2009 (8) TMI 1096 - HC - VAT and Sales Tax

Benefit of subsection (4) of section 18AA - Held that - It is not open to a dealer to contend that an amount which was shown and declared to have been collected as by way of tax and payment remitted to the Government as by way of tax, was not at all collected earlier, only because it subsequently points out that during the relevant time, there is no tax liability on the product and therefore there was no occasion for the dealer to have collected the amount and the amount was collected is not liable for forfeiture in terms of section 18AA of the KST Act. Sub-section (4) of section 18AA is a provision applicable only to persons who had in fact paid some amount by way of tax, which has been collected by the registered dealer and ultimately having been found not to be a tax, but anything other than that, and therefore liable for forfeiture in the hands of such a dealer and the buyers to claim refund. Such is not the situation here. Therefore, reference to subsection (4) of section 18AA of the KST Act is of no consequence. Appeal dismissed.

Issues Involved:
1. Interpretation of tax collection under the Karnataka Sales Tax Act and Central Sales Tax Act.
2. Application of section 18AA of the KST Act.
3. Examination of factual position regarding tax collection.
4. Claiming deduction from total turnover for computing taxable turnover.
5. Applicability of subsection (4) of section 18AA of the KST Act.

Issue 1: Interpretation of tax collection under the Karnataka Sales Tax Act and Central Sales Tax Act:
The revision petitioner, a dealer under the Karnataka Sales Tax Act, filed a petition under section 23(1) of the KST Act. The petitioner indicated an amount collected as tax in the return for merchandise sold, but it was later found that the product was exempt from tax for most of the period. The dealer argued that the amount shown as tax collected was part of the sale price and not actual tax collected, which was rejected by the authorities and appellate bodies. The petitioner contended that the amount was not collected as tax from customers, citing a Supreme Court judgment. However, the court held that the argument was fallacious and not tenable.

Issue 2: Application of section 18AA of the KST Act:
Authorities issued a notice under section 18AA of the KST Act as the tax amount shown in returns was not actually collected as tax from customers. The dealer's explanation that the amount was part of the sale price and not collected as tax was not accepted by the assessing officer or the appellate authorities. The court rejected the argument that the amount should not be forfeited under section 18AA, emphasizing that the dealer declared the amount as tax collected and claimed deductions based on it.

Issue 3: Examination of factual position regarding tax collection:
The dealer argued that the amount shown as tax collected was not actually collected from customers and was only part of the sale price. The court held that the dealer's later claim that the amount was not collected as tax was not acceptable, especially since the dealer had declared it as tax collected and claimed deductions accordingly. The court emphasized that the dealer cannot assert a different position later based on the factual findings already recorded.

Issue 4: Claiming deduction from total turnover for computing taxable turnover:
The dealer claimed that even if the amount was forfeited, it had been paid from the sale price received from customers. The court rejected this argument, stating that the dealer cannot claim benefit under subsection (4) of section 18AA as the amount was declared as tax collected and used for deductions in computing taxable turnover.

Issue 5: Applicability of subsection (4) of section 18AA of the KST Act:
The court clarified that subsection (4) of section 18AA applies to situations where a dealer had paid some amount as tax, which was later found not to be tax. In this case, the dealer had declared the amount as tax collected and claimed deductions, making subsection (4) inapplicable. The court dismissed the revision petitions based on the above analysis and upheld the orders of the lower authorities.

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