1980 (8) TMI 178 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to a notice of demand issued by the Commercial Tax Officer for advance tax payment under the Karnataka Sales Tax Act, 1957.

Detailed Analysis:
The petitioner, a registered partnership firm, challenged a notice of demand dated 2nd March, 1976, issued by the Commercial Tax Officer, Chitradurga, demanding a sum of Rs. 5,650.05 as advance tax payable under section 12-B(1) of the Karnataka Sales Tax Act, 1957. The petitioner contended that the notice was illegal and not warranted by law. The petitioner had filed a return for the month of January, 1976, disclosing exempted purchases and sales of groundnuts and groundnut seeds, crediting no tax. However, the Commercial Tax Officer issued the impugned notice demanding tax payment at 3 per cent on the turnover related to the purchase of groundnuts. The Court analyzed the relevant provisions of section 12-B and Rule 17 of the Act, emphasizing that if a dealer does not admit any tax liability, there is no obligation to pay any amount in advance. The Court highlighted that the authority can only demand payment if the amount paid falls short of the tax payable based on the filed statement. Therefore, the notice of demand issued before the final assessment was deemed unwarranted and was quashed.

Outcome:
The Court upheld the petitioner's contention, ruling in favor of the petitioner, a registered partnership firm, by quashing the notice of demand issued by the Commercial Tax Officer. The judgment emphasized the legal requirement for tax payment under the Karnataka Sales Tax Act, 1957, and clarified that a dealer is not obligated to pay any tax in advance if they do not admit any tax liability, with penalties applicable only after final assessment. The ruling provided clarity on the procedural aspects of tax assessment and demand under the Act, ensuring that authorities adhere to the statutory provisions before issuing notices of demand for tax payment.