Sri T Shivakumar vs The Commissioner Of Commercial Taxes on 15 February, 2010

[Cites 11, Cited by 0]

Karnataka High Court

Sri T Shivakumar vs The Commissioner Of Commercial Taxes on 15 February, 2010

Bench: K.L.Manjunath, Aravind Kumar

I R
IN Tfiii HIGH COURT OI' KARNA'I'AI'iA. BANGALORE

{)A"I'1-31) TI---118 'I'H'E£ 15*" DAY OF FEBRUARY. 20 
PRESENT ,.], s
THE I-ION'BLE MR. JUSTICE K.L.M.ANJUN13ITIfI .. __f  ;_. A' 

AND --  ~ .
THE HON'BLE MR. JUSTICE  _

S.T.A E\EO.8w/_2é'§O'7_   ; "
BETWE{C1\E A "
Sn. '1'. Shiva kuma r.
PWD ConE.1'ac1.0r.
Ecﬁgas Sireei.

H0le11arasipur~57321 1.   "
Hassan District. "~

(By S11,K.K.Ch:ii':z1.V:fiy21. 'A,<_:ﬁ>£1{ta.t€" for RaghL1ramaI1 Associates)
AND:

The C0mj11iss1s;1é1' or C ()1T1EH€I'CiE1I Taxes
V.z1f*:'i}yz1 'I'c:ri K2i1j\ra_I_;13=va:-1 .

'V " Ga1I'1rihi';i£1géir,

 ' £3a11_gaI--()_:'cz:56OvQ09.

: Respondent

(Smt.Ge::tF1é;1j'..--1'\/£e:1()11. Govern Ineni Advocate.)

 



as Civil work which is labour oriented. The appellant i.se'Va"}s0

carrying on {he business in I--ISD, Petrol diesel l»:;:b4rir:9;_:1-ifrsll'

etc.. as a subsequem. seller. For the assessnrzerltl";5eavr:_si.9'97é 

98 appellant had opted for the behel'ilZ"ef eornp.qsi<tiorrln 

respect of C()r1l'.1'E1Cl work u1'1derta.ke1'14'arld_the jlLrrisdit?tiC:riaEp 9'

Assessing OlTiC€1~_ namely V     of
Commercial Taxes [Assesspaenﬁ'"Pls,_sseii'1.levied"4'5Pxw~3[aX On
earthen work under Sectlllexlrll  order dated
26-4-1999 whieh.lig.__ai  Ofﬁcer
levied tax at  labour work
cf  to Rs. 15,56,671/~
rejegxtixaglllthel' :'le2l<rﬁe11ipti0n of receipts relasuing to
labour." -. LA 9 A V

 {ii}-"9'A f"\§§%§1'K'V<*lClH """ "by the order of assessment dated

thee.:vegssessee preferred an appeal before the

Joint' C(mm"1'i_.s'si0ner of Commercial Taxes in appeal

 ~.._*N0.KSTZAl'1;94/§999~2O0O who by order dated 22-6-2000

';iiEmve'd the appeal and set aside the order of the Assessing

 



6

22m6~2()00) and {he order passed by the Adclitional

Commissioner of Commercial Taxes Zone ll. Ba.;v'i~g¢'1l.ore

(dated 6«6~2003) are prejudicial io the inieresi.  .

and accordingly called for reply from the appellaii-ijassessee.__4 

in response to the said notice the ei»ppe:ll'anii' lierein"  'C

objections to the proposed revisionary"proceedings: vby reply'
dated 6--2«2007 (Annexure~H) wliitrli came ioconsidered
by the Commissioner of C_o:ri1m--ereialCu "i"~a1_;;es«,a11d by his order

dated 1-fl~»3~2007 1fejeetedAAi:_he_elairn  ihe Cerise;-eVssee--appellant

and restored ilieéottdepr .p::assedV"Vb3r"tleieixbepiiiy Commissioner

of ConiiiiercialTgxesg by his order dated 14-3-2007
rejected the (.:i_aim_oi' ijjlrlebVass'e«ssee--appellant and restored the

order Vpassed""b}} the Depiiiy Commissioner of Commerciai

 ppvTa"x§j:g'}I:.Ar3,'§€-3§n1e;%1_i';ufflaﬁsall dated 29"4~1999. H was hﬁfld

 Ezhmiein. il"::~;1i,.ori:":e the assessee has opted for composition he

1e.21CVnr1()Vl.i'  "oo=i'_:ar1d accordingly confirmed (he. order of

 E  ' 'ﬂy
Ass _ss1ii5j_ Oi  \.I" {T



(V) The appellembassessee being aggI'ieved by the said
order dated 14-32007 passed by the Commissioner of

Commercial Taxes, is assaiiing the same In this appeal:  

3. We have heard Sri.Cha.ii.ar1ya, 

appearing for the appeiianbassessee ii

Menon. learned Counsel appearing for, fihei resp'c)v:i'diAen.i,.i

revenue.
4. At the time of admissioriivioiiithe apf)eai,":the iolioudng

two questions have vfbeen _-.'o1'niu~lai:eCi'..by this Court on

1 l~7~20:{)8 ihrxhe!:ng_a;1Asw'e»re<;l: . _'

{i] i'=.Wii1ei.her  ':C'oi'4r1iT1issioner of Commercial
 was ."_§usi.ii'ied in coming to the
<3,O11c!1,is'io--r1--«that. when once the contractor

=.VhaVs~--.__submii:ted himself for composition
 withdraw the same subsequently?

. aié. Li

 as - {ii"}*...: Whether the amendment made to Rule 8-

8(1) of {he K.S.T. Rules is prospective and



whether the same was in force on the date
01' withdrawal of the application by the

appellant'?

5. Sri.Chait.anya for the appellant--assessee "mid

contend as follows:

{i} The power under Section 22~A(1} of  M

with the Additional Commissioner Whiehwis in f"ate.;?ia

with the power available under Section 1) of 

Tax Act and thus the Additional _C'on1n1issione_r lWas'..ji"i'srtiEied

in his order dated 6-6-3--2QQ3 pern1--itt'ing"~i;lie  to opt

out of tjornpositi.-9Vn.__Vggrovision and allowing the appellant-
assessee 1'<;,p'pr;_ i'o'r~.asse'ss'nien't tmder Section 5-133.

,{ii) x1helj1,,.1'c1giiieIit' in Karnataka State Construction

l'Co&r};5orati-o'{1 .I,in1it.ed lllll "was passed subsequent to the

lre\?1sioi1a_l"'~._ordcr_:..of the Additional Commissioner of

Cormfne1'(:ia.1liiigviles. Zone 11 dated 66-2003 and as on the

 .«._'said dat1e'i--i.e.. 6w6v2003 Mycon Construction case was

   the field and hence the order of the Commissioner

'""



"bag:  V'ia3.;g.

in holding that orders of Joint Commissioner {Appeals}
(dated 22~6~2000) and order of Additional Commissioner
[dated 8~6~2003) cannot be held to be erroneous on the

basis of the subsequent judgment.

