Karnataka High Court
Scorpio Engineering Private Limited vs Assistant Commissioner Of Commercial ... on 7 February, 2018
Author: Vineet Kothari
Bench: Vineet Kothari
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 07th DAY OF FEBRUARY 2018
BEFORE
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
WRIT PETITION Nos.3064/2018 &
5047-5048/2018 (T-RES)
BETWEEN:
SCORPIO ENGINEERING PRIVATE LIMITED
132, WHEELER ROAD, COX TOWN
BENGALURU-560005.
... PETITIONER
(By Mr. KARTHIK RAGHUNATHAN, ADV.,)
AND:
ASSISTANT COMMISSIONER OF COMMERCIAL TAXES
DVO-5, VTK-2, ROOM 604, 6TH FLOOR, 'A' BLOCK
KORAMANGALA, BENGALURU-47
... RESPONDENT
(By Mr. T.K. VEDAMUTHY, AGA)
THESE W.Ps. ARE FILED UNDER ARTICLES 226 & 227 OF
THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
IMPUGNED ORDER PASSED BY THE ASST. COMMISSIONER OF
COMMERCIAL TAXES (AUDIT) 5.9 DVO .5 BANGALORE DATED
26.10.2016 PASSED BY RESPONDENT VIDE ANNEX-C.
THESE W.Ps. COMING ON FOR PRELIMINARY HEARING
THIS DAY, THE COURT MADE THE FOLLOWING:-
Date of Order 07-02-2018 W.P.Nos.3064/2018 & 5047-5048/2018
Scorpio Engineering Private Limited Vs.
Assistant Commissioner of Commercial Taxes
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ORDER
Mr. Karthik Raghunathan, Adv. for Petitioner Mr. T.K.Vedamurthy, AGA for Respondent
1. The present writ petitions are filed against the reassessment order dated 26.10.2016 for the period April 2011 to March 2012 passed by the Respondent-
Assessing Authority.
2. The learned counsel for the petitioner Mr.Karthik Raghunathan submits that the impugned Demands have been raised, contrary to the decision of this Court passed in Input Tax Credit under Section 10(3) of the KVAT Act, 2003. He relied upon the decision of this Court in the case of M/s.Kirloskar Electric Co.
Ltd., & Ors. vs. The State of Karnataka & Ors.
decided on 10.01.2018, in which, this Court held as under:-
29. Thus the claim of credit of input tax is indefeasible as was the case of CENVAT under Excise law and such credit of ITC under VAT law Date of Order 07-02-2018 W.P.Nos.3064/2018 & 5047-5048/2018 Scorpio Engineering Private Limited Vs. Assistant Commissioner of Commercial Taxes 3/8 which is equivalent to tax paid in the chain of sales of the same goods, cannot be denied on the anvil of machinery provisions or even provisions relating to time frame which is law of limitation only bars the remedy rather than negativing the substantive claims under the taxing statutes.
30. Both the questions framed above are therefore liable to be answered in favour of the petitioners assessees. The claim of ITC cannot be restricted and denied on the stated grounds by Revenue. It cannot be denied only because ITC claim is not made in respect of Sale Invoices which are not pertaining to same Tax Period, nor it can be denied on the ground that such claim is not made immediately in the month or months following the month of purchase of goods in question. The machinery provisions of filing of Returns under Section 35 of the KVAT Act cannot defeat the substantive claims under Section 10(3) of the Act. The Revenue is entitled only to verify that the Sale Invoices are genuine and valid and such ITC claim is not duplicate, fictitious or bogus.
Article 265 of the Constitution of India does not entitle the State to retain such tax paid by Selling Dealers and deny the claim of ITC credit or set off in the hands of the Purchasing Dealers who claim such ITC against their Output Tax Liability when Date of Order 07-02-2018 W.P.Nos.3064/2018 & 5047-5048/2018 Scorpio Engineering Private Limited Vs. Assistant Commissioner of Commercial Taxes 4/8 they sell goods further, incurring such Output Tax liability.
31. One wonders whether the subsequent amendments effected by the Respondent State in the year 2015 and 2016 though not applicable to the assessment period involved in this batch of writ petitions presently being decided by this Court, is a 'relaxation' or a 'restriction' and whether it is for the benefit of the assessees as contended by the Respondent State or seeks to restrict and defeat the claim of ITC in the period of assessment following such amendment. Be that as it may. Since that amendment is neither applicable to the facts of the present case nor any of the sides has called the same in question, this Court need not make any further analysis of these amendments.
