R.M. TAPASHETTY vs STATE OF KARNATAKA & ORS

This revision petition is filed by the assessee under Section 65 (1) of the Karnataka Value Added Tax Act, 2003, (''the KVAT'' for short)

relating to the tax period - January, 2009, challenging the judgment and order of the Karnataka Appellate Tribunal at Bengaluru (Belagavi Camp)

dated 13.04.2016 in S.T.A.No.1743/2014.

The appellant is an engineer and contractor engaged in the business of execution of civil works contract. The assessee has filed monthly return

for the period January, 2009 declaring the taxability and thereby admitted the output tax and claimed input tax deduction. The Assessing Officer

concluded the reassessment under the Regular Scheme as the assessee had shifted from composition scheme to regular VAT scheme during the

relevant period. This assessment order was revised by the Joint Commissioner of Commercial Taxes (Enforcement), North Zone, Belagavi,

exercising the powers under Section 63-A of the KVAT Act, for the reason that voluntarily withdrawal from composition scheme for the tax

period January 2009 was not permissible in terms of Rule 143 of the Karnataka Value Added Tax Rules (for short ''the Rules). Since the assessee

had made the application for withdrawal from the scheme on 12.02.2009 and as such, is eligible for such withdrawal with effect from 01.03.2009.

However, the Assessing Officer has amended the registration from composition scheme to VAT scheme with effect from 01.02.2009, contrary to

the said facts, the assessee has filed letter dated 16.01.2014 before the ACCT LVO-420 Bagalkote for amending the EDR under VAT Scheme

of tax payment as 01.01.2009 instead of 01.02.2009. Accordingly, computation was made by the SMR authority assessing under the composition

scheme for the period January, 2009.

It is the contention of the learned counsel for the appellant that the appeal was preferred before the Tribunal on two grounds: firstly that the

assessee has shifted from composition scheme to regular VAT scheme with effect from 01.01.2009, the re-assessment order though was well

reasoned has been revised by the SMR authority, the same not being erroneous or prejudicial to the interest of the revenue without giving

opportunity of hearing, the impugned order has been passed, which is contrary to the decision of the Hon''ble Apex Court in the case of

Government of Andhra Pradesh Vs.Guntur Tobacco Ltd., reported in AIR 1965 SC 1396.

It is submitted that secondly, the assessee had called in question the levy of tax on the materials such as steel and cement supplied by the

contractee to the contractor for use in the execution of works contract. SMR authority while concluding the assessment under the composition

scheme again added tax under Section 3(2) on the goods supplied by the contractee to the contractor as URD purchases which is wholly

unjustifiable. Tribunal without addressing on this point proceeded to reject the appeal confirming the order of the revisional authority. Accordingly,

he seeks for setting aside the impugned judgment and order and to remand the matter to the Tribunal.

Learned AGA appearing for the revenue justifying the impugned judgment and order submitted that the SMR authority was right in invoking the

power of revision as the re-assessment order of the prescribed authority was erroneous and prejudicial to the interest of the revenue inasmuch as

concluding the assessment under the regular VAT scheme instead of composition scheme. That being the challenge made by the assessee before

the Tribunal, the same was considered and answered. Hence, no interference of this Court is warranted.

We have given our anxious consideration to the arguments advanced at the bar and perused the material on record.

It is the case of the assesee that the SMR authority having determined the taxable income under the composition scheme ought not to have

added tax under Section 3(2) of the Act as purchases on the goods supplied by the contractee to the contractor.

It is apparent that this argument of the assessee is not addressed by the Tribunal and no finding is given on this point. Tribunal proceeded only

on the ground that the determination of tax based on the composition scheme is justifiable. It is hardly required to be stated that when particularly

the assessee/appellant raises a ground and submits arguments on such point, it is obligatory for the Tribunal to address the said arguments and give

a finding in accordance with law.

Having regard to the facts and circumstances of the case, without expressing any opinion on the merits or demerits of the case, we deem it

appropriate to remand the matter. There being no whisper made by the Tribunal on this aspect, we find it appropriate to set aside the impugned

judgment and order of the Tribunal and remand the matter to the Tribunal for fresh consideration. Hence, the following:

ORDER

i. Appeal is allowed in part.

ii. The order of the Tribunal dated 13.04.2016 in S.T.A. No.1743/2014 on the file of Karnataka Appellate Tribunal, Bengaluru,

impugned herein, is set aside.

iii. The matter is remanded to the Tribunal for fresh consideration.

iv. All the rights and contentions of the parties are left open.

v. Tribunal shall consider all the arguments advanced by the assessee in a proper perspective and in accordance with law and shall

pass appropriate orders in an expedite manner.