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2012 (8) TMI 871 - KARNATAKA HIGH COURTTaxation of industrial inputs - Whether the assessee has violated the declaration furnished by him and is liable to suffer penalty under section 5A(3) of the Karnataka Sales Tax Act? Held that:- The section 5A(3) envisages two types of cases. The first situation being a person having no manufacturing unit, purchases the inputs by making false declaration under sub-section (1) to have the benefit of concessional tax. In the second case, a person having manufacturing unit, purchases inputs by furnishing declaration under subsection (1) and pays only concessional tax. Later on, sells away such inputs contrary to such declaration. In both the cases, the person can be levied penalty after being given opportunity. In the instant case, section 5A(3)(i) of Karnataka Sales Tax Act does not apply, because the assessee has got a manufacturing unit. In the instant case, he has sold the granite after processing. Processing of granite may not be the manufacturing activity. But however, the assessee has not violated the provisions of section 5A(1) and 5A(3)(ii), in other words, has not sold the goods in violation of the declaration. Therefore, levy of penalty is bad in law. The appeal is allowed.
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