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Dhanji Kalyanji and Co. Vs. the State of Karnataka - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKarnataka High Court
Decided On
Case NumberSales Tax Revision Petition No. 73 of 1975
Judge
Reported in1978(2)KarLJ117; [1978]42STC267(Kar)
ActsCentral Sales Tax Act, 1956 - Sections 15; Karnataka Sales Tax Act, 1957 - Sections 5(4) and 25A
AppellantDhanji Kalyanji and Co.
RespondentThe State of Karnataka
Appellant AdvocateB.V. Katageri, Adv.
Respondent AdvocateS. Rajendra Babu, High Court Government Pleader
Excerpt:
.....the nature of the property. hence, the matter requires to be reviewed. review petiton was allowed and the the judgment dated 24.7.2007 in rsa no. 955/2001 was restored to file for being heard by the appropriate bench. - a further appeal to the karnataka sales tax appellate tribunal, bangalore, also failed. the fact that the amendment of clause (b) of section 15 was not like some other provisions given retrospective effect, would not materially affect the position......act on the ground that the said goods, which were declared goods, had been sold in the course of inter-state trade or commerce and, therefore, they were liable to be exempted from assessment in view of the decision of this court in munshi abdul rahiman & brothers v. commercial tax officer, i circle, hubli ([1967] 20 s.t.c. 89). the assessee had not paid tax under the central sales tax act even though the goods in question had been, admittedly, sold in the course of inter-state trade. after the decision in the case of munshi abdul rahiman and brothers ([1967] 20 s.t.c. 89), section 15(b) of the central sales tax act, 1956, was amended by the central sales tax (amendment) act, 1972, with effect from 1st october, 1958, and section 5(4) of the state act was amended by the karnataka sales.....
Judgment:
ORDER

Venkataramiah, J.

1. The petitioner was an assessee under the Karnataka Sales Tax Act, 1957 (hereinafter referred to as 'the State Act') during the assessment year 1965-66. While the order of assessment under the State Act was passed, the purchase turnover of groundnuts amounting to Rs. 5,58,408 and the purchase turnover of cotton amounting to Rs. 60,387 were not assessed even though they were assessable under sub-section (4) of section 5 of the State Act on the ground that the said goods, which were declared goods, had been sold in the course of inter-State trade or commerce and, therefore, they were liable to be exempted from assessment in view of the decision of this Court in Munshi Abdul Rahiman & Brothers v. Commercial Tax Officer, I Circle, Hubli ([1967] 20 S.T.C. 89). The assessee had not paid tax under the Central Sales Tax Act even though the goods in question had been, admittedly, sold in the course of inter-State trade. After the decision in the case of Munshi Abdul Rahiman and Brothers ([1967] 20 S.T.C. 89), section 15(b) of the Central Sales Tax Act, 1956, was amended by the Central Sales Tax (Amendment) Act, 1972, with effect from 1st October, 1958, and section 5(4) of the State Act was amended by the Karnataka Sales Tax (Amendment) Act, 1973, with effect from the commencement of the State Act.

2. After the above amendment section 15(b) of the Central Sales Tax Act reads as under :

'(b) Where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or commerce and tax has been paid under this Act in respect of the sale of such goods in the course of inter-State trade or commerce, the tax levied under such law shall be reimbursed to the person making such sale in the course of inter-State trade or commerce in such manner and subject to such conditions as may be provided in any law in force in that State.'

3. After the amendment, the proviso to section 5(4) of the State Act reads as under :

'Provided that where tax has been paid in respect of the sale or purchase of any of the declared goods under this sub-section and such goods are subsequently sold in the course of inter-State trade or commerce, and tax has been paid under the Central Sales Tax Act, 1956 (Central Act 74 of 1956), in respect of the sale of such goods in the course of inter-State trade or commerce, the tax paid under this Act shall be reimbursed to the person making such sale in the course of inter-State trade or commerce in such manner and subject to such conditions as may be prescribed.'

4. By virtue of the said amendments, which were made with retrospective effect, the exemption that had been allowed by the Commercial Tax Officer while passing the order of assessment under the State Act on the basis of the earlier decision of this court became untenable. The Commercial Tax Officer therefore took action to rectify under section 25-A of the State Act the order of assessment passed earlier. After issuing notice to the assessee and hearing him, the Commercial Tax Officer rectified the mistake by levying tax under section 5(4) of the State Act on the purchase turnovers of groundnuts and cotton referred to above. Aggrieved by the order of rectification the petitioner filed an appeal before the Deputy Commissioner, Commercial Taxes (Appeals), Dharwar. The appeal was dismissed. A further appeal to the Karnataka Sales Tax Appellate Tribunal, Bangalore, also failed. Hence this revision petition.

