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1996 (3) TMI 479 - HC - VAT and Sales Tax
Issues:
1. Interpretation of branch transfers as sales under the Karnataka Sales Tax Act.
2. Inclusion of turnover from food and aerated waters in taxable turnover without sufficient evidence.
Analysis:
1. The appellant, holding CL-1 and CL-9 licenses under the Karnataka Excise Act, faced assessment for the year 1990-91. The assessing authority accepted branch transfers from CL-1 to CL-9 license premises as non-taxable. However, the revisional authority treated these transfers as sales, increasing the taxable turnover. The High Court held that transfers between the appellant's own establishments cannot be considered sales, emphasizing the lack of separate entities and the impossibility of selling to oneself. The revisional authority's error in adding turnover from these transfers as sales was corrected, and the original assessment was upheld.
2. The revisional authority also added Rs. 2,25,000 to the taxable turnover, alleging sales of food and aerated waters at the CL-9 premises based on license conditions. The High Court found no factual evidence supporting this addition, highlighting the lack of proof regarding actual sales of food items. The assumption that the appellant must have sold food due to the license conditions was deemed unfounded without concrete evidence. The Court emphasized that any violation of license conditions should be addressed by the excise authorities, and the revisional authority's inclusion of Rs. 2,25,000 without basis was overturned. Consequently, the addition to the taxable turnover was deemed unjustified, and the appeal was allowed, setting aside the revisional authority's order.