STATE OF KARNATAKA, BY THE COMMISSIONER OF COMMERCAL TAXES, VANIJYA THERIGE KARYALAYA GANDHINAGAR, BANGALORE - 560009 Vs. M/S REID AND TAYLOR(INDIA) LIMITED, THANDAVAPURA, THANDYA INDUSTRIAL AREA, NANJANGUD TALUK, MYSORE DISTRICT - 571302, BY TH

JUDGEMENT

(1.) THE State Government has preferred these revision petitions being aggrieved by the order dated 08 -12 -2009 made in STA No. 1124 -1126/2008 and STA No. 247/2008 passed by the Karnataka Appellate Tribunal, setting aside the order dated 16 -08 -2008 and 13 -01 -2009 passed by the Joint Commissioner of Commercial Taxes (Appeals), Mysore Division (herein after referred to as 'First Appellate Authority') wherein the First Appellate Authority confirmed the order passed by the Assessing Authority for the assessment years 2002 -2003 to 2005 -2006. Since the common question of law and facts are involved in these revision petitions but for the different assessment years with regard to purchase of furnace oil and diesel, all the petitions are clubbed together and disposed off by this order.

(2.) THE respondent is a company incorporated under the Companies Act, 1956 engaged in the manufacture of worsted fabrics and registered under the Karnataka Tax on Entry of Goods Act, 1979 (hereinafter referred to as KTEG Act). The respondent -company has filed their returns for the assessment year 2002 -2003 to 2005 -2006. The Assessing Authority accepted the returns filed by the respondent -company. However, the Assistant Commissioner of Commercial Taxes (Enforcement -I) inspected the respondent company on 18 -01 -2008 and noticed that the respondent has caused entry of furnace oil, high -speed diesel, lubricant, machinery, stores and spares during the assessment year 2002 -2003 to 2005 -2006. They also found that no entry tax has been paid on the said goods, which were brought into the local area. Accordingly, notice under Section 6(1) of the KTEG Act has been issued on 30th January 2008 for reassessment. Inspite of the said notice, the assessee has not filed any objections. However, he sought for time stating that he had filed an application before the State Government for exemption of the entry tax and the said application is pending. Further contending that KTEG Act exempts all inputs and raw materials brought into the local area for consumption or use as raw materials, component parts and input in the manufacturing of intermediate or finished products. Hence, the respondent is not liable to pay any tax. The Assessing Authority after considering the contention raised by the respondent passed reassessment order and issued demand notice to the respondent calling upon them to pay the Tax along with penalty. Being aggrieved by the same, the respondent preferred an appeal before the Joint Commissioner of Commercial Taxes (Appeals) Mysore in KTEG.AP.Nos.5 -7/2007 -08 and KTEG.AP.08/2008 -09 taking various contentions that no opportunity has been given and the order has been passed in violation of principles of natural justice. Further, the furnace oil, high speed diesel were brought into the local limits as input/raw material for the generator set for generating electricity for production of fabrics. Hence, the respondent is not liable to pay any tax. The First Appellate Authority after considering the matter in detail, relying upon the Government Notification dated 30 -3 -2002 and also notification dated 30 -7 -2003 issued under Section 3(1) of the KTEG Act held that only the goods specified at Sl.Nos.2, 3, 4, 7, 8, and 9 used as raw materials and input in the manufacture of intermediate or finished products are exempted from the payment of entry tax. Admittedly, furnace oil and high speed diesel fall under Sl.No.1 of the notification which were used as raw materials/input in manufacture of fabrics and as such, the respondent herein is not entitled to claim any exemptions under the KTEG Act and accordingly, dismissed the appeal by its order dated 16 -8 -2008 and 13 -1 -2009.

(3.) SMT .Sujatha S, learned Additional Government Advocate appearing for the State/revision petitioner contended that the order passed by the Karnataka Appellate Tribunal is contrary to law and has allowed the appeal wrongly interpreting the Government Notification dated 30 -3 -2002. The reading of Explanation (1) of the Government Notification makes it very clear that no tax shall be payable by the dealer on the goods specified in Sl.Nos.2,3,4,7,8, and 9 in the table above when brought by him into the local area for consumption or use as raw material, component parts and input in the manufacture of intermediate or finished products. However in the said notification, the furnace oil and high speed diesel were not included. The petroleum products come under Sl.No.1 and it was included in the said explanation. Further diesel and furnace oil are used not for the production of the end goods, however, they are used for generating power for the manufacturing of fabrics. The respondent is not selling the power generated from the generator sets. Hence, the furnace oil and high speed diesel cannot be treated as raw material or input in manufacturing the intermediate or finished products. She also relied upon the Division Bench judgment of this court made in TAET Nos.3/2010 and 1/2011 disposed off on 29 -07 -2011 and contended that the subject matter is fully covered and sought for allowing the revision petitions setting aside the order passed by the Karnataka Appellate Tribunal.