Interstate Purchase of Capital Goods by Dealer does not bar Benefit under Composition of Value Added Tax: Karnataka HC [Read Order]

The Karnataka High Court has held that the interstate purchase of capital goods by dealers does not bar benefit under the composition of Value Added Tax (VAT).

M/S. VenkateshwaraStone Crushers, the appellant filed the writ petitionpraying to set aside the order passed by the single judge and to allow the writ petition filed by the appellant.

It was submitted that the issue involved in the appeal is covered by the decision of the court in M/s.Ganapathi Stone Crushers Pvt.Ltd. Vs. State of Karnataka and Others. In this case, the appellant is a Private Limited Company in stone crushing business. For the financial year 01.04.2010 to 31.03.2011, the benefit of composition under Section 15(1) has been denied to the petitioner on the ground that the assessee has purchased capital goods from outside the State and assessment has been concluded under Section 39(1) read with Section 36(1) and 72(2) of Karnataka Value Added Tax Act, 2003 (KVAT). 

As per section 15(1), a composition of tax can be done subject to such conditions and in such circumstances as may be prescribed, any dealer other than a dealer who purchases or obtains goods from outside the State or from outside the territory of India, liable to pay tax as specified in Section 4.

It was stated that in Commissioner of Commercial Taxes Vs. Shri. Anantha Padmanabha Bhat it was held that if a dealer purchases capital goods from outside the State, it shall be entitled to the benefit of composition of tax.

Relying on the judicial decisions, the two-judge bench comprising Justice P S Dinesh Kumar and Justice C M Poonacha set aside the impugned order dated 07.11.2017 and the notices dated 09.12.2015 & 11.12.2015.

Further, the Court held that the assessee's interstate purchase of capital goods shall not affect the benefit under Section 15(1) of the KVAT Act. Ms.Veena J. Kamath, advocate appeared for the appellant and Shri Jeevan J.Neeralgi appeared for the State.

To Read the full text of the Order CLICK HERE

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