AI Structured Summary
Not yet generated for this judgment
Judgment
N. Kumar, J.—This appeal is preferred by the assessee against the order passed by the Authority for Clarification of Advance Rulings, Bangalore, rejecting his application on the ground that the application is not maintainable. The assessee is a company registered under the Karnataka Value Added Tax Act, 2003 (for short ''the Act'') and Central Sales Tax Act. The Assessee is engaged in the business of manufacture, selling & trading of Electrical and Automation Products and execution of works contract for Transmission & Distribution and electrical Balance of Plant for power sector, electrification of rail system and Airport Terminals etc.
The assessee applied by way of a tender, for supply, erection, testing and commissioning of power supply receiving/distribution system, for Bangalore Metro Rail Project, a Joint Venture Project between the Government of Karnataka and Union of India for implementing the Bangalore Metro Rail Project. The assessee was awarded the contract and it entered into a contract dated 14.12.2009. The appellant has filed its monthly returns regularly. On 01.08.2011, the audit authority issued a notice in Form VAT 275 u/s 52(1) of the Act, calling upon the assessee to produce the books of accounts for the purposes of audit, relevant to the assessment year 2010-11, for the first time. On 20.09.2011, the business premises of the assessee was inspected by the Enforcement Authorities. The assessee appeared before the Enforcement Authorities on 26.09.2011 and submitted the required documents. The Enforcement Authority issued a notice u/s 52 of the Act, on 01.10.2011. In reply to the same, the assessee submitted the relevant documents to the Enforcement Authorities on 03.10.2011. Elaborate reply came to be filed by the assessee on 21.10.2011, wherein the assessee substantiated its claim for exemption of certain transactions with Bangalore Metro Rail Company Limited with the relevant documents. Thereafter, on 02.11.2011, proceedings were drawn by the Enforcement Authorities, whereby, the authorized representative of the assessee stated that he would intimate the assessee to remit Rs. 2 crores as advance tax and the same would be set off against future monthly tax payments. Accordingly, Rs. 2 crores was remitted voluntarily under protest, without any reference or admitting the issue raised by the Enforcement Authorities. The issue raised by the Enforcement Authorities are yet to be decided by the authorities. On 03.01.2012, a second notice came to be issued by the audit authority, in form Vat No. 275 u/s 52(1) of the Act, calling upon the assessee to produce the books of accounts for the purposes of audit, relevant to the assessment year 2010 - 11. Thereafter, the audit authority visited the business premises on 16.01.2012 and recorded the statement for audit purposes. Thereafter, Enforcement Authority has made a recommendation to the Joint Commissioner of Commercial Taxes to take up the cases for audit and reassessment. On 30.04.2012, a third notice came to be issued to the assessee calling upon the assessee to produce the books of accounts. It is in this background, on 25.09.2012, the assessee filed an application in Form Vat No. 540 seeking clarification from the Authority for Advance Rulings on exigibility of transaction and liability of tax deducted at source under the Act. The Advance Rulings Authority has rejected the application filed by the assessee on the grounds that the question raised in the application is already pending before officer or authority of the department. Hence the application cannot be entertained relying on Rule 165(8) of the Karnataka Value Added Tax Rules, 2005. Further the authority held that the questions raised in the application are similar to the one pending adjudication before the different Audit Authorities for the tax periods of the financial years 2010 - 11 and 2011 - 12 and therefore, the application cannot be admitted. Accordingly, it came to be rejected. Aggrieved by the said order, the assessee has preferred this appeal.
Learned senior Counsel for the appellant assailing the impugned order contends, the returns filed by the assessee has been accepted. Thereafter notices are issued calling upon him to produce the documents. The reassessment proceedings is not yet initiated. The department has not made known their stand regarding the exemption to which the assessee is entitled to and as on today, there is no question pending consideration before the authorities. In that view of the matter, the application filed by the assessee was maintainable and the Advance Rulings Committee has committed a serious error in declining to entertain the said application.
