2016 (6) TMI 860 - HC - VAT and Sales Tax

Power of the tribunal to adjudicate upon the said order of the revisional authority - Karnataka Value Added Tax Act, 2003 (KVAT) - Input tax Credit benefit - Levy of interest and penalty - Held that - subject to the outcome of the proceedings against the order of the revisional authority dated 24.03.2010, it can be said that the order passed by the Tribunal in any case on merits cannot be sustained more particularly, when the Tribunal did not touch at all the subject matter of levy of interest and the penalty for which the appeals were preferred by the petitioner before the Tribunal. All appeals being STA Nos.809-820/2009 shall stand restored to the file of the Tribunal. The Tribunal is directed to await final conclusion of the aforesaid litigation against the order dated 24.03.2010 passed by the Addl. Commissioner of Commercial Taxes in revisional jurisdiction against the order dated 10.09.2008. After the conclusion of the aforesaid matter, the Tribunal shall pass appropriate orders in accordance with law, after giving an opportunity of hearing to both the sides - Decided partly in favor of assessee.

Summary

Issues:
1. Revisional powers exercised under Section 64(1) of the KVAT Act.
2. Tribunal's jurisdiction and observations on appeal matters.
3. Legality and validity of the order dated 24.03.2010 by the revisional authority.
4. Tribunal's order on levy of interest and penalty.
5. Remand of the matters to the Tribunal for reconsideration.

Revisional Powers under Section 64(1) of the KVAT Act:
The High Court considered the exercise of revisional powers under Section 64(1) of the Karnataka Value Added Tax Act, 2003. It noted that the Additional Commissioner of Commercial Taxes had set aside the order of the First Appellate Authority, which was the subject of appeals before the Tribunal. The Court highlighted the Tribunal's failure to address the revisional order's impact on the appeals, raising questions about the Tribunal's jurisdiction in such circumstances.

Tribunal's Jurisdiction and Observations on Appeal Matters:
The Court analyzed the Tribunal's jurisdiction and observations on the appeal matters. It observed that the Tribunal did not delve into the reasons recorded in the revisional order but proceeded to dismiss the appeals on merits. The Court emphasized that the Tribunal should have focused on the limited scope of the appeals, which were primarily concerned with the levying of interest and penalty. It criticized the Tribunal for making unnecessary observations beyond the appeal's scope.

Legality and Validity of the Revisional Authority's Order:
Regarding the legality and validity of the order dated 24.03.2010 by the revisional authority, the Court refrained from expressing a view on this matter. It highlighted that the order was the subject of a separate appeal, indicating that the issue needed separate consideration. The Court emphasized the need to await the outcome of the proceedings against the revisional authority's order before making any determinations.

Tribunal's Order on Levy of Interest and Penalty:
The Court scrutinized the Tribunal's order on the levy of interest and penalty. It pointed out that the Tribunal failed to address the crucial aspects of interest and penalty in its decision, despite these being the primary issues raised in the appeals before the Tribunal. The Court concluded that the Tribunal's order, lacking consideration of these key matters, could not stand on legal grounds.

Remand of Matters to the Tribunal for Reconsideration:
In light of the above issues, the Court set aside the Tribunal's order and remanded the matters back to the Tribunal for reconsideration. It directed the Tribunal to await the final conclusion of the litigation concerning the revisional authority's order before proceeding. The Court emphasized the need for the Tribunal to reexamine the issues in accordance with the law, particularly focusing on the levy of interest and penalty, after the resolution of the separate appeal against the revisional authority's order.