M/S Kaleesuwari Refinery Private LTD vs. The Accountant General (Karnataka)
Original PDF →No AI summary yet for this judgment.
Cause title — parties, addresses and appearances
O R D E R
The petitioner has sought for setting aside of the assessment order dated 12.04.2021 made with respect to the tax period from April 2016 to March 2017 at Annexure-C. The petitioner submits that he is a manufacturer of Sunflower Oil, Coconut Oil etc., and that in the process of manufacture at its Tumkur Unit, the petitioner received by stock transfer of raw materials from Tamilnadu and it is also submitted that local purchase of raw materials including de-oiled cake and pulses were also made. It is submitted that during the assessment proceedings the said aspect was brought to the notice of the Assessing Officer by way of reply to the proposition notice and attention is drawn to page No.23 of the impugned order wherein there is an extraction of the contention of the petitioner as follows:-
3
“With regards to exempted sales matter, we would like to mention, that my client were selling pulses(dhall) and De-Oiled cake.
Pulses (Dhall) were locally purchased with in the State of Karnataka and was also sold with in the state of Karnataka. Both purchases and sales were EXEMPTED.
De-oiled cake was procured through Inter- state stock transfer from Tamilnadu, and the same was sold in Karnataka. But however since it was not purchased locally or manufactured locally through procuring taxable inputs, there was no Tax input Credit involved, as such we had not taken any inputs and thereby the question of input Tax Credit Reversal does not arise.
Only when Taxable purchases are made within the state and input Tax Credit is availed and out of this stock partly is used for Local Taxable sales and Partly for exempted sales and interstate stock transfer outwards, provisions of Section 17 and Rule 131 is applicable.
4
But whereas De-oiled cake is procured by way of inter-state transfer from outside the state of Karnataka, the question of Input tax credit element does not arise. We are attaching ONE F-Form as a sample proof to show that the DOC is Procured by way of Inter-state stock transfer from outside the state.”
It is however submitted that the Assessing Officer has disposed of the said objections as follows:
“The assessee had not apportioned the input tax credit on sales of exempted de-oiled cake for the year 2016-17 relating to In-eligible input tax to be deducted as per the provisions of under section 17 of the Act and Rule 131 of KVAT Rules 2005. Hence, by rejecting the reply filed by the assessee and hereby disallowed the ineligible input tax credit of Rs.27,77,762.00 which is short deduction of ineligible input tax in VAT-100.”
5
It is contended that it was specifically brought to the notice of the authority that pulses were locally purchased and sold and hence, the question of input tax credit would not arise and as regards the de-oiled cake the same was procured through inter-state stock transfer from Tamilnadu and accordingly, the question of input tax credit would not arise and accordingly apportionment (reversal) as indicated under Section 17 of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as ‘the Act’ for short), would not arise.
Learned Additional Government Advocate supports the order of the assessing authority while pointing out the consideration at internal page-8 reproduced above (Supra).
Heard the learned counsel for the petitioners and the respondents.
6
It is clear that Section 17 of the Act relating to partial rebate would apply if the utilization of the materials are from two different sources which may consist of inter- state sales and local purchase. In the present case, though the authority has taken recourse to the methodology under Section 17 of the Act, however, the consideration of the contention that the pulses were locally procured within the State of Karnataka and also de-oiled cake was procured through inter-state stock transfer from Tamilnadu, both of which are not being eligible for input tax credit the resort to methodology under Section 17 of the Act, and disallowance of input tax credit would not arise.
Accordingly, the assessment order is set aside with liberty to the Assessing Officer with a direction to the Assessing Officer to re-look into the objections raised specifically by the assessee as regards inapplicability of Section 17 of the Act and decide the matter afresh in accordance with law.
7
The assessee is required to appear without notice before the Assessing Officer and put-forth his case and avail himself for an opportunity of personal hearing on 24.07.2021. The assessee to co-operate with the proceedings before the Assessing Officer which may be completed within a period of four months.
Accordingly, the petition is disposed of. JUDGE
GJM
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.