2016 (4) TMI 136 - HC - VAT and Sales Tax

Claim of full input tax rebate - Engaged in the manufacture and sale of sunflower oil, groundnut oil and soya oil - Returns of turnover in Form VAT 100 for the tax periods April 2008 to March 2009 were filed compiled on the basis of books of account and the tax was paid as admitted therein - Petitioner claimed partial input rebate in terms of section 17 of the KVAT Act in respect of sunflower cake, groundnut cake and soya seeds used as input in the extraction of oil on the understanding of the law while filing returns that it was not eligible for full input tax rebate - Held that - in a situation where if the revenue were to be in the position of the assessee and if it was discovered that by virtue of the operation of law, the revenue was entitled to a certain amount from the dealers, it would have certainly turned the tables on the assessee and proceeding on that presumption. So, it would be only just and fair to direct the revenue to consider the prayer of the petitioner for rectification, when there is no dispute that they were entitled to full tax rebate by virtue of the decision in M.K.Agro Tech Private Limited vs. State of Karnataka 2015 (1) TMI 854 - KARNATAKA HIGH COURT . Now, it would be a formality for the respondent to pass a rectification order and grant full tax rebate to the petitioner. - Decided in favour of petitioner

Summary

Issues:
1. Claim for partial input rebate under Section 17 of the KVAT Act.
2. Reassessment orders passed by the first respondent.
3. Application for rectification of reassessment orders.
4. Interpretation of the judgment in M.K. Agro Tech case.
5. Justifiability of rectification application.
6. Consideration of benefit post judgment.
7. Entitlement to full tax rebate post judgment.

Analysis:

1. The petitioner, a registered dealer under the KVAT Act, engaged in the manufacture and sale of oils, claimed partial input rebate for inputs used in the extraction process. The returns filed were deemed accepted under section 38(1) of the KVAT Act.

2. The first respondent audited the petitioner's accounts and passed reassessment orders, allowing partial input rebate but levying tax, penalty, and interest. The prescribed authority considered the exemption of de-oiled cake and taxable oils in the process.

3. The petitioner sought rectification of reassessment orders post a division bench judgment in M.K. Agro Tech case, clarifying the applicability of Section 17 of the KVAT Act to single-product manufacturers.

4. The judgment in M.K. Agro Tech case was pivotal, indicating that the petitioner was entitled to full tax rebate post the judgment date, affecting assessments made before and after the judgment.

5. The revenue contended that rectification was not permissible after the judgment, citing a clear statute at the time of the claim, and potential revenue loss if retroactive benefits were granted.

6. The petitioner argued that the legal understanding precluded them from making the claim earlier, and the rectification application was justified post the clarifying judgment.

7. The court held that the petitioner was entitled to the benefit of the judgment in M.K. Agro Tech case, directing the first respondent to redo the orders and grant full tax rebate to the petitioner as per the judgment.

Overall, the court allowed the petitions, setting aside the impugned orders, and mandated compliance with the judgment in M.K. Agro Tech case, despite the respondent's challenge before the Apex Court.