2011 (9) TMI 914 - HC - VAT and Sales Tax

Summary

Issues:
1. Bar on limitation under section 15B of the Karnataka Tax on Entry of Goods Act
2. Levying tax on furnace oil purchased from IOCL
3. Treatment of consumables as machinery parts and levying two per cent tax

Analysis:

Issue 1:
The revisional authority exercised power under section 22A(1) of the KST Act, setting aside the appellate order and modifying the assessment order. The appellant contended that the revisional order was erroneous and lacked sufficient opportunity for the appellant to substantiate his contentions. The appellant argued that the revisional order was not passed within the time prescribed under section 15B of the KTEG Act. However, the court found that the revisional authority's exercise of power was within the time limit prescribed by law. The court ruled against the assessee on this issue.

Issue 2:
The revisional authority levied tax on furnace oil purchased from IOCL, on which entry tax was collected. The appellant challenged this decision, arguing that the revisional authority's findings were based on erroneous conclusions and lack of documents produced before the assessing officer and appellate authority. The court noted discrepancies in the revisional authority's findings regarding the production of documents and the basis of their decision. The court held that the revisional authority's order was not passed in accordance with the principles of natural justice and set aside the impugned order, remitting the matter back to the revisional authority for fresh consideration.

Issue 3:
Regarding the treatment of consumables as machinery parts and levying a two per cent tax, the court did not provide a specific ruling due to the decision to set aside the revisional authority's order on other grounds. The court held that all contentions regarding this issue should be raised before the revisional authority in the fresh consideration of the matter. Therefore, the court did not address this issue in the current appeal.

In conclusion, the court allowed the appeal in part, justifying the initiation of proceedings by the revisional authority but setting aside the impugned order and remitting the matter for fresh consideration. The appellant was directed to file objections within a specified timeframe, and all contentions regarding merits were kept open for further argument before the revisional authority.