2004 (10) TMI 559 - HC - VAT and Sales Tax

Interpretation of Tax Exclusion for Dry Cell Batteries under Karnataka Sales Tax Act

The court interpreted entry 3 of the Eighth Schedule to section 5(3-C) of the Karnataka Sales Tax Act, 1957, regarding the tax levy on specific goods. The ... - Issues:Interpretation of entry 3 of the Eighth Schedule to section 5(3-C) of the Karnataka Sales Tax Act, 1957.Analysis:The case involved the interpretation of entry 3 of the Eighth Schedule to section 5(3-C) of the Karnataka Sales Tax Act, 1957. Entry 3 pertained to the tax levy on specific goods, including electrical goods, instruments, apparatus, and appliances, but excluding certain items like pumpsets with electric motors and dry cell batteries. The dispute arose when the assessing authority revised the assessment order for the year 1994-95 to include tax on the sales turnover of dry cell batteries, which the appellant contested. The first appellate authority initially set aside the reassessment order, following a clarification issued by the Commissioner of Commercial Taxes in 1989, which excluded dry cell batteries from the tax levy at the last sale point under section 5(3-C) of the Act.The revisional authority disagreed with the first appellate authority's decision and upheld the tax levy on dry cell batteries, leading to the appellant challenging this decision in court. The revisional authority argued that entry 3 of the Eighth Schedule did not mention dry cell batteries as excluded items, focusing on the interpretation of item No. (iii) of Sl. No. 2 of Part E to the Second Schedule. However, the court applied general principles of interpretation to construe the Schedule attached to the Act, emphasizing that the exclusion of dry cell batteries was clear from the language used in entry 3.The court analyzed the wording of entry 3 and highlighted that the Legislature's intent to exclude dry cell batteries was evident by the use of the conjunction 'and' after excluding pumpsets, indicating a separate exclusion for dry cell batteries. The court emphasized that the conjunction 'and' should be understood conjunctively, meaning both pumpsets and dry cell batteries were excluded from the tax levy at the last sale point. Therefore, the court concluded that the revisional authority's decision was not justified, and the order to include tax on dry cell batteries was set aside.In the final judgment, the court allowed the appeal, set aside the order of the revisional authority, and confirmed the decision of the first appellate authority to exclude dry cell batteries from the tax levy under section 5(3-C) of the Karnataka Sales Tax Act, 1957.