1998 (2) TMI 568 - HC - VAT and Sales Tax

Court rules on sales tax exemption for exports, affirming liability to pay tax on disputed purchase.

The Court upheld the revisional authority's decision, ruling that the appellant was not exempt from paying sales tax on the purchase made in Karnataka for ... - Issues:1. Whether the purchase made by a dealer for sale to an exporter for further sale to a foreign country is exempted from payment of sales tax.2. Whether the revisional authority exercised power within the prescribed limitation period.3. Whether the revisional authority can set aside the orders of both the appellate authority and assessing authority simultaneously.Analysis:Issue 1:The appellant contended that the purchase made by him in Karnataka for export to a foreign buyer should be exempt from tax. The revisional authority found that the purchase in Karnataka did not qualify as part of the export transaction. The Court referred to Article 286 of the Constitution and Section 5(3) of the Central Sales Tax Act, stating that only the sale or purchase preceding the export sale is exempt from tax. The Court held that the purchase in Karnataka was not a preceding purchase and, therefore, the appellant was not exempt from paying sales tax. The judgment in Jayalaxmi Industries v. Deputy Commissioner of Commercial Taxes was cited to support this interpretation.Issue 2:The appellant argued that the revisional authority exceeded the limitation period of four years under Section 22A of the Karnataka Sales Tax Act. The Court clarified that the limitation should be counted from the initiation of proceedings, not the issuance of notice. Citing the judgment in S. Subba Rao v. Commissioner of Commercial Taxes, the Court held that the initiation date determines the limitation period. Thus, the revisional authority's actions were within the prescribed time frame.Issue 3:The appellant contended that the revisional authority erred in setting aside the orders of both the appellate and assessing authorities simultaneously. The Court analyzed Section 22A of the Karnataka Sales Tax Act and concluded that the revisional authority has the power to set aside the orders of both authorities if they are concurrent. The Court held that in cases of concurrent orders, the revisional authority can set aside both orders. Therefore, the revisional authority's actions were deemed appropriate in this context.In conclusion, the Court confirmed the revisional authority's order, dismissing the appeal and upholding the decision regarding the liability to pay sales tax on the purchase made by the appellant in Karnataka for export.