IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF OCTOBER, 2019 BEFORE:
THE HON’BLE MRS. JUSTICE S.SUJATHA WRIT PETITION No.49972/2019 (T – RES) BETWEEN:
M/s. FURTADO FOOD PRODUCTS D.No.3-13A, AIRODY VILLAGE SASTAN POST, UDUPI-576226 REP. BY ITS PROPRIETOR Mr. ROBERT FURTADO. ... PETITIONER [BY SRI SANDEEP HUILGOL, ADV.] AND:
DEPUTY COMMISSIONER OF COMMERCIAL TAXES [AUDIT] UDUPI, VIVEKANANDA 4TH CROSS ROAD AJJARKAD, UDUPI-576001. …RESPONDENT [BY SRI T.K.VEDAMURTHY, AGA.] THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED ENDORSEMENT DATED 31.08.2019 ISSUED BY THE RESPONDENT AT ANNEXURE-R; AND ETC.
THIS PETITION COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R Learned Additional Government Advocate accepts notice for the respondent.
The petitioner has assailed the endorsement dated 31.08.2019 issued by the respondent at Annexure – R, inter alia, seeking a direction to the respondent to adjust the balance unallowed amount of tax exemption of Rs.7,46,354/- as against the petitioner’s tax liability under the provisions of the Karnataka Value Added Tax Act, 2003 (‘KVAT Act’ for short) for the tax periods June 2007 onwards or in the alternative to direct the respondent to forthwith refund to the petitioner the balance unallowed amount of tax exemption of Rs.7,46,354/- in terms of the certificate issued by the Government of Karnataka dated 21.03.2001.
2. The petitioner – a proprietary concern, was a dealer registered under the provisions of the Karnataka Sales Tax Act, 1956 (‘KST Act’ for short) and the KVAT Act, engaged inter alia, in the manufacture and sale of various bakery items and sweets. It transpires that under the KST Act, a certificate dated 21.03.2001 was issued to the petitioner in terms of which the petitioner was entitled to avail the exemption from payment of tax on sale of finished goods as per the Notification bearing No.FD 32/CSL/96(I) dated 15.11.1996. The exemption was granted to the petitioner on the basis that the petitioner was classified as a Tiny Industry and the petitioner would be eligible for the exemption for a period of seven years with effect from 01.06.2000 and thus the last date for availment of exemption in terms of the KST Certificate was 31.05.2007. However, pursuant to the VAT regime, the petitioner approached this Court in W.P.No.47236/2013 assailing the entitlement certificate dated 19.06.2006, revised entitlement certificate dated 24.07.2006 and endorsement dated 03.08.2013, whereby it was stated that the entitlement to tax exemption would be on the turnover exceeding Rs.42,69,319/-. The condition that if the turnover of the petitioner exceeds the aforesaid amounts, then it would be entitled to sales tax exemption, otherwise not. The same was challenged before this Court by the Assessee on the premise that the same is contrary to the Original Certificate dated 21.03.2001. This Court directed the respondent to reissue a fresh certificate of entitlement in line with the earlier certificate dated 21.03.2001 pursuant to which revised certificate of entitlement dated 21.08.2014 was issued. An endorsement was also issued on 14.03.2019 considering the request of the petitioner for rectification of the assessment orders passed for the assessment years 2000-01 to 2004-05 under Section 25A of the KST Act to the effect that the assessment orders passed for the said years having attained finality, it is only after the clarification of tax exemption in the reassessment proceedings by the prescribed authority under the KVAT Act for the period 01.04.2005 to 31.05.2007, the application will be verified for further action to be taken under the provisions of the KST Act. Subsequently, in terms of the proceedings of the Commercial Tax Officer (Audit), Kundapura dated 06.06.2019, exemption available in terms of the entitlement certificate has been determined which totally amounts to Rs.5,03,788/- for the VAT regime and Rs.1,55,867/- for the KST regime. Hence, the petitioner has sought for adjustment of the unallowed amount of tax exemption which has been rejected in terms of the endorsement dated 31.08.2019. Hence, this writ petition.
3. Learned counsel Sri. Sandeep Huilgol appearing for the assessee would submit that the petitioner is entitled to the tax exemption in terms of the original certificate dated 21.03.2001. The respondent – authorities have limited tax exemption to Rs.1,55,867/- under the KST regime. Learned counsel would submit that though the petitioner had challenged the certificate relating to the VAT period in W.P.No.47236/2013, it was obligatory on the part of the department to consider the tax entitlement of the petitioner even in the KST regime in terms of the original certificate dated 21.03.2001. Hence, the rectification application submitted by the petitioner ought to have been considered in the light of the original certificate and the tax exemption ought to have been allowed/adjusted/refunded to the petitioner.
4. Learned Additional Government Advocate supports the order/endorsement issued.
5. Having heard the learned counsel for the respective parties, it is not in dispute that the petitioner has not raised any objections/claims regarding the entitlement certificate with respect to the KST regime and the assessment orders were passed for the assessment years 2000-01 to 2004-05. It is only in the year 2018, the rectification of the assessment orders has been sought. The assessment orders having reached finality, the Assessing Authority has rightly observed that the clarification of tax exemption under the KST Act cannot be considered. The said order/endorsement has remained unchallenged. Subsequent to the determination of tax exemption made pursuant to the order of the Karnataka Appellate Tribunal in STA Nos.310 to 312/2016 dated 26.09.2018 pertaining to the VAT period, the petitioner has approached the respondent – authority requesting for adjustment of unallowed amount of tax exemption during the KST period or to refund the same.
6. In view of the assessment orders relating to the tax periods herein having reached finality and the revised entitlement exemption certificate as well as the revised tax exemption certificate being unchallenged, the order of this Court in W.P.No.47236/2013 having duly complied by the respondent – authority, no request made by the petitioner to adjust the unallowed amount can be considered by the respondent – authority at this stage. Moreover, such claim is barred by limitation.
Under the circumstances, no error can be found in the impugned endorsement. Writ petition is devoid of merit, accordingly stands dismissed.
Sd/- JUDGE PMR