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2019 (7) TMI 161 - HC - VAT and Sales TaxMaintainability of petition - Adjustment of tax paid by the main contractor towards the tax liability of the petitioner (sub-contractor) - Section 63-A(1) of the Karnataka Value Added Tax Act, 2003 - benefit of Composition scheme under Section 15(1) of the KVAT Act was opted by petitioner - HELD THAT - The issue involved herein is a mixed question of fact and law. It is not appropriate to examine the issues involved on the factual aspects when an effective mechanism is provided by the legislature for adjudicating such issues. In the circumstances, this Court is not inclined to entertain the writ petition. The writ petition stands dismissed with liberty to the petitioner to avail the alternative and efficacious remedy of appeal available under the KVAT Act.
Issues involved:
Assessment under Section 63-A(1) of the Karnataka Value Added Tax Act, 2003 for the assessment periods 2008-09, adjustment of tax paid by main contractor towards sub-contractor's tax liability, recovery of tax amounts from sub-contractor, revision of reassessment order by Joint Commissioner of Commercial Taxes, maintainability of writ petition without exhausting appeal remedy under KVAT Act, transfer of tax deducted under Form VAT-156 to subcontractor. Analysis: 1. Assailed Order under Section 63-A(1) of KVAT Act: The petitioner challenged the order of respondent No.1 under Section 63-A(1) of the KVAT Act related to assessment periods 2008-09. The petitioner sought direction for adjusting tax paid by the main contractor towards the sub-contractor's tax liability as per TDS Certificate and to prevent recovery of tax amounts from the petitioner for sub-contract works done during the said periods. 2. Composition Scheme and Sub-Contract Works: The petitioner, a partnership concern, executed civil works contract as a sub-contractor for a main contractor during the assessment period 2008-09. The main contractor was awarded a work contract by the Railway Department, and the petitioner executed sub-contract works amounting to a specified sum. TDS was deducted from the main contractor's payment, and Form VAT-156 was issued in favor of the main contractor. 3. Reassessment Proceedings and Revision Order: Respondent No.2 initiated reassessment proceedings, which led to the petitioner producing relevant documents and objections. The reassessment granted deduction based on TDS certificates. Subsequently, respondent No.1, the Joint Commissioner of Commercial Taxes, initiated suo moto revision proceedings to revise the reassessment order, modifying the tax liability on the sub-contractor's portion, which was challenged by the petitioner. 4. Contentions and Legal Arguments: The petitioner argued for adjusting tax collected from the main contractor towards the sub-contractor's liability based on a previous court order and a Division Bench judgment. However, the revenue contended that a writ petition was not maintainable without exhausting the appeal remedy under the KVAT Act. The revenue also cited Rule 44(3)(f) of the Karnataka Value Added Tax Rules, emphasizing that tax deducted under Form VAT-156 cannot be transferred to a subcontractor. 5. Court's Decision: The court noted the issue as a mixed question of fact and law, deeming it inappropriate to examine factual matters when a legislative mechanism exists for adjudication. Consequently, the court dismissed the writ petition, granting the petitioner liberty to appeal under the KVAT Act within two weeks from receiving the order, ensuring the Appellate Tribunal considers the appeal without objecting to the limitation period. This comprehensive analysis covers the key aspects of the judgment, including the legal provisions, factual background, arguments presented, and the court's decision regarding the issues involved in the case.
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