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2012 (9) TMI 894 - HC - VAT and Sales TaxWhether Appellate Tribunal was legally justified in restoring levy of entry tax on diesel brought into local area for use as raw material/input in the generation of electrical energy which is exempted from tax levy under entry Sl. No. 15 of the Second Schedule to the Karnataka Entry Tax Act? Whether levy of entry tax at two per cent in respect of hexane which is an input used in the extraction of solvent oil is legally justified as against the rate of tax at one per cent applicable under entry 80 of the First Schedule to the Karnataka Tax on Entry of Goods Act, 1979 read with Sl. No. 3 of Government Notification No. FD CET 98 (2) dated March 31, 1998? Held that:- The assessee has caused entry of diesel into local area, which is a scheduled goods under entry 67 of the First Schedule under the KTEG Act. The assessee is manufacturing and selling solvent oil from the oil-cake from its plant. The assessee has caused entry of diesel for generating the electric energy for running its machine. The assessee has never sold electrical energy. Hence, diesel cannot be treated as raw material or component part or an input used in the manufacture of some other goods. Hence, we find that there is no infirmity or irregularity in the order passed by the Karnataka Appellate Tribunal confirming the order passed by the assessing authority. With regard to the second question, the assessing authority has not noticed the notification dated March 31, 1998 wherein it was specifically mentioned that the raw materials, component parts and input which are used in the manufacturing of intermediate and finished products other than those specified in the Second Schedule is at the rate of one per cent. The assessing authority as well as the Karnataka Appellate Tribunal has not considered the said notification. Hence, the order passed by the assessing authority is required to be modified and the tax has to be levied on hexane at the rate of one per cent. Revision partly allowed.
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