STATE OF KARNATAKA Vs. KASTURI AND SONS LTD

JUDGEMENT

(1.) THIS Revision Petition under Section 23 (1) of the Karnataka Sales tax Act, 1957 [for short, the Act] is filed by the State. The respondent is a registered dealer under the Act. It is engaged in the business of printing and selling of newspapers. For the assessment year 1995 96, an order of assessment was made by the Assessing Authority on 12. 1. 1998. Under the said order, the turnover relating to 'waste paper' i. e. out waste paper, reel paper, rubbish paper and printed waste paper, was subject to tax as unscheduled goods under Section 5 (1) of the Act, the rate of tax being 10%.

(2.) FEELING aggrieved by the said assessment order, the assessee filed an appeal before the Joint Commissioner of Commercial Tax (Appeals) Bangalore City Division-l, Bangalore [hereinafter referred to as first Appellate Authority]. The Assessing Authority relied on the decision of the Supreme Court in STATE OF UTTAR PRADESH vs KORES (INDIA)LTD, wherein it was held that the word 'paper', not having been defined, has to be understood in the sense in which persons dealing in and using the article understand it; and the said work in common parlance or in the commercial sense would mean paper, which is used for printing, writing or packing purpose. Consequently, Supreme Court held that carbon paper is not 'paper'. The first Appellate Authority dismissed the appeal by order dated

(3.) 10. 1998, holding that cut waste papers, reel paper and rubbish paper and print waste papers cannot be used for the purposes for which generally paper is used i. e. for writing, printing or packing and therefore, waste paper was not 'paper'. 3. Feeling aggrieved, the Assessee filed a second appeal before the Karnataka Appellate Tribunal, Bangalore. The tribunal by its judgment dated 27. 8. 1999 allowed the appeal and set aside the order of the first appellate authority, and modified the order of assessment by treating the sale transactions relating to waste paper as liable to tax under entry at SI No. 3, part 'p' of II Schedule to the Act, accepting the contention of the assessee. The tribunal held that the decision in KORES (INDIA)'s case was inapplicable, the Supreme court was not considering an entry similar to SI No. 3 of Part'p' of the II Schedule to the Act.