2014 (8) TMI 48 - HC - VAT and Sales Tax

Levy of tax - Whether the old newspapers dealt with by the assessee are goods and if so, the liability on the part of the assessee is whether under both KST and CST - Held that - when an earlier Division Bench has already examined this question and has taken a view, unless this view is disagreed by another Division Bench by taking a contrary view and the matter is required to go before the Larger Bench, the earlier view of the Bench has to be followed. In view of the matter having already been seized before the Supreme Court in the other case and if the assessee cannot pursue the matter, we follow the earlier view taken by the Division Bench in the case of United Agencies v. Assistant Commissioner of Commercial Taxes, Bangalore 2010 (12) TMI 1105 - KARNATAKA HIGH COURT - The substantial question of law relating to the issue of goods is answered in favour of the Revenue in the sense-old news paper is termed as goods - decided in favour of revenue.

Summary

Issues:
- Whether old newspapers are considered goods under the Karnataka Sales Tax Act and the Central Sales Tax Act?

Analysis:
The High Court of Karnataka heard revision petitions by the State under section 23(1) of the Karnataka Sales Tax Act, challenging the Karnataka Appellate Tribunal's order dated January 20, 2011, which favored the assessee and set aside the lower appellate authority's decision. The substantial question of law raised was whether old newspapers handled by the assessee are classified as goods and if so, whether the liability under both KST and CST applies. The respondent-assessee was represented by Mr. M. Thirumalesh, while the petitioner-State was represented by Smt. S. Sujatha, Additional Government Advocate.

The learned Additional Government Advocate argued that the classification of old newspapers as goods was addressed in a previous judgment by a Division Bench of the court. However, Mr. Thirumalesh, representing the assessee, highlighted that the Tribunal's decision predates the court's judgment and that the matter is pending before the Supreme Court. He referenced the Supreme Court's past decisions and the conflicting interpretations by different courts. The court acknowledged the existing Division Bench's view on the matter and decided to follow it unless a different Division Bench provides a contrary opinion or the matter requires consideration by a Larger Bench. Consequently, the court ruled in favor of the Revenue, confirming that old newspapers are indeed considered goods under the Acts, overturning the Tribunal's decision.

In conclusion, the High Court of Karnataka allowed the revision petitions, answering the substantial question of law in favor of the Revenue by confirming that old newspapers are classified as goods. The court set aside the Tribunal's judgment on this issue and upheld the lower authority's view that old newspapers fall under the definition of goods under the relevant tax Acts.