The Karnataka High Court while settling all aspects of input tax credit (ITC) claims has held that ordinarily, the claim for Input Tax Credit has to be made in the Return or Revised Return only. A claim otherwise is an exception and bona fide of the same has to be demonstrated.
The bench of Justice Krishna S Dixit and Justice G Basavaraja has observed that when underclaim of ITC is made in the Return/Revised Return due to bona fide mistake of adopting inapplicable rates of tax only, it is permissible to seek rectification by making a representation provided that the foundational fact matrix is already available in the Return/Revised Return.
The bench stated that no rectification whatsoever can be sought for, once the assessment/reassessment proceedings are concluded or that the limitation period otherwise has expired.
The bench has also clarified that if the assessee during the course of re- assessment proceedings makes a claim for Input Tax Credit, the same cannot be disallowed only on the ground that the claim of the Assessee is disadvantageous to the State Exchequer.
The bench stated that if the reassessed tax is more than what is payable, then the same has to be recovered from the Assessee along with admissible interest/penalty; as a corollary of this, what is paid is more than what is payable on reassessment, then the claim for Input Tax Credit has to be favoured if that is made before the conclusion of re- assessment proceedings.
The department has preferred these Revision Petitions for assailing the Appellate Tribunal’s orders whereby, respondent-Assessee’s appeals having been favoured, he has been granted deduction of Input Tax Credit at the rate admissible in law although what was claimed in the Returns filed by him, was less than that.
The department contended that filing of Returns is a mandate of law. There is a format prescribed for that and it has a column relating to Input Tax Credit; unless it is specifically claimed in the Return itself or at least in the revised Return, benefit of the kind cannot be granted. As a corollary, grant of benefit cannot exceed the claim specified in the Return. A default in this regard cannot be rewarded. In compliance with the conditions is a must. There is a statutory limitation for making the claim for Input Tax Credit. After all, Input Tax Credit being a concession, cannot be claimed as a matter of right.
The assessee contended that one of the avowed objects of 2003 Act is to grant benefit of Input Tax Credit. Substantive provisions are enacted in that direction; delayed refund of Input Tax Credit attracts interest; in the scheme of Article 265 of the Constitution of India, State cannot retain money belonging to subjects. Input Tax Credit is not something like gratis, but partakes the character of State liability. Therefore, Input Tax Credit is a concession, and is misconceived. The machinery provisions of a statute cannot override its substantive provisions
The court dismissed the writ petitions being devoid of merits.
Case Details
Case Title: The State Of Karnataka Versus Tractors And Farm Equipment Limited
Case No.: STRP NO.26 OF 2023 C/W STRP NO.4 OF 2024
Date: 03/03/2025
Counsel For Petitioner: Aditya Vikram Bhat
Counsel For Respondent: T Surya Narayana
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