VINAYAKA AGENCY Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) These writ petitions have been filed by the petitioners seeking a declaration from this Court to the effect that the instruction/clarification issued by the Commissioner under annexure A and the Notification No. S.O. 1707, dated November 25, 1989 (annexure B), are contrary to the provisions of sections 5(1-A), 3A and 8A of the Karnataka Sales Tax Act, 1957 (in short, "the Act", hereinafter) and are as such ultra vires their powers and cannot be enforced.

(2.) The petitioners are wholesale dealers in Indian manufactured liquor such as whisky, rum, etc. They are registered dealers under the provisions of the Act. The petitioners purchase the liquor from the manufacturers and the Mysore Sales International Limited, Bangalore (in short, "MSIL") and sells it to the retail dealers in liquor. MSIL holds a distributor licence under the Karnataka Excise (Sales of Indian and Foreign Liquors) Rules, 1968.

(3.) The levy of tax on alcoholic liquors for human consumption, in contradistinction to other commodities, has been made multi-point as provided under sub-section (1-A) of section 5 of the Act, inserted by the Karnataka Sales Tax (Amendment) Act, 1988, with effect from April 1, 1988. The said provision reads as under : "Notwithstanding anything contained in sub-section (1), every dealer shall pay for each year tax on his taxable turnover of sales (other than the last sale in the State) relating to all kinds of alcoholic liquors for human consumption (other than toddy, arrack, fenny, wine and beer) at the rate of thirty-five per cent of such turnover : Provided that at any point of sale other than first point of sale and the last point of sale, the taxable turnover shall be arrived at by deducting the turnover of such goods on which tax has been levied under this sub-section at the immediately preceding point of sale : Provided further that no tax under this sub-section shall be levied and collected up to the 31st day of May, 1988 on subsequent sales excepting the last sale of alcoholic for human consumption (other than toddy, arrack, fenny, wine and beer) which have already been subjected to tax at the rate of forty-five per cent prior to the 31st day of March, 1988 under clause (a) of sub-section (3) of section 5 of the Act. Explanation. - For the purpose of this sub-section last sale shall be the sale by a retailer to the consumer and shall not include the first sale in the State." Subsequently there had been some amendments to the said provisions, but those are not material for the present purposes.