Independent VAT rebate applies when taxable goods are sold and goods are dispatched outside the State otherwise than by sale.

Section 17(2) of the Karnataka VAT framework operates independently of Section 17(1) and applies disjunctively where a dealer sells taxable goods and dispatches goods outside the State otherwise than by way of sale. The presence of exempted sales is not a condition for invoking partial rebate under that provision, because the word "or" creates alternative contingencies. Rule 131 cannot narrow the scope of the statute and must yield to the express language of the Act. Even if no exempted goods are sold, the relevant figure under the Rule may be nil, but that does not defeat applicability of Section 17(2).

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Issues: Whether partial rebate under Section 17 read with Rule 131 of the Karnataka Value Added Tax Act, 2003 applies where the dealer sells taxable goods and dispatches taxable goods outside the State otherwise than by way of sale, but does not sell exempted goods.

Analysis: Section 17(1) deals with a dealer making sales of taxable goods and exempt goods, while Section 17(2) contains independent contingencies relating to dispatch of goods outside the State otherwise than as a direct result of inter-State sale or purchase. The use of the word "or" in Section 17(2) creates alternative situations, and that provision cannot be read as requiring both taxable and exempted sales. Rule 131 must operate in aid of the Act and cannot curtail the scope of the express statutory provision. If no exempted goods are sold, the relevant figure under the Rule would only be nil, but that does not nullify the applicability of Section 17(2).

Conclusion: The dealer falls within Section 17(2) even without sales of exempted goods, provided taxable goods are sold and goods are dispatched outside the State otherwise than by way of sale; the petitions therefore fail.

Ratio Decidendi: A rule cannot be construed to restrict the plain and independent operation of a statutory provision, and Section 17(2) applies disjunctively to a dealer selling taxable goods who dispatches goods outside the State otherwise than by way of sale.

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