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of <h1>High Court affirms exemption for cashew kernel sales turnover under Karnataka Sales Tax Act</h1> The High Court upheld the Karnataka Appellate Tribunal's decision, ruling that the sales turnover of cashew kernels is exempt from sales tax under ... - Issues:1. Interpretation of explanation VI of Schedule II of the Karnataka Sales Tax Act, 1957.2. Whether the sales turnover of cashew kernels is liable to sales tax.Detailed Analysis:1. The revision petition was filed by the State of Karnataka against the order of the Karnataka Appellate Tribunal regarding the assessment period from 1st October, 1970 to 30th September, 1971, involving M/s. Peirce Leslie India Ltd., a public limited company engaged in the purchase and sale of cashew-nuts and cashew kernels. The issue revolved around the interpretation of explanation VI appended to Schedule II of the Act concerning the tax liability on cashew kernels extracted from cashew-nuts. The Tribunal found the levy of sales tax on cashew kernels unjustified and cancelled the same based on the broad interpretation of 'tax levied' under the Act, encompassing taxes under section 6 or section 5(3)(a) of the Act. The Tribunal's decision was supported by a Division Bench's observation that explanation VI acts as an exemption clause to exempt the kernel from tax if tax had been paid on the purchase of cashew, indicating a legislative concession to maintain edible kernel prices.2. The State contended that explanation VI applies only to sales under section 5(3)(a) of the Act and not to sales of products from purchased articles, while the assessee argued that the exemption applies to all cases of taxes levied under the Act. The Court upheld the Tribunal's decision, emphasizing that the term 'tax levied' in explanation VI is general and not limited to sales only, thus exempting the sales turnover of cashew kernels from sales tax. The Court declined to interfere with the Tribunal's order, deeming it legal and valid, and did not delve into other reasons supporting the assessee. Consequently, the revision petition was dismissed, with each party directed to bear its own costs.
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