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2004 (3) TMI 719 - HC - VAT and Sales Tax


Issues Involved:
1. Whether non-ferrous metal scrap falls under entry 29-A of the Second Schedule to the Karnataka Entry Tax Act, 1979.
2. Whether the appellant, having voluntarily filed returns and paid entry tax, could challenge the levy and collection of entry tax by filing appeals.

Summary:

Re: Point No. (i):

The appellant, a manufacturer of non-ferrous metal rods and wires, purchased non-ferrous metal scrap from outside the State and paid entry tax for the assessment years 1995-96 and 1996-97. The appellant later contended that due to amendments effective from April 1, 1995, non-ferrous metal scrap was exempt from entry tax as per entry 29-A of the Second Schedule to the Karnataka Entry Tax Act, 1979. The appellate authority accepted this contention and exempted the turnover from tax. However, the Additional Commissioner of Commercial Taxes, exercising suo motu revision power u/s 15(2) of the Act, set aside the appellate authority's order and restored the assessing authority's order.

The court examined the term "non-ferrous metal" and concluded that it includes scrap intended to be melted to produce metal or metal products. The court referred to several precedents, including *Porritts & Spencer (Asia) Ltd. v. State of Haryana* and *Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh*, to interpret the term in its popular sense and contextually. The court held that non-ferrous metal scrap is "non-ferrous metal" falling under entry 29-A of the Second Schedule, exempt from entry tax.

Re: Point No. (ii):

The appellant's voluntary filing of returns and payment of entry tax does not bar it from challenging the assessment order in appeal upon realizing that the goods were exempt from tax. The court referred to the decision in *Narsepalli Oil Mills v. State of Mysore*, which held that an assessee is not estopped from preferring an appeal and showing that the sales are not exigible to tax, even if the return was voluntarily submitted and accepted by the assessing authority.

Conclusion:

The revisional authority's order was unjustified, and the appellate authority's order exempting the turnover from entry tax was restored. The appeals were allowed, and parties were directed to bear their respective costs.

 

 

 

 

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