(iii) When two views are possible the View ta__1{eh' --l)f_V---  _

Additional Commissioner cannot be said to be_.err.oijeo't;a.s. .

{iv} The decision of Karnatetlia 

Corporation Limited Vs. State Vof.4_Kar1"1ai'_aka
75 did not deal with the specific  of Colrripositioni option.
In the decision in Wip1*oi_4I'nfote_eh.  reported in

(2000) 1.20_STC'C'..iVii9V:'<.it'has___beer;. held pure labour charges
are not ezxfigihle io'rsal'es  as such the levy of sales tax
on seijviees when there is no transfer of property in goods is
it  "  contended that the Commissioner of

Coin-rnere.ia1_fiiaxes in exercise of his power under Section

.u""«.__V"2.2wA[2]z iota the Act. is not empowered to review both the

 "o"1'ders"} i9€'I the order of the Joint. Commissioner dated

(200412 ..  gm: 0



22~6~2000 as well as the order of the Additional

COi'I1FT1lSSl(Ji"i€'.F of Commercial Taxes. Zone ll dated 6--6--"?,_O'O3

since the said provision permits him to disturb Einy..~o:1.e;  A' 

at a time.

6. Per contra Smi.Geetha Merion.llle'.9.rried.;'counseldfor 

the revenue, would contend that once the"assesse_e lias'~opted l'

for composition under Section l"I?g[.6}.ol" the-. 'Act. :i_l1eylllc2inlnot

be perinitted to opt out pai'ti'C:ull:arll§".._in the-A revisional

jurisdiction. Ii i.s also ;_l'cor1tende:{:Iev:l_ fihéii: the Mycon

Const1'uetio°i a- _ cﬁaselll :?':~.'«1iz:a.s"--re-n.dere'd"' in the background of
cor1sideri,ng'~1l1e elliV:{llerige"lto'the vires of amendment brought,
to Rule 8-B"!._ollKarri2_ii.é1ka _Sé_;v1es Ta.x[Amendment) Rules 2001

xvherejuridger tliewvires was challenged and in the said case it

vvas ":3 co'i'ice:-ysion given by the State and as such the

 petit_ioners_'therein. and similarly placed persons were allowed

t.o.'opl'i:lloi.1tof:'§'(iiiI1posit.ion and submits that order passed on

'nconcession cannot be a binding precedent. She further

1;' " ,..
s. gym
.

elaborates her subnlission that in B.V.Subba DCCTS ease reported in 125 STC 287 the .

was extended by relying upon i\/iycjonfs cas'e""andj ,boii,.f1'.ythev judgments were rendered by the ieéimedi s.i::1gIee. Jui;i'ge Court and she brought to ofiii"-.noticte'.f;haty t]i;te"'s.gti.d_yySttbba Reddys case came to be set a E;)€I1tj§h of this Court by its Hpetssed in W.A.No.1740/.?.OQl anci__ that neither Mycon's nor 'the----position of law has been iaid i4'ti1;tyl1§3~'~-v¢;ul:§';jnits that in Karnataka State CLons_tr1.1Vc%1'ifon..y_Corpoféition ease, the Division Bench of this Cotirthéts heid t"hVat_ oneethe assessee exercising option for C.'O:iIipC_)SitiO£T»Q{V,FEtX would be estopped from going back on «"thyeV'groti'-no tiitat some work or portion of work is not Works I also contends that in the ease of 'I'.i~I.~3[enk.ettggowda Vs. Commissioner' of Comrneroijai Taxes

-'«.___V'-reporteeivni 2006{E:Sl} Kar.L.J.289. the issue relating to levy of it "«f';3;:y_i_ni.;*espe(:t: oi' Labour Cont:r:;:ct.s, it has been held by this {W Court that Once the assessee opts for C0mp0si'L1'0r1 CanV11oj; bf,' permitted to opt. out and on these grounds she reqiiés*;5s_' _ Court. {:0 answer the que3si.i0ns of law in I'2':v011r.~3i7..tf1'e 1'C.VCnu€ "

and against the assessee.

7. In support of ih..§: '~.._subriaiss1onS~_ i';.1éi(ieV "by Sri.Chai1ayna he reiies upon theAC.f91I0Wii1g deCiSior1s:_J3

1. Malabar 1nd?us,fu":;1i' j' Vs. CIT [;2.Q00g_24;3 11jRgi33.'{sC3-.._V ' " "

C1T5j/S. QM: .,.;\/11:,-m1 .su§ii{iess Steel [P] 1 1;%.d;.=; (2d0:3;_V"*2£?s_3 .j1*rR 2%-§5"'(sC) Ivasc-.._1'r1r11;i Ltd. (2007) 295 {TR K.a_ma._:h*._Res-{aux-ant vs. ACCT (2007 8 \"/€-T:i72 mar.) . E$.~_CIT vs. Abdulkarim Stone Contractor V .,r:'1997} 225 ITR 1032 [Raj].

' Parikh 3: C0. vs. CIT (1980) me 610 ' [Guj.)

7. sum Amiya gala paui vs. C1T[2oo3) 262 ETR 407 [SC] j 13

8. Mycon Construction Ltd. VS. Sidie of Iiarnataka and Another [1998] 111 S'"FC_--.__ 322 (Kala) T

9. av. Subba Ready vs. DCCT (2o02:;'~~--:--2'::.'_ _ "if SEC 287 (Kan)

10. lqbai Ahamed vs.__~I§)C_C'I' KLJ 390 [Kali]

8. Per contra Sn1LGeetha 'M.er1on',-..iéarnegf'}$;§.di1iV0:31al Government Advocate appearing__{ic$i=..1_he_» res}.) c)nd:¢nt vﬁevenue wouid reiy upon the 1'c)EE()v\2'¢-Y-i1"Vig_de_cisaj1.0nS':_ ' .

(i) Karnataka S{.e...i"_e'» VCQ:1stri;.cti'<§n Corporation V"'T'i.--injF'.;'i.eci« ,:E33 11'ga&1"c3re \fS';"S"£é1t.e of Karnataka (2004) {ii} '"wr, A.VN;§. 1'174Q'/'2..uG'01_ disposed ex' on 10422004 V 'V in VU'i1."3 I1IEl'{v[€1' of Deputy Commissioner of . Ci<;1j11r11erc'i'é{l Taxes and others Vs. B.V.Subba I.__;i '<,>1'€ie1* to appretriafe the cromerltions raised by the V1;e9P?53Ct,iv£3---- "advocates. it wouid be ntécessary to extract the ' relevant provisions of KS'? Act as also Rule -8 of Karnataka Sales Tax Rules:

Section. 22-A of KST ACT _ [22~A. Revisional powers of Commissioner] and " it The {Additional Conm1issi.on'er]A' " own motion calI":_i'{;r__ anda.

