Jay Enterprises vs Additional Commissioner of Commercial Taxes

K.L. Manjunath, J.—The legality and correctness of the order dated May 19, 2009 passed in No. ZAC-1/BGM/SMR-26/08-09, T. No. 236/09-10 by the Commissioner of Commercial Taxes, Bangalore. Heard the learned counsel for the parties.

The appellant is a proprietary concern registered as a dealer under the provisions of the Karnataka Value Added Tax Act, 2003 (for short, "the Act"). It is the case of the appellant that it undertakes the processing of goods to arrive at rough cast iron castings or machinery components on the materials supplied to the appellant by its customers on job-work basis. In order to finish the goods entrusted on job-work basis, the appellant has to purchase certain consumable articles like oil which would be used in the course of processing of goods, for which, the appellant has paid the tax on the input used for processing for the benefit of supplier.

The appellant claimed refund of input tax in respect of the work executed on behalf of M/s. Shree Enterprises. The same was allowed. Thereafter, the audit proceedings were initiated and the claim made by the appellant came to be rejected.

Aggrieved by the order rejecting the claim of the appellant, an appeal was filed before the Joint Commissioner of Commercial Taxes (Appeals) Belgaum, which appeal came to be allowed. Thereafter, the Additional Commissioner of Commercial Taxes, Zone I, Bangalore, exercising the power vested in him u/s 64(1) of the Karnataka Value Added Tax Act, 2003, took up the matter suo motu, which revision petition has been allowed by setting aside the order of the appellate authority. This order is called in question.

It is the main contention of the appellant''s counsel that the power exercised by the Additional Commissioner of Commercial Taxes u/s 64(1) of the Karnataka Value Added Tax Act, 2003 is erroneous, because he did not consider that the appellant is not a consumer and he had not purchased inputs for his benefit. But the same was purchased by him for finishing the goods in respect of the raw materials supplied to him by the supplier on job-work basis and the person, who had supplied the raw materials, would in turn sell finished product and in turn collect the tax as an output. Therefore, he prayed the court to set aside the order and dismiss the revision petition exercised by the authority. We are unable to consider the argument advanced by the appellant for the following reasons

Because the appellant has not placed any material to show the terms and conditions of the job-work. If the amount payable to the appellant towards work rendered by him would include the cost of consumable product he cannot claim any refund because it amounts to unjust enrichment. When he is doing work of a third party as job-work, the nature of work of the appellant is inclusive of not only the labour, but also the input, i.e., required to be used for finishing the product and if he has already received the value of the input for his job-work, we are of the view that no error is committed by the Additional Commissioner of Commercial Taxes. Therefore, we do not see any merit in the appeal. Accordingly, the appeal is dismissed.