Raised: The primary legal issues raised before the Court were whether the Tribunal was justified in not considering the land cost at 50% (not claimed in returns) and confirming the 45% land cost allowed by the first appellate authority. The Court was tasked with determining if authorities can grant benefits beyond what is claimed in returns without revised filings.

3. Precedent and Legal Interpretation: The Court referred to previous judgments, notably the case of Infinite Builders and Developers, where it was held that authorities cannot grant benefits exceeding what is claimed in returns without revised filings. The Court emphasized the importance of adhering to the claims made in the original returns unless revised returns are filed, preventing authorities from providing unclaimed benefits.

4. Court's Decision: The Court held that the petitioner cannot receive benefits beyond what was claimed in the returns without filing revised returns. Upholding the decisions of previous cases, the Court emphasized the statutory provision for filing revised returns under the Karnataka Value Added Tax Act, 2003. The Court rejected the petitioner's argument for excluding land cost beyond 50%, stating that authorities must adhere to the claims in the original returns.

5. Conclusion: Consequently, the Court ruled in favor of the revenue and against the assessee, dismissing the petitions. The judgment underscores the significance of adhering to claimed amounts in returns and the limitations on authorities to grant benefits not specified in the original filings. The decision provides clarity on the scope of benefits that can be granted by tax authorities based on the information provided in the returns without revised filings.