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TMI Blog2022 (3) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... the levy of tax at 12.5% on the sale of Nutralite Table Margarine upholding the levy of interest and penalty - the reassessment order passed allowing the input tax credit of 4% on the purchase of Table Margarine made by it from M/s Pioneer Marketing confirmed by the first appellate authority, has been upheld. Having regard to these aspects, the Tribunal observed that there was no understatement of output tax liability and overstatement of entitlement to input tax credit by the assessee in the return filed and accordingly, set aside the levy of penalty and interest. Secondly, it is significant to note that the original order has been modified by the Tribunal in Sales Tax Rectification Application No.2/2016 vide order dated 26.4.2018 modif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) RESPONDENT : None O R D E R S. SUJATHA, J., This Sales Tax Revision Petition is filed under Section 65(1) of the Karnataka Value Added Tax Act, 2003 ( Act for short), raising the following question of law; Whether in the facts and circumstances of the case, the Karnataka Appellate Tribunal is right in setting aside the levy of interest and penalty under Sections 36(1) and 72(2) of the Karnataka Value Added Tax Act, 2003, when the respondent himself has accepted that he has understated his liability to tax on the sale of Nutralite during the year 2007-08? 2. The respondent is a dealer registered under the provisions of the Act and is a distributor of various products, including Table Margarine manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Karnataka Appellate Tribunal filed by the respondent, the same came to be partly allowed affirming the denial of additional input tax credit claimed by the respondent setting aside the levy of interest and penalty on the ground that the assessee has not understated its tax liability or overstated its input tax credit. Being aggrieved by the same, the State has preferred this revision petition. 4. Learned AGA appearing for the revision petitioner State submitted that the Tribunal failed to appreciate the vital aspect of levy of interest and penalty under Sections 36(1) and 72(2) of the Act respectively. The respondent having accepted short payment of tax on the sale of Nutralite has challenged the denial of input tax credit to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rine upholding the levy of interest and penalty. The Tribunal though observed that the issue of classification of commodity and the rate of tax with respect to Nutralite Margarine was considered and decided by this Court, in the case of M/s Pioneer Marketing, supra, wherein the rate of tax was held to be 4% under Entry 31 of the III Schedule of the Act, but proceeded to deny the claim of input tax credit of 12.5% as claimed by the assessee. In other words, the reassessment order passed allowing the input tax credit of 4% on the purchase of Table Margarine made by it from M/s Pioneer Marketing confirmed by the first appellate authority, has been upheld. Having regard to these aspects, the Tribunal observed that there was no understatement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation No.2/2016 is challenged in the present proceedings but the question of law raised is with respect to levy of interest and penalty. 8. We are not inclined to express any opinion on the rate of tax modified by the Tribunal at 5.5% whether is justifiable when the III Schedule during the relevant period attracts the rate of 4%, as the said issue is not before us. The Tribunal having modified the rate of tax from 12.5% to 5.5% in terms of the order passed in Rectification Application following the decision of this Court in M/s Pioneer Marketing, supra, it cannot be gainsaid that there is no understatement of output tax liability or overstatement of entitlement to input tax credit by the appellant in the return filed. Further, no ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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