2018 (2) TMI 1432 - HC - VAT and Sales Tax

Input Tax Credit - Section 10(3) of the KVAT Act, 2003 - demand raised relying upon the decision of this Court in the case of M/s.Kirloskar Electric Co. Ltd., & Ors. vs. The State of Karnataka & Ors. 2018 (2) TMI 524 - KARNATAKA HIGH COURT , where it was held that the machinery provisions cannot be allowed to override and defeat the substantive claim of the Input Tax Credits under Section 10(3) of the KVAT Act, 2003, which without any restriction of the time frame, allowed such deduction or credit of the ITC against the OPT liability of the Dealer in question - Held that - this Court is of the opinion that since the judgment of this Court has been delivered in recent past and the same can very well be cited before the Appellate Authority also, by which, he is bound, this writ petition deserves to be disposed of by relegating the petitionerassessee to the appellate remedy already availed by it. The writ petitions are disposed of with a liberty to the petitioner to pursue the pending appeals before the Joint Commissioner (Appeals) and at the same time, the Joint Commissioner (Appeals) is also directed to entertain the appeals on merits and decide the same on merits in accordance with the law.

Summary

Issues:
Challenge against reassessment order under KVAT Act, 2003 for the period April 2013 to March 2014. Delay in filing Regular Appeal under Section 62 of the KVAT Act, 2003. Waiver of pre-deposit requirement for the regular appeal.

Analysis:
The petitioner challenged the reassessment order dated 27.10.2016, arguing that the demands raised were contrary to a previous decision of the Court regarding Input Tax Credit (ITC) under Section 10(3) of the KVAT Act, 2003. Citing the case of M/s. Kirloskar Electric Co. Ltd., the Court emphasized that the claim of ITC cannot be restricted or denied based on technicalities like time frames for filing returns. The Court held that the Revenue is only entitled to verify the authenticity of sale invoices and ITC claims. The Court deemed the assessment orders denying ITC claims as illegal and unsustainable, quashing and setting them aside. The matters were remanded to the Assessing Authorities for fresh orders on ITC claims.

The Court expressed concern over the Assessing Authorities consistently passing orders contrary to judgments in favor of assessees, directing the Commissioner of Commercial Taxes to issue a Circular aligning with the Court's interpretation to prevent further unnecessary litigation. The Court warned of contempt proceedings if any Authority took a contrary view on ITC claims.

Regarding the delay in filing Regular Appeals under Section 62 of the KVAT Act, 2003, the Court noted that the appeals were pending without condonation of the delay by the Joint Commissioner (Appeals). Despite the pending appeals, the Court decided to dispose of the writ petitions, allowing the petitioner to pursue the appeals. The Joint Commissioner (Appeals) was directed to entertain the appeals on merits and decide expeditiously without requiring pre-deposit, emphasizing compliance with the Court's judgment.

In conclusion, the Court upheld the petitioner's challenge against the reassessment order, emphasizing the indefeasible nature of ITC claims and the need for Assessing Authorities to adhere to judicial decisions. The Court ensured the petitioner's right to pursue pending appeals, directing a speedy and fair consideration of the appeals without pre-deposit requirements, in line with the Court's interpretation of the law.