record of {any ordenpassed orprotteeding recorded] uvrider [Syeetioifi:f2tVO's.Q_r Sectioirii 01] this Act. that any order.passed.~the1f*einv--.by aﬁy who is not i:;i"1e7 'rani-.':K.,_oif a "(Joint " erroneous in so far as it a is . 'the interest of the it necessary, stay the operaiion sttch order for such period as L he de'ern,s___ifit and after giving the assessee .:;1An--..Voppori:iinit:y of being heard and after "nia--ki_r1g or causing to be made such "Vii".;r{uiry as he deems necessary, pass such order thereon as the circumstances of the case just'ify._ including an order enhancing or modifying the assessment, or canceling i6 [1] or sub» sect.ion {2}. as the Case may be. ii! (21) has not expired:

Act 4 of i992 [1-+92 to 31-3-99) power} under subsection

(b) the matter has been subject'-t_Q L"

appeal under S€CtiOI12?.""()Z'~.a 1I'evisi()"n.."ir1V the High Court: or} (C) more than four years"have1.e*}{p.ired after the passing oidrhet»0rder'sdught i£5--.3o"e"' revised. V _ (4) Noiwithstarrding ain}ftEi.i_i'2.g"contained in L " the . {Additi0r1a1 subsection (3), Ce5rn_misAsi0:1'e1'~}:01" the Commissioner, may '' pass 'order'un'd.er sub--seetion {1} or (2), the _<ra:5e~'niay be. on any point which has'n0'{' been raised and decided in an appealiorrevision referred to i.n clause [b} 'c>f°':~:t_1_b~seetior1 [3], before the expiry of a /, of one year from the date of the . n';-,-"de.r in such appeal}. or revision or before the expiiy of a period of four years referred {C} whichever is 1ater.] subsection :;{%>/" a to in clause of that the time for appeai against the ordergﬂ. [[5] Every order passed in revision unde1*;'"-- sub-se(:t'ior1 {1} shaii. subject to the provisions of sub~seCt.ion (2) section. Seeiions 23. 24 and Fina}.

(6) Every order Passed '10 i{é\I'isiori~_iIf1,C'ierV sub~seCi'.ion {2} .sh-2i_li, ;i:o"

provisions of SeCiion'sLf23. 24 finai] {Explanation-I» i . béissed or prooeedi_ngs V_ the«v:.e'pp1'opria£e a1V13:horiiL'y_.refe:rred to Vsuibiésection [1] or V'{2sji\::>iI1\}€£Vf3S"'"ah" iss'u"e*'o'n which the High : Co.ui*i.f1:isgiVen"'ii,s' decision adverse to the i revenue 'in some other proceedings and }ap.p¢--a1 "go the Supreme Court against Vs:.ichA""'d.e§:_ision of the High Court is penvding, the period spent between the L1iéu~e:f.raI' the decision of the High Court and date of the decision of the Supreme .'Cnouri shall be exciuded in computing the period referred to in clause of sub K section [3].

permission shail be in Form 8--AB and shall valid for the entire year to which it relates. ' {tit}'I'he [Assistant Cgmmtssieherii y erf * _ Commerciai Taxes] or [COH1ri»1€I'C"iE'1--!A.;Ta}l.Ofﬁ'C€f} may cancel such permission. if thehdealezf?'

(a) fails to pay tax i11't'.:/my nj0r1th'w:itthin the time speciﬁed; . "

fh) c:on1,raven.es_"ar,1y'prQvtsion'ef----the Act or :_ " Rttl e ::rI&1a3de"'Vth'e'1'e: den':

gttriiéndxfgent Rage s-a' t~e Ifi_n.il.e Jrules, in sub--ru1e(1}:-

i. or the "thirty days", the words " one httnd.reti and twenty days" shall be substituted: the words "course of the year". the Words shall be inserted, namely . _'f'.aﬁd such application once ﬁled by the dealer electing to compound the tax shall not be permitted to be withdrawn by him"

iii. The proviso shat} be omitted.

10. The Lmdisputed i'act.s leading to the i'e\Iisec§vo1'*der being passed by the COI'IHI1iSSiOI16l" of Con1merciaI«VTaxesatifei' V. Assessee is an individual P.W.D. contractor.invoived in the works Contract and had opted "i"orA_ 'assesisnient*:by0."1 composition method under Sectior1':'«.1__'/'b't5V}A. of Act:._ "

Assessing Officer in respect Voi7.Vt:'Works "carried the Contractor to the tune Q.--f-- levied at the rate of 4% which 'c1I1'1OLil"i4"E'€V'd:"L.')"- rejecting the ciaim fovr'i'ev::ertij;ptiori;"oi"--receipts'"*reiatir1g to Labour. The assessee be.ir1g.2tggrietfed"by.the same filed an appea} before the Joint Conin'1is'sio'ne'1',.oi'----Commerciai Taxes (Appeals) and the }\4;o1je1t]o.ate uAt1Eit1orityV"i3y order dated 22-6-2000 held that 0"worksV'eot1t.1'ar;t: r€C€iW[')tdCOI1C€rI1iI1g the execution of earthen of Rs.i.65,70,899/-- be reduced from the gr')s'::.__wo'i*iés_v.contract receipts and only the rest of the tum over'~be to tax under Section 17(6) of the Act, thereby reducing the tax liability to Rs.8.93.835/~.y"'"ron1 Rs. 15.56671/-- . One curious aspect which reqriiyifoslylltol"hoV noEiCr:*d at this juncture is that. the assesses being.._se1£is.iiéd.lof the same did not challenge the se1r1iey\Fi'iicl1 obvzi'oé,is sirirce the same being beneficial to it.

11. Be that as it. may. t.hé'»AEiditior2al.Coni1:r1issiorier of Commercial 'I'axes. Zon-"'e._li. £5é1"i1g;z:il'orésA..in exercise of his Powers under Sec'aio1'1 22-Ail] ('ﬁne Aoii;fs_;uo'vi11oiu issued a notice dated 2~9e2QQ)2 aippollant assessee to show L'.ElfJ1S€ 1.11%?réE.iéi"'give'l-1 by the First Appellate Aiithoriiy bii1:1*c:éitirigy'laﬁvozjiilori of the contract work should not be broiiglfii to fax 'qs"i.i an 'error' warranting revisional EECliQl};.' byVplac:i11.grelialice on the Case of S.S.Muddam1a Vs. of_vl&"s.rn§it;--1ka reported in 89 SEC 90 {HC](DB]. E1 is in ii. was contended by the appellzmi. that t,l1mi'§;11 had filed form No.8 and had sought for _'Eh..eVibe11e'i'iE of ctomposiiion. Ehere was statutory duty cast. on of the First Appellate Authoiities order l"i)d1'1g the liability t.o Rs.8,93,835/y .

