STATE OF MYSORE Vs. S V PAGADI

JUDGEMENT

(1.) This revision petition under section 23(1) of the Karnataka Sales Tax Act, 1957, preferred by the State relates to the assessment year 21st March, 1967, to 20th November, 1967, and it is directed against the order dated 22nd November, 1972, in S.T.A. No. 222 of 1972, on the file of the Mysore Sales Tax Appellate Tribunal, Bangalore.

(2.) The matter arises this way : The respondent is a dealer under the Karnataka Sales Tax Act, 1957, hereinafter called the "Act". The dealer had collected sales tax amounting to Rs. 565.80 on the sales of iron and steel rails, although he was the second dealer in the said goods. Under the Act, it is only the first or earliest of the successive dealers in the State that is liable to tax and, therefore, the dealer is admittedly not liable to tax on the said sales. However, the dealer had collected sales tax when the transactions were not exigible to tax. On the ground that the dealer had contravened section 18(1) of the Act, the commercial tax authorities levied a penalty of Rs. 565.80, which is equivalent to the amount collected by the dealer. That order was affirmed by the Deputy Commissioner of Commercial Taxes, Dharwar, but was reversed by the Tribunal following the decision of this court in Hindustan Drug House v. State of Mysore ([1970] 25 S.T.C. 182). The correctness of the said decision has been challenged in this revision petition by the State.

(3.) In State of Mysore v. S. S. Dhundushi ([1975] 35 S.T.C. 411 at 412; (1973) 2 Mys. L.J. 445 at 446), this court held that the amendment of section 18(1) of the Act which came into force on 1st April, 1966, has not made any difference in the position of law as laid down earlier in V. P. Patil v. Commercial Tax Officer ([1970] 25 S.T.C. 449) and, therefore, penalty cannot be levied. This court derived support for its view from the decision of the Supreme Court in State of U.P. v. A. B. Manufacturing Co. AIR1973 SC 1333 , (1974 )3 SCC121 , [1973 ]3 SCR987 , [1973 ]32 STC1 (SC )