1993 (6) TMI 228 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Revisability of the Deputy Commissioner's order dropping suo motu proceedings under section 21 of the Karnataka Sales Tax Act, 1957.
2. Applicability of entry 73-B of the Second Schedule to the Karnataka Sales Tax Act, 1957, to the lead battery plates sold by the assessee.

Issue-wise Detailed Analysis:

Revisability of the Deputy Commissioner's Order:

The first contention raised by the assessee was that the Deputy Commissioner's order dropping the suo motu revision proceedings under section 21 is not an order capable of being revised under section 22-A of the Act. The assessee argued that once the suo motu revision proceedings were initiated, the original assessment orders ceased to exist, and the dropping of these proceedings did not constitute an effective order capable of being revised.

The court rejected this "highly technical approach" and stated that the initiation of suo motu proceedings does not erase the original assessment orders for all purposes. When the Deputy Commissioner dropped the proceedings, it was an "order" made under the Act, which is capable of being revised under section 22-A. The court emphasized that section 22-A refers to "any order" passed in any proceeding under the Act, which is comprehensive enough to include an order dropping proceedings.

The court also discussed the doctrine of merger, stating that the original order of assessment merges into the order dropping the suo motu proceedings. This was supported by the Supreme Court's decision in Deputy Commissioner of Commercial Taxes v. H.R. Sri Ramulu, which held that once an assessment is reopened, the initial order ceases to be operative and is replaced by the reassessment order.

The court concluded that the order dropping the proceedings is an "order" under the Act and is subject to revision under section 22-A. The court also noted that the limitation period for revising such an order would be within 4 years from the date of the order dropping the proceedings.

Applicability of Entry 73-B:

The second contention was whether the lead battery plates sold by the assessee fell under entry 73-B of the Second Schedule, which covers "batteries of motor vehicles and parts thereof." The assessee argued that the lead battery plates were not specifically for motor vehicle batteries and thus should not fall under entry 73-B.

The court noted that the original assessment orders and the Deputy Commissioner's order did not make a clear finding on whether the lead battery plates were parts of motor vehicle batteries. The Commissioner of Commercial Taxes had opined that the lead battery plates were essential parts of motor vehicle batteries, but this was not conclusively determined by the lower authorities.

Given the lack of a clear factual finding, the court decided that the case required a fresh determination on whether the lead battery plates were meant for motor vehicle batteries. The court remanded the case to the Commissioner of Commercial Taxes for a fresh decision on this specific question, clarifying that the assessee could only contest this particular aspect and no other contentions would be entertained.

Conclusion:

The appeal was allowed, and the case was remanded to the Commissioner of Commercial Taxes for a fresh decision on whether the lead battery plates sold by the assessee were meant for motor vehicle batteries. The court emphasized that the assessee could only raise contentions related to this specific issue in the remanded proceedings.