- 1 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF FEBRUARY, 2026 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE K. V. ARAVIND SALES TAX APPEAL No. 1 OF 2025 C/W SALES TAX APPEAL No. 3 OF 2025 SALES TAX APPEAL No. 4 OF 2025 IN STA No. 1/2025 BETWEEN: 1. L AND T AND BRAPL JV PKG-2, No.1-3-278/9A, R.R COLONY, ASHAPUR ROAD, RAICHUR - 584 101, KARNATAKA, REPRESENTED HEREIN BY SENIOR MANAGER-ACCOUNTS, MR. THANGRAJ BALA CHANDRA, POWER OF ATTORNEY HOLDER. …APPELLANT (BY SRI.T. SURYA NARAYAN, SENIOR ADVOCATE FOR SMT. TANMAYEE RAJKUMAR, ADVOCATE) AND: 1. THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES (SMR)-I, 7TH FLOOR, VANIJYA THERIGE KARYALAYA, Digitally signed by VINUTHA B S Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 KALIDASA MARG, 1ST MAIN, GANDHINAGAR, BANGALORE - 560 009. …RESPONDENT (BY SRI ADITYA VIKRAM BHAT, AGA) THIS STA IS FILED UNDER SECTION 66(1) OF KARNATAKA VALUE ADDED TAX ACT 2003 AGAINST THE ORDER DATED 29.10.2024 PASSED IN ADCOM (SMR)- 1/KLB/SMR-14/2023-24 ON THE FILE OF THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES, (SMR) -I, BENGALURU SETTING ASIDE THE RE-ASSESSMENT ORDER DATED 7.05.2021 IN VAT.AP.No.67/2020-21 PASSED BY THE JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS)-1, KALBURGI AND MODIFYING THE ORDER DATED 30.09.2020 PASSED BY THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT-1) KALBURGI FOR THE TAX PERIODS FROM APRIL 2014 TO MARCH -2015. IN STA No. 3/2025 BETWEEN: 1. L AND T AND BRAPL JV PKG-2, No.1-3-278/9A, R.R COLONY, ASHAPUR ROAD, RAICHUR - 584 101, KARNATAKA, REPRESENTED HEREIN BY SENIOR MANAGER-ACCOUNTS, MR. THANGRAJ BALA CHANDRA, POWER OF ATTORNEY HOLDER. …APPELLANT (BY SRI T. SURYA NARAYAN, SENIOR ADVOCATE FOR SMT. TANMAYEE RAJKUMAR, ADVOCATE) - 3 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 AND: 1. THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES (SMR)-I, 7TH FLOOR, VANIJYA THERIGE KARYALAYA, KALIDASA MARG, 1ST MAIN, GANDHINAGAR, BANGALORE - 560 009. …RESPONDENT (BY SRI ADITYA VIKRAM BHAT, AGA) THIS STA IS FILED UNDER SECTION 66(1) OF KARNATAKA VALUE ADDED TAX ACT 2003 AGAINST THE ORDER DATED 5.11.2024 PASSED IN ADCOM (SMR)- 1/KLB/SMR-09/2024-25 ON THE FILE OF THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES, (SMR) -I, BENGALURU MODIFYING THE RE-ASSESSMENT ORDER DATED 30.03.2019 PASSED BY THE COMMERCIAL TAX OFFICER(AUDIT-1), RAICHUR FOR THE TAX PERIODS FROM APRIL 2013 TO MARCH-2014. IN STA No. 4/2025 BETWEEN: 1. L AND T AND BRAPL JV PKG-3, No.1-3-278/9A, R.R COLONY, ASHAPUR ROAD, RAICHUR - 584 101, KARNATAKA, REPRESENTED HEREIN BY SENIOR MANAGER-ACCOUNTS, MR. THANGRAJ BALA CHANDRA, POWER OF ATTORNEY HOLDER. …APPELLANT (BY SRI T. SURYA NARAYAN, SENIOR ADVOCATE FOR SMT. TANMAYEE RAJKUMAR, ADVOCATE) - 4 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 AND: 1. THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES (SMR)-I, 7TH FLOOR, VANIJYA THERIGE KARYALAYA, KALIDASA MARG, 1ST MAIN, GANDHINAGAR, BANGALORE - 560 009. …RESPONDENT (BY SRI ADITYA VIKRAM BHAT, AGA) THIS STA IS FILED UNDER SECTION 66(1) OF KARNATAKA VALUE ADDED TAX ACT 2003 AGAINST THE ORDER DATED 30.10.2024 PASSED IN ADCOM (SMR)- 1/KLB/SMR-14/2023-24 ON THE FILE OF THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES, (SMR) -I, BENGALURU SETTING ASIDE THE RE-ASSESSMENT ORDER DATED 08.01.2020 IN VAT.AP.No.115/2019-20 PASSED BY THE JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS)-1, KALBURGI AND MODIFYING THE ORDER DATED 29.11.2019 PASSED BY THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT) KALBURGI FOR THE TAX PERIODS FROM APRIL 2015 TO MARCH -2016. THESE APPEALS COMING ON FOR ADMISSION THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and HON'BLE MR. JUSTICE K. V. ARAVIND - 5 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE K.V. ARAVIND) Heard Sri. T. Suryanarayan, learned Senior counsel for Smt. Tanmayee Rajkumar, learned counsel for the appellant and Sri. Aditya Vikram Bhat, learned AGA for respondent in all these appeals. 2. Learned counsel appearing for the parties have advanced common submissions, and reliance has been placed on common documents. Hence, we proceed to dispose of these appeals by a common order. 3. The facts in STA No.3/2025 are referred to for the sake of convenience. 4. The appellant is a joint venture between M/s. Larsen and Toubro Ltd. (for short, ‘L&T’) and M/s. Bharat Rail Automations Pvt. Ltd. (for short, ‘BRAPL’) (collectively referred to as the ‘JV partners’). The joint venture is engaged in the business of executing works involving design, supply, erection, testing and commissioning in relation to railway signalling, telecommunication and electrification, along with associated - 6 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 civil engineering works, for M/s. Rail Vikas Nigam Limited (for short, ‘RVNL’) in the States of Karnataka and Andhra Pradesh. 