Transworld Star Manjushree Vs Addl. Commissioner of Commercial Taxes (Karnataka High Court)
The Karnataka High Court considered two appeals filed by a common assessee challenging the revisional authority’s order disallowing Input Tax Credit (ITC) claimed on purchases made from M/s Ashapura Metal Corporation and JAS Modular Systems during the Financial Year 2014-15.
The appellant had purchased goods from the two selling dealers for Rs.1,58,76,115/- and Rs.2,40,03,328/-, respectively, on which VAT at 14.5% was charged. The appellant claimed ITC on these purchases. Following inspection of the books of account, the prescribed authority found that although the selling dealers had raised invoices charging VAT at 14.5%, they had remitted only 5% VAT and there was a mismatch between their turnover and monthly returns. Accordingly, the authority reversed ITC of Rs.10,02,703/- and Rs.16,88,965/-, levied interest of Rs.10,48,501/- and Rs.12,44,059/-, and imposed penalties of Rs.1,20,517/- and Rs.1,68,898/-.
The appellant appealed under Section 62(6) of the Karnataka Value Added Tax Act, 2003. The First Appellate Authority accepted the appellant’s contention that it had conducted its business diligently by paying the invoice value, including VAT, through account payee cheque and held that the appellant could not be made liable for the selling dealers’ failure to remit the tax to the Government.
