2020 (12) TMI 63 - HC - VAT and Sales Tax

Validity of assessment order - Forfeiture of sales tax charged erroneously - error apparent on the face of record or not - appeal dismissed on the ground that there is neither any illegality nor any impropriety in the order passed by the revisional authority and invoking powers under Section 63-A of the Act - HELD THAT - Admittedly, the sales have been made in the course of import and therefore, the transaction in question is not exigible to tax under the Act as the same is covered under Section 5(2) of the CST Act. Article 286(1)(b) of the Constitution of India provides that no law for State shall impose or authorize the imposition of tax on supply of goods or of services or both where such supply takes place in the course of import of goods or services or both into, or export of goods or services or both out of territory of India. Thus, the levy of Value Added Tax under the Act on the goods which were sold during the course of import was clearly outside the purview of the Act. This was an error apparent on the face of the record. Even though, the assessing officer has referred to Section 39(1) of the Act, however, in substance, the Assessing Officer has exercised the powers under Section 69(1) of the Act, which deals with rectification of the mistake. Section 69(1) of the Act empowers the prescribed authority, assessing authority or revisional authority to rectify any mistake apparent from the record. Since, the levy of tax under the Act on the sale of goods during the course of import was an error apparent on the face of the record, the Assessing Officer in purported exercise of powers under Section 69(1) of the Act has rightly rectified the same. It is trite law that from the tenor of the order, the source of power can be traced. Therefore, merely because the Assessing Officer has referred to Section 39(1) of the Act, the same would not invalidate the order passed by the Assessing Officer. However, the revisional authority as the tribunal has failed to appreciate the aforesaid aspect of the matter. The tribunal has decided the question of law involved in the revision before it erroneously. The order of AO is restored - revision disposed off.

Summary

Issues:
1. Interpretation of tax liability on sales made in the course of import under the Karnataka Value Added Tax Act, 2002.
2. Jurisdiction of assessing authority to levy tax on transactions not liable under the Act.
3. Applicability of Section 63A and Section 39(1) of the Act in reassessment orders.

Analysis:
1. The petitioner, a registered dealer selling electronics and telecommunication equipment, charged tax on sales made in the course of import to a research institution. The institution later clarified that the transaction was not taxable under the Act due to being covered by Section 5(2) of the Central Sales Tax Act, 1956. The assessing authority forfeited the tax charged erroneously, leading to a revisional order canceling the reassessment and forfeiture. The tribunal upheld the revisional authority's decision, prompting the petitioner to file a revision under Section 65(1) of the Karnataka Value Added Tax Act, 2002. The High Court held that the sales in the course of import were not taxable under the Act, citing Article 286(1)(b) of the Constitution of India and rectification powers under Section 69(1) of the Act. The High Court quashed the revisional authority and tribunal's orders, restoring the assessing officer's decision.

2. The petitioner argued that the assessing authority lacked jurisdiction to levy tax on transactions not subject to tax under the Act. The government advocate contended that Section 63A was rightly invoked as Section 39(1) did not apply, and the tribunal correctly upheld the revisional authority's order. The High Court found that the assessing officer rectified an error apparent on the face of the record regarding the levy of tax on import sales, even though Section 39(1) was referenced. The tribunal failed to grasp this aspect, leading to an erroneous decision. The High Court emphasized that the source of power can be inferred from the order's context, validating the assessing officer's action and invalidating the tribunal's decision.

3. The High Court, after considering submissions and records, concluded that the sales made in the course of import were not taxable under the Act. It highlighted the error in the tribunal's decision and the correct application of rectification powers under Section 69(1) by the assessing officer. Consequently, the High Court quashed the revisional authority and tribunal's orders, reinstating the assessing officer's decision. The judgment clarified the interpretation of tax liability on import sales under the Karnataka Value Added Tax Act, 2002, the jurisdiction of assessing authorities, and the application of relevant provisions for reassessment orders.