Joint Commissioner of Commercial Taxes (Appeals) Vs Rajshreee Impex (Karnataka High Court)
The Karnataka High Court considered a revision petition filed by the Revenue challenging the order dated 19.09.2018 passed by the Karnataka Appellate Tribunal (Tribunal) in S.T.A. No. 895/2016. The respondent, a registered dealer under the Karnataka Value Added Tax Act, 2003 (KVAT Act), was engaged in the business of trading in iron and steel. For the tax period April 2011 to March 2012, the respondent filed returns claiming Input Tax Credit (ITC) on purchases made from registered dealers.
The Assessing Authority passed a reassessment order dated 30.05.2014 disallowing the ITC claimed in respect of purchases from three dealers on the ground that they were non-existent and bogus dealers who had merely issued tax invoices to enable the respondent to claim ITC. The Assessing Authority also levied penalty under Section 70(2) and interest under Section 36 of the KVAT Act. Subsequently, the reassessment order was rectified by a fresh order dated 29.11.2014 after one of the alleged bogus dealers had paid the tax relating to the sales made to the respondent.
The respondent’s appeal before the First Appellate Authority under Section 62 of the KVAT Act was dismissed by order dated 09.08.2016. Thereafter, the respondent preferred a second appeal before the Karnataka Appellate Tribunal, which allowed the appeal and set aside the orders of the Assessing Authority and the First Appellate Authority. The Tribunal held that ITC could not be denied merely because the selling dealer had failed to discharge its tax liability. Aggrieved by this order, the Revenue filed the present revision petition.
