2003 (5) TMI 482 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 17(6) of the Sales Tax Act in light of a notification under section 8-A.

Analysis:
The petitioner applied for assessment under section 17(6) of the Karnataka Sales Tax Act but faced a proposal for a normal assessment without reference to the composition application. A notification was issued providing total exemption on the turnover related to works contract for an Information Technology Park. The petitioner challenged this action through a writ petition, leading to a proposition notice for composition tax at 4% for a specific period. The respondents proceeded with the assessment for another period under a different section, resulting in a demand notice.

The petitioner argued that the respondents erred in bifurcating the yearly composition order, citing a previous judgment. The Government Advocate contended that the tax under section 17(6) should not include tax under section 6-B, supporting the governmental action. After hearing both sides, the court examined section 17(6) and relevant rules, noting that the petitioner had applied for composition, which was accepted. Referring to a previous case, the court emphasized that exemption granted during the year ends the liability, and it is impermissible to demand tax under a different section based on a notification.

The court rejected the government's arguments, distinguishing a previous judgment that focused on exempting only specific taxes. It ruled that the statute must be interpreted in favor of the assessee, quashing the assessment order and demand notice. The court allowed the writ petition with no costs, setting aside the impugned assessment order and demand notice.