ASSOCIATED CEMENT COMPANIES LIMITED Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) The substantial question of law arises in this appeal is whether the petitioner herein has to pay the turnover tax on the sale of packing material based on the notification dated 30.3.1994 at the reduced rate of tax of second sale at 1% instead of 2.5%.

(2.) The facts leading to this case are as hereunder: The assessee is a manufacturer of cement which sells the cement in bags and the bags for selling the cement is purchased as packing material by the assessee which according to the assessee had suffered sales tax at the time of purchase of MT bags. For the assessment year 1.4.1994 to 31.3.1995, the assessee filed returns under the provisions of the Karnataka Sales Tax Act. The contention of the assessee before the Assessing Officer was that in view of the notification dated 30.3.1994 in respect of the bags used as package material is liable to pay at 1% and not at 2.5%. The contention of the assessee has been rejected by the Assessing Officer and he has been called upon to pay tax at 2.5% only. Aggrieved by the order of the Assessing Officer dated 19.2.1999 an appeal preferred before the Joint Commissioner of Commercial Taxes (Appeals) under Section 20(5) of the EST Act, 1957 which appeal came to be dismissed. Being aggrieved by the same the assessee filed second appeal before the Appellate Tribunal, Bangalore, STA 140/2004 and other connected appeals. The appeal preferred by the assessee came to be dismissed by the Tribunal by its order dated 31.5.2006. Challenging the concurrent findings of the authorities below the present revision petition has been filed raising the following questions of law:

(3.) The learned Counsel for the assessee relying upon the Division Bench decision of this Court of the assessee's case only reported in 2004 (57) Kar. L.J. 1 (H.C) dated 13.4.2004 contends that the assessee is not liable to pay the turnover tax at 2.5% in respect of the material used for packing the cement and entitled to pay turnover tax at 1% only. He further contends that in view of the notification dated 30-3-1994 the petitioner is liable to pay 1% only. The notification reads as hereunder: "No.FD 190 CSL 93(IV), Bangalore, dated 30th March, 1994 Karnataka Gazette (Extraordinary), dated 31st March, 1994 (Cancelled w.e.f. 1-4-2002, by Notification No.FD 54 CSL. 2002(1), dated 30.3.2002 (Sl.No.893) In exercise of the powers conferred by Section 8-A of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957), the Government of Karnataka hereby reduces with effect from the First day of April, 1994, the tax payable by a dealer under Section 6-8 of the said Act on the turnovers relating to second and subsequent sales or purchases In the State to one per cent." Therefore he contends that the packing material has to be considered as second or subsequent sales or purchase in the State and the assessee ha to pay turnover tax at 1% in respect of packing material.