Justice SR Krishna Kumar on the excessive courtroom, by a July judgement, the copy of which is obtainable now, has additionally ordered the division to pay curiosity on the relevant fee to Flipkart India in money on your complete deposit quantity of Rs 23 crore from the date of deposit to the date of refund.
A senior official of the industrial taxes division stated the difficulty right here was whether or not curiosity was payable by the federal government on refund to the supplier, if the fee by the supplier was made utilizing the input tax credit (ITC) below the provisions of Karnataka VAT Act. The division is inspecting the courtroom order.
A protracted-drawn dispute arose after the industrial tax authorities handled cell phone chargers as an unscheduled commodity and taxed them at a better fee, elevating a mixed demand of Rs 23.01 crore. The division did so by the use of 4 separate reassessment orders in 2016 and 2017 below the Karnataka VAT Act, 2003, for the tax interval from 2011-12 to 2014-15.
Sad with the evaluation, Flipkart India filed appeals earlier than the division authorities by depositing Rs 6.90 crore (30% of the demand) in money as required below VAT legal guidelines. When the division dismissed the attraction, it challenged the dismissal earlier than the Karnataka Appellate Tribunal in July 2019 after depositing the remaining tax demand of Rs 16.11 crore (70% of the tax demand) utilizing its enter tax credit score (ITC) accessible within the digital credit score ledger (ECL).
The Tribunal, nonetheless, allowed Flipkart’s appeals in March 2022, and the HC division bench, too, later dismissed the gross sales tax revision petition filed by the division. Thus, Flipkart India grew to become entitled to the refund of your complete 100% of the pre-deposit it paid to the division.
The division, nonetheless, refunded solely Rs 6.90 crore (30% of the tax demand) in money and continued to retain Rs 16.11 crore (70% of the tax demand), which Flipkart discharged utilizing its ITC. The division, nonetheless, didn’t reply to Flipkart India’s requests to refund Rs 16.11 crore together with the relevant fee of curiosity.
Justice Krishna Kumar, in his 52-page order, wrote: “…I’m of the thought of opinion that the petitioner (Flipkart) is entitled to your complete 70% pre-deposit made by way of ITC/ECL by the use of refund in CASH from the respondents who’re liable to repay/refund your complete 70% pre-deposit paid by way of ITC/ECL again to the petitioner along with curiosity as a consequence of delayed refund inside a stipulated time-frame.”
Based on one touch upon microblogging web site X, the excessive courtroom has supplied vital readability and aid for companies concerned in tax disputes, notably on pre-deposits and refunds. The courtroom has dominated that if a refund is admissible, it should be paid in money, no matter whether or not the unique pre-deposit was made in money or by utilizing enter tax credit score.
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