M/S Mangalore Refinery And Petrochemicals vs. The State Of Karnataka - Karnataka High Court, 01 July 2021

Cause title — parties, addresses and appearances

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF JULY 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE HEMANT CHANDANGOUDAR S.T.R.P. NO.435 OF 2017 BETWEEN: M/S MANGALORE REFINERY AND PETROCHEMICALS LIMITED KUTHETOOR P.O., VIA KATIPALLA MANGALORE-575030 (REP. BY SURINDER PAL SINGH CHAWLA AUTHORIZED SIGNATORY). ... PETITIONER (BY SRI. RAVI RAGHAVAN, ADV.,) AND: THE STATE OF KARNATAKA REPRESENTED BY THE COMMISSIONER OF COMMERCIAL TAXES GANDHINAGAR, BANGALORE-560009. ... RESPONDENT (BY SRI. JEEVAN J. NEERALGI, AGA) - - - THIS STRP IS FILED UNDER SECTION 65(1) OF THE KARNATAKA VALUE ADDED TAX ACT, AGAINST THE JUDGMENT DATED 17.07.2017 PASSED IN STA NO.66/2017 ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT BENGALURU, DISMISSING THE APPEAL AND UPHOLDING THE ORDER DATED 17.12.2016 PASSED IN KVAT/AP/312 TO 321/2013-14 ON THE 2 FILE OF THE JOINT COMMISSIONER OF COMMERCIAL TAXES, MANGALURU, DISMISSING THE APPEAL AND UPHOLDING THE ORDER DATED 30.09.2013 PASSED IN MRPL/VAT/2011-12 ON THE FILE OF THE DCCT, MANGALURU, FILED UNDER SEC.39(1) OF THE KVAT ACT, 2003 R/W SEC.72(2) AND 36 OF THE KVAT ACT, 2003 FOR THE TAX PERIODS OF APRIL 2011 TO MARCH 2012. THIS STRP. COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:

ORDER Mr.Ravi Raghavan, learned counsel for the appellant.

Mr.Jeevan J.Neeralgi, learned Additional Government Advocate for the respondent.

This petition under Section 65(1) of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as 'the Act' for short), has been filed by the petitioner against the order dated 17.07.2017 passed by the Karnataka Appellate Tribunal. The petition was admitted on the following substantial questions of law by order dated 11.10.2018: "(1) Whether on the facts and in the circumstances of this case, the KAT was right in holding that the conditions for availment of input tax credit in respect of capital goods

3 under Section 12(2) of the KVAT Act are not independent of one another? (2) Whether on the facts and in the circumstances of this case, the KAT was right in holding that input tax credit in respect of capital goods cannot be availed before the commencement of commercial production as per Section 12(2) of the KVAT Act? (3) Whether on the facts and in the circumstances of this case, the KAT was right in holding that the conditions as mentioned under Section 12(2) of the KVAT Act, i.e., sale of taxable goods or commencement of commercial production, must necessarily be related to the petitioner's expansion project under Phase III itself? (4) Whether the KAT was right in holding that the penal provisions under Section 72 of the KVAT Act are mandatory and thereby upholding the levy of penalty against the petitioner in this case?"

For the reasons assigned by us today in STRP No.433/2017, the impugned order dated 17.07.2017 passed by the Tribunal and order dated 17.12.2016 passed by the Joint Commissioner of Commercial Taxes cannot be sustained

4 in the eye of law and the same are accordingly quashed. The appellant is held entitled to refund of interest paid under protest. In the result, the petition is allowed. JUDGE JUDGE RV