MULGUND AND CO Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) This revision petition is directed against the order dated 31st October, 1978, made by the Appellate Tribunal in S.T.A. No. 3/78. It relates to the scope and ambit of section 5(3-A) of the Karnataka Sales Tax Act ("Act").

(2.) The petitioner-firm filed a return for the accounting period from 20th October, 1971, to 5th November, 1972, stating that its total, exempted and taxable turnovers for the year are Rs. 13,27,230.01, Rs. 4,59,161.88 and Rs. 8,68,158.13 respectively. It also contended that the latter turnover was liable to tax at 2 per cent under section 5(3-A). The assessing authority rejected that contention and assessed the turnover to tax at 3 per cent and 3 1/2 per cent under section 5(1) of the Act. On 21st April, 1977, the petitioner claimed that its sale transactions had the support of form 37 and therefore liable to be taxed at the concessional rate provided by section 5(3-A) and the levy at the rates prescribed under section 5(1) was an apparent mistake which demands rectification. But the assessing authority rejected that claim for rectification stating thus :

(3.) The primary question that arises for consideration in this revision petition is, whether the authorities below were justified in rejecting form 37 produced by the petitioner for earning concessional rate of tax prescribed under section 5(3-A). Section 5(3-A) provides that notwithstanding anything contained in sub-section (1) or sub-section (3), the tax payable by a dealer in respect of any sale of goods by such dealer to a registered dealer for use by the latter as component part of any other goods mentioned in the Second Schedule which he intends to manufacture inside the State for sale, shall be at the rate of four per cent on the turnover relating to such sale. (The rate of tax during the relevant period i.e., 1971-72, was only 3 per cent). The proviso to section 5(3-A) sets out the particulars required to be furnished by the assessee in order to claim the benefit of concessional rate of tax. The assessee has to furnish to the assessing authority declaration duly filled in and signed by the dealer to whom the goods are sold. Rule 38-A of the Karnataka Sales Tax Rules, framed under section 5(3-A), provides that the declaration shall be in form 37. A dealer who wishes to sell goods to another on payment of tax at the rate specified in section 5(3-A) shall obtain such blank forms on payment of two rupees per book from the assessing authority and shall furnish to the purchasing dealer the original and duplicate portions of the declarations duly filled in and signed by him. The rule also states that a dealer who claims that a sale is liable to tax at the concessional rate shall attach to his return of turnover the original of the declaration received by him from the purchasing dealer and also produce for inspection the portion of it marked "duplicate" if the assessing authority directs him so to do. Explanation to section 5(3-A) clarifies the meaning of "component parts" for the purpose of the said sub-section. The explanation reads thus :