2014 (4) TMI 918 - HC - VAT and Sales Tax

Whether the impugned judgment pertaining to the exemption under the KST Act even after holding that the amount collected by the petitioner from its customers as deposit in the case does not amount to collection of tax is sustainable in law Validity of judgment Withdrawal of Exemption Scheme - Sale of All Steel Radial Tyres for heavy vehicles (Trucks & Buses) - Collection of tax Held that - There was no question of assessee collecting tax from the customers between 01.01.2000 and 08.10.2000 as deposit - Since during this period in view of withdrawal of the exemption vide Notification dated 01.01.2000, the customers were liable to pay tax and it was rightly collected by the petitioner and deposited with the Department - That appears to be the reason why in the Government Order dated 25.10.2000 it is stated that eligibility for exemption from payment of tax would be available if the tax is not collected on sale of All Steel Radial Tyres for heavy vehicles (Trucks & Buses) - Admittedly, in this case, the tax was collected by assessee and it was deposited with the Department and therefore, they cannot seek any benefit whatsoever of the Government Order dated 25.10.2000 - The authorities below have considered and appreciated the contentions urged on behalf of the petitioner in proper perspective and this Court do not find any reason to interfere with the same Decided against Assessee.

Issues:
1. Dismissal of appeals by the Tribunal under Section 22(1) of the Karnataka Sales Tax Act, 1957.
2. Exemption claimed by the petitioner under the KST Act.
3. Collection of taxes from customers by the petitioner during a specific period.
4. Rejection of the petitioner's claim for adjustment of collected taxes towards taxes due and payable by the Company.

Analysis:
1. The revision petition challenged the order of the Karnataka Appellate Tribunal dismissing the appeals under Section 22(1) of the Karnataka Sales Tax Act, 1957. The appeals were against the order passed by the Joint Commissioner of Commercial Taxes, which dismissed the appeal filed by the appellant challenging the Assessment order. The primary question raised was whether the dismissal of the appeal by the Tribunal, regarding the exemption claimed by the petitioner under the KST Act, without assigning any reason, was sustainable in law.

2. The petitioner had claimed exemption from tax under the KST Act for the sale of All Steel Radial Tyres for Heavy Vehicles. The State Government had initially exempted the tax, but later withdrew the exemption. The petitioner collected tax from customers during the period when the exemption was withdrawn. Subsequently, the Government restored the exemption, allowing adjustment of taxes collected towards any taxes due. However, the petitioner's claim for adjustment was rejected by all authorities, including the Tribunal.

3. The key contention was whether the taxes collected by the petitioner from customers during the period of exemption withdrawal could be considered as deposits or actual tax collections. The Court rejected the argument that the collected amount was in the nature of a deposit, emphasizing that since the customers were liable to pay tax during that period, the amount collected was indeed tax and not a mere deposit. As the taxes were collected and deposited with the Department, the petitioner was deemed ineligible for the benefit of the restored exemption.

4. The Court upheld the decisions of the lower authorities, stating that the petitioner could not seek any benefit from the Government Order restoring the exemption as they had collected and deposited the taxes during the period in question. The Court found no reason to interfere with the decisions of the authorities below, as they had considered the petitioner's contentions appropriately. The petitioner failed to present any other significant arguments apart from the tax collection issue, leading to the dismissal of the revision petition.

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