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TMI Blog2014 (7) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 2003 (hereinafter referred to as the 'KVAT Act') and also under the provisions of the Central Sales Tax Act, 1956 (hereinafter referred to as 'CST Act') and is borne on the files of the LVO-190, Mysore. The petitioner filed returns of turnover in Form VAT 100 in respect of all the 21 tax periods commencing from July 2005 to March 2006 and April 2006 to March 2007, and has paid taxes as admitted therein. On scrutiny of the returns, the Deputy Commissioner of Commercial Taxes was of the view that the assessee manufactured/extracted sunflower oil and also obtained de-oiled sunflower oil cake. While sunflower oil was liable to tax, de-oiled sunflower oil cake was exempted from tax under Government Notification No. FD 197 CSL 2005(1), dated 30-4-2005. The assessee was therefore eligible only for partial input tax rebate as per Section 17 of the Karnataka Value Added Tax Act, 2003 read with Rule 131(3) of the Karnataka Value Added Tax Rules, 2005. Therefore, the Assessing Authority after issue of proposition notice, considering the objections filed by the assessee, rejected the same and proceeded to pass the order dated 23-4-2009. Aggrieved by the said order, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of goods made by that dealer in the course of his business, and includes tax payable by a commission agent in respect of taxable sales of goods made on behalf of such dealer subject to issue of a prescribed declaration by such agent. (2) Subject to input tax restrictions specified in Sections 11, 12, 14, 17 and 18, input tax in relation to any registered dealer means the tax collected or payable under this Act on the sale to him of any goods for use in the course of his business, and includes the tax on the sale of goods to his agent who purchases such goods on his behalf subject to the manner as may be prescribed to claim input tax in such cases. (3) Subject to input tax restrictions specified in Sections 11, 12, 14, 17, 18 and 19, the net tax payable by a registered dealer in respect of each tax period shall be the amount of output tax payable by him in that period less the input tax deductible by him as may be prescribed in that period and shall be accounted for in accordance with the provisions of this Act. (4) For the purpose of calculating the amount of net tax to be paid or refunded, no deduction for input tax shall be made unless a tax invoice, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner or any other authorised person and any input tax deducted in excess shall become repayable forthwith". 7. Rule 131 Of the KVAT Rules, 2005 deals with partial exemption, capital goods and special accounting schemes. Section 131(1) and 131(2) reads as under: "131. Apportionment.--Apportionment of input tax in the case of a dealer falling under Section 17 shall be calculated as follows.-- "(1) All input tax directly relating to sale of goods exempt under Section 5 other than such goods sold in the course of export out of the territory of India, is non-deductible. (2) All input tax directly relating to taxable sales may be deducted, subject to the provisions of Section 11." ....................." 8. From a reading of the aforesaid provisions, it is clear that the input tax in relation to any registered dealer means tax collected or payable under this Act on the sale by him on any goods for use in the course of his business. Output tax in relation to any registered dealer means, the tax payable under this Act in respect of any taxable sale of goods made by the dealer in the course of his business. Sub-rule (3) of Rule 10 makes it clear that su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17, which deals with partial rebate, applies to the goods when the tax paid on purchases is attributable to sale or manufacture of more than one product and out of that, one product is taxable and another product/goods is non-taxable or exempt from tax. Then applying the Rule 131, proportionate input tax deduction is to be valued. But, when the assessee is in the business of sale or manufacture of only one product and that is taxable one, merely because in the process of manufacture or in the process of sale, certain ancillary or by-product arises and that is sold for a certain price, which is exempted from payment of output tax, that would not attract Section 17 of the Act. It is not the case of the Court interpreting exemption notification, where it is a settled law that a strict literal interpretation is to be applied. Here, we are interpreting the statutory provision where the Legislature has extended the benefit of deduction to assessee. The task of interpretation of a statutory provision is an attempt to discover the intention of the Legislature from the language used. If strict literal construction leads to an absurd result i.e., result not intended to be sub-served by the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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