HAJI S MOHAMMED GHOUSE Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) These are three connected sales tax appeals presented by a registered dealer under section 24(1) of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the Act), against the order of suo motu revision made by the Commissioner of Commercial Taxes revising the order of the Deputy Commissioner of Commercial Taxes in appeal and confirming the penalty imposed by the assessing authority under section 12-B of the Act.

(2.) The appellant is a dealer in cotton yarn waste, rags and chindies. During the three assessment years 1971-72, 1972-73 and 1973-74, the assessee filed monthly returns as required under section 12-B(1) of the Act. He also paid tax calculated on the basis of the monthly returns for the three years at Rs. 350, Rs. 499 and Rs. 474 respectively. The assessee had not disclosed his turnover relating to cotton waste which constituted the bulk of his turnover. The assessing authority proposed to bring the turnover of cotton waste also to tax. The contention of the assessee was that cotton waste fell within the description of the word "cotton" and, therefore, was exempted as it was included in the Fourth Schedule to the Act. This contention of the assessee was rejected by the assessing authority in view of the amendment excluding cotton waste from the relevant entry relating to cotton and including it in the Second Schedule. The assessing authority therefore brought the following turnover of cotton waste to tax :

(3.) The Commissioner of Commercial Taxes having entertained the view that the order of the appellate authority was prejudicial to the revenue, initiated suo motu proceedings under section 22-A of the Act, proposing to revise the order of the Deputy Commissioner reducing the penalty. After giving notice and hearing the appellant, the Commissioner revised the order of the Deputy Commissioner and restored the order made by the assessing authority.