AMARAVATHI WINES Vs. DEPUTY COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) THE constitutional validity of Explanation to first proviso to subsection (1. A) of Section 5 of karnataka Sales Tax Act, 1957 ('the Act' for short) as introduced by Section 3 of Karnataka taxation Laws (Amendment) Act, 1996 w. e. f. 1. 4. 1996 is under challenge in this batch of Writ petitions by wholesale dealers in Karnataka, doing business in liquor.

(2.) I may refer to the facts in W. P. 21980-981 of 1996, which is representative of and typifies the content in which of and typifies the content in which the question arises. The petitioners are engaged in the business of Indian Manufactured liquor (IML) and registered as dealers under the provisions of the Act. In the course of business, the petitioners purchase I. M. L from other manufacturers and effect sale of such goods to other retail dealers.

(3.) BEFORE I advert to and evaluate the merits of the contentions, it is appropriate to refer to statutory provisions. The levy of sales tax on certain alcoholic liquors for human consumption, in contradiction to other commodities, is governed by Sub-section (1. A) of Section 5 of the Act, as inserted by the amendment Act of 1988 effective from 1. 4. 1988. Section 5 (1. A) imposes levy on every dealer of liquor to pay tax on his taxable turnover at the prescribed rate except the dealer effecting the last sale in the State. The scheme of levy of tax as envisaged under the said provision is that of value added taxation where under the value added to a commodity and which has not suffered tax is only subjected to levy of tax. Proviso to sub-section provides a mode of arriving at taxable turnover in case of sales other than at the first and the last point. According to this proviso, the taxable turnover of a dealer is arrived by deducting the turnover of such goods on which tax has been levied under this sub-section immediately preceding point of sale.