BABA ASSOCIATES Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THE petitioner, M/s. Baba Associates, has challenged the order dated November 30, 1990, passed by the Karnataka Appellate Tribunal, Bangalore, under section 22 (6-A) of the Karnataka Sales Tax Act, 1957 ("the Act" for short ). By the said order, the Tribunal has rectified its earlier decision rendered on October 4, 1985, in S. T. A. No. 1340 of 1983. The petitioner has contended that the said rectification proceeding is barred by time and is without jurisdiction.

(2.) IN order to appreciate the grievance of the petitioner, it is necessary to state briefly, the facts of the case : The relevant period of assessment is December 1, 1978 to June 29, 1979, being a part of assessment year 1978-79. The assessee is the manufacturer and seller of Indian-made foreign liquor. For the relevant period, the petitioner filed a revised return declaring a gross turnover of Rs. 3,22,417. 77. The petitioner contended that a sum of Rs. 1,92,110. 78 representing excise duty paid by the purchasers directly into the State treasury, will not form part of the sales turnover of the petitioner and therefore did not declare the same as part of its turnover. The assessing authority rejected the claim of the petitioner. The assessee went in appeal to the appellate authority against the order of the assessing authority. The appeal was dismissed. Against the said dismissal order, the petitioner preferred a further appeal before the Tribunal in S. T. A. No. 1340/1983. Before the Tribunal, in support of its contention that the excise duty paid directly by the purchasers will not form part of its sales turnover, the petitioner relied on the decision of the Supreme Court in the case of Mcdowell and Company Ltd. v. Commercial Tax Officer [1977] 39 STC 151. The Tribunal following the said judgment, allowed the appeal directing the assessing authority to revise the demand by excluding the excise duty paid by the purchasers, directly to the State treasury from the taxable turnover of the petitioner. It was also held that the petitioner was not liable to pay additional tax, as the total turnover of the petitioner would be less than rupees five lakhs.

(3.) THE Tribunal took up the said rectification application for consideration, heard the petitioner as well as the applicant (Revenue) and passed an order dated November 30, 1990. The Tribunal took the view that the rectification proceedings were within the period of limitation and that its earlier decision dated October 4, 1985, suffered from an apparent error of law as the second Mcdowell case [1985] 59 STC 277 (SC) had not been considered. Consequently, the Tribunal allowed the rectification application by ordering that the excise duty of Rs. 1,92,110. 75 paid by the purchasers of liquor directly into the State treasury, formed part of the sale price of the assessee and, therefore, the assessee shall be liable to pay tax, additional tax and surcharge on the said amount of Rs. 1,92,110. 75. As noted earlier, the assessee has challenged the said order of rectification of the Tribunal in this revision petition.