2003 (4) TMI 510 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutionality of Section 6-B of the Karnataka Sales Tax Act, 1957.
2. Inclusion of exempted turnover (inter-State and export sales) in total turnover for determining turnover tax rate.
3. Application of the principle of res judicata.
4. Legality of assessment orders and endorsements refusing rectification.

Detailed Analysis:

1. Constitutionality of Section 6-B of the Karnataka Sales Tax Act, 1957:
The petitioner contended that Section 6-B of the Karnataka Sales Tax Act, 1957, which imposes a turnover tax, is unconstitutional. The petitioner argued that the inclusion of inter-State and export sales in the "total turnover" for determining the rate of turnover tax violates constitutional provisions, specifically Article 286. However, the court noted that the constitutional validity of Section 6-B had already been upheld in previous judgments, including Shantilal & Brothers v. State of Karnataka and Padmashri Plastics v. Commercial Tax Officer. These judgments established that the classification of dealers under Section 6-B is rational and does not violate Articles 14 and 19(1)(g) of the Constitution. The court ruled that Section 6-B does not intend to tax non-liable turnovers under Article 286, thus affirming its constitutionality.

2. Inclusion of Exempted Turnover in Total Turnover for Determining Turnover Tax Rate:
The petitioner argued that including exempted turnovers, such as inter-State and export sales, in the total turnover for determining the turnover tax rate is illegal. The petitioner referenced the Supreme Court's decision in A.V. Fernandez v. State of Kerala, which stated that transactions not liable to tax should not be included in the turnover calculation. The court acknowledged the argument but refrained from making a definitive ruling due to the binding nature of previous decisions and the principle of res judicata.

3. Application of the Principle of Res Judicata:
The court emphasized the principle of res judicata, which prevents the same issue from being litigated multiple times. The petitioner had previously filed a writ petition challenging the endorsement related to the turnover tax, which was disposed of with directions to file an appeal. The court held that the petitioner could have challenged the constitutional validity of Section 6-B in the earlier petition but failed to do so. Consequently, the court ruled that the principle of res judicata barred the petitioner from raising the same constitutional issue in the current petition.

4. Legality of Assessment Orders and Endorsements Refusing Rectification:
The petitioner sought to quash the assessment order dated June 22, 1999, and the endorsement dated December 9, 1999, which refused to rectify the order. The court noted that the petitioner had already approached the Tribunal to challenge the assessment orders. The court directed the Tribunal to consider the petitioner's case on merits without being influenced by its decision on the constitutional validity of Section 6-B. The court confined its ruling to the constitutional issue and dismissed the writ petitions, allowing the Tribunal to address the legality of the assessment orders.

Conclusion:
The court dismissed the writ petitions, upholding the constitutional validity of Section 6-B of the Karnataka Sales Tax Act, 1957, and applying the principle of res judicata to bar the petitioner from re-litigating the same constitutional issue. The court directed the Tribunal to consider the petitioner's case on the merits regarding the assessment orders.

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