2015 (9) TMI 524 - HC - VAT and Sales Tax

Karnataka High Court: Sales tax appeal allowed, penalty overturned for incorrect tax rate on iron/steel turnovers.

Shifa Constructions Versus Additional Commissioner of Commercial Taxes, (Zone-1), Gandhinagar, Bangalore

The High Court of Karnataka allowed the sales tax appeal, setting aside the revisional authority's order. The appellant-assessee's challenge regarding the ... Determining rate of tax to be levied – Assessing authority had passed assessment order determining gross turnover and taxable turnover and levied tax – Tax was levied at rate of 1.5 per cent. under section 6B of KST Act though it was case of assesse that as per Government notification, tax payable under section 6B of KST Act on turnovers relating to sale of iron and steel was specified at 0.3 per cent – Held that:- Admittedly revisional authority while taking into consideration fact that amount was paid before date of service of assessment order and fact that assessing authority did not take notification into consideration, in exercise of powers under section 22A(1) set aside order of appellate authority mainly on ground that form 32B prescribed under provisions of section 6A(2) was not filed by assesse – Proviso on which revisional authority relied upon was omitted by Act – This was overlooked by revisional authority – Keeping this in view and having regard to amount involved court inclined to allow appeal – Decided in favour of appellant. Issues:1. Interpretation of the Karnataka Sales Tax Act, 1957 regarding the tax rate on turnovers related to the sale of iron and steel.2. Consideration of advance tax payments made by the appellant-assessee.3. Application of penalty under section 12B(4) of the KST Act.4. Requirement of filing form 32B as per section 6A(2) of the Act.Analysis:The High Court of Karnataka heard a sales tax appeal challenging the order of the Additional Commissioner of Commercial Taxes. The revisional authority had set aside the order of the First Appellate Authority in KST. AP. Nos. 211, 212, 213/07-08. The appellant-assessee's case involved a dispute over the tax rate applicable to turnovers from the sale of iron and steel. The assessing authority had levied tax at 1.5%, but the appellant argued for a lower rate per a government notification. The appellant had made advance tax payments of Rs. 15,868 and Rs. 85,000 before the assessment order, which were not fully considered by the assessing authority.The assessing authority imposed a penalty of Rs. 50,000, considering the balance payable by the appellant. However, the First Appellate Authority overturned this penalty, taking into account the advance payment of Rs. 85,000 made before the assessment order. The revisional authority set aside the First Appellate Authority's decision, citing the non-filing of form 32B by the assessee as per section 6A(2). The revisional authority's reliance on the omitted proviso post-Act No. 5/2002 was deemed incorrect for the relevant period of 2003-04.The High Court, noting the timely payment of Rs. 85,000 by the appellant before the assessment order and the amount involved, allowed the appeal. The Court set aside the revisional authority's order dated May 27, 2009, emphasizing the oversight regarding the filing of form 32B and the incorrect reliance on the omitted proviso. The appellant's appeal was granted with no costs awarded.