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1997 (6) TMI 343 - HC - VAT and Sales Tax
Issues:
Interpretation of section 6-B of the Karnataka Sales Tax Act regarding the liability of buying commission agents for outside principals to pay turnover tax. Analysis: The judgment revolves around the interpretation of section 6-B of the Karnataka Sales Tax Act, specifically focusing on the liability of buying commission agents for outside principals to pay turnover tax. The Tribunal held against the petitioner, emphasizing the provision under section 11(1) of the Act, which states that agents operating on behalf of principals who are residents of Karnataka are liable to pay tax under section 6-B, regardless of whether the principal is a dealer under the Act. This statutory provision clearly outlines the tax liability of such agents. The petitioner argued that the term "total turnover" in section 6-B should be understood in the same sense as defined under section 5(6) of the Act read with rule 6 of the Karnataka Sales Tax Rules. However, the Court referred to previous judgments in cases like B.P. Automobiles v. State of Karnataka and Shantilal & Brothers v. State of Karnataka, where similar contentions were rejected. The Court reiterated that the definition of "total turnover" under section 6-B must be interpreted in line with section 2(u-2) of the Act, and the deductions provided under rule 6 cannot be considered for determining turnover for section 6-B. Further, the Court cited the case of Jain Industrial Corporation v. Commercial Tax Officer, where it was emphasized that exemptions under other provisions of the Act do not affect the liability under section 6-B. The legislature specifically excludes the consideration of such exemptions under section 6-B, and only deductions provided under the first proviso to section 6-B(1) can be made from the total turnover as defined under section 2(u-2) for the purpose of turnover tax levy under section 6-B. Therefore, the Court concluded that the impugned order by the Tribunal should not be interfered with, and the petition was dismissed accordingly.
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