Goverment Of Karnataka vs. The Project Manager

This Court, by order dated 20.03.2018, dismissed the present revision petition, which was challenged before the Hon’ble Apex Court by the petitioners herein. The said Civil appeals arising out of SLP (C) Nos.18479-18481/2018 was disposed of vide order dated 20.01.2022 whereby the order passed by this Court was set aside and the matter was remitted back for fresh consideration in accordance with law, keeping open the contentions of both the parties.

We have heard the learned Additional Advocate General appearing for the petitioners and the learned counsel appearing for the respondent and perused the material on record.

The respondent, Bidar Nirmithy Kendra, Basaveshwar Circle, Bidar is registered under the Karnataka Co-operative Societies Act and carrying on activities of civil construction work. It is also registered dealers under the KVAT Act. For the assessment year 2008-09, 2009-10 and 2010-11, they filed returns NC: 2023:KHC-K:7770-DB before the concerned Assessing Authority i.e., the Deputy Commissioner of Commercial Taxes (Audit)-2, DVO, Gulbarga, who concluded the assessment order under Section 39(1) of the KVAT Act. While passing the order, the Assessing Authority disallowed the claim of the assessee – respondent on the following issues: (i) The assessee has not claimed the input tax benefit within six months time for the said assessment years under Section 35(4) of the KVAT Act. Therefore, the input tax benefit of the assessee was rejected by the officer.

Aggrieved by the assessment orders passed by the Assessing Authority, the assessee filed an appeal NC: 2023:KHC-K:7770-DB before the Joint Commissioner of Commercial Taxes (Appeal), Gulbarga Division, Gulbarga in Nos.KVAT/AP- 10/13-14, KVAT/AP-11/13-14 and KVAT/AP-12/13-14. The said appeal came to be dismissed by an order dated 26.07.2013. Aggrieved by the order passed by the Joint Commissioner in the above appeals, the assessee approached the Karnataka Appellate Tribunal in STA No.2341 to 2343/2013. The said appeal was partly allowed by order dated 09.10.2014, which is impugned in this revision petition.

As per Section 3(4) of the KVAT Act, revised return has to be filed by the assessee within six months. However, the rejection of the tax benefit for non filing the return within six months was not proper in view of the order passed by this Court in W.A.No.1431/2018 in the NC: 2023:KHC-K:7770-DB belatedly, was answered in favour of the assessee and it is held that the assessee is entitled for the benefit of input tax, even though claimed belatedly.

Secondly, the Assessing Authority disallowed the claim of the assessee – respondent like labour and other charges and disallowed the entire labour charges claimed for all the three years. It is relevant to see that, as per Rule 3(2) (m) Table-5, such amounts calculated at the rate specified therein, towards labour charges and other like charges as incurred in the execution of works contract and when such charges are not ascertainable from the books of accounts, has to be deducted which is admittedly not allowed by the Assessing Authority.

Thirdly, the Assessing Authority determined the URD purchases like the registered dealer turn over and disallowed and concluded the orders for all the three years. It is the contention of the review petitioners that they being the Government concern, has effected purchases of sand and jelly from local registered dealers NC: 2023:KHC-K:7770-DB and the copies of the bills have been produced before the Appellate Authority and no remarks have been made in their orders and therefore, estimation of URD purchases does not arise and the estimation done by the Appellate Authority on URD purchases of sand and jelly is required to be set aside.

The Assessing Authority has determined the URD purchases equivalent perform of registered dealer purchasers, since the assessee did not produce the relevant documents under the registered dealers/purchases. In that view, the matter needs to be remanded to the Assessing Authority to verify the documents to the extent of URD purchases and the extent of tax liable to be paid by the assessee-respondent.

To the above extent, the revision petition is allowed. The matter is remitted back to the Assessing Authority to verify the documents to the extent of URD purchases and the tax liability of the assessee – NC: 2023:KHC-K:7770-DB respondent, in the light of the observations made in the order. In the meantime, if the assessee is entitled for any benefit under the ‘Kara Vivad Scheme’, it is open for him to claim the said benefit. JUDGE JUDGE