5. The following facts are undisputed :

(1) That the assessee was the last purchaser of the groundnuts and cotton in question inside the State of Karnataka and the turnovers in respect of them were liable to tax under section 5(4) of the State Act; and

(2) that there has not been any payment of tax under the Central Sales Tax Act in respect of the sales turnover of the goods in question in the course of inter-State trade.

6. The contention of Sri B. V. Katageri, the learned counsel for the petitioner, is that the petitioner had not collected the Central sales tax from the purchasers of the goods in the course of inter-State trade or commerce during the relevant period and that, therefore, no liability to pay Central sales tax would arise. Hence, there was no liability in law to pay any tax under the Central Sales Tax Act. It is, therefore, contended that the order of rectification passed by the Commercial Tax Officer, which is affirmed in the appeals, is not in order. We are not concerned in this case with the question whether there could be a levy under the Central Sales Tax Act in respect of the turnovers of the goods in question and whether the petitioner would be liable to pay any tax under the Central Sales Tax Act. Hence, we cannot examine the tenability of the said contention in this case.

7. Under the proviso to sub-section (4) of section 5 of the State Act, as it stands after the amendment, any tax paid in respect of the sale or purchase of any of the declared goods under sub-section (4) of section 5 of the State Act, would become refundable only on proof of such goods being subsequently sold in the course of inter-State trade or commerce and on proof of payment of tax under the Central Sales Tax Act. On a true construction of the proviso to sub-section (4) of section 5 of the State Act, we are of the view that a dealer who wants to claim the benefit of the proviso to sub-section (4) of section 5 of the State Act should first pay the tax under the Central Sales Tax Act and then claim reimbursement under the said proviso after satisfying the conditions mentioned therein. It is obvious that in order to claim such reimbursement tax must have been paid under the State Act.

8. The petitioner's counsel, however, relying upon the decision of the Supreme Court in Manickam and Co. v. State of Tamil Nadu : [1977]1SCR950 , contended that by the amendment of section 15(b) of the Central Sales Tax Act there was no change brought about in the legal position that existed prior to the amendment. He further urged that the view expressed in the case of Munshi Abdul Rahiman and Brothers ([1967] 20 S.T.C. 89) continued to prevail even after the amendment. In support of the above contention he relied upon the following passage in paragraph 10 of the above decision of the Supreme Court.

'The amended provision makes it plain beyond any pale of controversy that the tax levied under the State Act in respect of declared goods has to be reimbursed to the person making sale of those goods in the course of inter-State trade or commerce in such manner and subject to such conditions as may be provided in the law in force in that State. According to the notes explaining the different clauses appended to the statement of objects and reasons of the Bill, which emerged as the amending Act, the amendment made in clause (b) makes it clear that local sales tax would be reimbursed to the person making the sale in the course of inter-State trade and commerce. The amendment made in clause (b) can thus be taken to be an exposition by the legislature itself of its intent contained in the earlier provision. We are not impressed by the argument of the learned Additional Solicitor-General that the amendment made in clause (b) was intended to mark a departure from the position in law as it existed before the amendment. The fact that the amendment of clause (b) of section 15 was not like some other provisions given retrospective effect, would not materially affect the position. As already mentioned above, the legislature as a result of the amendment, clarified what was implicit in the provisions as they existed earlier.'

9. The learned counsel for the petitioner is not right in his submission, because the Supreme Court made the above observation while deciding the question whether refund of the tax paid under the State Act could be claimed by the person who had paid the tax under the Central Sales Tax Act or by the person who had paid the tax under the sales tax law of the State. Ultimately, the Supreme Court held :

'Looking to all the facts, we are of the view that the appellant-firm is entitled to be paid the amount of sales tax levied under the State Act in respect of the goods sold by it in the course of inter-State trade provided the appellant has paid the sales tax under the Central Act in respect of those sales'.

10. It is thus clear that the above decision is of no assistance to the petitioner.

11. The Commercial Tax Officer was, therefore, right in rectifying the order of assessment passed earlier and levying tax under sub-section (4) of section 5 of the State Act. The petition is dismissed.

12. We, however, made it clear that any other remedy open to the petitioner under law remains unaffected by this judgment.

13. Petition dismissed.


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