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2009 DIGILAW 114 (KAR)

WIRES & CABLES (INDIA) v. STATE OF KARNATAKA.

2009-02-09

D.V.SHYLENDRA KUMAR

body2009
ORDER D. V. SHYLENDRA KUMAR, J. - Writ petition by a registered dealer under the provisions of the Karnataka Sales Tax Act who had purchased some goods by paying tax at the rate as stipulated under the provisions of the Karnataka Sales Tax Act and who had kept such goods in stock for the purpose of consuming them for a product which the dealer intended to sell. The Karnataka Value Added Tax Act, 2003 having replaced some of the provisions of the Karnataka Sales Tax Act, the Legislature thought it fit to extend some concession in respect of the tax liability under the new Act in favour of those dealers who had such sales tax paid goods in stock which had already suffered tax under the provisions of the Karnataka Sales Tax Act and this provision is found expression in section 18 of the Act which are as under : "18. Transitional provisions covering relief on sales tax on stock in hand for manufacture and resale at the date of commencement of this Act shall be as prescribed." Rule 166. Transitional relief on stock in hand. - (1) At the date of commencement of the Act, any registered dealer shall be entitled under section 18 to relief on the goods taxable under the Act held in stock which were taxable under the Karnataka Sales Tax Act (Karnataka Act 25 of 1957) hereinafter referred to as the said Act and were purchased during the preceding twelve months within the State from other dealers registered under the said Act for resale or use in manufacture as component part or raw materials or consumable other than as fuel as defined under the said Act at an amount equivalent to - "(a) the tax payable under section 5 or 5A or 6 of the said Act; or (b) the tax payable under section 4 of the Act, whichever is lower." Concession to be provided in terms of section 18 was relegated to rule 166 by the statute itself and in terms of rule 166 the concession was confined to the amount of tax liability which was under the earlier Act or under the later Act whichever was less. It appears the petitioner had suffered tax in respect of inputs at 12 per cent in respect of some parts and 12.5 per cent in respect of other parts and the petitioner had filed an application in form 265 to claim benefit of section 18 read with rule 166. The Department has restricted the benefit to the extent of tax liability under the new Act, i.e., at four per cent in terms of the order passed in form VAT 270. The petitioner it appears being aggrieved, has earlier approached this court by filing a writ petition. That writ petition was disposed of reserving liberty to the petitioner to seek clarification from the competent authority in terms of section 90 of the Act. The petitioner thereafter having approached the competent authority and the competent authority having opined that the order as passed earlier was correct one and that the petitioner cannot claim for better benefit than what had been granted earlier and had rejected the request for better claim in terms of the order dated June 4, 2008, the copy of which is as per annexure D in the writ petition. The petitioner is before this court in the second round of writ litigation. Appearing on behalf of the petitioner Sri S. V. Subramanyan, learned counsel, would urge that the Principal Secretary to the Government, Finance Department, before whom clarification was sought for as per section 90 of the Act, has not properly understood the scope of the section; that the authority appears to be of the impression that under the powers exercisable and referable to section 90 of the Act, when only difficulty in implementing the provisions of the Act arises then alone such powers can be exercised, is erroneous and therefore it is deserved to be quashed. The submission of Sri S. V. Subramanyan is, that apart this very order being arbitrary, petitioner would like to question the validity of the provisions of rule 166 itself which restricts the concession to be given to a lesser of the liability under the two Acts to extend the benefit to the maximum tax which the petitioner must have incurred under the earlier Act. Notice had been issued to the respondents. The respondents are represented by the Government Pleader. Notice had been issued to the respondents. The respondents are represented by the Government Pleader. The submission of Sri Shivoyogiswamy, appearing for the respondents is, the order, annexure D, is very correct in respect of a situation like this and section 90 is not attracted. It is incidentally submitted that the order passed by the authority while extending the benefit in terms of the order in form VAT 270 is correct and that it is in accordance with the statutory provisions and therefore no interference is pointed out and the writ petition deserves to be dismissed. The claim is in respect of a concession given under section 18 of the Act and concession is not a matter of right. A concession can be claimed only in terms of the enabling statutory provisions and not beyond. By enacting section 18 the Legislature enabled the Government to frame Rules. This is to extend a concession effectuated through rule 166. The rule in categorical terms says that concession is confined to reducing the tax liability under the later Act only to the extent of the lesser of the liabilities under the two Acts and not beyond that. Therefore irrespective of the tax liability under the earlier Act, the concession cannot be extended to the whole of the tax liability under the earlier Act if the liability under the later enactment if is less; which is the situation in the case of the petitioner. If the petitioner should have incurred a lesser liability, there was no possibility of the petitioner getting the concession to the extent of liability under the later enactment. Therefore not only the order passed by the authority restricting the concession to the extent of liability under the latter is in consonance with the statutory provisions but also the provisions by themselves do not suffer from any vice or arbitrariness, illegality or ultra vires the provisions of section 18. In any view of the matter no exception can be taken to the earlier order dated March 2, 2007 passed in form No. 270 and if it is so irrespective of the nature of order passed under section 90 order for clarification by the Government, that order stands and in this view of the matter no interference is warranted. Writ petition has no merit and the writ petition is accordingly dismissed.