Where appellant's claim for input tax credit on purchase of materials had been denied by Additional Commissioner on ground that vendors had not paid tax collected from appellant to revenue, order of Additional Commissioner was to be set aside and matter was restored to file of Additional Commissioner for fresh consideration.

  • Vide decision of High Court of Karnataka in Aequs S.E.Z. (P.) Limited vs. Commissioner of Commercial taxes.

Facts of the case:

  1. The appellant is a private limited company engaged as a developer of SEZ units, maintenance and operation of infrastructure facility.
  2. The appellant had filed monthly returns in VAT-100 for the tax periods 2010-11. On verification of the same, the Prescribed Authority noticed that the appellant had claimed input tax credit for the purchase of materials from their sub-contractors.
  3. The respondent vide his order dated 15-9-2014 after hearing the appellant proceeded to deny the refund of input tax credits claimed on supplies by the aforestated vendors on the ground that the purchase invoices related to the year 2009-10 and that the vendors had not paid the tax collected from the appellant to the Revenue.
  4. The appellant preferred an appeal before the 3rd respondent whereby the 1st Appellate Authority had set-aside the order dated 15-9-2014 passed by the respondent- Assistant Commissioner of Commercial Taxes, Belagavi and allowed the appeal. Thereafter, the respondent initiated the revisionary proceedings in terms of section 64(1) of the Act and has set-aside the order of the 1st Appellate Authority restoring the order of the prescribed Authority. Hence, the present appeal.


The Honorable High Court of Karnataka held the case as follows:

  1. The appeal is partly allowed. The order of the respondent-Additional Commissioner of Commercial Tax dated 12-12-2018 at Annexure-A is set-aside.
  2. The proceedings are restored to the file of the respondent-Additional Commissioner of Commercial Taxes to reconsider the matter in the light of the aforesaid legal aspects.
  3. The respondent shall take a decision in accordance with law after providing an opportunity of hearing to the appellant-assessee.
  4. The appellant-assessee is at liberty to file additional documents, if any, to substantiate his claim.

Compliance shall be made in an expedite manner, in any event, not later than twelve weeks from the date of receipt of certified copy of this order. All rights and contentions of the parties are kept open.