2019 (4) TMI 1057 - HC - VAT and Sales Tax

Separate registration for different units - Section 38 6 of the Karnataka Value Added Tax Act, 2003 - HELD THAT - The Assessee is bound to have a common registration number and by taking advantage of separate registrations under Section 38 6 of the Act while availing the benefit of concessional rate under composition scheme under Section 15 of the Act, for one unit, the entire tax liability cannot go down below the minimum on the basis of regular payment of tax for other units, under Rule 47 1 of the Rules. Commissioner rightly denied the request to accord ex-post facto permission to hold both separate VAT Composition registrations - Decided against the assessee.

Summary

Issues:
Challenge to order denying separate registration under Section 38(6) of the Karnataka Value Added Tax Act, 2003 based on Rule 47(1) of the Karnataka Value Added Tax Rules, 2005.

Analysis:
1. The petition challenges the order of the Commissioner of Commercial Taxes denying separate registration to the Assessee under Section 38(6) of the Act based on Rule 47(1) of the Rules. The Commissioner held that the Assessee, with different business units, did not meet the conditions for separate registration as per Rule 47(1).

2. The Commissioner's decision was based on the interpretation of Section 38(6) and Rule 47(1) of the Act and Rules. The conditions prescribed in Rule 47(1) state that each branch must pay tax as if it were not a separate unit, irrespective of turnover, for separate registration to be granted.

3. The judgment referred to a previous case where separate registration was granted for a new food outlet without liquor sales, allowing a lower tax rate. However, in the present case, the Assessee violated Rule 47(1) by paying less tax in the parent unit under a composition scheme compared to regular VAT, leading to the denial of separate registration for the liquor-selling unit.

4. The Assessee argued citing a previous order in a similar case where the right to secure separate registration for different units was upheld. However, the Court upheld the Commissioner's decision, emphasizing Rule 47(1) requirements and the Division Bench's precedent in a specific case.

5. The Court found the Commissioner's reasoning just and legal, relying on the Division Bench's judgment. The Assessee's attempt to secure separate registrations while reducing overall tax liability below the minimum was deemed in violation of Rule 47(1) and the Act.

6. Ultimately, the petition was dismissed, upholding the Commissioner's order denying separate registration under Section 38(6) based on Rule 47(1) compliance. The dismissal of the petition also led to the dismissal of the application for impleading.

This detailed analysis covers the issues raised in the judgment, the legal interpretations, and the application of relevant provisions leading to the final decision.