ANANTHA PADMANABHA BHAT Vs. COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) The petitioner is aggrieved by the notice issued by the respondent Commissioner of Commercial Tax Officer, (Audit)- 3.3, DVO-3, Bangalore, seeking to re-assess the petitioner and pass re-assessment order denying him the benefit of Composition Scheme enacted under Section 15(1) of the Karnataka Value Added Tax Act, 2003.

(2.) The petitioner admittedly runs a restaurant serving vegetarian food in Bangalore and opted to pay tax at the composite concessional rate of 4% under Composition Scheme as enacted under Section 15(1) of the Act with effect from 1.4.2015. The impugned reassessment notice Annexure-A dated 15.6.2015 and consequent order passed vide Annexure-E dated 17.10.2015 and Annexure-F dated 20.10.2015 were based on the ground that during the course of inspection, the investigating authorities had observed that the petitioner assessee effected the purchase of goods i.e. Vitrified Tiles worth Rs.1,69,910/- and Rs.23,375/- as per e-Sugum Nos.1544436804 and 1035063610 during the tax period in question and since they were "goods in stock" there was a violation of the conditions and restrictions imposed under Rules 135 and 144 of the KVAT Rules, 2005 and the petitioner assessee was thus ineligible to continue under the Composition Scheme under Section 15(1) of the KVAT Act, 2003 and therefore liable to pay the regular rate of tax on the sales/turnover as per Section 3 of the KVAT Act, 2003.

(3.) The learned counsel for the petitioner submitted that, despite a representation made to the said authority that the Vitrified Tiles were purchased from the State of Gujarat upon payment of Central State Tax, since the said goods were purchased in the course of inter-State trade and were used for laying the floor of the restaurant run by the petitioner assessee, they could not be said to be the "goods in stock" at the time availing the said Composition Scheme vide Rule 135(2) of the KVAT Rules, 2005 and such Vitrified Tiles fixed in the floor became part of the immovable property and since they were not "goods in stock" as such dealt by the assessee in the regular course of business, the prohibition against purchase of goods from outside the State and lying in stock on the date he opts for this composition scheme did not apply to the present case and the benefit of Composition Scheme could not be denied on this ground while invoking the powers of re-assessment under Section 39(1) of the KVAT Act, 2003.