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TMI Blog2019 (7) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to a registered dealer in respect of a returned period against the output tax payable by him for such period and the dealer shall pay to the Government the balance of output tax in excess of the input tax credited in the manner prescribed. On the facts of the case, the assessee closed down the business after selling the stock of goods at a reduced price. The intend and purport of the 2nd proviso introduced to Section 11(3) is to restrain the assessee from claiming input tax credit over and above the output tax collected. That is why it is insisted that the claim of input tax credit shall not exceed the output tax payable, in case the goods are sold at subsidized price. The interpretation given by the Tribunal that the word 'subsid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th respect to the period from April 2014 to September 2014, within the assessment year 2014-15, was rejected by the Assessing Authority finding the following irregularities; ( 1) The dealer has not accounted intra-state purchase made on 05.08.2014. ( 2) The gross loss of ₹ 43,51,555.94/- claimed during the period is false and the trading account produced in support are manipulated with an intention to evade payment of the tax due. 3. Assessment was proposed on best judgment basis by adding the sales turnover with respect to the alleged unaccounted purchases along with an addition of 5% gross profit and equal amount towards probable omission and suppression, and to impose tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was contained in the sale invoices or books of accounts. Hence it was found that the assumption based on which the sales turnover was calculated by adding 5% profit margin to the purchase value, was not at all correct. The Appellate Authority placed reliance on the decisions of this Court in KMP Timbers and Saw Mills v. Commissioner Tax Inspector and another [(2012) 50 VST 195 (KER] and Classic Members v. State of Kerala [16 KTR 397] . Reliance was also placed on a Circular of the Government to the extent that assessment on undervaluation should be based on material evidence gathered on enquiry and that no such assessment shall be made only on the basis of the floor rate fixed. However, the first appellate authority found that the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner of Agricultural Income Tax and Sales Tax : 1994 (2) KLT 820. In the said ruling it was held that the subsidy was paid for the benefit of the public to keep the prices at a reasonable level and at the same time to ensure a reasonable return of investments to the units. It is not a consideration for the sale effected by them and therefore it is not related to any particular transaction of sale. Hence, it was held that the amount of subsidy could not constitute turn over and is not sustainable under the KGST Act. 10. With respect to the damaged goods which was left under unsaleable conditions, the Tribunal found that no input tax credit can be allowed. The challenge against levy of interest was also dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d above the output tax collected. That is why it is insisted that the claim of input tax credit shall not exceed the output tax payable, in case the goods are sold at subsidized price. The interpretation given by the Tribunal that the word 'subsidized price' contained in the second proviso to Section 11(3) can only be construed as a sale in which the Government have provided subsidy to support the price, cannot be accepted as a correct interpretation. We are of the considered opinion that the term 'subsidized price' used in the 2nd proviso to Section 11(3) will carry within it any sale made by the dealer at a subsidized price below the purchase value of such goods. Therefore, we are of the opinion that the assessee in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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