2019 (3) TMI 1084 - HC - VAT and Sales Tax

Benefit of composition scheme - section 15 of KVAT Act - sale of liquor - place of business - section 4 of KVAT Act - Held that - Considering the issue pending before the Division Bench of this court, it would be appropriate to direct the respondent to proceed with the reassessment proceedings and the same shall be subject to the result of STA No.153/2016 pending before this court - It is needless to mention that even if the reassessment order is passed for the tax periods in question, the same shall not be enforced until a decision to be taken by this court in STA 153/2016. The petitioner is at liberty to produce books of accounts on 25.3.2019 without expecting any notice from the respondent. The respondent authorities shall consider the books of accounts, objections/submissions of the petitioner assessee and shall proceed in accordance with law - petition disposed off.

Summary

Issues:
Challenge to Reassessment Notice under Karnataka Value Added Tax Act, 2003 for tax period 2013-14.

Analysis:
The petitioner, a private limited company, challenged a Reassessment Notice issued under the Karnataka Value Added Tax Act, 2003, for the tax period 2013-14, alleging abuse of jurisdiction. The petitioner contended that it was entitled to pay tax at the regular rate under section 4 of the Act for places selling liquor, while also benefiting from the composition scheme. The respondent erred in alleging violations of Section 15 of the Act and in treating purchases as violating the same section. The petitioner argued that since the tax period 2014-15 was sub-judice with a pending interim order, the Reassessment Notice for 2013-14 was illegal.

The respondent, represented by the Additional Government Advocate, argued that the interim order related to the tax period 2014-15 and not 2013-14. They highlighted that the limitation period for initiating reassessment proceedings for 2013-14 would expire soon, potentially resulting in revenue loss for the State exchequer if not acted upon. The respondent emphasized the importance of initiating reassessment proceedings to safeguard revenue interests.

The High Court acknowledged the pending matter regarding the benefit of composition tax under Section 15 of the Act in another case. While authorities were bound by the decision pending in another case, the court emphasized following proper procedure and considering the limitation period to protect revenue interests. The court directed the respondent to proceed with reassessment proceedings for 2013-14, subject to the outcome of the pending case. The reassessment order, if passed, would not be enforced until a decision was made in the pending case. The petitioner was given liberty to produce books of accounts without prior notice, and the authorities were instructed to proceed in accordance with the law.

In conclusion, the High Court disposed of the writ petition, allowing reassessment proceedings for the tax period 2013-14 to proceed, subject to the outcome of the pending case regarding the benefit of composition tax under Section 15 of the Act. The court emphasized the importance of following proper procedure and considering the limitation period to protect revenue interests.