2016 (7) TMI 788 - HC - VAT and Sales Tax

Claiming special rebate in terms of Section 12(1) of the KVAT Act 2003 - The total output tax payable by the petitioner during the relevant years was more than the special rebate claimed for the purchase turnover as per Section 6(2). However while making the assessment the assessing officer had only given a special rebate at 4% of the purchase turnover for the year 2011-12 and 5% for the year 2012-13. This according to the petitioner is on a wrong interpretation of the fourth proviso to Section 12(1) of the Act. The petitioner therefore challenges the vires of the statute viz. fourth proviso to Section 12(1) and alternatively contending that the method adopted by the assessing officer in giving rebate is absolutely wrong. Held that - As rightly contended by the learned counsel for the petitioner when Section 12(1) gives a benefit and the benefit is restricted by way of a proviso the proviso has to be read as it is without any addition or deletion. Each word in the proviso has to be given a meaning and while giving such an interpretation the only possible view that could be taken is with reference to the amount of special rebate that the dealer claims with reference to the output tax payable and not with reference to the rate of tax. The assessing authorities were not justified in limiting the rebate to 4% and 5% as the case may be. The petitioner was entitled for rebate for the entire amount paid in terms of Section 12(1) and even going by the fourth proviso since the output tax payable does not exceed the total claim for rebate under Section 6(2). - Decided in favor of petitioner.

Summary

Issues:
Challenge to special rebate claimed under Section 12(1) of the KVAT Act, 2003 for assessment years 2011-12 and 2012-13.

Detailed Analysis:

Issue 1: Challenge to the Fourth Proviso to Section 12(1) of the Act
The petitioner contested the assessment orders Exts.P5 and P6 for the years 2011-12 and 2012-13, specifically disputing the special rebate granted by the assessing officer. The petitioner argued that the rebate provided was incorrectly interpreted by the assessing officer, challenging the validity of the fourth proviso to Section 12(1) of the Act. The petitioner contended that the method adopted for granting the rebate was erroneous. The Court analyzed the provisos under Section 12 and emphasized that these limitations are exemptions to the general rule, allowing the legislature to either grant or restrict benefits under the statute. The Court found that the challenge to the fourth proviso lacked sufficient grounds for sustaining it and thus negatived the challenge.

Issue 2: Interpretation of the Special Rebate Provision
The alternate contention raised was regarding the interpretation of the words "the special rebate under this section shall not exceed the output tax payable in respect of such goods or goods manufactured out of such goods." The assessing officer limited the rebate based on the rate of tax payable, while the petitioner argued that the rebate should be linked to the total output tax payable. The Court examined the statutory provision under Section 12 and concluded that the proviso should be read as is, without any additions or deletions. It held that the rebate claimed by the dealer should be with reference to the output tax payable and not the rate of tax, as contended by the assessing authority. The Court emphasized that when there is no ambiguity in the provision, further interpretation is unnecessary, and the words of the statute must be given their plain meaning. Therefore, the assessing authorities were deemed unjustified in limiting the rebate based on the rate of tax, and the petitioner was entitled to the full rebate under Section 12(1).

In conclusion, the Court allowed the writ petition, setting aside the assessment orders and directing the assessing authority to issue fresh orders within two months, considering the correct interpretation of the fourth proviso to Section 12(1) of the Act.