1992 (3) TMI 332 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether a notification issued by the State Government under section 8-A of the Karnataka Sales Tax Act, 1957, is impliedly repealed or rendered ineffective when the Legislature amends the Act and introduces an entry in the Schedule to the Act related to the class of goods exempted by the notification.

Issue-wise Detailed Analysis:

1. Compatibility of Notification with Legislative Amendments:
The core issue was whether a notification under section 8-A of the Karnataka Sales Tax Act, 1957, remains effective after the Legislature amends the Act and introduces a new entry in the Schedule concerning the same class of goods. The court examined the legislative mandate under section 5 of the Act, which directs the levy of tax as specified in the Schedules. Section 8-A empowers the State Government to notify exemptions or reductions in tax. The court held that the legislative mandate must be respected by the executive, and any notification under section 8-A must align with the amended provisions of the Act.

2. Precedents and Judicial Interpretations:
The court reviewed several precedents, including Janardhana Acharya v. State of Karnataka [1980] 46 STC 375, where it was held that a notification under section 8-A(1) remains in force until modified or canceled by the State Government. The court noted that this view was challenged by subsequent decisions and legislative amendments, such as the insertion and later omission of sub-section (3-A) in section 8-A, indicating a legislative intent to override the earlier judicial interpretation.

3. Supreme Court's Guidance:
The court referred to the Supreme Court's decision in Commissioner, Sales Tax v. Agra Belting Works [1987] 66 STC 1, which held that a subsequent notification prescribing a tax rate impliedly withdraws any prior exemption notification. The court applied this principle, stating that the legislative intent to alter the tax rate overrides any prior exemption notification.

4. Legislative Intent and Amendments:
The court emphasized that when the Legislature amends the Act and introduces a new entry in the Schedule, it demonstrates a clear intent to treat the class of goods in a specified manner. This legislative intent is paramount and overrides any conflicting executive notifications. The court found that the retrospective amendment of entry 48-A(ii) indicated the Legislature's intent to levy tax as per the new entry, rendering any conflicting notification ineffective.

5. General Clauses Act and Inconsistency:
The court addressed section 24 of the Karnataka General Clauses Act, which allows notifications to continue unless inconsistent with the amended law. The court concluded that if a notification is inconsistent with the amended provision, it cannot be enforced, thus supporting the view that legislative amendments override prior notifications.

6. Legislative History and Judicial Interpretation:
The court examined the legislative history, including the insertion and omission of sub-section (3-A) in section 8-A, and found no clear legislative intent to revive the earlier judicial interpretation in Janardhana Acharya's case. The court concluded that the legislative amendments impliedly repealed or rendered ineffective any conflicting notifications.

Conclusion:
The court answered the referred question in the affirmative, holding that a notification issued under section 8-A of the Karnataka Sales Tax Act, 1957, is impliedly repealed or rendered ineffective when the Legislature amends the Act and introduces an entry in the Schedule related to the class of goods exempted by the notification. The reference was answered in the affirmative, affirming the legislative supremacy in tax matters.