12. The respondent Commissioner in eXer'cis_e'~.o'fghi.s power under Sub~Section 2 of Section 22»A of . both the above said orders narnely,_the order'"oli'_the*.J'oVint. Commissioner' dated 22~6~2000 Additional Commissioner dated 6-_6--2tl03llby hisvllorder 14-3-2007 holding that the aslsesseey had' made any request before the Assessing to_'\zl7i'thdraVxr permission granted,to---.hiln'i.tol'G;o1; leom.;3osit.ion either during the assessrrient at the time of assessment by Assessing l£\L§tll1:)rilt'y_ a'nd" at the Appellate stage. It was 11()tiC«é§d by the "v--.Con1n1issioner of Commercial Tax that Ad'd.itior_;al_ Commisslorier of Commercial Tax, Zone»lI, vﬂrelied upon the judgment. in Mycon Const1'L1et4ior1"l Limited referred to supra and permitted the _las-syesseerto revoke the Composition option. By perusal of the T\.) (J:

judgment. in i\/Eycor: Co'r1st'ruct1ion L-iriiited's Case it i's:rio"ti.ce<:! by us that assessee therein were permitted to oVu.t_'o1i"thVe'e M basis of the concession made by.:th_e._Sta~*__e. }"1:I.'4thev.,S«aiEi.. decision. the constitutional xralidity ofhSub?'se'ctiori Section 17 was under coris_id'eratioIi" arid it "this "

background. the learnect J u.dgeV_oI':V:t.h._is' 'Court in paragraph 13 of Mycorfs case held as 'i'o3viﬂows.{ } "However._'in__ view} "of '«.ca_tegoriea1 statement made b_Vy?_:theit'estVat.e"* rstatemeht. of Viotﬁections stating that i.his_:.'Cotirt~.. ca"f11:'p,e'rmit the"petitioner opt for 5~B: and I have ta;1._§ef1"th'at as the factors to come to the CO1'1'C"3.LtS'if)vI'1VV't1"iEt;LA:'U'!<%"'i»I'Xit)ugI1€d provision is a way ,resi.1.!ts.V a'rbitrai*iriess or violation of the right .15*g1;iai*a1nteedxHtowhe petitioner either under article 145 orv1i1i'de1~ articie i9(1}[g} of the Constitution; it reserve liberty to the petitioners to A opt. :i§r}.,.a€égt;_1ai- assessment under section 5-13 of 'the'«:_Ae1. 11otw'ithsta1'1ding the fact that they had i * ooted for COl"I1p0Si1'iOI] under section 17(6) of the ..«*«Aet. if the petitioners. within 12 weeks from today. i,, 26 make a.n appiication to the concerned assessing authority that they may be assessed as provided under section 5-8 oi' the Act, and further direct"- the assessing authorities to proceed to assess petitioners and ail others, who are not '7' V Court. as provided under section 5--B_otft_heV _ This direction is binding on"the'<Sta.te .:atAtCil._it_Vs"«x' assessing. revising or ap"pellate~ au.th0_riti&es"'~~_H7A wherever an appiication islﬂrnade fseeiging assessment under section"5_-13. of the" vahdlltyhey are directed to pass approfir"iate~~..orders*vsi.iitably modifying the assessi:f;1ent.s.'Z'_' . "

Stibsequventlyepi l5l§edVdy's case similar issue nameiy zwhle«the1'- off.-'composition is permissible by an assessee""eai'ne_l1or 'consideration and on scrutiny the "~,l_earn_e'cl Judge ofxlthis-~~«Court following the dicta in MyCon's ear'-ed held.the"'issu.e in favour of the assessee and the relevant pa'i<agraph l"v'vl€:)'j_.7..--::II.'1 Suloba Reddy's case reads as follows:

*7. The assessee in this case had prayed for composition be1.1eiit'.s under section 17(6) of the Act. Thereatter. realising that the COIi'1pOSi1.i()!} application fiied by him not be beneficial to him, had thot1gh_i§f_:'.i"i't' ' approach the assessing at1th_ori'ty complete the assessmen'tfs'---i.n his the assessment year 1'A99??9Ei tiridee provisions of section_5--B oi' the Aet;;V5._iV_11:my opinion. the assessi'itef'"authoritif 'iinV.'.vie"vg the observations m;;Lde:b*,r_ the learned.A.J1i.ie1ge of this Court" _ {_i'v'Ii/"eo'1'i.Tﬂonstruction i iifii should i 1-9981' Lin1ited's case hatxrueiﬁasssefsi orrie_;1jM;T_Veoiiio1etinz{ the section of the Act {1qii1iott't. iiiiiptigined endo:"semenl.. l'1*1i'~.j\?i_Ve*.=trféoi' _t'h.e above. the endorsement "issue_ci'_assessing authority is "'--<:4oriitreiry to the}observations made by this Court in"I\/Iyeon Construction LimiteCi's Case 3.3998} i"i"i"STC 322. In that View of the V'.'l"}'..'gVi:f'{!ifI'. it is difficult to sustain the :""'iV1_npitzgned enclorsernent. Therefore. the . :.?,nE4}:;.i"IAi<-1' reqttires to be set aside by this Court."

{emphasis suppiieci by us} 3: '2 "Fhereaf1.erwards the above said Subba Reddys case.'l:wavs

1.al<en up in appeal by the State in whereunder the coordinate Bench oi""'tl"~:-is'Cot1rt'lloy.'ii'sl order.' dated 1012-2004 reversed i,he:"';

B.V.St1bba Reddys case thrill'VJ:P.No".274i§Q«{2GtlO'"dated 20- 102000 and allowed the a.p.peal_i1'l--ed by "t'i"--1e_SVtate. It is held by Coordinate Ben(:hlyoi'l'.*,his Subba Reddy's case (paragraph No.8 in:.W';A_:l'toV.'i.7.4_Ol/to the following effect:

.vr[hevrefg}e{l.;_:in oar _::theL§o1'der passed by the Jttdge is -liable to be set. aside on :t'hels_hort.lground._:ijhat_.the conclusion reached by him,_.~u»jls"'¢($u§n;ef_"_;~to the two Division Bench 1 ' 'd.ecision-sh ElhisV'Court, referred to above. Further.

as riightilyﬂ l'f)'o'inted~out. by learned Additional Gvo¥*¢1'ift"ment Advocate, in the case of Mycon Court has not laid down the law the View that if once an assessee seeks for assessnlent by Way of composition under Section is .lV?{6] oi' the Act. it would still be open for him to Opt out of it and seek for assessment under * 1[é1tthe rate of four per ce1'1t.]I 31

14. Section 17 of the KS?' Act" pro\IideSr'»for composition of tax. The reievant provision VVhiC?1'1..~'~€1JT'i'S~€'.S'"' for"

consideration in the present appeal is sL1bV__Se-ctiof1"~ 6 of» _& Section 1'7. The same reads as i'o11o\-ﬁe. _ V _ _ V "Sec.17(6){i) Karnataka Ta}:-v_tA.AAct.'V n Section }7{6} {i)'_ contained in Section t..V_g,eibject. f.OHSVEA,1Ch conditions and in as may be Ae;SeS:sth'g"At1thority of the ar':eétTvj';?1f1et3:/2,.V'Vif-.et'~c1VeaIe_rHlgiabie to tax under Se'ct1'on accf/'Pt in lieu of the amou{1n_Vt pf by him during the .«.§;year und'e'1<._thHis by Way of composition an on total consideration for the évcohtracts executed by him in that year :State in respect of works contract spseciﬁed in Column {2} of the Sixth Schedule

ii) Any dealer may appiy to the assessing authority to be __ permitted to pay t.he amou_nt_ﬂ._4i_i'-._ under Ciause (i) and, on beirj1g'so_~ :_.

