9911796707
TMI Blog2012 (9) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... x on Entry of Goods Act, 1979 ("the KTEG Act", for short). During the assessment years 1998-99 and 1999-2000 in the course of its manufacturing activities, the assessee effected purchase of diesel for use as raw material in the generation of electricity energy in its captive generation set for the purpose of electrical energy. The assessee also effected purchase of hexane for use as an input/catalyst in the process of extraction of solvent oil, since the diesel as well as hexane are the raw materials/input which are used in the manufacture and intermediate or finished product specified in the Second Schedule. The assessee has not filed any returns for the assessment years 1998-99 and 1999-2000. The Assistant Commissioners of Commercial Taxes visited the business premises of the assessee for inspection on December 18, 1999. During the course of inspection, it was noticed by them that the assessee has purchased high speed diesel and hexane and caused entry of the same into the local area. No taxes have been paid, accordingly, notice was issued under section 5(4) of the KTEG Act. Though the assessee was served with notice, no reply has been filed to the said notice inspite of granting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra and for that reason the impugned common appeal order is modified and it is declared that the levy of entry tax on the turnovers relating to diesel as levied in the impugned assessment orders in respect of both the years are hereby affirmed; (iii) The impugned penalties levied under section 5(5) in respect of both the years are hereby deleted. (iv) The assessing authority shall issue revised demand notices in respect of both the years in terms of this order. The original order shall be kept in STA No. 554 of 2002 and copies thereof in STA No. 555 of 2002 and in ST Cross Appeals No. 299 of 2007 and 300 of 2007." The assessee being aggrieved by the order dated April 17, 2008 passed by the Karnataka Appellate Tribunal preferred this revision petition. 5. While admitting this revision petition, this court has framed the following questions of law: "(i) Whether 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? (ii) Whether levy of entry tax at two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other connected matters (Nestle India Ltd. v. State of Karnataka) this court has taken a different view. The co-ordinate bench cannot take a different view. Hence, the order made in Nestle India Ltd. v. State of Karnataka (CRP No. 1250 of 2004 decided on March 22, 2006-Karnataka High Court), cannot be considered and sought for allowing the appeal. 8. On the other hand, Smt. S. Sujatha, learned Additional Government Advocate, argued in support of the order passed by the Karnataka Appellate Tribunal and contended that the judgment of the Division Bench of this court in Nestle India Ltd. v. State of Karnataka (CRP No. 1250 of 2004 decided on March 22, 2006-Karnataka High Court) covers the field. It is the latest judgment. The Division Bench has clearly held that the nature of goods and type of the goods at the point of entry are the relevant factors in determining the rate of tax and not how the goods are used thereafter, since diesel as well as the hexane are the taxable goods under the KTEG Act. Though the assessee has purchased the diesel, it cannot be treated as raw material for the finished products. However, it was used for manufacturing of the electricity energy. Hence, the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts plant. The assessee has caused entry of diesel for generating the electric energy for running its machine. As per entry 80 of the First Schedule to the Act, raw materials, component parts and inputs which are used in the manufacture of intermediate or finished products other than those specified in the Second Schedule are liable to be taxed as per the rate specified in the notification issued under section 3(1) of the Act. The electrical energy is not intermediate or finished product relating to the solvent oil. 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. 11. With regard to the second question, the hexane is not listed in the First Schedule or in the relevant Government Notification dated March 31, 1998, wherein petroleum products are mentioned by various descriptions. Hence the petitioner claims that hexane cannot be subjected to entry tax at the rate of two per cent. He claims that hex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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