TMI Blog2015 (4) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the said benefit is not extended. The reason is obvious. The purchase is not that of a used car. The purchase is that of a brand new car from the manufacturer. After purchase from the manufacturer, if the dealer instead of selling the same to a customer uses the said car for demonstration purpose and after some time sells the said car to a customer, it would not be a case of purchase of used car and sale of a used car. The benefit under the notification is meant only for purchase of used cars and sale of used cars. By mere use of the new car purchased from the manufacturer for the purpose of demonstration, the said car cannot be treated as a used car so as to attract the benefit under the notification. Therefore, the Tribunal has rightl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olete and there is a change of model the petitioners sell these cars as used cars for a price. In terms of the notification dated 25.10.2005 the reduced rate of tax is applicable on sale of used vehicles. The petitioner claimed benefit of the said notification when they sold these demo cars. When the authorities noticed that the claim is for demo cars and not used cars, the said claim was disallowed and tax was levied at 12.5% on the value of the cars sold. Aggrieved by the said order, the petitioner filed an appeal before the Joint Commissioner of Commercial Taxes (Appeals) who confirmed the said order. Aggrieved by the said order the assessee preferred second appeal to the Karnataka Appellate Tribunal. The KAT held the aforesaid notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er passed by the assessing authority, first appellate authority, the Tribunal and the impugned order. 5. The fact that these demo cars were purchased by the petitioner on payment of tax is not noticed. Similarly, when the said cars were sold, whether the said input tax paid by the petitioner was deducted out of the output tax payable was also not placed on record and not considered. It is in the review petition, it was brought to the notice of the Court that the notification does not apply to the demo cars as it was not purchased from an unregistered dealer and it was not purchased for re-sale immediately. Therefore, the Tribunal has exercised its power under Section 63 (8) of the Act and reviewed the said order. 6. Section 63 (8) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the Motor Vehicles Act, 1988 (Central Act 59 of 1988). 8. The said notification applies to sale of used cars. The concessional rate of tax is payable by a dealer under Sub Section (1) of Section 4 of the said Act. In other words, the said dealer should be a dealer who is dealing with the sale of used car. In fact, a clarificatory notification has been issued as per Sl.No.76, which is as follows: NOTIFICATION No.FD 115 CSL 2007 (7), Bangalore, dated 30.03.2007 In exercise of the powers conferred by sub-Section (1) of Section 5 of the Karnataka Value Added Tax Act, 2003 (Karnataka act 32 of 2004), read with Section 21 of the Karnataka General Clauses Act, 1899 (Karnataka Act III of 1899), the Government of Karnata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the purchase and sale of used cards, the dealer s claim under the notification has been allowed. It is only in respect of the cars, which are purchased from the manufacturer, the said benefit is not extended. The reason is obvious. The purchase is not that of a used car. The purchase is that of a brand new car from the manufacturer. After purchase from the manufacturer, if the dealer instead of selling the same to a customer uses the said car for demonstration purpose and after some time sells the said car to a customer, it would not be a case of purchase of used car and sale of a used car. The benefit under the notification is meant only for purchase of used cars and sale of used cars. By mere use of the new car purchased from the man ..... X X X X Extracts X X X X X X X X Extracts X X X X
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