permitted, he shat} payV__t:ax. i advance as provided. 'for _:.u_n*der in Section 12-13 and" all provisions 'S-ecxtion mutatis mutVan_ti'is_ shail. A_app1y:':§to this sub section]s;';

iii} The amount 1--i11dei5;elause (ii). ' ''''su'ovjeCt to such may be necessary ' ,.4':"eorn'p1etion of final No tax shail be payable under tiii.sj~..s"ubi'~~section on the turnovers to amounts 'paid. fej. 'sub--c:ontra(:tors as consideration for exvexfjtation of works contract' Whether wholiy " riwaéorvwpartiy subject to production of proof that Vsueh sub--eontraetor is a registered dealer .. Hie " it A liable to tax under the Act and that turnover of such amounts is incltidecl monthly statements or return of ttirnotier, it the case may be, filedmby contractor. "

15. Ifa dealer is liable tol.t'éL"2i.Vunde'l" Section t.o S' elect for composition. inlieu olf_ahiiour1t_V of 'payable by the assessee during the yea"1"=.~ion 'iihef,t,ol.4éi'lVt:(:Q»fisideration for the works contract e>:ecutec'l"b'y~ y.ejar in the State, in respect of woijks5t3o.i1traict'specified irimcolumn No.2 of VI St:hedul'e.l"'iThe'j;.rate}:of wotil'Ci"l:>e 40/o. Conditions and CiI'CLll'1}S-tai;l{".€S' ]_)Vi'e.:écribeti'--..girlder the said Section is to be found in of the Ii.-érnataka Sales Tax Rules . 1956. ~ , A Rule ' 83B rezids aé§'i'ol__lo_wvs:

Composition of tax in the case of lAV.l.Ve"2iecuting Works contracts- (1}'I'he elects to compound the tax for any y.eeii§_ tinder sub-section (6) of Section 17. shall *n,_suSl5rz1it. an application in Form 8--AA to the ~ASS(3SSil"lg Authority each year. within [one 34 hundred and twenty days} from the date (.'()fI}i"I1€'I}C€'i'I1EZ11l of such year. or of the bUSlI16'SSl'~'l' if he has crommencecl the business diigmg. Course of the yeariand such application. . filed by the dealer electing tofeonrtpeurlid l£l'l€V:ltE?~.)_§._l"'V'l shall not be permitted to be 2 " A {X X x X x X} (2){l]The assessing Wpautuhority lhavilifig jurisdictiori, after Jjlsmzch _'\?erilieati=ol'11_as may" be necessary permit saeh l'de.aler,_lsuj'bjeet to the concfitions speeifie:d"'m~ .;éi1b~'rt1'lte to in lieu of the 21I§_lOtt§}.1_' of §pa"yable_lb}.k "l1-Em during the year, .o'i'~.jjwhie_h'p. such' permission is g;jaI1t_edA,l'a_r: ..arnotm_t"".by .w_'ay of Composition as prlo-vietedlm L5] of Section 17.

(ii')S,uCh7'permission for composition shail J!'l'be§_gra.r1ted\3vith--iri' thirty days from the date of _V re_eeipt..'vTo{._the application during the year for composition is applied for. The l' lllpermis'-s_1:)l1 shall be in Form 8-AB and shall be it \-ialld for the entire year to which it relates. Com1'1'1<~rrcial 'I'a_xes] or [Commercial Tax Oi'§TiMc:er.;."i.'l;. DJ LI} (1'ii]The [Assistant Commissioner of .. may Caiicel such permission, if the dealei'.-fl"

{a} fails to pay tax in art}? rtiorith :\J'\i"iLlf1i],lV'l.l'1'CV time specified; or {b} contravenes any'-vproyisioh voi''the'*_Ae't--ao'r''' ' the Rule made thereunder] Amendment to Rate' 8--By is it in rule 8~B.of the:.saiti:rt1les;»_irt.sv1tti;i:€1};e(1):-

For the ._.wor<:ls:' the words " one ~ a1i'dv>tw'er1ty" shall be substituted: it ._Afte_rV '«the "course of the year", the l.__4f'C)ll.Vo\2V\}'i:_1g shall be inserted. namely iii. * "a1'1-dyilsuleh V'appliCat;ion once filed by the dealer leleet1rig"'"'i:o'V compound the tax shall not be 'pei'm_it,ted to be withdrawn by him"

g' proviso shall be omitted.

16. The words "and such application once ﬁled by the dealer electing to compound the tax shall no't'*.be permitted to be withdrawn by him" came to be the Karnataka Sales Tax (amendment) Ru1es.""~_2:O{I1_".~.iixiiltlﬁ. effect from 8-6-200i. It. is contended; 'Chaiij.zalri§/_a.Vv"then". learned Counsel for the appelianiwassessee, their abovev send words came to be added to SU.§;"Rul€ {i}, width effect from 8~6~200l a.nd,.-- as sueih'*dn"assessee«iwas prevented from withdrawing the c¢'£ri'p_:;s:1t',:_gf;':;:a£1n§1=A.§p¢ed with effect only from the_'s:-V1__id :dat'e',f p'eir?Ltiie_1'iié;ri}jxlithe period of assessntieni to _31~3~1998. The said words added ioﬁsub Rule'vV[A:_i.~},_:oii__l{L1'1e 8~B not being in existence during theEa:sVsevssrner1'ir._Vperiod in question i.e.. 1~4-1987 to 31~3e§i9iV98 canno{..1::>e applied to the facts and circumstances 'o:'.:;hé czalse :a_n'd.z1<:eordi13gly submits that the reasoning given lay of the,Con;:Vi:..i,ssi()11er of Commercial Tax in his Revisional ordeefdafged'i3l_<1.513~2OO7. passed in exercise of power under fVSecti.o1?.. 22~}X(2} of the KS'? Act. is erroneous and liable to be set aside. The undisputed facts on this issue in the iiistant case are: the assessee had opted by way of4e.]:e'c-tien to get the eomposition done under Section l7{61 _ and had obtained an assessment order_-on....i2944fl999_"

(Annexure B) which resulted in ﬁtirig Joint Commissioner of Comnie_rCia1V"7{'aX (App'ea}s) came to be aliowed by order 22-'8--'2Gt:)O and the assessee having ac:cepted"~V.§he _shariiei"i:r.i .eii"ect wodldiiviresuit in an inevitable conclusion that assessee'dVid_'_'..not have any grievance in, ;so~._f'=;1r =as,g eortipos-i_t--ior1__f'method adopted partieuiarly .hiatfirig_V"11cot.«..ei5'erosed the said order of Joint COrI1rI1iSS'i'(}.i_1'€'I',Oi'; the dealer has accepted the order ipasseditinder Seetioh 20 of the Act. dated: 22~e~2000. v€'he_n themadditionai Commissioner proposed to revision.Vifjroeeedings under Section 22--A{ 1) of the Act '.,§t1O .~l]1t_)t&?;1AVV by issue of notice dated: 2--9«2002, the ~'«4___V'~assesseeV__iAh its repiy dated: 24-5-2005 sought for withdrawal "--E'ro.r_n t:on1posi't',ioz.i method and sought for being assessed under Section 5--B of Act. There is no separVat.e"<.Vor"

independent application made by the as'sess_ee ' withdrawing from composition method... it is seen" i'ro;m Sciause-._V

