1985 (4) TMI 266 - HC - VAT and Sales Tax

Summary

Issues Involved:
- Levy of additional tax under Section 6-B of the Karnataka Sales Tax Act (K.S.T. Act) on sales tax levied under the Central Sales Tax Act (C.S.T. Act).
- Legislative history and nature of the levy under Section 6-B.
- Applicability of Section 8 of the C.S.T. Act to the additional tax under Section 6-B of the K.S.T. Act.
- Validity of notices issued for additional tax under Section 6-B on inter-State sales or declared goods.

Detailed Analysis:

1. Levy of Additional Tax under Section 6-B of the K.S.T. Act on Sales Tax Levied under the C.S.T. Act:
The core issue was whether the additional tax under Section 6-B of the K.S.T. Act could be levied on sales tax levied under the C.S.T. Act. The petitioners, registered dealers under both Acts, challenged the actions of the assessing authorities proposing to levy additional tax on inter-State sales turnovers.

2. Legislative History and Nature of the Levy under Section 6-B:
The court examined the legislative history of Section 6-B, noting its amendments over time:
- 1971 Act: Introduced Section 6-B, levying an additional tax of two paise in the rupee on sales or purchase tax.
- 1975 Act: Modified the levy to apply only to dealers with turnovers exceeding ten lakhs, at higher rates.
- 1977 Act: Changed the nature of the levy to a turnover tax on the total turnover.
- 1981 and 1982 Acts: Further amendments continued the turnover tax nature, excluding inter-State sales and declared goods from the levy.

The court emphasized that Section 6-B, as a charging section, must be construed strictly. It concluded that Section 6-B levied additional tax on sales or purchases under the K.S.T. Act only, not on inter-State sales under the C.S.T. Act.

3. Applicability of Section 8 of the C.S.T. Act:
The court analyzed Section 8 of the C.S.T. Act, which stipulates rates of taxes on inter-State sales or purchases but is not a charging section. Section 8 does not declare that additional taxes under a State enactment like Section 6-B of the K.S.T. Act apply to inter-State sales. Thus, Section 8 did not support the Revenue's case.

4. Validity of Notices Issued for Additional Tax under Section 6-B:
The court examined the notices issued to the petitioners, which proposed additional tax on inter-State sales turnovers. It found that these notices were without jurisdiction as Section 6-B did not intend to levy additional tax on inter-State sales or declared goods.

Conclusion:
The court upheld the order of Rama Jois, J., in Writ Petition No. 12324 of 1982, which quashed the notice proposing additional tax on taxes payable under the C.S.T. Act. The court dismissed Writ Appeal No. 2765 of 1982 and quashed the impugned notices in the writ petitions to the extent they proposed additional tax on inter-State sales or declared goods.

Orders and Directions:
1. Dismissal of Writ Appeal No. 2765 of 1982: The court upheld the order of Rama Jois, J., in Writ Petition No. 12324 of 1982.
2. Quashing of Notices: The court quashed the notices impugned in the writ petitions in so far as they related to the levy of additional tax under Section 6-B of the K.S.T. Act on inter-State sales or declared goods.
3. Liberty for Determination: The validity of the notices in other respects, if any, was left for determination before the authorities constituted under the Act, in accordance with law.
4. Costs: The parties were directed to bear their own costs in all these cases.

This comprehensive analysis ensures that the legal terminology and significant phrases from the original text are preserved, providing a thorough understanding of the judgment and its implications.