2014 (9) TMI 742 - HC - VAT and Sales Tax

Availability of benefit of exemption of sale of the used cars - Karnataka Value Added Tax Act, 2003 - Whether notification No.FD.300.CSL.05 dated 24.10.2005 as it stood during the period from 24.10.2005 to 31.7.2007 is applicable to the sale of used cars by all dealers or does it apply only to dealers engaged in purchase and sale of the used cars - Held that - Tribunal did not observe in so many words that the first condition in the notification dated 24-10-2005 was not fulfilled, in effect, it meant that the first condition in the notification was not satisfied by the assessee. The fact remains that the assessee did not have any occasion/reason nor did the authorities below granted an opportunity to the petitioner-assessee to place on record the materials to satisfy whether they fulfilled both the conditions in the notification. The Revision Petitions are partly allowed and remanded to the Assessing Officer to once again examine the matter in the light of the observations made in this order and shall grant an opportunity to the petitioner-assessee to place materials in support of their case that they satisfy both the conditions as stipulated in the notification dated 24-10-2005 - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of notification regarding sales tax on used cars
2. Application of notification to dealers engaged in different businesses

Analysis:
1. The case involved a dispute regarding the application of a notification dated 24-10-2005 issued by the Government of Karnataka under the Karnataka Value Added Tax Act, 2003. The notification reduced the tax payable by a dealer on the sale of used cars to 4% of the difference between the taxable turnover and the purchase amount of the car. The Assessing Authority initially held that the notification applied only to dealers engaged in the sale and purchase of used cars. However, the Tribunal extended the application to dealers engaged in other businesses as well. Despite this, the Tribunal ruled against the petitioner, stating that they did not provide sufficient evidence to prove compliance with the notification's conditions, specifically regarding the purchase and tax payment of the cars during the VAT period.

2. Upon careful review, the High Court found that the Tribunal did not explicitly state that the petitioner failed to meet the first condition of the notification. However, it was implied that the condition was not satisfied. The Court noted that the petitioner was not given the opportunity to present evidence to demonstrate compliance with both conditions of the notification. Consequently, both parties agreed that the matter should be remanded to the Assessing Authority for a limited review. The petitioner agreed not to raise any new contentions and requested the chance to provide supporting materials to show compliance with the notification. The Court allowed this request, emphasizing that only the specified issue should be reconsidered, and no new arguments should be entertained.

3. The High Court partially allowed the revision petitions and remanded the case to the Assessing Officer for a fresh examination in line with the Court's observations. The Assessing Authority was directed to allow the petitioner to present evidence supporting their compliance with the notification conditions. The Court confirmed the findings on other issues raised in the case and instructed the Assessing Authority to expedite the review process within six months. The petitioner agreed not to pursue the second question of law raised during the admission of the case, which was accepted by the Court. Finally, the revision petitions were disposed of without any costs being awarded.