2022 (3) TMI 982 - HC - VAT and Sales Tax

Revision of Appellate Authority s order beyond the time prescribed under Section 64 (3)(c) of the KVAT Act - subcontractors turnovers were not disclosed, while verifying e-filing system, even though the law to file returns electronically in Form-100/Form-120 was introduced only from September, 2010 by Notifications No.KSA/CR-60/2010-11(I) No.KSA/CR-60/2010/11(II) both dated 30.09.2010 - non-disclosure of turnover of work executed to the appellant in their e-returns - HELD THAT - It is not in dispute that the filing of monthly returns electronically was introduced vide Notification No.KSA/CR-60/2010- 11(I), dated 30.9.2010. The revisional authority has proceeded to set aside the order of the first appellate authority mainly on the ground that on verification of the departmental VAT e-filing system, it was noticed that, the sub-contractors of the assessee had not declared the turnover in their monthly returns. Having regard to the mandatory requirement of electronic filing of returns having come into force w.e.f., 30.9.2010, denying the claim of the appellant assessee sans examining the monthly returns filed manually cannot be countenanced. Atleast for the tax period from May to August 2010 it was incumbent on the part of the revisional authority to examine whether returns were filed by the sub-contractors manually disclosing the turnover. The matter is restored to the file of Addl. Commissioner to re-consider the matter and pass appropriate orders keeping in mind the monthly returns said to have been filed by the sub contractors for the tax periods in question more particularly for the tax periods from May 2010 to August 2010 manually - appeal allowed in part.

Summary

Issues:
1. Interpretation of Section 64(1) of the Karnataka Value Added Tax Act, 2003 for revising the Appellate Authority's order.
2. Verification of subcontractors' turnovers in electronic filing system versus manual returns.
3. Justification of revisional authority's decision on non-disclosure of turnover by subcontractors.

Analysis:
1. The appellant, a private limited company engaged in civil works, challenged a reassessment order under the Karnataka Value Added Tax Act, 2003 for the tax period 2010-11. The first appellate authority allowed the appellant's claim for deduction of sub-contractor's turnover. However, the Additional Commissioner of Commercial Taxes initiated revisional proceedings beyond the prescribed time, raising questions on the authority's power to revise the appellate order under Section 64(1) of the Act.

2. The revisional authority's decision was based on the alleged non-disclosure of subcontractors' turnovers in the electronic filing system. The appellant argued that subcontractors had submitted manual returns before the mandatory introduction of electronic filing in September 2010. The court noted that the revisional authority failed to consider the manual returns filed by subcontractors for the tax period from May to August 2010, which should have been examined before denying the appellant's claim.

3. The court found that the revisional authority's decision to set aside the first appellate authority's order solely based on electronic filing discrepancies was not justified. As per the Notification making electronic filing mandatory from September 2010, the authority should have considered the manual returns filed by subcontractors for the relevant period. The court allowed the appeal in part, setting aside the revisional authority's order and directing a re-consideration based on the manual returns filed by subcontractors for the specified tax periods. The appellant was instructed to appear before the Revisional Authority for further proceedings.