2009 (12) TMI 876 - HC - VAT and Sales Tax

Court directs reassessment on exemption claim for iron and steel partnership firm under KST Act

Brindavan Steel Industries Versus Additional Commissioner of Commercial Taxes, Zone I, Bangalore and others

The court set aside the revisional authority's order rejecting the exemption claim of a partnership firm dealing in iron and steel products for lack of ... Exemption claimed under the KST Act on the ground that the entire iron and steel purchased from registered dealers within the State and being second and subsequent dealers in the State was not liable to pay taxes Held that:- On perusal of the said documents [form 32B now being counter-signed by the sellers], it is seen that the date of issue of the same is July 10, 2001, but have been handed over to the appellant only recently, i.e., subsequent to the order of the revisional authority impugned in this appeal. The order passed by the revisional authority dated August 30, 2008 is set aside and a direction is issued to the second respondent to consider the said documents and pass an order in accordance with law. Since we are remanding the matter to the assessing authority, the said authority is also directed to consider the case of the appellant with regard to the exemption sought by the appellant in accordance with law. In view of this order, the order passed by the appellate authority (third respondent herein) would also have no effect. Issues:Challenge to assessment order and seeking confirmation of appellate order.Analysis:The appellant, a partnership firm dealing in iron and steel products, filed returns for the year 2001-02 claiming exemption under the KST Act on the ground that all iron and steel purchased were from registered dealers in the State. The assessing authority determined the total and taxable turnover, levying tax. The appellant appealed, and the appellate authority directed a re-computation. However, the revisional authority rejected the exemption claim for lack of form 32B, directing tax levy at four percent on purchases. The appellant argued that the first dealers were not registered in Karnataka and that form 32B was a technical formality. The respondent contended that exemption must be sought in accordance with law, requiring form 32B. The burden of proof under section 6A lies on the dealer to show transactions not liable to tax.The court noted that the railway and another seller were not registered dealers in Karnataka, and form 32B was not produced for transactions. Section 6A requires furnishing a declaration duly filled and signed by the registered dealer for goods like iron and steel. The burden of proving the last purchase is on the Department, and form 32B is crucial for claiming exemption. The appellant's argument that form 32B was not countersigned initially was considered, but the documents produced later were dated after the revisional authority's order. The court decided to remand the matter to the assessing authority to consider the new documents and determine if the appellant is entitled to exemption in accordance with the law.The order of the revisional authority was set aside, and a direction was given to the assessing authority to consider the new evidence and decide accordingly. The appeal was allowed, remanding the matter back to the assessing authority for further consideration based on the additional evidence filed during the appeal.