2018 (4) TMI 1916 - AT - VAT and Sales Tax

Rectification of Mistake - mistake apparent from the records - failure on the part of Hon ble Tribunal to appreciate the established law that the Tribunal has got the power to look into the issue for the first time when it is raised, that too when there is a judgment of higher court, under Article 141 of the Constitution of India - Classification and rate of GST - Margarine - HELD THAT - There was specific argument advanced by the appellant s counsel before this Tribunal stating that the Hon ble High Court of Karnataka while dealing with the rate of tax applicable for the sale of Margarine has categorically held that Margarine is an edible oil falling under Entry 31 of the 3 Schedule to the KVAT Act, taxable at the rate of 5.5%. In fact, the Tribunal has discussed the issue but for the reason that the issue was not raised before the lower authorities, this Tribunal declined to decide the issue which was raised for the first time, It is submitted that the Tribunal being the last fact finding authority for the First Time new facts could also be brought to the notice of this Tribunal. In view of the appellants plea to declare the rate of tax on margarine at 5.5% to set right the mistake that happened with respect to rate of tax on Margarine at the hands of the authorities below which has not been done in the earlier order of the Tribunal, the same is hereby rectified by holding that Margarine is taxable at 5.5% as per the High court decision in Pioneer Marketing Case, for the relevant tax period. The Rectification Application in No. 2/2016 is allowed. Margarine is taxable at 5.5.% - The Registrar of the Tribunal is directed to comply with Regulation 53(b) of Chapter-IX of Karnataka Appellate Tribunal Regulations 1979 by communicating this order to the persons mentioned therein.

Summary

Issues Involved:
1. Rectification of order under Section 63(9)(a) of the Karnataka Value Added Tax Act, 2003 Read with Regulation 29 of the KAT Regulation 1979.
2. Classification of Table Margarine for tax purposes.
3. Disallowance of input tax rebate.
4. Interpretation of judgment by Hon'ble High Court of Karnataka in relation to the rate of tax on Margarine.
5. Tribunal's authority to consider new facts based on higher court judgments.

Issue 1: Rectification of Order
The Rectification Application was filed to rectify the order passed by the Tribunal in STA Nos.902 to 913/2012 dated 19.08.2016. The appellant argued that the Tribunal failed to declare the rate of tax on the sale of Margarine as taxable at 5.5% despite the judgment of the Hon'ble High Court of Karnataka in the case of M/s. Pioneer Marketing. The Tribunal was urged to correct the mistake apparent from the record.

Issue 2: Classification of Table Margarine
The appellant classified the sale of Margarine as edible oil falling under Entry 31 of the 3rd Schedule to the KVAT Act. However, the Assessing Authority re-assessed the case and held that Table Margarine is taxable at the rate of 12.5%. The appellant contended that the Hon'ble High Court had categorically held Margarine as edible oil taxable at 5.5%, which the Tribunal failed to acknowledge initially.

Issue 3: Disallowance of Input Tax Rebate
The Assessing Authority refused to grant the difference of input tax rebate of 8.5% arising due to the seller M/s. Pioneer Marketing paying tax at 12.5%. The appellant challenged this disallowance, but the First Appellate Authority dismissed the appeal for lack of documentary evidence. The Tribunal partially allowed the appeal but did not rectify the rate of tax on Margarine as per the High Court's judgment.

Issue 4: Interpretation of High Court Judgment
The Tribunal initially refused to declare the rate of tax on Margarine as 5.5% despite the High Court's clear ruling. The appellant argued that the Tribunal should have rectified this mistake and aligned the tax rate with the High Court's decision in the Pioneer Marketing case.

Issue 5: Tribunal's Authority to Consider New Facts
The appellant contended that the Tribunal, as the final fact-finding authority, could consider new facts for the first time, especially when supported by judgments of higher courts like the High Court of Karnataka. The Tribunal ultimately rectified its earlier order and held that Margarine is taxable at 5.5% based on the High Court's decision.

In conclusion, the Tribunal allowed the Rectification Application and modified its earlier order to align with the High Court's judgment regarding the tax rate on Margarine. The decision highlighted the importance of applying higher court judgments and rectifying mistakes apparent from the record to ensure accurate tax classification and assessment.