32. This Court is, therefore of the considered opinion that the impugned assessment orders/re-assessment orders passed by the Respondent - Assessing Authorities to this extent of denying the claim of ITC to the petitioners assessees are illegal and unsustainable and deserve to be quashed and set aside by this Court.
Date of Order 07-02-2018 W.P.Nos.3064/2018 & 5047-5048/2018 Scorpio Engineering Private Limited Vs. Assistant Commissioner of Commercial Taxes 5/8
33. The writ petitions are accordingly allowed and the impugned orders are quashed and set aside. The matters would stand restored to the file of the Respondent Assessing Authorities to pass fresh orders in accordance with law as interpreted above as far as claim of Input Tax Credit is concerned.
34. This Court is of the further opinion that despite more than one judgment interpreting the provisions of Section 10(3) of the KVAT Act, 2003, in favour of the assessees, the tendency on the part of the Assessing Authorities of the Respondent Department to still keep on passing the orders contrary to these judgments is in utter disregard of the judicial and hierarchical discipline which they are bound to observe and it may also amount to a deliberate disobedience on their part and may invite contempt action and therefore to prevent any such further unnecessary litigation on this issue, at the behest of the different Authorities of the Department taking a contrary view, it is directed that the Head of the Respondent Department, namely, the Commissioner of Commercial Taxes shall issue a Circular in terms of the various aforesaid judgments of this Court in favour of assessees, for being followed by the Authorities through out Date of Order 07-02-2018 W.P.Nos.3064/2018 & 5047-5048/2018 Scorpio Engineering Private Limited Vs. Assistant Commissioner of Commercial Taxes 6/8 the State to avoid any further multiplicity of litigation before this Court and Appellate Forums. Therefore, such a Circular shall be issued by the Respondent Commissioner of Commercial Taxes and the Respondent - Departmental Authorities, including the Appellate Authorities under the Act are cautioned that now onwards if any contrary view is found to be taken by such Authorities of the Department on aforesaid issue, this Court would initiate suo motu contempt proceedings against the Commissioner of Commercial Taxes as well as the concerned Authorities of the Respondent Department.
35. With these observations and directions, these writ petitions are allowed. All the impugned orders passed by the Assessing Authorities are set aside and the matters are restored to file of the respective Assessing Authorities, for passing fresh orders in accordance with law, as interpreted above. No costs".
3. The submission made by the learned counsel for the petitioner is that though the Regular Appeal under Section 62 of the KVAT Act, 2003, against these reassessment orders are pending, but the delay in filing Date of Order 07-02-2018 W.P.Nos.3064/2018 & 5047-5048/2018 Scorpio Engineering Private Limited Vs. Assistant Commissioner of Commercial Taxes 7/8 the appeals has not been condoned by the Joint Commissioner (Appeals) and therefore, the Appeals have not been considered on merits. He has also submitted that in view of the fact that the impugned demands are absolutely unsustainable in view of the aforesaid judgment of this Court, even the pre-deposit requirement for the said regular appeal deserves to be waived by this Court.
4. Having heard the learned counsels for the parties, this Court is of the opinion that since the judgment of this Court has been delivered in recent past and the same can very well be cited before the Appellate Authority also, by which, he is bound, this writ petition deserves to be disposed of by relegating the petitioner-
assessee to the appellate remedy already availed by it.
5. Accordingly, the writ petitions are disposed of with a liberty to the petitioner to pursue the pending appeals before the Joint Commissioner (Appeals) and at Date of Order 07-02-2018 W.P.Nos.3064/2018 & 5047-5048/2018 Scorpio Engineering Private Limited Vs. Assistant Commissioner of Commercial Taxes 8/8 the same time, the Joint Commissioner (Appeals) is also directed to entertain the appeals on merits and decide the same on merits in accordance with the law laid down by this Court in the aforesaid judgment expeditiously, within a period of four weeks from today without insisting upon pre-deposit requirement. The petitioner may appear before the said Appellate Authority in the first instance on 26.02.2018.
No costs.
Sd/-
JUDGE Srl.