Canara Overseas Limited, Bangalore vs State of Karnataka

K.L. Manjunath, J.-Heard the learned Counsel for the petitioner and the Government Advocate for the respondent.

This revision petition is filed under Section 65(1) of the Karnataka Value Added Tax Act, 2003 challenging the order passed by the Karnataka Appellate Tribunal, Bangalore in STA Nos. 313 to 315 of 2006, dated 28th February, 2007.

The aforesaid appeal was filed by the revision petitioner herein challenging the order passed by the Joint Commissioner of Commercial Taxes (Appeals) dated 28-3-2006 for the period April 2005 to June 2005. The appellant had filed an appeal before the Joint Commissioner of Commercial Tax (Appeal) against the order passed by the Deputy Commissioner of Commercial Taxes (Audit-21), under the provision of the Karnataka Value Added Tax Act, 2003. The facts of the case are as hereunder:

The appellant is an 100% export oriented unit engaged in exporting iron ore from Karnataka to other countries. For the purpose of transporting the iron ore, the petitioner purchased the chassis of a goods vehicle and thereafter got constructed the body over the chassis. Based on the purchase made by the appellant, refund claimed under the head, input tax was disallowed by invoking Section 11(a)(3) of the Karnataka Value Added Tax Act, 2003 on the ground that the petitioner was not liable for deduction under Fifth Schedule of the Act. In other words, the claim made by the petitioner was disallowed. Aggrieved by the order passed by the Assessing Officer, an appeal was preferred by the petitioner before the Joint Commissioner of Commercial Taxes (Appeals), which appeal also came to be dismissed. Against which a second appeal was filed before the Karnataka Appellate Tribunal, Bangalore which formulated the following three issues in the appeal:

(1) Whether the Assessing Authority is justified in disallowing the claim for input tax credit paid on the goods vehicle in these cases?

(2) Whether the First Appellate Authority is justified in dismissing these appeals?

(3) To what order?

The Tribunal after hearing the parties relying upon the provision of Section 11(a)(3) of the Act held that the chassis was purchased by the petitioner for transportation of the iron ore from the place of extraction (Mine) and also from the place of processing to the port. All the authorities including the Appellate Tribunal considering the definition of the word ''input'' as defined under Section 2(19) of the Karnataka Value Added Tax Act held that the chassis is not a capital goods purchased by a dealer in the course of his business for resale or for use in the manufacture or processing or packing or storing of other goods or any other use in business and held that the petitioner is not entitled to claim refund. Against the same, the present revision is filed raising the following substantial questions of law:

(1) Whether the authorities were justified in holding that the petitioner was not entitled for refund of input tax on chassis of motor vehicles as the same is debarred under Section 11(a)(3) of the Act read with Fifth Schedule?

(2) Whether the respondent-authorities were justified in denying the refund claim even though the petitioner has satisfied the provision of Section 12 of the Act, by referring to Section 11(a)(3) of the Act?

After hearing the learned Counsel for the parties we have noticed the following undisputed facts:

The petitioner is an 100% export oriented unit engaged in exporting the iron ore the place of extraction and processing to the other countries. In order to export the same, iron ore has to be transported from the place of extraction or from the place of processing, till shipment is completed. In order to transport the iron ore, chassis is purchased and thereafter a body is built on it, in order to treat it as a truck or lorry. Now the claim is made by the petitioner for refund of the input tax on the ground that the investment made by the petitioner is for the purpose of its business of manufacturing and processing. According to us in view of the definition of sub-section (19) of Section 2 and Section 11(a)(3) of the Act, we are of the opinion that the purchase of chassis by the petitioner is not for the purpose of manufacturing of the goods or for proceeding. It is used only for transportation.

Therefore, we do not see any substantial question of law arises in this petition.

Accordingly, this petition is dismissed.