Karnataka High Court
State Of Karnataka vs M/S Reliance Industries Limited on 16 February, 2010
Bench: K.L.Manjunath, B.V.Nagarathna
IN THE HIGH couaw OF KARNATAKA AT BANGALORE DATES THIS THE 16" BAX OF FEBRUARY, 2010 PRESENT THE HON'BLE MR. JUSTICE K.L. MANJugA§§2_ AND _ .1_ _ THE HON'BLE MRS. JUSTICE B.v.1sAs3aAegsA2" STRP No.119?2dg§;2: " 2 2 BETWEEN : State of Karnataka, 2\I\ R/by the Secretary to Govt}, = Finance Department;\fi «" W Vidhana Soudha, j- e ;_ ;.s--s Bangaloreml. *_ 22: ;u2,;.2" PETITIONER (By Go¢tfgAg§ocateLSmt.Geetha Menon) AND: M/s Reliance Incustnles Ltd., <,N0f77/C} II F1OQ¥x "D,KLLane,hQhikpet, "ggaangalgreasa, .. RESPONDENT
(ByfiAavoca£es?Sri.G.Rabinathan & M.Thirumalesh) x;This STRP is filed under Sec.23(l) of KST Act "against the order dated 12.2.2008 passed in STA ,_"Noo412/2007 on the file of 'the Karnataka Appellate :Tribunal, Bangalore, allowing the appeal and directing "the AA to issue revised demand notices accordingly. 3 This Petition is coming on for final hearing this day, NAGARATHNA J. made the following:
0 R D E R This revision petition has been filed by the State challenging the order dated l2.2.20d8 passed in STA 412/2007 by the Karnataka AppellatepdTrihfinal, Bangalore. 1 . , _ _ _ p p
2. The relevant facts of Qthewgcasea are ytha the respondentéassessee is vengaged; in ithef,buSiness* of trading in polyester yarn and other sneh fiaterials and is a dealer' undera the" provisions of the Karnataka Value Added Tan Aet}QCO3 (hereinafter referred to as Vxfihe hot?) and Central Sales Tax Act,1956. For the hperiod:.frongdApril,2006 to September,2006 respondent filed}V monthly returns under the provisions of lip Sec.3$§l) of the Act R/w Rule~38 of Karnataka Value *h:Addedgfax Rules,2005 (hereinafter referred to as "The h\_iflules'). Claiming deduction in the total turn over ddeolared in the monthly returns filed towards discount £4 allowed to its purchasers which has resulted in reduction of taxable turn over relating to goods sold during the said months. Respondent whadk issued invoices for the sales effected during the said period and had charged sales tax for goods at the rate of 4% under the Act separately. V .
3. According to the respondent; incentive scheme was extended to its purchasers 'to encourage them to purchase higher quantities ofi ééods and make payments towards the goods purchased for.%hich respondent had issued credit?ndaeS"lhl§vefl@aonth and allowed certain discounts to nitsfilhuverspisubsequent to tax invoices already issued under the provisions of Sec.29 of the uAct and fiules made thereunder. On account of the said 'scheme oi incentives and the issuance of credit notes and by fiaf of trade discounts which has resulted in 'reduced taxable turn over relating to the goods sold = :for particular months for which respondent had claimed lx_ reduction in the amount of tax from the total turnover h'"r dof the said months. //i
4. For the tax period April,2006 respondent had declared total turnover including the exempted sales and has claimed deduction of Rs.52,24,775/m_jincluding tax at 4%) towards discount of taxable goods which has resulted in corresponding reduction ,ih .the*:tasable turnover and consequently on "the ltasiiiiahilitf'uo§ Rs 2,08,99l/-. The assessinédlauthoriigiihowever disallowed such discountsp and "levied ltax fiby 'order dated 29.1.2007. An;§pPlicatioh for rectification of the said order was ';;fi§o_é¢j§§g§§,_by the assessing auth°ritY by ed§QrS§%ent dated Edd? 2007. Aggrieved by theiassessmen£_ordé§,_respondent had preferred an appeal before the first appellate authority which by its order dated"20sS:2007, dismissed the appeal and idcohfir¢ed'the order of the appellate authority. Being adgrieued by the said order, matter was carried to the i'tribunal in STA 410/07 which was pleased to allow the ~ifl3PP€al hand the amount of trade discount on the lstréngth of the credit notes issued subsequent to the :issue of tax invoices was allowed and a direction was 8/?
given to issue revised demand notice. The said order is under challenge in this revision petition.
5. We have heard the learned Govt. Advocate and the learned counsel for the respondent--assessee;"f.V
6. It is submitted on behalf of the petitioner that the tribunal was not justified in granting benefit of reduced tax in allowing the amount as trade discount on the strength of credit "notesp suéséqfiéht tot the issue of invoices and that Ruie%3(2)© of the Rules had not been complied with lbv ;the§ respondent. She therefore $ubm;;;_ that _the order of the tribunal requires 'to pbep set .§side and order of the first appellate authority as well as the assessing authority iebe gives effect to:
7r~",Per-ficontra; it is submitted on behalf of the i'respondent that the system of incentive given by the 'd'3 respondent. is in order' to achieve higher sales and lprompt repayments and that the price variation occures :Subsequent to the issuance of the invoice and in order
354.
(3 to encourage the purchasers credit notes are issued which would mean that the amounts at which invoices were issued would automatically be reduced 'to the extent of credit notes given to various PflFCha3ers and that the tribunal was justified in gaging note of the said fact and granting benefit kifih regard to reduced turn over by allowing -£he éppea;::£;1ed° byi the respondent.
8. Having heard the learned counsel for the parties and on perusal of the material on record, it is not in diSPute~Mth#te.iha terms *of5 the incentive scheme respondent has giuen to its various purchasers credit notes with the purpose of encouraging than to sell . greater lquantities_ of its products and also with hregard to prompt repayment. The issuance of the credit notes twoulfii automatically' mean that the amounts as hq 'mentioned in the invoices would be reduced which would "v result in reduction in the over all turn over relating h*_ to the goods sold for the particular month. However, h"ughwe find that the tribunal has not taken into %a assessing authority as well as the first appellate authority.
9. From the material on record, it is not Known as to whether the details as stated in finie¥§1 of the Rules had been furnished hy"~thel a§sésséé3 tou the assessing authority at the time of tfiaimifi§otehefit under the said Rule. Under the circgmsféhcesy we"deem it proper to remana the" flatter 'tow.the assessing authority with a direction to the respondent-assessee to furnish. allLy§etailsi;;fioLterfisllof Rule--31 of the Rules an& therefiyxdirect the assessing authority to remconsider t5§*§fi¢§§e flatter in the light of the said provisions and pa§§*%&§sh orders in accordance with nlaw.fK hl3_rmEOr the aforesaid reasons, this revision petition is'allowed};V}"
«~::':;','E._"S$21:§ Esggigg