Disposed

M/S. Anil Engineering Works v. Authority for Clarification

Karnataka HC31 Mar 2021WP/52445/2019

Case brief

AI extract

What is this about?

Writ petitioner challenged a tax clarification on paper insulated aluminium wire. The High Court held that the authority need not dispose of the petition as it failed to address the taxpayer's specific contention regarding Section 4(1)(a) and must pass a speaking order.

What did the court decide?

Petition disposed of; matter remanded to authority to pass a speaking order addressing the petitioner's contentions.

M/S. Anil Engineering Works Vs Authority for… — GST and Indirect Tax | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 31^ST DAY OF MARCH 2021

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BEFORE

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THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV

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WRIT PETITION NO.52445/2019 (T–RES)

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BETWEEN:

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M/s.Anil Engineering Works Harige, Ganapathi Temple Road, Vidya Nagara (Post) Shimoga – 577203 Karnataka Represented by its Partner.

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... Petitioner (By Smt.Veena.J.Kamath, Advocate for Sri.Govindraya Kamath.K, Advocate)

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AND:

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Authority for clarification and Advance Rulings Represented by Commissioner of Commercial Tax Vanijya Therigegala Karyalaya, Kalidasa Road, Gandhinagara, Bengaluru-560009.

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The Commissioner of Commercial Taxes in Karnataka Vanijya Terige Karyalaya-1, Gandhinagar, Bangalore-560009.

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State of Karnataka Represented by Under Secretary to Government,

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Finance Department, Vidhana Soudha, Bengaluru-560001.

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Assistant Commissioner of Commercial Tax(Audit)-1 1^st Floor, Suvarna Karnataka Vanijya Therige Bhavan B Block, 12^th Cross, Gopalgowda Layout Shimogga-577205.

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Joint Commissioner of Commercial Taxes(Appeal) Malnad Division Commercial Tax Department Gopala Gowda Extension Shimoga-577204.

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…Respondents

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(By Sri. K. Hema Kumar, AGA)

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This Writ Petition is filed under Articles 226 and 227 of the Constitution of India praying to quash the clarification dated 03.09.2019 issued by the R-1 as per Annx-A and declare that the rate of tax for paper insulated wire/winding aluminum wire is as per the notification dated 31.03.2006 issued by the R-2 as per Annx-C.

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This Writ Petition coming on for Preliminary Hearing ‘B’ group, this day, the Court made the following:

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ORDER

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The petitioner has filed the present petition

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seeking for setting aside of the clarification dated 03.09.2019 at Annexure-A and sought for declaration

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that the rate of tax for paper insulated wire/winding aluminium wire is as per the notification dated

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31.03.2006 and alternative prayer is also sought for setting aside the clarification dated 03.09.2019 and clarification dated 21.06.2008.

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The petitioner submits that petitioner had sought for the clarification as per the application at Annexure-D before the authority for clarification of Advance Rulings in terms of Section 60 of the KVAT Act, 2003. The specific clarification was as regards to the applicable rate of tax with respect to the paper insulated aluminium wire/paper insulated aluminum winding wire.

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The petitioner submits that the tax that

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ought to have been made applicable is in terms of Section 4(1)(a) of the Act which prescribes rates applicable with respect to the goods in the III schedule which the petitioner contends is applicable to the petitioner. It is further submitted that the III

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schedule prescribes various categories of goods and at item No.1 there is a category which reads as “Industrial input and packing materials as may be notified”.

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The petitioner submits that State Government has passed the notification dated 31.03.2006 under Section 4(1)(a) of the Act clarifying the nature of goods at item No.51 to include “9 – paper insulated aluminium wire”. Hence, it is contended that authority ought to have clarified taking note of the Government notification dated 31.03.2006 that the paper insulated aluminium wire was to be taxed at the rate as provided under III schedule. Attention is drawn to the clarification at Annexure-A wherein the authority concerned has observed as follows:

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6. The Commissioner of Commercial Taxes, Bangalore vide Clarification

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No.CLR.CR-151/2007-08, dated 21.06.2008, has clarified that “Aluminium Winding Wires insulated or covered with any Material” are taxable at 12.5% under Section 4(1)(b) of the KVAT Act, 2003.

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7. Thus, “Paper insulated Aluminium Wire/Paper insulated Aluminium Winding Wire” is taxable at 14.5% as the clarification referred above states that the Aluminium Winding Wire whether insulated or covered with any material is taxable as unscheduled goods under Section 4(1)(b) of the KVAT Act, 2003.

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Therefore, it is ruled that “Paper insulated Aluminium Wire/Paper insulated Aluminium Winding Wire” is liable to tax at the rate of 14.5% under Section 4(1)(b)(iii) of the KVAT Act, 2003, with effect from 01.08.2012.

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Accordingly, it is contended that the authority concerned has not taken note of submissions as reiterated before this Court are recorded above.

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Learned counsel appearing for the Revenue

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would submit that as against the order at Annexure-A

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an appeal is provided under Section 66 of the Act to the High Court and on the said ground itself petition is to be rejected. It is also to be noted that the petitioner has submitted that the alternative prayer had sought for quashing of the clarification issued dated 21.06.2008 and accordingly, present petition has been filed.

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Learned Government Advocate would point out that clarification is only inter parties and would be binding on the sub-ordinate authority and not binding on any superior authorities, however, extending benefit for the bonafide assumption that the validity of such clarification is to be challenged only before this Court.

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The petitioner’s contention that the petition has been appropriately filed before this Court can be accepted.

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However, while noticing that the matter is

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pending from the year 2019 and also noticing that the order does not refer to the contention of the petitioner as noted above regarding the goods falling within Section 4(1)(a) of the Act, matter requires to be reconsidered by the authority by passing a speaking order by adverting to the contention of the petitioner as noted above. Authority has merely recorded the finding at paragraphs 6, 7 and 8 without stating as to why the rate of tax under Section 4(1)(a) of the Act as contended is not applicable with respect to the goods for which clarification is sought for.

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Accordingly, the petition is disposed off.

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Sd/JUDGE

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NS

M/S. Anil Engineering Works v. Authority for Clarification

Case brief

What is this about?

What did the court decide?

M/S. Anil Engineering Works v. Authority for Clarification

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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