(ii) oi' Sub Section 6 of Section l.'7.:":.tl1e_"dealer Will"

apply to the Assessing Authority--.V.i'or p'errniti.ingtVo'vpa_y--'ithe amount under clause [1] and _o_n'-.'oei.ng so '--permitted, the assessee is required tovpaﬁ' _th'e i'n.Sjadv'o..nce as provided under Section l2,.--_B of _E~1'iF:._l:'\C't'- aisidﬁavllvél"t:h'e: provisions of Section 1213 the"Actﬁhaitellibeeltir.rr;ade'"applicab_1e to Sub Section (6) of i3_ee_tion Vlifiwflittanciis and the said advance tax _;5afivSd~Vwo:u.ldvneeessaiily be paid subject to such adjustrnent, has it S'--rna.y"'*«.__ai'l'se on completion of final assessrneni. The provision of Section l2~B reads as follows:

1233 l5aj}fIient of tax in advance~{{l} ;t.:o'~.such mles as may be prescribed. "T._evér§¥'_'aea;'e'£ shall send every month [X X X X } a sta.__te'1ri,eSni containing such particulars as may be p'resé:ribed including the taxable turnover it l"v.during the preceding month and shall pay in advance the full amount of {tax payable by him [under this Act within twenty days after the 2 ciose oi' the preceding month to which rekates on the basis of the turnover p21I't.i.C:"t:1'1aI'_S7VV"".:"' shown in the stateme'nt]] andmthe arr'Io'u--ntf*t.so*v.o ' payable shat} for the purposes '[2; x__ Section 13 be deemed to bea'~anH_amoLintA. due "

under this Act from Loutah. dealer.'} 1'?! 1 {Provided than'

(i) in the case ofa'i'deaier_.¢iX7hfetre'payment by way o1'4:;§or1_1poeitVioVI'1' (1) of Sect,i0n_Vi1_7 go" _ac.eept.e_dV. theAt.prouvisi'ons of sub section 1 [AV Ushadtlo not dapply: and '=,(ii} in Vi'--he"'r§dase""'of'dealer being a small scale A.iE1dLlS{]':y regist.e'red'. with the Director 01' [:5$'h1;C111St;_I'ies Commerce, Government. of _V £§arnataka_, such dealer shall send such a «;Astv;ate1_nen':.oéh accordance with st,tb--section(1) but in advance the fuli amount of tax 2 payable for every quarter within twenty days at , after the close of that quarter:} .1' ts; ' rule.

. /\"' it A .

vz 40

(iii) in the ease of a deaier whose turnover in any year is 1101. more than seven 3 ' fifty thousand rupees shall submit stafe_eVri1.eIit:§SL'* for each moriih in aec0:jdahee.wi1h_v. _s'ub-- 'A S€3(.'li0I1{1] once in a quarter arid p_ay'ii111adVar1Ce the full amount of tax payable ibr_ every --.qi;'x';j1'I7t§I' within twenty days after theyyVe2»0se ol"'{h_ai aquarier to which such tax ire-1ates,E"" -.

Provided 1"urt11eIr:Ih'a1:b =i11e.._dfuA1fi.i.Vainount of tax payahi4e::by_tl1e_' the year as rediieed the idaxwalready paid under withiri thirty the:f1::i'i*0ae.ye'f tiiedyeardio which such tax 1Pro'\ridedi.A'ai:_s"C«--._ihadt where the tax payable for au:'1y_V Cguariier a small "scale industrial "'3'«:.urider1aki1aig«ianot paid within thirty days after thieVA..e1'6'se of the quarter to which such tax fs.ii.el1 undertaking shaii be iiabie to pay Ea); .ihei'e:ai"t'e1' as provided under this sub--seeti0I1 2 (.:'}<i'C,IL1.dxiI1g ihe first proviso] Act 5 of 2000 (From 1.4.2000} {[2} If default is committed in the payment. of tax for any month or quarter as the case 5 . i be. beyond ten days. whether or not. a stat'e.r_nent«.. as required under sub~seot'.ion»A{~l)_yis l.'i1edV;'u if"

the arnottnt. of tax paid is lessrtlian it of tax payable for any month oi=ycl1'uart.er,ais.the case may be, the dealer'defaulting'..paj,:nientgVo"l'''' ' tax or making short pay_r11Vle:i'tt_ tax' 'shvallui-in addition to the interest"oale'u1ated at the rate of two per cent. date of such default', or to date of payment of .tax{:'or_T V up. t V ' 'date specified for pa5'_n1e:_nt;.v_ tinder Section 12, 1 l' ['{[3}}: liiiljfioihs1;44eh__:s't.aten1ent is submitted by a dealyerl ttnder'.lsubh1's.eoti0n [1] before the date jrpreserihed or if the statement submitted by him to""t*--he'l assessing authority to be ._ineo«rreet'vo_r incomplete, the assessing authority the dealer provisionally for that A V 1noVn.1_}:1't,he best of his judgment. recording the reasons for such assessment. and proceed to V " 4_ dernand and Collect the tax on the basis of such aassessnient: [[r/W rule 17(2)} Provided that before taking action under _ this subsection the dealer shall be given reasonable opportunity of being heard] [Exp1anation~For the purpose _ .. Of ' Section "Quarter" means the'Npe'ri.od".s'of:.three:' A months e1'1diI1g on 3151- clay 'h315'~_day' of August. 30"' day of Noxﬁember a11_d'28'*' {or 29" day] of February.} [3~A] When:_4_'''mak.i:ngV_ : assessment oxtder subsection (3). the :sAsses:'s§'V1'1.g._A:jt:.horit.y may also direet_'t'he deahlerto ad.-;ﬁtto1'1 to tax 21vssess'ede;' » a hh ta} riot one and a 1'1a,1ft}:fI1€S but Vhot_VV1Vr:ss*v_th'a}1 one half of the amount of _ V tax._g_I__L"1«e. on turnover that was not V, dise1osed by the dealer in his V h = 5:t:;aten1e1'1t.: or ' 'V~V't:(j}'31.';1ot exceecEi11g one and haif times the J tax assessed in the case of faiiure to submit a staétement] {{4} {fat the end of the year it is found "

the amount of tax paid in advance ' dealer for any month or quarter n1f_,l:oi=. . whole year in the agg1'e,glat,Ve"wa's"..fes.s the tax Payable for tl1at.:"1«(f1C5'\l3_Atet*1"lV or the tax for the s_2\;hole"y_ear as.'Vl'in;a1ly assessed. as the clasedlmay "b3*V-lnaoire than fifteen,-- 'per th-»e_ assessing auth.ority may 'direct to pay, in addition to petiavltyﬁ/:hi"Ch shall not..be.#less than one 'halfjo.[ tax so paid __in X X x X} the a-.r_r_1<'jul1:*;:_tp the so paid fall payahlve for the month or "duarter:"o.rl for __whole year as the ease mzay be! A ' vl"Provided,t_ha1r no penalty under this sub» sdseetion shall be imposed unless the dealer has had a reasonable opportunity '()'f't&'_'.,Vl::::)V\/'1I1g Cause against such impos1t1on;] _A'i{Provided further that no penalty shall be levied under this subsection after a period 44 of eight years from the close of the year V» which any tax paid in short relates]

