Karnataka High Court
Srinivasa Electricals, Represented By ... vs The Additional Commissioner Of ... on 29 October, 2004
Equivalent citations: ILR2004KAR5042, [2006]147STC265(KAR), 2004 AIR - KANT. H. C. R. 3471, (2004) 57 KANTLJ(TRIB) 474
Author: H.L. Dattu
Bench: H.L. Dattu, Manjula Chellur
JUDGMENT H.L. Dattu, J.
1. Interpretation of Entry 3 of VIII Schedule to Section 5(3)(c) of the Karnataka Sales Tax Act, 1957 ('KST Act' for short) has fallen for consideration of this Court in this appeal.
2. Entry 3 for the relevant assessment year namely, 1994-1995 reads as under:
"Goods falling under items (i) & (iii) of Serial No.2 of Part 'E' of the Second Schedule i.e., all electrical goods, instruments, apparatus and appliances including fans and lighting bulbs and all other parts and accessories by excluding pumpsets with electric motors of not more than 10 H.P. and dry cell and dry cell batteries."
3. Section 5(3)(c) of the KST Act starts with a non-obstante clause and proceeds further to say that in the case of sale of any of the goods mentioned in Column (2) of the VIII Schedule to the Act which has already been subject to tax under Clause (a) of Sub-section (3) by a dealer liable to tax under this Act, a tax at the rate specified in the corresponding entry of Column (3) of the said Schedule shall be levied at the point of last sale in the State on the taxable turnover of sales of such dealer in each year relating to such goods.
4. The assessee in the appeal is a dealer in electrical goods in particular, dry cell and dry cell batteries. In this appeal, we are concerned with the assessment year 1994-1995. The assessee had sold the dry cell and dry cell batteries and had declared its annual turnover while fling its annual returns before the assessing authority. The assessing authority had not levied any tax on the sales turnover of dry cell and dry cell batteries while concluding the assessment by his order dated 17.11.1995.
5. The assessing authority by invoking his powers under Section 12A of the KST Act has revised the assessment order passed for the assessment year 1994-1995 dated 17.11.1995. In the said re-assessment proceedings, the assessing authority has levied tax on the sales turnover of dry cell and dry cell batteries under Section 5(3)(c) of the KST Act at the rate mentioned in Column (3) of the VIII Schedule.
6. Aggrieved by the said order, the appellant has filed an appeal before the first appellate authority. The first appellate authority by his order dated 27.3.1999 has allowed the appeal and has set aside the order of reassessment passed by the assessing authority for the assessment year 1994-1995.
7. The revisional authority being of the view that the order passed by the first appellate authority is erroneous and prejudicial to the interest of the revenue, had initiated revisional proceedings by issuing a show cause notice to the appellant and in that had indicated that the order passed by the first appellate authority in setting aside the order passed by the assessing authority under Section 12A of the KST Act is erroneous for the sole reason dry cell and dry cell batteries are items which are liable to be taxed on the last sale point under Section 5(3)(c) of the Act at the rate mentioned in the VIII Schedule. This was objected to by the assessee by filing its detailed objections. In the objections, the assessee had brought to the notice of the revising authority that the first appellate authority while allowing the appeal filed by the assessee against the order passed by the assessing authority under Section 12A of the KST Act has followed the clarification issued by the Commissioner of Commercial Taxes, dated 18.7.1989. The assessee had also brought to the notice of the revisional authority that dry cell and dry cell batteries are excluded from the levy of tax on the last sale point.
8. The revisional authority not being convinced by the objections filed by the assessee has proceeded to pass the impugned order dated 12.7.1999 and in that has set aside the order passed by the first appellate authority and has confirmed the order passed by the assessing authority under Section 12A of the KST Act. It is the correctness or otherwise of this order, which is called in question by the appellant before this Court.
9. The revisional authority while revising the order of assessment passed by the first appellate, authority is of the view that Entry 3 of VIII Schedule to Section 5(3)(c) of the Act speaks of item 3 of Sl. No. 2 of part 'E' to the 11 Schedule to the Act. According to the revisional authority, it would include all electrical goods, instruments, apparatus, appliances including fans and lighting bulbs and all other parts and accessories, but excludes pumpsets with electric motors of not more than 10 H.P., and according to the revisional authority, item 3 of Sl.No.2 of the part 'E' to the II Schedule does not speak of dry cell and dry cell batteries. Therefore, the exclusion is only in so far as the pumpsets with electric motors of not more than 10 H.P.
10. We have already extracted item 3 of the VIII Schedule to Section 5(3)(c) of the Act. While interpreting an entry to a Schedule to the Act, the ordinary rule of construction requires to be applied to understand the entries in Schedule to the taxing Statutes. There is a functional difference between the body of a Statute on the one hand and the Schedule, which is attached thereto, on the other hand. The Sections in the Act are enacting provisions. In contrast, the Schedule in an Act sets down things and objects and contains their names and descriptions. They can neither enlarge or cut down the meanings or articles or things specifically named in the list. Therefore, the general principles of interpretations of a Section in the Act also requires to be adopted to interpret the Schedules to a Section.
Keeping these aspects of principles of construction of a Schedule in the taxing Statute, a reading of Entry 3 of VIII Schedule to the Act would clearly demonstrate that apart from what is contained in item 3 of SI.No.2 of the part 'E' of the II Schedule, even the dry cell and dry cell batteries are excluded from the purview of the levy of tax on the last sale point. The Legislature in its wisdom immediately after the expression "but excluding pumpsets" uses the expression "and" dry cells and dry cell batteries meaning thereby, it is not only intends to exclude pumpsets but also the dry cells and dry cell batteries. The word 'and' should normally he given its ordinary meaning and should be understood in a conjunctive sense. If the intention of the Legislature was that the provisions of these clauses should be available only to item III of Serial No.2 of part 'E' of the Schedule, then it would not have used the word 'and' immediately after the word 'excluding pumpsets'. In order that the second part might be held to be independent of the first part, it should by itself be complete and be capable of operating independently. Unless this test is satisfied, the conjunction 'and' should have to be read into what follows it. If it is understood in that manner, in our opinion, the revisional authority was not justified in his conclusion that what is excluded under part 3 of VIII Schedule is only pumpsets with electric motors not more than 10 H.P., and not dry cell and dry cell batteries. In this view of the matter, the impugned order requires to be set aside.
11. Accordingly, the following:
ORDER I. Appeal is allowed.
II. The impugned order passed by the revisional authority in case No. SMR. KST. 15/99-2000 dated 12.7.1999 is set aside.
III. The order passed by the first appellate authority in case No. KST. AP. 311/98-99 dated 27.3.1999 is confirmed. Ordered accordingly.