KANTHI ENTERPRISES Vs. DEPUTY COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) THE controversy in all these petitions being the same they are disposed of by this common judgment. Validity of the provisions of the explanation to Section 5 (1-A) of the Karnataka Sales Tax Act, 1957 as inserted by Act No. 1 of 1996 with retrospective effect have been assailed in these petitions. The provisions of Section 5 (1-A) provides levy of tax on purchases. Section 5 is the charging section for creating the liability of tax on first point on the taxable turnover. Section 5 (1-A) was inserted by Act No. 15 of 1988 with effect from April 1, 1988 as under :

(2.) IN the case of Sri Vinayaka Agency v. State of Karnataka [1996] 102 STC 404 (Kar)clarification issued by the Commissioner of Commercial Taxes on the interpretation of first proviso to Section 5 (1-A) of the Act came for consideration before this Court and it was interpreted that the amount collected by way of sales tax by the registered dealer and paid over to the State Government could be included by the registered dealer in the sale price of the goods sold and the amount was liable to be given deduction while arriving at the taxable turnover of the dealer. The expression "turnover" used in the first proviso to Section 5 (1-A) was interpreted to include the amount of sales tax collected by selling dealer. This interpretation was given on august 18, 1995. By Act No. 1 of 1996 the following explanation was added beside the validation of the assessments already made : "explanation.--For the purpose of this proviso 'turnover of such goods on which tax has been levied' means 'taxable turnover and shall not include tax'. "

(3.) VALIDITY of the said explanation was considered by this Court in Amaravathi Wines v. Deputy commissioner of Commercial Taxes ILR1997 KAR 875 , where the competence of the State Legislature to enact the law with retrospective effect was examined and objection raised were found of no substance and accordingly the writ petitions were dismissed.