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TMI Blog2010 (2) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... opriately since the petitioner cannot go back on its contractual terms with its customers for the period April and May 2006, and revoke the transaction, prepare fresh invoices showing the discounts, so as to comply with the amended provision of rule 3(2)(c) is illegal, unworkable, and a cause of serious concern for the petitioner. In the circumstances, the contentions supra advanced by the petitioner, are worthy of acceptance. - Writ Petition Nos. 16721,16722 of 2009 - - - Dated:- 26-2-2010 - RAM MOHAN REDDY , J. ORDER:- RAM MOHAN REDDY J. The petitioner, a registered dealer under the Karnataka Value Added Tax Act, 2003 and the Rules framed thereunder, has presented this petition calling in question the vires of the words and the tax invoice or bill of sale issued in respect of the sales relating to such discount shows the amount allowed as discount in the proviso to rule 3(2)(c) of the Karnataka Value Added Tax Rules, 2005 (for short, the Rules ), inserted by Notification No. FD.124.CSL.2006 dated May 27, 2006, retrospectively with effect from April 1, 2006, on the premise that the amendment is unreasonable, unworkable, arbitrary and impossible of being implemente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the rule, as existing. The petitioner is said to have filed its monthly returns in Form No. VAT 100 for the months of April and May, 2006 claiming discounts effected on the basis of the aforesaid three modes. The credit notes extended to the dealer disclose the discount being in conformity with section 30 of the Act, the petitioner submitted the returns for the months of April and May 2006. It is the allegation of the petitioner that the State Government, by the notification, brought into force the amendment to the proviso to rule 3(2)(c) of the Rules by inserting the said phrase, with retrospective effect from April 1, 2006, causing hardship and inconvenience in the carrying on its business. It is the further allegation of the petitioner that the first respondent-assessing authority, while verifying the petitioner's books, observed that a wrong claim for deduction of discount, was allowed for the months of April and May 2006, not in conformity with the amended proviso to rule 3(2)(c) of the Rules, and accordingly, disentitled a deduction of the discount, to arrive at taxable turnover. In other words, the assessing officer noticed that the discount not shown in the inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that the amended provision of rule 3(2)(c) is unworkable. (ii) The unamended rule 3(2)(c) contemplated taxable turnover to be determined by allowing the deductions of all amounts shown as discounts from the total turnover even though the discount amount allowed was not mentioned in the invoice. Therefore, it is contended that the State cannot expect the petitioner to modify the invoice or issue a fresh invoice which would be contrary to the Act and Rules. The petitioner having issued the invoices for the months of April and May 2006 without showing the deduction of the discount in the invoices, having not forseen the intention of the State to bring such an amendment creates an additional tax liability with retrospective effect which is impermissible. (iii) Section 30 of the Act contemplates issuing of credit and debit notes while the corresponding rule 31 prescribes in what circumstances the credit and debit notes could be issued, one such being, when the value of sale is altered due to discount. The rule having been in existence from April 1, 2005 onwards, the petitioner claimed discount at the end of the month or subsequently, until after the notification impugned ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n manifest injustice and unsettling normal business practice without a sufficient policy justification and hence, opposed to public policy. The nature of the business of the petitioner and the business practice does not permit the petitioner to go back on the contract with its clients and rework the contractual terms as also make entries in the books of account to comply with the amended provision of rule 3(2)(c) of the Rules, and therefore, it is contended that the petitioner is put to additional burden of tax, penalty and interest which is illegal. (vii) Section 88 of the Act empowers the State Government to make rules by notification and to carry out the purposes of the Act, while sub-section (4) contemplates that the rules so framed, if made retrospective in operation, to specify the reasons for making such rules and should be laid before both houses of the State Legislature, as required by section 89. According to the petitioner, the notification impugned does not provide objects and reasons nor disclose that it was laid before the Houses of the State Legislature and hence, the notification is illegal. The reassessment order, annexure J, for the period April and Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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