4.1 The work awarded to the appellant–JV by RVNL was, in turn, subcontracted to its JV partners, namely L&T and BRAPL. In respect of the Assessment Years 2013–14, 2014–15 and 2015–16, which are the subject matter of the present appeals, the entire work was subcontracted and executed by the said JV partners. 4.2 The prescribed authority withheld VAT Tax Deducted at Source (TDS) on the ground that the same had not been included in the turnover. The appellant, however, treated the entire contract value as exempt turnover, contending that the whole of the work had been subcontracted and executed by the subcontractors and that the transfer of property in goods had taken place from the subcontractors directly to the contractee. 4.3 Reassessment proceedings were initiated, and an order came to be passed accepting the claim of turnover - 7 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 exemption. The said order was thereafter subjected to rectification proceedings. 4.4 Subsequently, suo motu revisional proceedings were initiated by the Joint Commissioner of Commercial Taxes (JCCT) on the ground that the reassessment order was erroneous insofar as it had granted exemption to the appellant in respect of the value of contracts executed by the subcontractors. However, upon consideration of the submissions made by the appellant, the Suo Motu Revisional Authority dropped the revisional proceedings and allowed full exemption of the turnover, as claimed by the appellant in respect of the subcontracted work. 4.5 Thereafter, proceedings under Section 64 of the Karnataka Value Added Tax Act, 2003 (for short, ‘KVAT Act’) were initiated on the premise that the reassessment orders as well as the suo motu revisional orders passed by the Joint Commissioner were erroneous and prejudicial to the interests of the Revenue. The order passed under Section 64 of the KVAT Act is impugned in the present appeal. - 8 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 5. The appeals raise the following substantial questions of law: In STA No.1/2025: (1) the Respondent's exercise of jurisdiction under section 64 of the KVAT Act to revise the FAA i.e. Joint Commissioner (Appeals) order 07.05.2021 on the ground that the same is erroneous and prejudicial to the interests of the revenue, is valid and legal? (il) the Respondent's exercise of jurisdiction under section 64 of the KVAT Act to revise the FAA by re- appraising the same evidence and thereby substituting his opinion over the opinion of FAA, is valid and legal? (iii) the Respondent was right in directing disallowance of the exemption of the sub- contractor's turnover on the basis that the Appellant had not complied with the conditions specified in Rule 3(2)(i-1), by ignoring that the Appellant was not required to comply with the said rule since it had claimed exemption as per the ratio laid down by the Hon'ble Supreme Court in the case of State of Andhra Pradesh v. Larsen & Toubro (supra) and Hon'ble Madras High Court in Larson & Toubro Limited vs The Assistant Commissioner (CT) and The State of Tamil Nadu (supra)? (iv) the Respondent was right in rejecting the refund of TDS credit amounting to Rs. 3,23,467/- on the ground that the TDS certificates were issued to the Appellant instead of RVNL, when the substantial compliance viz. payment of TDS amount was already made to the Government by RVNL? (v) the Respondent was right in directing the Assessing Authority to levy interest and penalty?" - 9 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 IN STA No.3/2025: " (i) the Respondent's exercise of jurisdiction under section 64 of the KVAT Act to revise the Joint Commissioner's order dated 19.07.2023 on the ground that the same is erroneous and prejudicial to the interests of the revenue, is valid and legal? (ii) the Respondent's exercise of jurisdiction under section 64 of the KVAT Act to revise the FAA by re-appraising the same evidence and thereby substituting his opinion over the opinion of FAA, is valid and legal? (iii) the Respondent was right in directing disallowance of the exemption of the sub- contractor's turnover on the basis that the Appellant had not complied with the conditions specified in Rule 3(2)(i-1), by ignoring that the Appellant was not required to comply with the said rule since it had claimed exemption as per the ratio laid down by the Hon'ble Supreme Court in the case of State of Andhra Pradesh v. Larsen & Toubro (supra) and Hon'ble Madras High Court in Larson & Toubro Limited vs The Assistant Commissioner (CT) and The State of Tamil Nadu (supra)? (iv) the