In a significant ruling, the Karnataka High Court has held that the re-assessment order passed under the Karnataka Value Added Tax (KVAT) Act after the rollout of the Goods and Services Tax Act ( GST ) cannot be held as invalid.
Before the High Court, the petitioners challenged a re-assessment order passed under the Karnataka Value Added Tax Act by contending that post 101st Amendment to the Constitution of India, there are certain lacunas in not saving Entry 54 of List II in its original form prior to the 101st Constitutional Amendment which received the Assent of the President on 08/09/2016 and was notified to be effective from 16/09/2016 and therefore the impugned re-assessment Order passed by the Assessing Authority does not legally stand the test of an Order passed under due authority of law.
It was also contended that the imposition of tax by its levy, assessment and collection, all have to be supported by the now existing law and since the impugned Order has been passed by the Assessing Authority on 31/03/2018 after the said KGST Act, 2017 has come into existence with effect from 01/07/2017.
Rejecting the contentions, Justice Vineet Kothari observed that the taxable event under the Value Added Tax law is individual transaction of sale or purchase by the Dealer and the law applicable on the date of taxable event is the relevant law for imposition of tax.
“Merely because the re-assessment Order is passed under KVAT Act, 2003 after the KGST Act, 2017 under CAST regime came into effect from 01/07/2017, it dces not mean that the said Order passed. on 31/03/2018 under the KVAT Act, 2003 is nun-est or void in the eye of law,” the Court said.
“Section. 174 of the KGST Act, 2017 clearly saves all the rights, obligations or liabilities acquired, accrued or incurred under the repealed Acts enumerated under Section 173 of the said Act which includes KVAT 2003. The ground of attack on Section 174 of the KGST Act, 2017 does not affect the validity of KVAT Act, 2003 and the Orders passed under that enactment,” the Court added.
The Court further added that “therefore, the larger constitutional questions raised in the present writ petition and as sought to be canvassed by the learned Senior Counsel for the petitioner like the substitution of Entry 54 in List II, effect of Article 246-A inserted by the 101st Constitutional Amendment Act of 2016, the sunset Clause as the learned Senior Counsel chose to name it, namely Clause 19 of the said 101st Constitutional Amendment Act etc, are all the questions which can be raised and considered only in an appropriate case to which these amended Constitutional and statutory legal provisions under the GST law regime are applicable for a tax period which falls after 01/07/2017. The Entry 54 of List II and KVAT Act, 2003 for the tax period in question, viz. 2012-13 was very much in existence for the said period and these provisions are not under challenge. Merely passing of the re-assessment order after 01/07/2017 does not get adversely affected on the basis of the said arguments sought to be canvassed by the learned counsel for the petitioner.”Subscribe Taxscan AdFree to view the Judgment