TaxTMI 
TaxTMI 
2010 (7) TMI 937
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....been filed by the State. The respondent is the manufacturer of various brands and varieties of fertilizers. The respondent is a registered dealer under the provisions of the Karnataka Sales Tax Act, 1957, (for short, hereinafter referred to as "the Act"). For the assessment years 1994-95 and 1995-96, the respondent collected tax as per form No. 3 and form No. 4 in a sum of Rs. 2,58,48,158 and Rs. 4,01,76,658, respectively. Subsequently, they filed a revised return of turnover in form No. 4 for both the years, as a sequel to the decision of the Allahabad High Court in the case of Rashtriya Chemicals and Fertilisers Limited v. State of U.P. reported in [1996] 101 STC 487 (All). In the said judgment it was held that subsidy given by the Gover....
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....ce of the chemical fertilizers as per the revised annual return. Thus in effect they illegally appropriated the taxes collected on the subsidy amount. Therefore, a show-cause notice was issued under section 18AA of the Act. The assessee filed objections. They contended that the assessing officer has considered the aforesaid contentions and passed an order and therefore the question of reconsidering the same would not arise. They contended that they have not collected any taxes on the subsidy amount. Therefore the notice issued for forfeiture of the amount which they had not received, would not arise. In fact, they also filed returns showing that they had not collected taxes on subsidy. They also gave examples in writing to show how no tax w....
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....subsidy and it was impermissible to add that tax collected to the basic price of the products and therefore it dismissed the appeal. Aggrieved by the same, the assessee preferred an appeal to the Karnataka Appellate Tribunal. The Tribunal on appreciation of the facts held that the sale proceeds realised by the assessee were the amounts billed as net invoice values or MRP inclusive of tax but excluding subsidy. The tax amounts comprised within the net invoice values would be the basic tax, surcharge and cess payable on sale prices excluding subsidy. That the assessee met the difference in the cumulative incidence of tax as between the taxes comprised within the net invoice value excluding subsidy and the sale prices inclusive of subsidy, ou....
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....rtment. Per contra, the learned counsel for the assessee submitted that as is clear from the invoice, the money which they have collected from the consumers is after giving deduction to the subsidy. They have not collected any tax. As such, they are not liable to pay any amount to the Department in terms of the impugned order passed by the assessing officer. In the light of the aforesaid facts and rival contentions, the short point that arises for our consideration in this revision is: "Whether the assessee has collected sales tax on the subsidy and has not passed on the said collected tax to the Department as contended by the Department." In order to appreciate these rival contentions, we intend to extract annexure C, the invoice on wh....