2016 (7) TMI 1467 - HC - VAT and Sales Tax

Validity of N/N. FD 21 CSL 2014(II) dated February 28 2014 - Discriminatory nature of notification or not? - KVAT Act 2003 - Levy of VAT on Liquor - classification of dealers based on value addition criteria - Held that - The issue is identical to the case of RENUKAMBA Versus STATE OF KARNATAKA AND ANOTHER 2016 (4) TMI 1325 - KARNATAKA HIGH COURT where the petition was dismissed by holding that The classification of dealers based on value addition criteria for the purpose of tax levy and exempting the dealers based on area criteria cannot be held to be discriminatory - petition disposed off in same terms.

Summary

Issues:
1. Interpretation of a judgment by a co-ordinate Bench regarding license fee discrepancies for liquor sellers in urban and rural areas.
2. Classification of dealers based on value addition and area criteria for tax levy on liquor sales.
3. Rejection of contentions regarding discrimination in taxation based on different license types and locations.

Analysis:
1. The High Court considered a controversy regarding the interpretation of a judgment by a co-ordinate Bench in a previous case involving license fee differentiation for liquor sellers in urban and rural areas. The court noted that the present case was similar to the one decided earlier and agreed with the reasoning and decision of the co-ordinate Bench. The court emphasized that the present writ petitions should be dismissed based on the same grounds as the previous judgment.

2. The court delved into the classification of dealers based on value addition and area criteria for tax levy on liquor sales. It highlighted the exemption of bar and restaurants in rural areas from certain taxes compared to other license holders based on economic considerations. The court explained that the differentiation in taxation was not discriminatory as it was based on the economic wisdom of the State Legislature to capture value addition in liquor sales. The judgment emphasized that the classification of dealers based on value addition criteria for tax levy and exemption based on area criteria was not discriminatory.

3. The court addressed the contentions raised by the petitioners regarding discrimination in taxation based on different license types and locations. It rejected the arguments, stating that the contentions were without merit. The court proceeded to dismiss the writ petitions, emphasizing that the observations made by the learned single judge in the previous judgment were applicable to the present case as well. The court declined the suggestion to refer the matter to a Division Bench and allowed the petitioners to file an appeal if desired, in accordance with the law. Ultimately, the court dismissed the writ petitions, aligning with the previous judgment's conclusions.