1987 (12) TMI 319 - HC - VAT and Sales Tax

Summary

Issues:
Recovery of purchase tax under Karnataka Sales Tax Act, liability of transferor and transferee under section 15, jurisdiction of the court, verification of tax amounts, remission or installment options.

Analysis:
The petitions involved a common order for recovery of purchase tax under the Karnataka Sales Tax Act, 1957 for different periods. The issue revolved around the liability of the transferor and transferee under section 15 of the Act. The court clarified that the responsibility under the Act is joint and several, allowing the taxing authority to recover the tax from either the transferee or the transferor, or both. The court emphasized that the agreement between the parties does not affect the tax authorities' right to collect arrears, citing the Supreme Court's decision in Deputy Commercial Tax Officer v. Sha Sukraj Peerajee [1968] 21 STC 5. The court held that the trial court misinterpreted section 15(1) of the Sales Tax Act and affirmed the petitioner's entitlement to recover the amount from either party.

The argument raised regarding making the Salar Jung Mills a party was rejected by the court to prevent confusion and manipulation by parties to avoid tax payments through transfers. The court highlighted the provisions of section 12-B and section 25-B of the Sales Tax Act, emphasizing the obligation of dealers to pay taxes and the criteria for levying purchase tax on sugarcane. The amounts claimed in the petitions were confirmed to be due under section 13 based on the returns submitted by the respondent.

Regarding jurisdiction, the court clarified that the head office of the respondent in Hospet should be treated as the registered dealer for tax recovery purposes, establishing the court's jurisdiction in Hospet. The court directed the sales tax authorities to produce the returns filed by the respondent to verify the claimed amounts and issue warrants for the correct amount after verification. The court also mentioned the possibility of remission or installment options, indicating that any government order in this regard should be considered by the tax authorities.

Conclusively, the court set aside the impugned order and remanded the matter to the lower court for reconsideration in line with the directions provided, allowing the petitions.