2017 (1) TMI 744 - HC - VAT and Sales Tax

Validity of the impugned assessment order dated 28.11.2016 - denial of exemption of tax in respect of the sales made by the petitioner-company outside the State of Karnataka - the Company has not furnished the documents as required by the provisions of the Act i.e.,u/s 4 of CST s Act 56. In the absence of such documents, the claim of exemption is rejected and levied tax thereby. Held that - The imposition of tax under the provisions of the KVAT Act, 2003 in the present case on the sales claimed to be exempt and made outside the State of Karnataka requires going into the relevant facts of these transactions which have to be proved by the Assessee company as the sales taking place outside the State of Karnataka. This Court advisedly would not make any comment on the evidence so far produced by the Assessing Company and non recording of separate detailed findings by the Assessing Authority in the impugned order, as would appear from the quoted portion of the order as stated above, so that the interest of either of the parties is not adversely affected. The petitioner-assessing company not only has the remedy by way of filing an appeal against the impugned assessment order, but, if the assessing company is of the opinion that there are factual errors in the impugned order, and such mistake of facts is apparent on the face of the impugned order, it has a remedy by way of filing the appropriate Rectification application under the provisions of Section 69 of the Act. Petition disposed off - petitioner given liberty to make deposit and seek for rectification.

Issues:
1. Challenge to the assessment order passed by the Deputy Commissioner of Commercial Taxes.
2. Denial of exemption of tax under the provisions of KVAT Act for sales made outside the State of Karnataka.
3. Dispute regarding turnover details and exemption claim for sales outside Karnataka.
4. Disagreement on the eligibility for exemption under the CST Act, 1956.
5. Opposing arguments on the maintainability of writ petitions and availability of alternative remedies.
6. Examination of evidence and lack of detailed findings in the assessment order.
7. Remedies available to the petitioner-assessing company, including filing an appeal or a rectification application.
8. Request for permission to file a rectification application without pre-depositing the appeal amount.
9. Disposal of writ petitions with a direction to deposit a specific amount and file a rectification application within a specified timeframe.

Analysis:
1. The writ petitions were filed by a public sector undertaking challenging the assessment order by the Deputy Commissioner of Commercial Taxes for the period April 2010 to March 2011, which raised a demand of ?24,72,79,464 under the KVAT Act, 2003. The dispute centered around the denial of tax exemption for sales made outside Karnataka, totaling ?95,34,92,290, as claimed by the petitioner-company. The Assessing Authority refused the exemption, citing non-compliance with CST Act provisions and lack of required documentation for sales outside Karnataka.

2. The petitioner argued that exemption for outside sales was allowed in previous years, and the denial in the current assessment was unjustified despite providing relevant documents. The Respondent-Department contended that the petitioner failed to prove the origin of sales outside Karnataka, as indicated by the presence of Karnataka TIN numbers on invoices. The Respondent emphasized the need for proper documentation and compliance with KVAT Act Rules for claiming exemptions.

3. The Court acknowledged the availability of alternative remedies for the petitioner to challenge the assessment order, including filing an appeal or a rectification application under Section 69 of the Act. It advised the petitioner to pursue these remedies to address factual errors or mistakes in the assessment. The petitioner sought permission to file a rectification application without pre-depositing the appeal amount due to financial constraints as a loss-making entity.

4. In the final disposition, the Court directed the petitioner to deposit ?5 crores within a month and file a rectification application. The deposit would remain subject to the final decision of the Assessing Authority on the rectification application. The petitioner was instructed to cooperate fully, produce relevant evidence, and attend hearings promptly. The Assessing Authority was mandated to review the rectification application and evidence before March 31, 2017, and provide a reasoned decision on the exemption claim for sales outside Karnataka.

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