2016 (2) TMI 319 - HC - VAT and Sales Tax

Input Tax Credit / Input rebate - KVAT - whether the petitioner could avail the benefit of the judgment which was rendered much after the assessment order was passed and whether such reassessment orders can be passed on their prayer for rectification of the earlier assessment. - Held that - in a situation where if the revenue were to be in the position of the assessee and if it was discovered that by virtue of the operation of law, the revenue was entitled to a certain amount from the dealers, it would have certainly turned the tables on the assessee and proceeding on that presumption, it would be only just and fair to direct the revenue to consider the prayer of the petitioner for rectification, when there is no dispute that they were entitled to full tax rebate by virtue of the decision in M.K.Agro Tech , supra. It would be a formality for the respondent to pass a rectification order and grant full tax rebate to the petitioner in terms of its prayer. The petitions are allowed. - Decided in favor of assessee.

Summary

Issues:
1. Claim for partial input rebate under the KVAT Act.
2. Re-assessment orders passed by the first respondent.
3. Application for rectification of re-assessment orders.
4. Interpretation of the judgment in M.K.Agro Tech case.
5. Justifiability of rectification application by the petitioner.
6. Benefit of judgment post-assessment order.
7. Consideration of rectification prayer by the revenue.
8. Compliance with the judgment by the respondents.

Analysis:
1. The petitioner, a registered dealer under the KVAT Act, engaged in manufacturing and selling oils, claimed partial input rebate for specific tax periods based on the understanding that full rebate was not applicable. The returns filed by the petitioner were accepted under section 38(1) of the KVAT Act.

2. The first respondent audited the petitioner's accounts and passed re-assessment orders, allowing partial input rebate as per Section 17 of the KVAT Act. However, a subsequent court judgment clarified that manufacturing a taxable product alongside an exempted by-product does not qualify for partial rebate under Section 17.

3. Following the court judgment, the petitioner applied for rectification of re-assessment orders to claim full input tax rebate for the relevant periods. The application was rejected on the grounds that the claim should have been made initially and not retrospectively.

4. The judgment in M.K.Agro Tech case established the legal position that influenced the petitioner's rectification application. The court held that the judgment applied to assessments made both before and after its pronouncement.

5. The revenue contended that the rectification request was untimely and that the petitioner should have made the claim initially. The petitioner argued that the legal clarity provided by the court's decision justified the rectification application.

6. The central issue revolved around whether the petitioner could benefit from the court judgment post-assessment and if rectification of the re-assessment orders was permissible.

7. The court directed the revenue to reconsider the rectification request, emphasizing the petitioner's entitlement to full tax rebate as per the M.K.Agro Tech judgment. Compliance with the court's directive was mandated, despite the respondent's challenge of the judgment in the higher court.

In conclusion, the court allowed the petitioner's plea, setting aside the impugned orders and instructing the revenue to grant the full benefit of the M.K.Agro Tech judgment to the petitioner. The decision highlighted the importance of legal clarity in tax matters and the necessity for fair rectification procedures post-judicial pronouncements.