1990 (11) TMI 357 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of the concept of total turnover in a notification reducing the rate of tax.
2. Whether an alternative remedy is available to challenge a notice issued under section 12-A of the Act.

Analysis:
1. The petitioner, a dealer in handmade washing soaps, was assessed under the Karnataka Sales Tax Act, with a turnover exceeding Rs. 10 lakhs due to sales of various goods. The issue revolved around the interpretation of total turnover in a notification reducing the tax rate for handmade washing soaps. The Revenue argued that total turnover should include turnover from all goods, not just handmade washing soaps. However, the court emphasized that the notification's subject was handmade washing soaps, and the turnover referred to should relate to that specific product. Reference was made to a Bombay High Court case where turnover was linked to the subject of exemption, not overall turnover. The court held that the notification's purpose was to benefit handmade washing soap dealers, and this benefit should be extended as long as the turnover in that specific product did not exceed Rs. 10 lakhs.

2. The Government Pleader raised a preliminary objection, arguing that the petitioner should pursue the available alternative remedy of showing cause against the notice under section 12-A. However, the court rejected this contention based on two circumstances. Firstly, the Commissioner of Commercial Taxes had expressed a view favoring the petitioner's position, and secondly, the court believed that considering the availability of an alternative remedy should have been done earlier in the proceedings. The court concluded that the action initiated against the petitioner should be set aside, and the impugned notice under section 12-A was deemed invalid.

In conclusion, the court allowed the writ petition, setting aside the notice issued under section 12-A of the Karnataka Sales Tax Act. The judgment clarified the interpretation of total turnover in the context of a notification reducing the tax rate for handmade washing soaps, emphasizing that the turnover referred to should be specific to the subject of the notification. The decision highlighted the importance of considering alternative remedies promptly and the need to interpret tax notifications in a manner that upholds the intended benefits for specific categories of dealers.