STATE OF KARNATAKA Vs. ANJANA ZARDA AGENCIES

JUDGEMENT

(1.) State has preferred this revision challenging the order dated May 31, 2005 passed in S.T.A. Nos. 1601, 1602, 1603 and 1604 of 2004 by the Karnataka Appellate Tribunal in Bangalore. The facts of the case are that the respondent who is a registered dealer under the provisions of the KST Act and is engaged in the sale of gutka, pan masala, jarda and other similar products had filed its returns and the assessments were completed for the years 1994-95 up to 1997-98. Pursuant to a decision of the apex court in the case of Kothari Products Ltd. v. Government of Andhra Pradesh, 2000 119 STC 553, it was held that the State Government had no authority to impose sales tax on the sale of gutka. Thereafter, the assessing officer rectified the assessment orders under section 25A of the Act and granted exemption from levy of tax on the sales turnover of gutka. However, the assessing authority had passed an order under section 18AA of the Act forfeiting the tax paid by the respondent on the said product for the relevant period. The respondent being aggrieved by the said order passed under section 18AA of the Act filed an appeal before the appellate authority which was dismissed confirming the order passed by the assessing authority. The said matter was carried in appeal before the Tribunal, which, by its order dated May 31, 2005 has allowed the appeals and thereby set aside the order passed by the assessing authority which was confirmed by the appellate authority. Being aggrieved by the said order, the State has preferred this appeal raising the following questions of law:

(2.) We have heard the learned Government Pleader for the State and the learned counsel for the respondent-assessee.

(3.) It is submitted on behalf of the State that the assessment for the years 1994-95 to 1997-98 had attained finality and it was thereafter that the apex court had ruled in the matter of Kothari Products Ltd. : [2000] 119 STC 553. That the State did not have power to levy tax on the said products. Therefore, in the matter of considering the exemption from levying of sales tax, the assessing authority is justified in passing an order under section 18AA of the Act forfeiting the amount of tax because the said decision was rendered after the assessments had attained finality which order was rightly affirmed by the first appellate authority and the Tribunal was not justified in setting aside the said order which was resulted in loss of revenue to the State. He therefore submits that the Tribunal's order has to be set aside and the order of the assessing authority confirmed by the appellate authority has to be affirmed in this appeal.