FMC SANMAR LTD Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THIS case involves an interesting question of law requiring a decision at the hands of this court. Facts in brief are as under : petitioner registered dealer entered into works contract with Hindustan Petroleum Corporation ltd. , in terms of annexure A. In respect of the said works contract undertaken, petitioner opted for composition of tax in terms of Section 17 (6) of the Karnataka Sales Tax Act, 1957 in lieu of the amount payable under the said Act. Petitioner states that the works contract undertaken under the contract dated November 24, 1995 was executed over a period of three years. In as much as the petitioners have opted for composition scheme, the assessment in respect of the said assessment years were duly completed under Section 17 (6) accepting the composition of tax for the assessment years 1996-97. While concluding the assessment tax has been levied at Rs. 15,49,049 which has already been remitted by the petitioner. After assessment proceedings, petitioners were served with a notice dated November 10, 2000 under Section 18-AA of the KST act. It was observed that the petitioners have charged and collected tax of Rs. 15,49,050 from m/s. HPCL. As per Section 18 (2) of the K. S. T. Act as substituted by the Karnataka Taxation laws Amendment Act, 1996 (Act 1 of 1996) and Karnataka Taxation Laws Amendment Act, 1997 (Act 7 of 1997), the works contractor who opts for composition under Section 17 (6) is not entitled to charge and collect tax separately on the bills during the relevant assessment year, 1996-97. According to the notice dated November 10, 2000 petitioner was alleged to have contravened the provisions of Section 18 of the Act. He was asked to show cause as to why the amount so collected as tax should not be forfeited in terms of Section 18-AA of the Act. Petitioner submitted a detailed reply in this regard. Respondents however by order dated January 4, 2001 annexure G rejected the contentions raised by the petitioner. In the said order the notice issued under Section 18-AA was confirmed and the demand notice for forfeiture was asked to be issued in terms of annexure H. Petitioner in these circumstances is before me seeking for a declaration declaring the provisions of Section 8 (14) of the Karnataka Taxation Laws amendment Act, 1997 (Act 7 of 1997) to be declaratory in nature and thus having retrospective operation. Petitioner is also seeking for a writ of certiorari for quashing of annexures G and H on the facts of this case.

(2.) RESPONDENTS have entered appearance and they have filed their detailed statement of objections. In the statement of objections, respondents contend that the Taxation Laws amendment Act is prospective in nature and the same has come into force from April 1, 1997. According to respondents there was clear prohibition on the petitioner from collecting the tax in the light of an option for composition of tax under Section 17 (6) of the Act. Having negatived the same, according to the respondents, petitioner is answerable for forfeiture in terms of the Act. They have also filed a bill which clearly goes to show the collection by the petitioner. Respondents justify their stand in the matter.

(3.) PARTIES are heard at great length.