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of <h1>Court clarifies application of Karnataka VAT Act Section 17(2) to interstate sales</h1> <h3>M/s. Jindal Aluminium Ltd. Versus State of Karnataka,</h3> M/s. Jindal Aluminium Ltd. Versus State of Karnataka, - TMI Issues:Whether the partial rebate scheme under Section 17 read with Rule 131 of Karnataka Value Added Tax Act, 2003 can be made applicable to the petitioner or notRs.Analysis:The petitioner-assessee raised questions of law, but the main issue was whether the partial rebate scheme under Section 17 of the KVAT Act could apply to them. The petitioner argued that both conditions of Section 17 should be satisfied, involving sales of taxable and exempted goods, which they claimed they did not deal with. The petitioner contended that the Tribunal wrongly applied Section 17 to them. On the other hand, the respondent supported the Tribunal's order, stating that the petitioner's contention lacked merit.The court examined Section 17 of the KVAT Act, which allows for partial rebate for input tax credit. It observed that while the petitioner did not deal with exempted goods under sub-clause(1) of Section 17, sub-clause(2) had different requirements. The court clarified that if the dealer dispatched taxable goods outside the State under certain conditions, they would be covered by Section 17(2). The court emphasized that the word 'or' in the provision should not be read as 'and,' indicating that either of the two conditions in sub-clause(2) could be satisfied for its applicability.The court rejected the petitioner's argument that both conditions of selling taxable and exempted goods were necessary for Section 17(2) to apply. It emphasized that if a dealer sold taxable goods and dispatched goods outside the State, even without dealing in exempted goods, they could still fall under Section 17(2). The court also dismissed the petitioner's attempt to use Rule 131 to nullify the express provisions of Section 17, stating that the Rules should not override the Act's provisions.In conclusion, the court held that Section 17(2) could apply to a dealer selling taxable goods and dispatching goods outside the State, even if they did not sell exempted goods. It found no error in the Tribunal's decision and dismissed the petitions as meritless. The court noted that questions regarding the calculation of facts and figures under Rule 131 were outside the scope of the present petitions, limited to questions of law.
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