2018 (3) TMI 1325 - HC - VAT and Sales Tax

Composition Scheme - It is the case of the assesee that the SMR authority having determined the taxable income under the composition scheme ought not to have added tax under Section 3(2) of the Act as purchases on the goods supplied by the contractee to the contractor - Held that - Tribunal proceeded only on the ground that the determination of tax based on the composition scheme is justifiable. It is hardly required to be stated that when particularly the assessee/appellant raises a ground and submits arguments on such point it is obligatory for the Tribunal to address the said arguments and give a finding in accordance with law - matter remanded to the Tribunal for fresh consideration.

Summary

Issues:
1. Revision petition challenging the judgment of the Karnataka Appellate Tribunal regarding the shift from composition scheme to regular VAT scheme.
2. Dispute over the levy of tax on materials supplied by the contractee to the contractor for works contract.

Analysis:
1. The petitioner, an engineer and contractor, filed a revision petition under Section 65(1) of the KVAT Act, challenging the Karnataka Appellate Tribunal's order regarding the shift from composition scheme to regular VAT scheme for the tax period January 2009. The Assessing Officer revised the assessment, stating that the petitioner's withdrawal from the composition scheme was not permissible under Rule 143 of the KVAT Rules. The petitioner contended that the Tribunal's order was contrary to the decision of the Hon'ble Apex Court and sought setting aside of the judgment and a remand to the Tribunal for fresh consideration.

2. The second issue involved the levy of tax on materials like steel and cement supplied by the contractee to the contractor for works contract. The SMR authority added tax on these materials under Section 3(2) as URD purchases, which the petitioner deemed unjustifiable. The Tribunal failed to address this specific point raised by the petitioner and proceeded to reject the appeal without giving a finding on this matter. The petitioner argued that the Tribunal should have considered their arguments on this issue and given a finding in accordance with the law.

Judgment:
After considering the arguments and perusing the material on record, the Court found that the Tribunal did not address the crucial argument raised by the petitioner regarding the tax on materials supplied by the contractee. Therefore, the Court set aside the Tribunal's judgment and remanded the matter for fresh consideration. The Court allowed the appeal in part, directing the Tribunal to consider all arguments presented by the petitioner properly and in accordance with the law, ensuring an expedited resolution of the matter while leaving all rights and contentions of the parties open for consideration.