1981 (2) TMI 212 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the petitioners are liable to pay tax under the Karnataka Sales Tax Act.
2. Whether the chargeability to tax arises only when the petitioners purchase sugarcane from others.
3. Whether the demand notices issued without prior assessment are legal.

Analysis:

1. The petitioners, who are agriculturists growing sugarcane and paddy, claimed they are not dealers under the Karnataka Sales Tax Act. They received notices demanding tax payments for crushing sugarcane grown by them. The petitioners contended that they are not liable to pay tax as they only crush their own sugarcane. The respondents argued that the petitioners should pay tax as per section 25-B of the Act. However, no assessment was conducted before issuing the demand notices. The court held that without completed assessments, demand notices would be illegal. The court quashed the demand notices but allowed the 1st respondent to issue fresh notices after proper assessment proceedings.

2. The respondents stated that the demand notices were issued to alert sugarcane crushers using electric power to register as dealers and pay tax. The court noted that no assessment proceedings were concluded, and it was found that the petitioners were using electric power for their crushers. The court did not delve into the disputed factual question but emphasized the necessity of proper assessments before issuing demand notices. The court highlighted that demand notices without assessments would lack legal authority, thereby quashing the impugned notices.

3. The court emphasized the requirement of completed assessment proceedings before issuing demand notices under the Act. The learned Government Pleader did not cite any provision empowering the 1st respondent to issue the demand notices without assessments. It was reiterated that demand notices without assessments would be unlawful. Consequently, the court quashed the demand notices but allowed the possibility of issuing fresh notices post proper assessment procedures. No costs were awarded, and the petitions were allowed in favor of the petitioners.