TaxTMI 
TaxTMI 
2010 (7) TMI 934
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....d books of account, it was noticed that the assessee had claimed exemption on a turnover of high speed diesel (HSD) of Rs. 26,34,19,619 in terms of Notification No. FD 65 CSL 2001, dated April 4, 2001/July 10, 2001 issued under section 8A of the KST Act 1957 with regard to sale of high speed diesel (HSD) to fishermen. According to the said notification, the assessee was eligible for benefit of tax exemption in terms of the above notification. However, the benefit was restricted to the tax payable under section 5 only and not section 6D of the Act. In terms of the aforesaid notification, according to the Department, benefit was available only on sales effected under section 5 of the Act and the said notification did not exempt the payment of levy of cess. The levy of cess at the rate of 5 per cent of the amount of tax did not qualify for exemption in terms of the said notification. Therefore, the assessment order came to be passed and the assessing officer levied cess under section 6D of the Act. Aggrieved by the said order, the assessee preferred an appeal to the Joint Commissioner of Commercial Taxes who affirmed the said order. In the appeal against the said orders before the Kar....
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....passed by the authorities below is strictly in accordance with law and does not call for any interference in this revision. Therefore, the short question that arises for our consideration is: "Whether the Notification No. F.D. 65 CSL 2001 dated July 10, 2001, exempt the payment of cess under section 6D of the Act? Section 8A of the Act empowers the State Government to notify exemptions and reductions of tax. In pursuance of the power conferred on the State, Notification No. FD 65 CSL 2001, Bangalore, dated July 10, 2001 was issued which was duly published in the Karnataka Gazette, Extraordinary No. 1340 dated July 10, 2001 and the same is extracted hereunder: "In exercise of the powers conferred by section 8A of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957) and in supersession of the 'Notification No. FD 65 CSL 2001 dated 4th April 2001 (see serial No. 845A), the Government of Karnataka hereby exempts with immediate effect, the tax payable under section 5 of the Act, on the sale of diesel not exceeding fifty thousand (50000) kilo litres for supply to fishermen for use in fishing activities as per the indents issued on a monthly basis by the Director o....
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....s made thereunder including those relating to efund or exemption from tax shall, so far as may be, apply in relation to the levy, assessment and collection of the cess payable under sub-section (1) as they apply in relation to the levy, assessment and collection of sales tax or purchase tax under this Act." A Constitution Bench of the Supreme Court in the case of Shinde Brothers v. Deputy Commissioner, Raichur reported in AIR 1967 SC I512, explained the meaning of the word "cess" at para 39 as under: "39. . . . The word 'cess' is used in Ireland and is still in use in India although the word rate has replaced it in England. It means a tax and is generally used when the levy is for some special administrative expense which the name (health cess, education cess, road cess, etc.,) indicates. When levied as an increment to an existing tax, the name matters not for the validity of the cess must be judged of in the same way as the validity. . ." A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered. There is no element of "quid pro quo" between the tax-payer and the public authority. A ....
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....n Infrastructure Development Corporation (Karnataka) Limited activities extend to whole of Karnataka. Therefore, it is not a case of any specific service rendered to a specific area or to a specific class of persons or trade or business in any local area and as a condition precedent for the said services or in return for, cess is levied against this class of persons. Therefore, it is in the nature of a tax and not a fee. In this background, when we look at the section, the opening words of section 6D makes it clear that cess is payable in addition to the tax payable under sections 5, 5B, 5C and 6. Therefore, it is in the nature of an additional tax or an increment to an existing tax. The rate of cess payable is five per cent of the tax payable under sections 5, 5B, 5C and 6. However, the proviso prescribes the rate of tax payable in respect of petrol and diesel at the rate of 25 paise per litre and 10 paise per litre, respectively. No doubt a Division Bench of this court in the case of Commercial Tax Officer, IV Circle, Davangere, Chitradurga District v. Hallur Halappa and Company, Davangere, Chitradurga District [1996] (41) Kar LJ 503 (HC) (DB), has held that "exemption noti....
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....to the State Government's intention to extend the benefit to the poor fishermen. It is a social as well as a welfare measure, to ameliorate the condition of poor fishermen in the State. The benefit is extended to a class of people who are marginalised because of their financial weakness, with the intention of bringing them to the main stream of the society. Though while interpreting fiscal legislation and the notification issued under such legislation, exemption notification has to be strictly construed and the assessee should bring himself squarely within ambit of the notification, the courts cannot lose sight of the inten tion of the Government in issuing such notification. It is not a case of liberal construction of such notification but purposive construction of such notification when a benefit is conferred keeping in mind the historical background with a social objective, effect must be given to such notification to achieve such object. The courts cannot place such construction on such notification to negate the benefits flowing therefrom on the premise of strict construction. When an attempt is made to deprive the legitimate benefits due to persons who belong to weaker se....