CA Koduri Jitendra Babu
In an important judgement in the case of Sri Anjaneya Agro Tech Private Limited Vs. The Dy. Commissioner of Commercial Taxes (Audit) [2016-VIL-63-KAR], Hon ‘ble High Court of Karnataka has ruled that assessee-dealer is entitled to claim benefit of a subsequent judgement of the court, even after completion of assessments, by filing rectification application.
The assessee has claimed partial input tax credit on the belief that he is not entitled to input tax credit on the exempted by-products produced during the process of manufacture of edible oils. Assessments for the periods April 2006 to March 2010 were completed. Subsequently, Hon ‘ble High Court of Karnataka in the case of M.K. Agro Tech Private Limited Vs. State of Karnataka, [2014 (18) KLJ1 = 2015-VIL-57-KAR] held that when an assessee is in the business of manufacture of only one product, namely, oil and which is liable to tax, merely because in the process of manufacture of oil, certain by-product arises, which is sold and which is exempted from tax, that would not attract provisions of Section 17 of the KVAT Act relating to partial rebate.
Based on the above judgement, the assessee-dealer filed rectification application, seeking grant of full ITC. Department rejected the claim, as usual, on the ground that the benefit cannot extended since the assessments were completed and the State has challenged the judgement of the High Court before Supreme Court.
The High Court negated the views of the department and held in favour of the assessee-dealer, directing the department to extend full
benefit to the assessee-dealer. The following observations of the High Court are very much pertinent –
“8. In the above circumstances, in a situation where if the revenue were to be in the position of the assessee and if it was discovered that by virtue of the operation of law, the revenue was entitled to a certain amount from the dealers, it would have certainly turned the tables on the assessee and proceeding on that presumption, it would be only just and fair to direct the revenue to consider the prayer of the petitioner for rectification, when there is no dispute that they were entitled to full tax rebate by virtue of the decision in M.K. Agro Tech, supra. It would be a formality for the respondent to pass a rectification order and grant full tax rebate to the petitioner in terms of its prayer.”
The judgement is brought to the notice of the trade and industry, so that they can apply for benefit of any subsequent judgement of higher courts by filing rectification petition, if the benefit was not granted to them in the assessment orders. Copy of the judgement is
attached herewith for ready reference.