STATE OF KARNATAKA Vs. VASAVI WOOD INDUSTRIES

JUDGEMENT

(1.) This revision petition is by the State against the order passed by the Tribunal holding that sale of a used car by the assessee was one time transaction and it was not his regular business and therefore, no tax is payable under the provisions of the Karnataka Value Added Tax Act, 2003 (for short, 'Act'). The assessee is a partnership concern, is a dealer in timber. After scrutiny of the deemed assessment concluded by Section 39(1) of the Act, the Assessing Officer brought sale of used car at Rs. 1,25,000/- to tax under Section 4(1)(b) at 12.5%. He observes that the motor vehicle being input tax restricted goods under Section 11(a)(2) of the Act, deduction or exemption or lower rate of tax is not applicable. In coming to the said conclusion, he relied on the judgment of Canara Overseas Limited, Bangalore v. State of Karnataka,2009 67 KarLJ 161He also levied penalty. The assessee challenged the said order before the First Appellate Authority under Section 62(1) of the Act. The Appellate Authority declined to interfere with the order passed by the Assessing Authority. Aggrieved by the same, the assessee preferred a second appeal to the Karnataka Appellate Tribunal. The Tribunal held, in order to attract levy of tax under the Act, pursuant to carrying of business in a particular commodity, it must depend upon volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods. A transaction must ordinarily be entered into with a profit motive. During the course of business, there must be continuous exercise of an activity, real, substantial, systematic or organised course of activity or conduct set with a purpose. As the assessee in the instant case is a dealer in timber, the sale of a used car by him was one time transaction and it was not his regular business. Therefore, the liability of tax on the sale of used car does not arise and therefore, the Tribunal set aside the order and allowed the appeal. Aggrieved by the said order the Revenue is in revision.

(2.) The learned Government Advocate assailing the impugned order submitted, Section 2(12) of the Act defines the "dealer":

(3.) Per contra, the learned Counsel appearing for the assessee submitted the sale of Car is a solitary transaction and therefore, the assessee do not fit into the definition of "casual dealer" also.