17. Under Section 128 t.here...is__a duty,' cast on every dealer to declare the "taxabl..e' turnover the preceding month and t.he'l_dea.1er"i's.. lrer1_t1ireld advance the full amount. of taxdoagxgabie unjder this Act within 21 days after "month to which such tax re_lat.es on the basis of the tttrnovef: A:iVn':'l.t'nett:statement filed by the assessele, relex*antc'i_'Rt:l-e apfilicable in, so far as payment of 5i;.1--:1 ad3\.{ance"~is concerned is Rule 17. The said Rule reads __ "'--f_'[1'Z.[Pay'ine--n of tax, in advance. itxicimbuursemeﬁt of excess tax paid on :l':i11;_;!i1stzfial ii1p'~u--ts,etc~§{(1} The statement under

(l) of Section 12-8 shall be {in Form "ariti:ir;x."t'l1e case of an industrial unit in }"*'orr11 3 A along: a statement in the form of Annexure t.ol'E':_orr:13] and t.he return underisub-section {3} V " ofVVVSection 25-8] shall be in Form 3~B and shall Vxk} M/M. i E be sent in duplicate to the Assessing At1.tl10ri_i»y. [or the Registering Authority. as the case n1;;y":3:~,..__i' 5 ~ . so as to reach it withinltwenty days] arid the. close of the month to which such4staE.en'1e'ht;0rV"

1-etum relates. Such staternentgor re? p7rr17shall"-be"if--..__ accompanied by a receipt i'r0rri«.Aa"..Govejrri.ment Treasury. a acrossed p0s_fLla~l._ 01'derV.__ a-,_ci*Qs"s.eld' l cheque or a Crossed (Zl61T1t'--_';t'f'1VVVC'l»._Cl1'.'<)._ f'L ir.1.'i'ayQ_urJ-53f the Assessing :«tj'_i3eA'*,Regist.Aering Authority. as the case=i.liI1ay~lbe,}__.ahdfei'1'eashable at a post gf"i"ice/bahlksituated' place of locatioribf thee" lpffice authority! or the. lo:r"'the Registering Atiivthcrityjfls maybe.} and encashable atha post tsa_ril: 's1_tuated in the place of local the oiiéfthe Assessing Auth0rity[or :ti1eLI{egiVst-ei'ingl' Authcrity. as the case may be .] xix} 't'hel"ull arnount of tax payable by _him'0nl._thve__basis of his actual taxable turnover V"K.,,.\°l'L1Vl}"iV.IA41"5/ifl,l'l4bmIE"l0I1l'.l'1 to which the statement. or ret u~r~n_ i'rjei21t.es.] [Provided that the statement. to be V " '"~.4 L'-'3L1l5I}'1i1.'i(?C?l for the month of April 2001 shall be 48 direc:t.ed to pass appropriate orders suitable iiiodifying the assessments...@. We there1'o1'e. __ request your good authority to canoe} thedd composition benefit sought by us and to ass.e_ssVd'x.K. u/s. 5~B of the Act and thus render jL1st';ie'e us. We have fiied herewith purchase sta't1eine{nt:s;"»: ' Expenditure incurred detai1s;;"RA 'proves it the works Contract undertaiten "no it transfer or property is irL4roi<.:ed ette-..Vier_ehat)ii:r1g you to finalise the assessrnent.' _

18. Thus. the assessVee_Ain_ qgevstiorz Fully aware as to the nature of tra.r1saeti,o*n~ar:d Vbei:1g'e'0_ns'(;i.ous of the same had e1eL:ted_ ifoxbe .governed- by. alternate method of taxation nameiy eo.1_n;:osit.iVon;-. 'Was no compulsion on the assessee to opt for inethvod taxation as provided under Sub Sﬁﬁeetiion o'i7.Seet,ionmt;7. It was voluntary C1'10iC€ and it was "t~.ht».;_;m iLi"1Vti'--~_va:SS€SS6€ on its own Voiitioh. Thus, the atssessee Vbﬁifigtltktélre oi' the fact that it had iess than 5% of hworks eQr_it:rac:t im-'oiving transfer of property would not have "«,/}£;V<)_se'£A_: for composition tinder Sub Section (6) of Section 17 50 the Contract. and the tax thereon for purpose of payment of tax as 'V' judgment of the Supreme Court .

chosen to hold in our Vjilexvl'agaiiiisif 't.'.tV1ev'"' assessee. The Appellate has._r1g.htly in our View held th'atv."'the assesseev.vha_'v'ing Voluntarily, and with of the features ofiftihe of taxation. opted to cannot be heard question' 'sul:§seVq.uer1t'ly" the levy of ta); . Revisional Aut.horjtyl_lll;~after' iggoiuaog option under notieing the iegal error eo'rnfn_ittedll . the Assessing Authority, has rightly' ehos'e_nl'to" review the assessment order _;jor1i.i:he ground of prejudicial to the revenue of State. The order of the Revisional " fully backed by Section 17(6) of .""lthel;i';%j:t' also by the ruling of the Supreme Coti.rt'."""l'he Appellate Tribunal, on the facts of .. this Case is perfectly justified in confirming v _ "lithe revisional order".

19. One another aspect which requires to by us is with regard to applieabil_it::y~..e. the antendment/added words with »Hfrorn"._8~:6w--2_O'O_ Rule making power is a delegated Legi_slation. ltgpannlot 'oxfer * ride the statutory provision naniely.Section..:1"?Et3} 'act. Sub Clause (2} of Sub VSe.ction.'rt{l5}".otlj l7' postulates that assessee after elect.ir1g method would be pern}it.ted_-.byauthority to pay the amount urider'ﬂat:-se_V__{.l erily on being granted the permission" lldeaieif would pay the tax in advanctéfas pr()videdAAe4t1ndenr__'Section 12-13 of the Act. In effect it would that oitcebernlitted under the Act of election by vthﬁe assesseetl"thee___assessee cannot retrace the steps and '&1§lfi'}it -t0",Ci£.)_ "t1__11do what has been done. The same is li:'n:;l)erniVisslib]_elftihdei' the Act itself, which is the only conclusi'or1."which can be drawn by reading the words in sub ._:c'l::1Iu..se {2} of Section {6) of Section 17 of the Act and no other U"! 2.0 the Rules. Thouggh Sri. Chaitanya Hegdelhe learned for the Peliiioner would contend that Rule 1'1Ei\'iIT;g:"CO}'%lV€"..:l'1'1lis-, ' effect on 8~6»2001.. is to be interpreted' asi5fo'syﬁie::{i'~xexiii'-_ nature by pressing into service ihe"':de€:'i:sio:n of {he Apex Court. in Hitendra Q sﬂaﬁtate-'E of Maharasht-ya reported in AIR that law relailng E0 righi ol'V£:e.ili0_1jusu'los1'antiVe in nature can only be prospectiveondii. e;;n1ioi".«'heVIioeiieospeciive and accordingly added Words in Sub Rule (1):: jhsvsdio be substantive and not .Losg§ree with the same since the Acid' iiself $30-Orrecl proposition namely p€I'l'I1i:{:':'svi()_Al'1 being gréiritied ihe Assessing Officer when so delecztjed they assessee ii. cannoi be said thai. the assessee 'Veinop_Lion=.i,.o_}.withdraw from such election. The Act. does 11of._.provi.de"2_1n option to the assessee io withdraw from *.eon1posii.ioi1 scheme. The amended rule only clarifies the [l] 82 (ii) of sub~seotion [6] of section 17 which has 54 to be held procedural in nature and thus it. woi,ild_'b_e applicable to the period anterior to amendment alsof' ' d

