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STA No. 20 of 2025

Reserved on : 12.03.2026 Pronounced on : 09.04.2026

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9^TH DAY OF APRIL, 2026

PRESENT

THE HON'BLE MR. JUSTICE S.G.PANDIT

AND

THE HON'BLE MR. JUSTICE K. V. ARAVIND

SALES TAX APPEAL No. 20 OF 2025

BETWEEN:

1. M/S. EMJAY ENGINEERING COMPANY, No.70, 1^ST CROSS, 2^ND A MAIN,

DOMLUR LAYOUT, BENGALURU-560 071, (REPRESENTED BY ITS PROPRIETRIX)

SMT. MEENAKSHI JACOB, AGED ABOUT 71 YEARS.

…APPELLANT (BY SRI K. M. SHIVAYOGISWAMY, ADVOCATE)

Digitally signed by VINUTHA B AND:

S Location: High Court of 1. THE ADDITIONAL COMMISSIONER OF

Karnataka COMMERCIAL TAXES, (SMR)-3, V.T.K.-1, 8^TH FLOOR,

GANDHI NAGAR, BENGALURU-560 009.

…RESPONDENT (BY SRI ADITYA VIKRAM BHAT, AGA)

THIS STA IS FILED UNDER SECTION 64(1) OF KARNATAKA VALUE ADDED TAX ACT 2003 AGAINST THE ORDER DATED 30.03.2025 PASSED IN CAS No.345441054 AD SMR ON THE FILE OF THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES, (SMR) - 3, BENGALURU AND MODIFYING

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STA No. 20 of 2025

THE ORDER PASSED BY THE FAA VIDE APPEAL No.KVAT.A.P. 81/2020-21 DATED 22.01.2021 BEING ERRONEOUS ILLEGAL AND IMPROPER INSOFAR AS PREJUDICIAL TO THE INTEREST

OF THE GOVERNMENT REVENUE.

THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR JUDGMENT, COMING ON FOR PRONOUNCEMENT THIS DAY,

K.V. ARAVIND J., DELIVERED THE FOLLOWING:-

CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and

HON'BLE MR. JUSTICE K. V. ARAVIND

C.A.V. JUDGMENT

(PER: HON'BLE MR. JUSTICE K. V. ARAVIND)

Heard Sri K.M. Shivayogiswamy, learned counsel for the

appellant-Assessee and Sri Aditya Vikaram Bhat, learned

Additional Government Advocate for the respondent-Revenue.

2. This appeal is by the assessee impugning the order dated 30.03.2025 passed under Section 64(1) of the Karnataka Value Added Tax Act, 2003 [for short, ‘the Act’] by the Additional Commissioner of Commercial Taxes (SMR)-3, Bengaluru [Suo

Motu Revisional Authority (SMR)].

3. The following questions of law are raised for

consideration;

"(i) WHETHER on facts and circumstances of the case the order of the Appellate Authority is erroneous and prejudicial to the interest of Government Revenue

to invoke Section 64(1) of the KVAT Act?

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STA No. 20 of 2025

(ii) WHETHER on facts and circumstances of the case, the revisional authority was right in setting aside the appeal order by modifying the appeal order

restricting the Input Tax Credit?"

4. The brief facts are that the Deputy Commissioner of Commercial Taxes, Bengaluru [hereinafter referred to as the ‘Assessing Authority’], concluded the reassessment proceedings by order dated 20.11.2020 under Section 39(1) of the Act for the tax periods from April 2017 to June 2017, rejecting the input tax credit (ITC) claim of Rs.3,62,723/-. The ITC was denied on the ground that the supplying dealers had either filed NIL returns, declared lesser turnover, or had not uploaded the details in e-upass, and also on the ground that the assessee had effected purchases from a composition dealer, on which

input tax is not allowable.

4.1 Aggrieved by the reassessment order, the assessee preferred an appeal before the Joint Commissioner of Commercial Taxes (Appeals)-5, Bengaluru [hereinafter referred to as the ‘Appellate Authority’]. The Appellate Authority, by order dated 22.01.2021, allowed the appeal. Thereafter, the SMR, in exercise of suo motu revisional jurisdiction under Section 64(1) of the Act, revised the order of the Appellate

Authority.

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STA No. 20 of 2025

4.2 The SMR, noticing that the selling dealers had filed NIL returns implying that no output tax had been admitted, held that the assessee was disentitled to the ITC claimed, except insofar as the supplies were found to have been declared, in which case the ITC was extended. The SMR concluded that the order of the Appellate Authority was erroneous, illegal, improper and prejudicial to the interest of the Government revenue. Accordingly, the Assessing Authority was directed to re-compute the turnover tax liability and to issue a revised

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