M.M. Pattanashetty vs State of Karnataka

K.L. Manjunath, J.—The above appeal was admitted on 19-1-2010 to answer the following substantial questions of law.-

(i) Whether on the facts and in the circumstances of the case the Revisional Authority is right in holding that the burden is on the appellant to prove that the suppliers have actually deposited the tax collected as per Section 70(1) of the Karnataka Value Added Tax Act, 2003 to claim input tax rebate?

(ii) Whether on the facts and in the circumstances of the case the Revisional Authority is right in revising the appeal order which is not in existence, when the reassessment order is passed u/s 39 of the KVAT Act subsequent to the appeal order but before the initiation of revisional proceedings u/s 64(1) of the KVAT Act?

(iii) Whether on the facts and in the circumstances of the case the Revisional Authority is right in passing the order wholly on the ground that the appellant has not proved that the tax amount collected by the suppliers has actually deposited with department in the absence of proposing the same in the notice issued u/s 64(1) of the KVAT Act?

(iv) Whether on the fact sand in the circumstances of the case the intelligence authority is right in passing the protective assessment order u/s 38(5) of the KVAT Act and in turn the Revisional Authority''s acceptance of the same?

(v) Whether on the facts and in the circumstances of the case the Revisional Authority is right in revising the appeal order without rejecting the documentary evidences produced as not genuine?

(vi) Whether on the facts and in the circumstances of the case the Revisional Authority is right in holding that there is no movement inspite of documentary evidences produced in support of movement of goods?

Heard the Counsel for the parties.

After hearing we have noticed that without answering all the questions of law framed herein, the matter is required to be remanded to the Revisional Authority to consider whether the Revisional Authority was competent to revise the order dated 19-4-2007 when there was an order of reassessment passed u/s 39(1) of the Karnataka Value Added Tax Act, 2003, on 17-10-2007.

The Revisional Authority exercising its power vested in it u/s 64(1) of the Karnataka VAT Act has revised the order passed by the First Appellate Authority dated 19-4-2007 passed in Appeal No. JC/AP/BGKVAT-233/2006-07/B121, which order was passed by the Appellate Authority in an appeal filed by the assessee challenging the order passed by the Assessing Authority u/s 38(5) of the Karnataka VAT Act, as a protective assessment order.

Thereafter the Deputy Commissioner of Commercial Taxes (Audit-3) has passed a regular assessment u/s 39(1) of the Karnataka VAT Act, 2003, on 17-10-2007. Against the regular assessment passed by the Deputy Commissioner, the assessee has not filed any appeal because he is satisfied with the order. But the question is that when Regular Assessment Order has been passed on 17-10-2007, whether the Revisional Authority would get jurisdiction to review the order passed by the First Appellate Authority against the order passed as a protective assessment order because any order passed as a protective assessment will merge with the regular assessment. In other words the protective assessment order passed u/s 38(5) would merge with the order passed u/s 39(1) of the Karnataka VAT Act. Therefore we are of the view that in view of the order of reassessment passed u/s 39(1) of the Act for the entire year 2006-07, it is for the Revisional Authority to reconsider the entire matter afresh in accordance with law. Since the Revisional Authority has exercised its power and revised the order passed by the First Appellate Authority, which appeal was filed against the protective assessment order, as there is no opportunity for the Revisional Authority to consider the order passed u/s 39(1) of the Karnataka VAT Act, we set aside the order dated 4-12-2009, passed by the Revisional Authority, as per Annexure-E to the appeal, without answering the questions of law framed in this appeal the matter is remanded to the Revisional Authority to dispose of the revision in accordance with law. While doing so the Revisional Authority shall consider the effect of the order of regular assessment passed u/s 39(1) of the Act.