Plain-language taxation and deferment-based limitation saved the assessment, while the branded-goods proviso was not extended beyond its terms.

A taxing provision must be applied according to its plain language, and the third proviso to section 5(3)(a) of the Karnataka Sales Tax Act was not extended to branded goods transactions not contemplated by its terms; the assessee's sale structure, though tax-motivated, was not treated as a sham, and the Tribunal's finding in favour of the assessee was upheld on that issue. On limitation, the existence of a deferment order under section 12(6) saved the assessment for 1991-92 from being time-barred, so the Tribunal's limitation finding was set aside and the issue was decided for the Revenue.

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Issues: (i) Whether the third proviso to section 5(3)(a) of the Karnataka Sales Tax Act, 1957 applied to the assessee's sales of branded goods so as to treat the second sale as the first sale liable to tax; (ii) Whether the assessment order for the year 1991-92 was barred by limitation in view of the deferment order under section 12(6) of the Karnataka Sales Tax Act, 1957.

Issue (i): Whether the third proviso to section 5(3)(a) of the Karnataka Sales Tax Act, 1957 applied to the assessee's sales of branded goods so as to treat the second sale as the first sale liable to tax.

Analysis: The proviso was construed to apply where goods are manufactured under another dealer's trade mark and are sold in the statutory sequence contemplated by the provision. On the facts, the manufacturer and the trade mark owner were distinct from the assessee, and the sales were made by the manufacturers to the assessee, not to the trade mark proprietor. The arrangement, though designed to reduce tax, was held to be within the framework of the statute and not a sham transaction. The provision could not be expanded by interpretation to cover a situation not contemplated by its plain language.

Conclusion: The third proviso to section 5(3)(a) was not attracted, and the finding of the Tribunal on this issue was upheld in favour of the assessee.

Issue (ii): Whether the assessment order for the year 1991-92 was barred by limitation in view of the deferment order under section 12(6) of the Karnataka Sales Tax Act, 1957.

Analysis: The record showed an order of deferment under section 12(6), which had the effect of saving limitation. The Tribunal's view that the assessment was time-barred was therefore incorrect.

Conclusion: The limitation finding was set aside and the issue was decided in favour of the Revenue.

Final Conclusion: The revision succeeded only to the limited extent of the limitation issue for 1991-92, while the ruling on the inapplicability of the third proviso to section 5(3)(a) was maintained.

Ratio Decidendi: A taxing provision must be applied according to its plain statutory language, and a tax-motivated commercial arrangement is not liable to be disregarded or recharacterised unless it is a sham or the statute expressly covers it.

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