1990 (9) TMI 311 - HC - VAT and Sales Tax

Summary

Issues:
- Exemption claimed under administrative charges
- Interpretation of Karnataka Sales Tax Rules
- Assessment of taxable turnover

Analysis:
1. The Karnataka Food & Civil Supplies Corporation filed a sales tax revision petition for the assessment year 1976-77, claiming exemption on administrative charges incurred. The assessing authority allowed exemptions under three heads but disallowed the claim for administrative charges. The company contended that the charges were collected under government directions and should be exempted.

2. The assessing authority disallowed the administrative charges claim as it was not permissible under rule 6 of the Karnataka Sales Tax Rules for computing taxable turnover. The company appealed to the Deputy Commissioner of Commercial Taxes and the Appellate Tribunal, which rejected the claim, leading to the current revision petition questioning the exemption eligibility of administrative charges.

3. The Court examined the costing sheet provided by the company, revealing that administrative charges were included in the sale price. The company argued that the charges credited to the government's account were exempted turnover. However, without sales invoices, the assessing authority couldn't verify if the charges were part of the sale price subject to tax.

4. The Court emphasized that taxable turnover is calculated as per rule 6, and deductions not specified in the rule cannot be exempted. Despite the company crediting the charges to the government, the absence of invoices prevented the assessing authority from exempting the amount. Upholding the assessment, the Court stated that the rule-bound authority correctly taxed the amount not demonstrably exempt.

5. The Court noted that the company's failure to provide sales invoices hindered proving the charges were separate from the sale price. Without such evidence, the assessing authority rightly followed rule 6 and taxed the amount. The appellate authorities' decisions were upheld as compliant with the Sales Tax Rules.

6. The Court declined to entertain the question of exemption for transactions where the company acted as the government's agent, as it was not raised before the assessing authority. Consequently, the Court dismissed the petition without costs, affirming the assessment of taxable turnover and the disallowance of administrative charges exemption.