2023 (2) TMI 1040 - HC - VAT and Sales Tax

Correctness of remanding the case - Entitlement to claim benefit of customs duty - denial on the ground that there were no records to show re-export of repaired units between 2005 and 2007 - HELD THAT - No doubt the impugned order is a remand order but the matter is remitted to the file of the Assessing Officer for passing fresh re-assessment order under Section 39(2) of the KVAT Act. KAT has noticed assessee s contention in para 6.1 of the impugned order. The assessee has pleaded before the KAT that the KVAT authority was relying solely on the show cause notice issued by the DRI Authority in a different set of proceedings under different legislation - Unless an authority vested with a power to impose tax and the KVAT authorities in this case have had sufficient material based on its own investigation proposition and confirmation of such proposed tax would be untenable in law. It is not in dispute that reliance has been placed on the show cause notice issued by the DRI authorities and the said ground has been noticed by the KAT. In our view the KAT was required to return a finding on the said ground. It is assessee s specific case that the UPS machines exported abroad were imported without any consideration for the purpose of repair and refurbishing. According to the assessee after repair machines have been exported. Therefore there needs to be an appropriate adjudication not only with regard to the factual matrix but also on the questions of law. In the circumstances KAT was duty bound to return its findings on the main ground urged on behalf of the petitioner. Matter is remitted to the file of the KAT to re-examine the principal contention urged by the assessee and to pass fresh orders in accordance with law - Revision petition allowed.

Summary

Issues involved:
1. Correctness of remanding the matter without considering substantial questions of law.
2. Correctness of remanding the matter limited to document verification without deciding taxability.
3. Consideration of best judgment under the KVAT Act based on a show cause notice under a different enactment.
4. Use of proceedings under the Customs Act as a basis for levying tax under the sales tax law.
5. Legality and validity of levying CST without independent investigation under the KVAT Act.
6. Sustainability of CST demand on export sales returns without evidence of goods' actual sale location.
7. Assessing Authority's demand of CST without establishing sale's basic ingredient despite contrary findings.

Analysis:

1. The revision petition challenged a judgment remanding the matter without considering substantial questions of law. The petitioner argued that the Tribunal failed to address crucial legal aspects before remanding the case for fresh consideration.

2. The Tribunal's decision to remand the matter for document verification without determining the initial taxability issue was contested. The petitioner raised concerns about the limited scope of the remand order and the necessity to address the fundamental taxability question.

3. The issue of best judgment under the KVAT Act based on a show cause notice from the Directorate of Revenue Intelligence (DRI) under a different enactment was raised. The petitioner questioned the validity of utilizing DRI's investigation in proceedings under the KVAT Act without independent verification.

4. The Tribunal's decision to use proceedings under the Customs Act as a basis for levying tax under the sales tax law was disputed. The petitioner argued that the taxable events under both enactments were distinct, questioning the legal foundation for imposing tax under the sales tax law.

5. The legality of levying Central Sales Tax (CST) without an independent investigation under the KVAT Act was challenged. The petitioner contended that the CST demand lacked substantiation and raised concerns about the absence of a proper inquiry by the tax authorities.

6. The sustainability of CST demand on export sales returns without evidence of the goods' actual sale location was brought into question. The petitioner emphasized the necessity for concrete evidence to support the CST levy on export transactions.

7. The Assessing Authority's demand for CST without establishing the basic ingredient of sale, despite conflicting findings, was highlighted. The petitioner argued that the lack of conclusive evidence regarding the sale location and other essential elements rendered the CST demand legally questionable.

In the final judgment, the court allowed the revision petition, remitting the matter to the Karnataka Appellate Tribunal (KAT) for re-examination of the principal contentions raised by the assessee. The court emphasized the importance of addressing both factual and legal aspects in determining the tax liability, directing the KAT to pass fresh orders in accordance with the law while keeping all contentions open.