Per contra, learned Counsel for the revenue supporting the impugned order contended that not one but three notices have been issued calling upon the assessee to produce the documents and twice the premises has been visited by the authorities. In fact, the assessee has already paid Rs. 2 crores as Tax, subject to the result of the reassessment proceedings. A recommendations is already made for initiation of reassessment proceedings. It is in this background, the authority was justified in not entertaining the application as the very question which is raised in this application is pending consideration before the authorities and therefore, he submits that no case for interference is made out.
Rule 165(8) of the Karnataka Value Added Tax Rules, 2005 on which reliance is placed, reads as under:-
The Authority shall not admit the application where the question raised in the application:-
(a) Is already pending before any officer or authority of the Department or any other Authority constituted under sub-rule (6) or Appellate Tribunal or any Court in any proceedings before them; or
(b) Relates to a transaction or issue which is designed apparently for the avoidance of tax.
Section 60 of the Act deals with ''Clarification on Advance Rulings'', which reads as under:
(1) The Commissioner may constitute an ''Authority for Clarification and Advance Rulings'', consisting of three Additional Commissioners, to clarify the rate of tax in respect of any goods or the exigibility to tax of any transaction or eligibility of deduction of input tax or liability of deduction of tax at source under the Act, in respect of any case or class of cases as the Commissioner may specify.
(2) Any registered dealer seeking clarification or advanced ruling under this Section, shall make an application to the Authority in such form, accompanied by proof of payment of such fee, paid in such manner as may be prescribed.
(3) No officer or any other authority of the Department or the Appellate Tribunal shall proceed to decide any issue in respect of which an application has been made by an applicant under this Section.
(4) The order of the authority shall be binding, only on the applicant who seeks clarification and only in respect of the goods or transaction in relation to which a clarification is sought and also only on all the subordinate officers.
(5) The order of the Authority under this Section shall be binding as aforesaid unless there is a change in law or facts on the basis of which the order was passed.
(6) Where the authority finds, on a representation made to it by any officer or otherwise, that an order passed by it was obtained by the applicant by fraud or misrepresentation of facts, it may, by order, declare such order to be void ab initio and thereupon all the provisions of this Act shall apply to the applicant as if such order had never been made.
(7) Subject to the provisions of Section 66, every order passed under this Section shall be final.
A reading of the aforesaid provisions make it very clear that the authority shall not admit or allow the application where the question raised in the application is already pending before any officer or authority of the department or any other authority or appellate tribunal or in Court and it relates to a transaction or issue, which is designed apparently for the avoidance of tax. In other words, the application before the Advance Rulings Authority has to be made before the question raised for consideration before any officer or authority of the department. If such a question is already decided by the authority, acting on the decision, the assessee can manage his affairs better. The authority who are subordinate to the said Advance Rulings Authority are bound by the opinion of the Advance Rulings Authority. At the same time, once the said question arises for consideration before any officer or authority, the said officer or authority is competent to decide the said issue of the assessee. If he is aggrieved, he is provided with a statutory remedy of preferring an appeal before the appellate authority as well as to the tribunal. In this background, when we look at the facts of the case, the assessee did not approach the Advance Rulings Authority before importing the goods. By not paying the tax, goods were imported. Then returns are filed claiming exemption. It is only after inspection of the premises, the authorities issued notices to the assessee calling upon him to produce the documents, a recommendations is made for initiation of reassessment proceedings, and A demand for Rs. 2 crores was made to the assessee which is already paid after protest, the assessee filed the application before the Advance Rulings Authority. If the authorities have accepted the returns as it is and if they had no grievance whatsoever, they would not have called upon the assessee to produce the books of accounts and would not have collected a sum of Rs. 2 crores as tax even under protest. So prima facie, the question of exemption is pending before the officer concerned for adjudication and therefore, once such a question is pending before any authority or officer for adjudication, the aforesaid provision makes it clear that an application for advance rulings is not maintainable. That is precisely what has been said. In the light of the aforesaid facts, we are satisfied that there is no illegality committed in refusing to entertain the application, in view of the prohibition contained in the aforesaid provisions. We find no merits in the appeal. Accordingly, the appeal is dismissed.