Respondent was right in rejecting the refund of TDs credit amounting to Rs.39,80,998/ on the ground that the TDS certificates were Issued to the Appellant instead of RVNL, when the substantial compliance viz, payment of TDS amount was already made to the Government by RVNL? (V) the Respondent was right in directing the Assessing Authority to levy interest and penalty?" - 10 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 IN STA No.4/2025: (i) the Respondent's exercise of jurisdiction under section 64 by issuing a notice dated 08.02.2024 under the said section after four years from the date of passing of the order sought to be revised i.e. Joint Commissioner (Appeals) order dated 08.01.2020 is barred by limitation and therefore, is valid and legal? (ii) the Respondent's exercise of jurisdiction under section 64 of the KVAT Act to revise the FAA i.e. Joint Commissioner (Appeals) order 08.01.2020 on the ground that the same is erroneous and prejudicial to the interests of the revenue, is valid and legal? (iii) the Respondent's exercise of jurisdiction under section 64 of the KVAT Act to revise the FAA by re-appraising the same evidence and thereby substituting his opinion over the opinion of FAA, is valid and legal? (iv) the Respondent was right in directing disallowance of the exemption of the sub- contractor's turnover on the basis that the Appellant had not complied with the conditions specified in Rule 3(2)(i-1), by ignoring that the Appellant was not required to comply with the said rule since it had claimed exemption as per the ratio laid down by the Hon'ble Supreme Court in the case of State of Andhra Pradesh v. Larsen & Toubro (supra) and Hon'ble Madras High Court in Larson & Toubro Limited vs The Assistant Commissioner (CT) and The State of Tamil Nadu (supra)? (v) the Respondent was right in directing the Assessing Authority to levy interest and penalty? - 11 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 6. Sri T. Suryanarayan, learned Senior Counsel appearing for the appellant, submits that L&T and BRAPL had constituted a joint venture and that the contract awarded by RVNL was entirely subcontracted to the said JV partners. The entire work under the contract was executed by the subcontractors on a back-to-back basis. 6.1 It is further submitted that the subcontractors had declared the entire turnover arising out of the execution of the contract. The TDS effected by RVNL was claimed as refund by the appellant–JV. In the reassessment proceedings as well as in the suo motu revisional proceedings, the said claim was accepted. Learned Senior Counsel contends that the very same issue has once again been reopened and revised under Section 64 of the KVAT Act. It is submitted that, since the entire turnover has already been subjected to tax at the hands of the subcontractors, the withholding of the refund is unjustified and contrary to law. 7. Sri Aditya Vikram Bhat, learned Additional Government Advocate, on instructions from Smt. R. Tharadevi, Assistant Commissioner of Commercial Taxes (SMR)-1, submits - 12 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 that the entire tax liability has been discharged by the subcontractors upon declaration of their respective turnover. In view of the said factual position, learned AGA fairly submits that the orders impugned, passed under Section 64 of the KVAT Act, may be set aside. 8. Having considered the submissions made by learned counsel appearing for the parties, and in view of the fair submission made by the learned Additional Government Advocate, we are of the considered view that it is unnecessary to examine the contentions urged on merits, as any such exercise would be purely academic. 9. In light of the submission made by the learned Additional Government Advocate, and having regard to the fact that the entire contract work was subcontracted and that the subcontractors have included the same in their turnover and discharged the tax liability thereon, the orders passed under Section 64 of the KVAT Act cannot be sustained. 10. Accordingly, the following order is passed: - 13 - HC-KAR NC: 2026:KHC:9218-DB STA No. 1 of 2025 C/W STA No. 3 of 2025 STA No. 4 of 2025 O R D E R (i) The appeals are allowed. (ii) The order dated 29.10.2024 passed in No.ADCOM(SMR)-1/KLB/SMR-14/2023- 24 for the Assessment Year 2014-15 in STA No.1/2025, the order dated 05.11.2024 in No.ADCOM(SMR)- 1/KLB/SMR-09/2024-25 for the Assessment Year 2013-14 in STA No.3/2025 and the order dated 30.10.2024 passed in No.ADCOM(SMR)- 1/KLB/SMR-16/2023-24 for the Assessment Year 2015-16 in STA No.4/2025 are hereby set aside. (iii) No order as to costs. Sd/- (S.G.PANDIT) JUDGE Sd/- (K. V. ARAVIND) JUDGE VBS/List No.: 1 Sl No.: 12