Research › Search › Judgment

Karnataka High Court · body

2004 DIGILAW 402 (KAR)

STATE OF KARNATAKA v. BINARY SYSTEMS PVT. LTD.

2004-06-28

A.C.KABIN, H.L.DATTU

body2004
H. L. DATTU, J. ( 1 ) THESE petitions are against the order passed on 3. 8. 2000 by the Karnataka Appellate Tribunal in STA No. 130 and 131/1998. ( 2 ) BRIEFLY stated the facts are: the respondent - assessee is a dealer registered under the provisions of the Karnataka Sales Tax Act and also the Central Sales Tax Act. it is a dealer in computers and computer peripherals. Its sales are second or the subsequent sales. For the assessment year 1994-95, the Assessing Authority had completed the assessment proceedings and had not levied the turnover tax under Section 6-B of the Act. For the assessment year 1995-96, on the declared turnover of the dealer in computers and computer peripherals, the Assessing Authority had levied the turnover tax at the rate of 1%. By initiating re-assessment proceedings for the assessment year 1994-95, the Assessing Authority had revised his earlier order of assessment and had levied the turnover tax at the rate of 1%. While framing the re-assessment order, the Assessing Authority had also levied certain penalties under the Act. Aggrieved by that order, the petitioner had preferred an appeal before the First Appellate Authority. The Appellate Authority partly allowed the appeal by deleting the levy of penalty imposed by the Assessing Authority. ( 3 ) AGGRIEVED by the order made by the First Appellate Authority, petitioner filed second appeals before the Karnataka Appellate Tribunal, Bangalore, in STA Nos. 130 and 131/1998. The Tribunal by its order dated 03. 08. 2000 has allowed the appeals and has set aside the orders made by the Assessing Authority. ( 4 ) THE undisputed facts are, that the assessee is a dealer in computers and computer peripherals. His sales are second or subsequent sales within the State of Karnataka. ( 5 ) THE Government had issued in exercise of its power under section 8-A of the Act a Notification No. FD 43 CSL 94 (2) dated 30. 03. 1994 providing for levy of tax on computers and computer peripherals at 4% as against the scheduled rate of 10%. There is yet another Notification in No. FD 35 CSI. 96 (17) dated 30. 03. 1996. In that, the Government has specifically exempted the turnover tax under Section 6-B of the Act on computers and computer peripherals with effect from 01-04-1996. ( 6 ) IMMEDIATELY after issuance of the Notification dated 30. 03. There is yet another Notification in No. FD 35 CSI. 96 (17) dated 30. 03. 1996. In that, the Government has specifically exempted the turnover tax under Section 6-B of the Act on computers and computer peripherals with effect from 01-04-1996. ( 6 ) IMMEDIATELY after issuance of the Notification dated 30. 03. 1994, the Commissioner of Commercial Taxes had issued a clarification in No. CLR. CH. 92/1994-95 dated 25. 06. 1994 and in that, he had clarified that no turnover tax is leviable on second and subsequent sates of computers and computer peripherals. ( 7 ) SRI. B. Anand, learned Government Advocate appearing for the revenue submitted before this Court, that by Notification dated 30. 03. 1994, the State Government had reduced the rate of tax on computers and computer peripherals to 4% as against the scheduled rate of 10%. Since notification does not exempt the levy of turnover tax on second and subsequent sales of computers, the Tribunal was not justified in setting aside the orders passed by the Assessing Authority in levying turnover tax on the second sales of the computers of the respondent - dealer. It is true that the notification dated 30. 03. 1994 does not provide for exemption from levy of turnover tax on second sales of computers and computer peripherals, but, the Commissioner of Commercial Taxes for the reasons best known to him, had issued a clarification dated 25. 06. 1994 and in that he had specifically clarified that no turnover tax is leviable on second and subsequent sales of computers and computer peripherals. ( 8 ) BY the subsequent Notification dated 30-03-1994, the State Government itself has exempted payment of turnover tax on computers and computer peripherals with effect from 01-04-1996 ( 9 ) THE assessees contention before the Authorities under the Act was, that in view of the clarification issued by the Commissioner of Commercial Taxes, no turnover tax is leviable on the second and subsequent sales of computers and computer peripherals. ( 10 ) THE Assessing Authority as well as the Appellate Authority have also rejected the claim of the assessee for exemption of turnover of computers on its second sales, on the ground that if the intention of the State Government was to exempt the turnover tax payable on the computer and computer peripherals for earlier years, it would not have issued the Notification dated 30-03-1994exempting the turnover tax on the second sales of computers and computer peripherals specifically with effect from 1. 4. 1996. ( 11 ) IN our opinion the Assessing Authority as well as the First Appellate Authority have committed an error. The Notification issued by the State Government dated 30-03-1994 was known to the Commissioner of Commercial Taxes and inspite of the said notification, the Commissioner had thought it fit to clarify by issuing a clarification dated 25. 06. 1994 that the turnover of second or subsequent sales of computers and computer peripherals are not eligible for levy of turnover tax. That clarification was binding on the Assessing Authority at the relevant point of time, till it was withdrawn by the Commissioner of Commercial Taxes by order made on 29-06-1996, in view of the judgment of this Court in Jagadish Colour Tabs case. ( 12 ) KEEPING in view the purport of the clarification issued by the Commissioner of Commercial Taxes, the Tribunal, in our opinion has rightly observed, that for the relevant period, the Commissioners clarification was binding on the Assessing Authority and therefore they could not have levied the turnover tax on the sales turnover of computers and computer peripherals of the assessee. In our opinion the findings and the conclusion reached by the Tribunal are in consonance with the clarification issued by the Commissioner of Commercial Taxes dated 25. 06. 1994. In that view of the matter, we do not find aw error in the orders passed by the Tribunal in allowing the assessees appeal and setting aside the orders passed by the Assessing Authority. In the result, the petitions fail and accordingly they are rejected. Ordered accordingly. --- *** --- .