2009 (12) TMI 873 - HC - VAT and Sales Tax

Summary

Issues involved:
1. Interpretation of liability under section 5B and 6B of the Karnataka Sales Tax Act.
2. Validity of the order of the Advance Ruling Authority and the Commissioner's interference under section 22A.
3. Consideration of proviso (x) to section 6B of the Act in determining resale tax liability.

Analysis:
1. The case involves the interpretation of liability under sections 5B and 6B of the Karnataka Sales Tax Act. The appellant, a works contractor, sought clarification on resale tax liability under section 22A(2) from the Advance Ruling Authority. The Authority initially held the appellant liable for resale tax, but a subsequent appeal allowed by the court led to a reconsideration. The Commissioner, finding the Advance Ruling prejudicial to state revenue, initiated proceedings under section 22A(2) and held the appellant liable for resale tax under section 6B. The appellant challenged this decision, arguing that the Commissioner's order was contrary to proviso (x) to section 6B. The court, after hearing both parties, directed the Commissioner to reconsider the matter in light of proviso (x) and the objective behind introducing resale tax.

2. The validity of the order of the Advance Ruling Authority and the Commissioner's interference under section 22A was also at issue. The Advance Ruling Authority initially ruled in favor of the appellant, but the Commissioner disagreed, leading to the current appeal. The appellant contended that the Commissioner erred in not considering the purpose of introducing resale tax under section 6B, as highlighted in the Finance Minister's speech. The court agreed that the Commissioner needed to reassess the matter in line with proviso (x) to section 6B and the legislative intent behind the introduction of resale tax.

3. The consideration of proviso (x) to section 6B of the Act was crucial in determining the resale tax liability. The appellant argued that the Commissioner failed to properly consider this proviso, while the Government advocate maintained that it was indeed taken into account. However, upon further examination, the Government advocate conceded that a reevaluation in light of proviso (x) was necessary. Consequently, the court set aside the Commissioner's order and remanded the matter for fresh consideration, emphasizing the importance of reconsidering the issue in alignment with proviso (x) and the legislative intent behind the resale tax provision.

In conclusion, the court allowed the appeal, setting aside the Commissioner's order and directing a fresh consideration within three months, emphasizing the need to reevaluate the matter in light of proviso (x) to section 6B and the underlying purpose of the resale tax provision.