1990 (6) TMI 197 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the notification dated 10th July, 1981, issued under section 8A of the Karnataka Sales Tax Act, 1957, stood automatically cancelled with effect from 1st April, 1982.
2. Whether the turnover figures for the period from 1st April, 1982 to 12th August, 1982 were correctly assessed.

Issue-wise Detailed Analysis:

1. Automatic Cancellation of Notification Dated 10th July, 1981
The primary issue was whether the notification dated 10th July, 1981, which reduced the tax rate on gold and silver articles from 4% to 2%, stood automatically cancelled with effect from 1st April, 1982, due to the amendment of the Karnataka Sales Tax Act, 1957, which increased the tax rate to 5%.

Legal Provisions and Interpretation:
- Section 8A of the Act: Grants the State Government the power to notify exemptions and reductions in tax rates.
- Section 8A(3A): Introduced by Act No. 7 of 1981, specifies that if the rate of tax payable under the Act is modified by an amendment, any notification issued under clause (a) of subsection (1) shall be deemed cancelled from the date the amendment comes into force.
- Court's Interpretation: The notification dated 10th July, 1981, falls under clause (a) of section 8A(1), which pertains to the sale or purchase of specified goods. Consequently, with the amendment increasing the tax rate to 5% effective from 1st April, 1982, the notification stood automatically cancelled.

Precedents and Arguments:
- Janardhana Acharya Case: The petitioner relied on this case, where it was held that a notification continues until cancelled by another notification under section 8A(3). However, this case was decided before the introduction of section 8A(3A) and thus was deemed not applicable.
- Krishna and Co. Case: The petitioner also relied on this case, but the court clarified that the notification in question there was under clause (b) of section 8A(1), which was not affected by section 8A(3A).

Conclusion: The court upheld the Commissioner's view that the concessional rate of 2% was not available from 1st April, 1982, to 12th August, 1982, due to the automatic cancellation of the notification by the force of section 8A(3A).

2. Correct Assessment of Turnover Figures
The petitioner contended that the entire turnover of Rs. 3,68,542.83 was incorrectly subjected to a 5% tax rate, while only the turnover for the period from 1st April, 1982, to 12th August, 1982, should attract the 5% rate.

Arguments and Evidence:
- Petitioner's Claim: The petitioner argued that the turnover figures for the period in question were ascertainable from the monthly returns filed, which were accepted by the authorities.
- Commissioner's Concession: The learned High Court Government Pleader conceded that the turnover for the period from 1st April, 1982, to 12th August, 1982, was Rs. 1,37,342, not Rs. 3,68,542.83.

Court's Decision:
- The court directed the Commissioner to levy the 5% tax rate only on the actual turnover of Rs. 1,37,342 for the specified period and to take further steps in accordance with this order.

Final Order:
1. The appeal was partly allowed.
2. The order of the Commissioner regarding the 5% tax rate for the period from 1st April, 1982, to 12th August, 1982, was upheld.
3. The Commissioner was directed to modify the order to restrict the 5% tax levy to the actual turnover of Rs. 1,37,342 for the period in question and proceed accordingly.

Appeal partly allowed.

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