State Of Karnataka vs. M/S Abb Limited

Facts leading to filing of this petition briefly stated are that the respondent is engaged in the business of manufacture, sale and trading of electrical and auto-machine products as well as execution of works contract for transmission and distribution and electrical balance of plant of power sector etc. The respondent is a public limited company and is a dealer registered under the Act. This petition pertains to tax periods from April 2008 to March 2009. For the aforesaid period, the respondent stocked transferred various goods manufactured or purchased by 3 them and reversed non-deductable input tax. Thereupon, the proceeding of re-assessment was initiated and an order of re-assessment was passed on 31.03.2011 inter alia disallowing excess input tax credit claimed by the respondent on the ground that same was not claimed in VAT 100 returns and the revised returns were filed belatedly beyond the period of 6 months prescribed under Section 45(4) of the Act.

The respondent thereupon filed an appeal. The First Appellate Authority by an order dated 27.03.2012 inter alia held that the respondent had identified the excess input tax credit at the time of filing his audited statement of accounts in Form VAT 240 as prescribed under Section 31(4) of the Act. It was further held that the assessing authority ought to have assessed the correct liability of the respondent under Section 31 of the Act. Accordingly, the input tax credit that was claimed in excess of the amount claimed in the returns, was allowed. The petitioner as well as respondent filed appeals against the aforesaid judgment. The Karnataka Appellate Tribunal, by a common judgment dated

Learned Additional Government Advocate for the petitioner submitted that the Tribunal grossly erred in rejecting the appeal preferred by the petitioner and ought to have appreciated that the respondent had filed belated return under Section 35(4) of the Act. It is further submitted that issue involved in this appeal is covered by a Division Bench judgment of this Court dated 05.02.2021 passed in M/s. AND OTHERS' IN W.A.No.309/2020 AND CONNECTED MATTERS. It is also submitted that amounts declared in audited statement of accounts cannot be taken into consideration as Form VAT 240 is not a return prescribed under the Act but is merely a statement of account which is audited by a Chartered Accountant. It is contended that the First Appellate Authority and the Tribunal erred in recording a finding that the Assessing Authority ought to have allowed

On the other hand, learned counsel for the respondent submitted that the Division Bench decision relied upon by learned counsel for the petitioner in MFAR CONSTRUCTIONS PVT. LTD supra has no application to the facts of the case as in the aforesaid decision, input tax credit was not claimed in the return. It is further submitted that provisions of Sections 10(3) and 35(4) of the Act are not applicable to the fact situation of the case as they have been incorporated in the statute subsequently. It is further submitted that at the relevant time, there was no requirement of filing the revised returns within prescribed period of 6 months as it was not in existence at the relevant point of time. Therefore, the revised return filed by the respondent under Section 35(4) of the Act could not be said to be belated. In support of aforesaid submission, reference has been made to Circular No.15/2017-18 dated 08.02.2018 and decision of Supreme Court in 'M/s. FERTILIZER

We have considered the submissions made on both sides and have perused the record. The respondent, for the tax period i.e. from April 2008 to March 2009, has reversed the input tax credit for an amount of Rs.91,98,450/- @ 2.26% on stock transfer outward. The credit of excess input tax reversal cannot be rejected on the ground of non-filing of the revised return within the due date. It is pertinent to note that Section 35(4) of the Act which provides the revised return within a period of 6 months from the end of relevant tax period, is incorporated in the Act w.e.f. 01.04.2012 i.e. subsequently. Section 35(4) of the Act reads as under: "35(4) If any dealer having furnished a return under this Act, other than a return furnished under sub-section (3) of Section 38, discovers any omission or incorrect statement therein, other than as a result of an inspection or receipt of any other information or evidence by the prescribed authority,

Sofar as reliance placed by the learned counsel for the petitioner on the Division Bench decision of this Court in MFAR CONSTRUCTIONS PVT. LTD. supra is concerned, the same has no application to the fact situation of the case as the aforesaid judgment is an authority for the proposition that audited statement of accounts in Form VAT 240 is only an audited statement of accounts issued by the Chartered