Case Laws
Acts
Notifications
Circulars
Classification
Forms
Manuals
Articles
News
D. Forum
Highlights
Notes
🚨 Important Update for Our Users
We are transitioning to our new and improved portal - www.taxtmi.com - for a better experience.
⚠️ This portal will be fully migrated on 31-July-2025 at 23:59:59
After this date, all services will be available exclusively on our new platform.
If you encounter any issues or problems while using the new portal,
please let us know
via our feedback form
, with specific details, so we can address them promptly.
Home
2015 (9) TMI 1438 - HC - VAT and Sales TaxLevy of VAT on Liquor - constitutional validity of Entry No.59A of the III Schedule to Karnataka Value Added Tax Act 2003 - it was contend that by virtue of this notification the State has attempted to over come the legislative limitation imposed on the State not to exempt dealers or class of dealers from levy of tax under KVAT Act and the device adopted by the State to confer exemption in respect of liquor sold by the dealers who are not holding certain stated categories of licences under Excise Law and it amounts to class oriented discrimination. Held that - In the matters of tax laws larger discretion is extended to the State Legislature and ample freedom to select and classify persons districts goods properties incomes and objects which it would tax and which it would not tax so long as the classification made within this wide and flexible range by a taxing statute does not transgress the fundamental principles underlying the doctrine of equality and it would not be vulnerable to attack on the ground of discrimination merely because it taxes or exempts from tax some incomes or objects and not others. It could be seen that State legislature in its economic wisdom of taxation has chosen to provide for levy of tax on liquor sold by certain dealers namely Bar and Restaurants operating in urban areas i.e. licence issued in Form No.CL-9 and in respect of Star Hotels Clubs and Hotel Boarding Houses and Lodges located anywhere in the State considering the potential for tax collection being huge and at the same time exemption has been extended to similar licence holders running Bar and Restaurants by operating them in rural areas considering the fact of low value addition between the price at which liquor is purchased and sold to customers in rural areas. However a Hotel Boarding House or Lodge holding licence in CL-7 though located in rural area would also serve liquor only to the residents of the Hotel and their guests who are elite customers and they can afford to pay more for the comfort they enjoy with varying degree of facilities. Thus condition of licence itself enables the licence holder to fix the price of the liquor irrespective of MRP on account of substantial value addition and as such the legislature has brought this class of dealer also to taxation. However Bar and Restaurants located in the same rural area which would not cater to the elite class of customers or customers of economic superiority have been exempted by virtue of notification dated 28.02.2014. 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. - Decided against the petitioners.
|