1990 (11) TMI 388 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of entry 31B of the Fifth Schedule to the Karnataka Sales Tax Act, 1957 regarding the exemption of sugar syrup.
2. Validity of the order passed by the Deputy Commissioner of Commercial Taxes modifying the assessment order concerning the taxation of sugar syrup.

Analysis:

Issue 1: Interpretation of entry 31B of the Fifth Schedule
The case involved a partnership firm engaged in the sale of confectionery, sugar-candy, and sugar syrup, assessed for sales tax under the Karnataka Sales Tax Act, 1957. Initially, the assessing authority granted an exemption under entry No. 31B of the Fifth Schedule. However, a show cause notice was issued proposing to tax sugar syrup at 4% multi-point, as it was deemed not eligible for exemption under entry 31B. The Deputy Commissioner held that sugar syrup did not fall under the exemption provision of entry 31B, as it was a different commodity not specified in the Act. The judgment cited the case of Krishna Products, where it was established that sugar syrup is not exempt under entry 31B as it is a form of sugar, not falling within the definition of 'sugar' under the Act.

Issue 2: Validity of the Deputy Commissioner's Order
The petitioners challenged the order modifying the assessment, primarily based on a previous ruling in Bagi v. Assistant Commissioner of Commercial Taxes. However, the Court distinguished this case, emphasizing that the transactions in question were intra-State sales governed by the Karnataka Sales Tax Act. The Court relied on the Krishna Products case, which clarified that sugar syrup does not qualify for exemption under entry 31B. As the matter was settled by the previous judgment, the Court dismissed the writ petitions, upholding the validity of the Deputy Commissioner's order and directing the petitioners to pay costs to the State.

In conclusion, the judgment clarified the interpretation of entry 31B of the Fifth Schedule to the Karnataka Sales Tax Act, 1957 concerning the taxation of sugar syrup and affirmed the validity of the Deputy Commissioner's order modifying the assessment to tax sugar syrup at 4%. The Court's decision was based on established legal principles and precedents, ultimately dismissing the writ petitions in favor of the Revenue.