VOLTAS LIMITED Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THIS revision petition is filed by the assessee under section 15-A of the Karnataka Tax on Entry of Goods Act, 1979. The assessment year is 1992-93.

(2.) BRIEF facts which are germane for disposal of the revision petition can be stated as under: the petitioner is a limited Company manufacturing, among others, air-conditioners and refrigerators in various States in India and the countrywide marketing network with branches including one at Bangalore. The petitioner is a dealer registered under the Central Sales Tax Act, 1956 (for short CST Act), Karnataka Sales Tax Act, 1957 (for short KST Act.) and Karnataka Tax on Entry of Goods Act, 1979 (for short KTEG Act ). The petitioners branch at Bangalore is engaged in selling its manufactured goods. For the assessment year 1992-93, the petitioner filed its return under the KTEG Act declaring the value of goods arrived at by finding the amount shown in the stock transfer invoice issued by the manufacturing unit which represents the value declared for the purposes of Central Excise Duty as increased by freight incurred in transporting the goods from the manufacturing unit into its godown at Bangalore. Entry tax was paid accordingly on such value. The petitioner would contend that this practice is being followed ever since air conditioners and refrigerators became taxable goods in the year 1982 though they ceased to be taxable goods in and around from 1984 to 1992.

(3.) THE Assessing Officer did not accept the petitioners return on the ground that the entry tax is required to be paid on the market price of the goods in the recipient local area and not on the value mentioned in the stock receipt memos. According to the Assessing Authority the word value occurring III Section 2 (8-a) of the Act in respect of goods received otherwise by way of purchase meant effectively eventual sale price. In so far as the refrigerators, the Assessing Authority held that the petitioner had marketed the same for consideration of a gross profit of 15. 5% and therefore proposed to add the stock to the stock receipt value. In respect of air conditioners, he also sought to adopt the same value. The Assessing Authority issued a notice proposing to levy tax on the said revised value. The said revised value was objected to by the petitioner by filing its objections. The petitioner inter alia contended that the taxation event in respect of the goods is at the entry point into the local area and in the circumstances the value of the scheduled goods at the time of entry becomes chargeable. In other words, the petitioner contended that the value at the point of entry would be the basis for levying of the entry tax. The petitioner also amongst other things contended that the levy of tax on the sale price is not permissible. They also contended that the tax is payable only on the cost of the goods when they entered the local area. The petitioner also further sought to explain. That when the goods manufactured in its manufacturing units outside the State, the excise duty was paid and were brought into Karnataka and those goods will be assigned a value and described as stock transfer price when they enter the local area. In conclusion they stated that what is germane for levying tax is the stock transfer price and not the sale price. The assessing Authority rejected all the contentions by its order doted 27th May 1996, marked as Annexure-A. The Assessing Authority has taken the sale price at 15. 5% over and above the stock transfer price. This order of the assessing Authority was taken up in appeal before the Joint Commissioner. The Joint Commissioner agreed with the view taken by the Assessing Authority regarding the interpretation of the term value of goods, but, however, came to the conclusion that the course adopted by the assessing Authority for levying tax was on the higher side and reduced the gross profit from 15. 5% to 10%. The order passed by the Joint Commissioner is produced at Annexure-B. The petitioner aggrieved by the said order preferred an appeal to the Karnataka Appellate Tribunal in KTEG No. 106/97, which is marked as Annexure-C in this proceedings. The Appellate Tribunal, however, dismissed the appeal by its order dated 4th January 1999. The Tribunal interpreting Section 2 (8-a) of the Act came to the conclusion that the latter part of the said definition of value of goods would be more relevant to the facts of the case and recorded a finding that for the purpose of levying tax what Is required to looked into Is the sale price and thus confirmed the order passed by the Assessing Authority as well as the Appellate Authority. The said orders of the authorities are challenged by the petitioner in !he above revision petition.