20. It is well settled that a dis-i.i'nc'i:i.r)r1 fl121s.t"of¥g;e drn.af.;ie7., by the Courts lvhile interpreting proﬁisions' of taxing' s.ta'i_ti_t¢]--. between charging provisions _impose__ the and machinery provisions'. xxrhipc-h-dduphrovide niac'i1i.ne:f3; for the quantification of the tax collection of tax so imposed. V .\N\E1.i_\l(3 are construed strictly, ddgednderally subject to a i'i_s_?:UI{)lI£.~}"-L?Ovf1_i%.l.i'ttC:l:lE§_§1. P'lor:'.bie§ Supreme Court: in the (vase Company Limited Vs. commerciht :e*a:§"'o_f}E";:ei§;_"_.'eKota and others AIR 1981 so . _ 1 33 :{.h'as~ held has-..fopl_low:s:

_V "'Fdl'1e.Va1rgi.11r1ent pressed be-I-'ore us on behalf oi' the .is»t.hat since Section 7 of the Act does not expressly: say that a registered dealer who has not it filed return or a person who has claimed that his 'turnover or any part thereof is not taxable and ffghas not paid tax due in respect of such disputed turnover should also pay interest on the tax is Eegitimat.e1y due to the Government. 9 V by him. no interest can be ctaimed Llnder of the Act in such cases. SeCtj1'o¥i 1* z§sC:t'W_}1.ieh:t.v deals with the submission 1:et.i;1rns'._i's Charging section but inachinety" sectt:ion,.:'_v1ti settled law that a dist:ine'tion. has to_V_be."'made"

Court while iiiterpreting 'At,-he...joroy*isions«'of-a .12-axing statute between eft--atgingp2.royisions'which impose the charge to tax and" which provide the~:tn'a.ehiinery' -the'_q_tian':.itieation of t:he tax and of the tax so imposed. '];5roy§isions are construed ~ are not generally sti'bje'c4t. to The courts are expected toV"coasi~:rLi"e the machinery sections in gsueh a heat1i'1er that charge to tax is not defeated. above 1itiIe****oi' construction of a taxing statute __has'«.be.env _adopted by this Court: in India United EC\Ar'i'i'1t'S'~._yvI';i€n1"_'vV.Commissioner of Excess profits Tax. £3omb'ay.'C{1955; 1 SCR 810: [AIR 1955 so 79) in wI'ti'ehvSectio11 15 of the Exctess Profits Tax Act came C " tttffor COI1Sid€I'::1Ii.iO1"1. The Court observed in that. tase thus {at P82):

56 'That section is. it should be en1phasise--d';.__'_i' , A' not a cha1*gii"1g section. but a r11aei'?.i_'r1e.ry._ 'M section. And a rI1ElChiI1€l'»'y~ section sh*o.L:;1dV'' ' be so construed as to :efﬁEi3tteE>1tieA.' charging section.'

21. It is no doubt true thatKs~t1wb RVu1e"('i--} 8--B of the Rules came to be vi"whei"e«.L1nder the words " and such app1icationAVoV_rii<:eV ﬁiéealer electing to compound" "not*:.'"be....fSermitted to be withdrawn:py.;_i::xi;?*"---ca{h:é'j;a.£§ at iihserted with effect from 8~6~2G7O1 t',h_otigi1 "i1j1__ existence as on the date of the a.ssessmer_1_t'oV1"der._"29--4~1999, it was very much prese-11--t as oh t.he'e11ate'V'oI'hpplieation made by the assessee ii'"seeitiiﬁg»--f'"i,oVVi'xyithdréi'iX}'««I'rom composition method and for under Section 5-8 of the Act by its apgtiheatioriih 24~5~2003 and 21130 as on the date of isstiinggz' notice under Section 224(1) dated 2-9-2002 by "«_"_:,?r1e 4'A(:idit'.io1'1e1i Commissioner of Commercial tax. Even oilierwise ii is we}! mcrogiiiseci rule 01' iI1LE.'1'p1'€1dI.iOI1 aI11€'I1(h'1'1€I'1I wfiicrh is by way of a criarifieatiori;"tvo_uid:'he"

useful aid in construing the existing earlier e_ver1"

though such ameiidmeiit is not A subsequent legislation on t'V.he_.4_sar1ie'--. éuhjeet .. into by the Court in 0rdei*i»::to see" hgiroper coristructiori to be ptivtiup oii::VAdeii'V1_ vtrherevveither it is silent or £1£11bViguOtiS.W in the earlier 1egis};i"tioiiL:V1"thei=i iegislation would guide the bropdeij i.iit:erpre'i:aAtiC-ﬁtwhich is to be put upon the earlier.

22. 31-1, View of 1~h€K,P'1b()V€ proposition of law laid down uiollowing the pririoipies ehunciated by_the ' H'(')'1'"~1.'1§)i'<?,_VSli}3i.I'é'i1i€ Court as discussed hereinabove. we are of {he'veoiisidveireélvopinion that Rule 8» {BN1} of the Rules which has come.' into effect from 8--6»2001 is aiso appiicabie to the xperiod anterior to the same. since the said addition is cEari["iCa1():y in I1d1,L1I'€. ACC01"ding}y.. Question answered againsi the assessee and in favour of t_1j€=: Ft'3_\jV'é3'1'T.'1",1'€._: "'-, '

23. Accordingly the foliowing "

(1) The appeal filed ~-/the xassrvssss-axe 'H1;1ve¥'eby dismissed. . n u '& V' [ii] The SLibS1.a1'1"L%£{}'; forrnuiated 1"1€§!'€'i"Af1; VL:i}1bo\:%_'e _.s,.§;3insi the assesses:

"

[iii] " No g1?dé:jr_;1s ,:6--s_:o"sg,s. S&f~ E"?

S&gw

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Karnataka High Court

Sri T Shivakumar vs The Commissioner Of Commercial Taxes on 15 February, 2010

Bench: K.L.Manjunath, Aravind Kumar