2018 (2) TMI 1602 - HC - VAT and Sales Tax

Exemption from payment of Sales Tax/Luxury Tax - hotel industry - KVAT Act - Held that - In the absence of any clear entitlement of exemption of the petitioner and any specific Exemption Certificate issued in favour of petitioner-assessee, the claim of the petitioner-assessee is at best, only debatable one. It would depend upon the facts to be established by the petitioner before the concerned authorities of the Department and the application of the Notifications on such facts, in the present case. The petition is disposed of by relegating the petitioner/assessee to the alternative remedy available to the petitioner against the impugned order, and if, such an appeal is filed before the Joint Commissioner (Appeals) under Section 62 of the Act within a period of 4 weeks from today - petition disposed off.

Summary

Issues:
Challenge against assessment order under Karnataka Value Added Tax Act, 2003 for exemption from Sales Tax/VAT based on notifications issued by Tourism Department.

Analysis:
The petitioner, a hotelier, challenged the assessment order passed by the Commercial Tax Officer seeking exemption from Sales Tax/VAT. The petitioner claimed exemption based on notifications issued by the Tourism Department. However, the court noted that no specific notification exempting the hotel industry from tax was produced. The revenue contended that the Tourism Department lacked the authority to grant such exemptions. The court observed that the matter involves a mixed question of facts and law best decided by the appellate authority under the Act.

The respondent's reasons for denying exemption were based on the substitution of the Karnataka Sales Tax Act by the Karnataka Value Added Tax Act-2003. The court highlighted that the tourism industry was not covered under the relevant notification for tax exemption. Additionally, the court referenced a previous judgment stating that hotel industries claiming exemption should possess a certificate from the Department of Industry and Commerce. Since the petitioner lacked this certificate and did not claim input tax credit, the output tax payable was calculated without giving input tax credit.

The court directed the petitioner to pursue the alternative remedy of filing a regular appeal before the Joint Commissioner (Appeals) under Section 62 of the Karnataka Value Added Tax Act, 2003. The court noted that the limitation for filing such an appeal might have expired, but if the appeal is filed within four weeks, it will be entertained without objection to the limitation. The petitioner was instructed to comply with relevant conditions for maintaining the appeal before the First Appellate Authority.

In conclusion, the court disposed of the petition, granting liberty to the petitioner to pursue the alternative remedy available. No costs were awarded in this matter.