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TMI Blog2025 (4) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... HON'BLE MR JUSTICE KRISHNA S DIXIT) These three Sales Tax Appeals by the Assessee are filed u/s 66 of the Karnataka Value Added Tax Act, 2003, for laying a challenge to the following SMR orders. STA No. SMR Order Period Tax demand Interest Penalty Total demand 18/2022 CAS order no. 398438333 AD SMR dated 12.10.2022 April 2016 to March 2017 2,48,97,811 2,67,58,610 24,89,784 5,41,46,205 19/2022 CAS order no. 361438331 AD SMR dated 12.10.2022 April 2015 to March 2016 30,82,820 4,13,165 47,18,110 82,14,095 20/2022 CAS order no. 328438594 AD SMR dated 16.11.2022 April 2014 to March 2015 6,41,44,099 64,14,410 8,76,22,474 15,81,80,983 2. FOUNDATIONAL FACTS: 2.1 Appellant-Assessee is a Limited Liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 13,02,82,107/- made to the sub-contractor is allowed and the remaining claim of Rs. 75,63,738/- is bought to tax at 4% for not producing certificates mandated under Rule 3 (2) (i-1) of KVAT Rules, 2005; (iii) after verification of documents, the exemption on the claim of collection of tax is allowed; (iv) Assessee had not made any URD purchases and hence the proposal of demand of 10% of URD purchases is dropped; (v) Assessee had claimed deduction on the service tax paid and therefore, the said claim is allowed. 2.3 Consequently, notice was issued quantifying the total demand payable including interest and penalty of Rs. 4,77,562/-. The Assessee paid the tax arrears to the tune of Rs. 2,88,557/- vide challan dated 19.07.2019 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of satisfying the twin conditions adumbrated by Legislature...? b. Whether levying tax on receipt for land cost i.e., immovable property, which does not constitute consideration for works contract under Composition Scheme of KVAT is sustainable...? c. Whether the assessment proceedings for the period 2014-15 and 2015-16 which have attained finality under the Karasamadhana Scheme, 2019 can be reopened by invoking revisional powers under section 64 of the Act...? 4. SUBMISSIONS AT THE BAR: 4.1 Learned Sr. Advocate appearing for the Appellant-Assessee argues that in the absence of twin test being satisfied, there was no scope for SMR; in any event, the Act does not provide for including the land cost while working out value of works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s namely the order to be revised is erroneous and the said order is prejudicial to the interest of the Revenue is a sine qua non vide CIT vs. Chemsworth (P) Ltd. [2020] 119 taxman.com 358 (Karnataka). On no count, the orders subjected to SMR at the hands of 1st Respondent were not demonstrably erroneous, be it in law or on facts. Similarly, there was no case made out as to the said orders being prejudicial to the interest of Revenue, either. 5.3 The prescribed authority having verified all the documents, vouchers and the ledgers, accepted the total turnover. When value of land is not exigible to VAT, the authority took the turnover excluding the value of land. This cannot be said to be prejudicial to the interest of Revenue merely because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is apparently outside the scheme of taxation under the Act. He is also incorrect in observing that under the Composition Scheme, there is no deduction granted towards value of labour or land cost. Thus, the impugned orders have erroneously disallowed the deduction claimed towards 'land cost' from the total receipts. 5.6 It must be noted that separate agreements are entered into for sale of undivided share of land and works contract. What is contemplated by the statute is that the former agreement for sale of land would not be a subject matter of the tax, and the aggregate of works contracts agreements only would be taken into account as they represent the total consideration for the works contract. Further, in terms of section 15 (4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter herein is own land, this circular is binding on the authorities, as well vide K.P. Varghese vs ITO (1981) 4 SCC 173. 6. The assessment proceedings for the period 2015-16 has attained finality under comprehensive Karasamadhana Scheme 2019 (CKSS 2019), the same cannot be reopened by invoking revisional powers in terms of Section 64 of the Act. 6.1. The reassessment orders were passed demanding tax, interest & penalty. Later, the State Government promulgated comprehensive Karasamadhana Scheme, 2019, granting waiver of arrears of penalty & interest subject to payment of full arrears of taxes. Assessee sought the benefit of this scheme for waiver of penalty & interest. Respondent No.2 after verifying the application, issued order dated 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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