Claiming Higher Contract Amount And Then Complaining That Tax Authorities Premised Decision On Same Amounts To Defrauding State: Karnataka High Court
The appeal before the Karnataka High Court was filed by the assessee under Section 66(1) of the Karnataka Value Added Tax Act, 2003, challenging the order passed by the respondent- Additional Commissioner of Commercial Taxes.

While upholding the order of the Additional Commissioner of Commercial Taxes, the Karnataka High Court has held that claiming a higher contract amount by inflated figures and thereafter complaining that the Tax authorities have premised their decision on such figures virtually amounts to defrauding the State.
The appeal before the High Court was filed by the assessee under Section 66(1) of the Karnataka Value Added Tax Act, 2003, challenging the order passed by the respondent- Additional Commissioner of Commercial Taxes.
The Division Bench comprising Justice Krishna S Dixit and Justice Ramachandra D. Huddar observed, “It is not that the assessee had not put his signatures to the Returns and Records filed before the Revenue, in a normative way. It is also not that the Tax Consultant would have been benefited by the inflated figures stated in the Return; obviously, it was the assessee who was the beneficiary. Claiming higher contract amount by inflated figures and thereafter complaining that the Tax authorities have premised their decision on such figures, virtually amounts to defrauding the State, in two-ways. Such an assessee does not deserve any relief at the hands of this Court.”
Advocate Sathyanarayana T. R. represented the Petitioner, while AGA Aditya Vikram Bhat represented the Respondent.
Reasoning
The Bench found that the appeal was structured on ‘Substantial Questions of Law’ that were incoherently framed. “Firstly, the questions of law are haphazardly framed and they lack coherence both in terms of law and language. Secondly, these questions are not of law inasmuch as, to answer them, turning the pages of statute book would not come to aid. Despite taking us through the Paper Book of the appeal, we are not shown which finding in the impugned order is perverse that is to say contrary to evidence borne out by record or which of the observations in the impugned order are made without evidentiary basis”, it said.
The Bench rejected the assessee’s argument that his client was not given a reasonable opportunity to produce relevant evidentiary material such as books of accounts after noting that despite granting the opportunity, the assessee failed to avail the same. The Bench made it clear that claiming a higher contract amount by inflated figures and complaining that the Tax authorities have premised their decision on such figures amounts to defrauding the State.
It was further held that the argument that for the fraud committed by the Tax Consultant, the assessee should not be made to suffer was too broad a proposition to accept. The Bench affirmed that a Tax Consultant is an Agent of the assessee, notwithstanding the professional elements involved in the Act. The Court also discarded the contention that the respondent had approached the matter with a prejudicial mind. “Why a high functionary of the State who acts quasi-judicially in deciding the tax liability of the assessee should be presumed to be prejudicial, remains unanswered”, it said.
Finding that the Additional Commissioner had judiciously considered all contentions of the assessee as reflected in the impugned order, the Bench dismissed the Petition.
Cause Title: M/S Yellalinga Electricals v. The Additional Commissioner of Commercial Taxes (Neutral Citation: 2025:KHC:11280-DB