TMI Blog2012 (11) TMI 1049X X X X Extracts X X X X X X X X Extracts X X X X ..... r M/s. Dua Associates For the Respondents : K.M. Shivayogiswamy, Additional Government Advocate, ORDER:- H.G. RAMESH J.- In this writ petition, the petitioner has challenged the constitutional validity of sub-section (5) of section 4 of the Karnataka Value Added Tax Act, 2003 ( the KVAT Act , for short) which is inserted by the Karnataka Value Added Tax (Amendment) Act, 2010 (Karnataka Act No. 4 of 2010) with effect from the first day of April, 2010. 2. By consent of the learned counsel on both sides, the writ petition is heard on merits. I have heard Shri K.G. Raghavan, learned Senior Counsel appearing for the petitioner and Shri K.M. Shivayogiswamy, learned Additional Government Advocate appearing for the respondents. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eof as the measure of tax and as held by the Supreme Court in State of Rajasthan v. Rajasthan Chemists Association [2006] 147 STC 542 (SC); [2006] 6 SCC 773, such a taxing provision is beyond the legislative competence of the State. According to the learned Senior Counsel, the State Legislature has no competence to levy tax on the sale or purchase of goods on any notional measure of tax, i.e., on the basis of a notional price as a measure of tax. He further submitted that a similar provision had come up for consideration before the Rajasthan High Court in Rajasthan Chemists Association v. State of Rajasthan [2006] 147 STC 476 (Raj) which held the said provision as beyond the legislative competence of the State as being outside the scope of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Standards of Weights and Measures Act, 1976 (Central Act 60 of 1976) or the Rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods. (3) The State Government may, for the purpose of fixing the rate of abatement under sub-section (1), take into account the amount of sales tax and other local taxes, if any, payable on such goods. Explanation.-(i) Where on the package of any goods different retail sale prices are declared with reference to different areas, the retail sale price declared with the reference to the area within the State in which it is sold shall be deemed to be the retail sale price for the purposes of this section. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is tax on sale as defined in the Sale of Goods Act, 1930, the price . . . remains an integral part of sale which becomes subject of tax and the levy cannot be divorced therefrom where price and not the weight of goods is the measure of tax. 208. If section 4A is designed to bring a levy into existence which is divorced from the sale subject to tax under the Act, it falls foul with the legislative competence under entry 54 of List II of the Seventh Schedule so also notification, annexure 3, to the extent it is intended to levy tax on first point sale with reference to price which could be charged in respect of a subsequent sale which has not come into existence at the time liability to tax arises and is determined ex hypothesi . ..... X X X X Extracts X X X X X X X X Extracts X X X X
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