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Judgment
Ashok Bhan, J.-Aggrieved against the order of the Single Judge dismissing the writ petition thereby denying the benefit of the notifications dated 23-6-1986 and 28-3-1987 issued under Section 8-A of the Karnataka Sales Tax Act, 1957 (for short the ''Act'') for the financial year 1991-92 for the period from 1-4-1991 to 31-3-1992 the present appeal has been filed.
Appellant is a public sector company owned by the Government of India having its manufacturing unit in the State of Karnataka. It is a registered dealer under the Act. The Television sets and components which were the items manufactured by the appellant were liable to assessment under the II Schedule of the Act at 6% for the financial year 1991-92. State of Karnataka had issued Notification No. FD 46 CSL 86, dated 20-6-1986 under the Act reducing tax payable on television sets and component parts to 2% by a dealer having its manufacturing unit in the State of Karnataka. On 28-3-1987, the State of Karnataka issued another notification whereby the rate of tax payable by a dealer on television sets and components parts manufactured in the State was enhanced from 2 to 3 per cent. The dealers of television sets manufactured outside the State of Karnataka were required to pay 6% tax.
The notifications by which the rate of tax payable by dealers in television sets and component parts manufactured in Karnataka was reduced was challenged by Solidaire India Limited, a company manufacturing television sets outside the State of Karnataka inter alia on the ground that the same was discriminatory. On 8th October, 1990, the writ petition was allowed and the notifications were quashed. Judgment is in Solidaire India Limited v State of Karnataka and Another, (1994)92 STC 278 (Kar.).
Against the order of the Single Judge number of writ appeals were filed including the one by Solidaire India Limited. The same were dismissed on 15th/18th September, 1995
(Solidaire India Limited v State of Karnataka and Another, 1999(47) Kar. L.J. 278), by the Division Bench. Leading judgment is in Writ Appeal No. 1390 of 1991. It may be stated here that some of the units manufacturing televisions in Karnataka also filed appeals. One of the prayers made in the appeal was that the declaration of the notification as void be made prospective otherwise they would be made to suffer for no fault of theirs. That they had collected the tax at the reduced rates under the notification and would now be required to pay higher rate of tax thereby causing loss to them. This was not accepted by Bench.
British Physical Laboratories (India) Limited one of the manufacturing units located in the State of Karnataka filed Civil Appeal Nos. 11515 to 11517 of 1996 (British Physical Laboratories (India) Limited v State of Karnataka and Another, (1999)1 SCC 170), in the Supreme Court of India challenging the notice issued in January 1991 by the sales tax authorities calling upon them to show cause why they should not be taxed at the normal rates instead of reduced rates pursuant to the quashing of the said two notifications. This appeal was allowed by the Supreme Court with the following directions.-
"In the result, following the judgments aforementioned and in the interest of justice and equity the appeals are allowed and the judgment and order under appeal is set aside insofar as it deals with the writ petitions preferred by the appellants, that is, Writ Petitions Nos. 4040 to 4042 of 1991, before the High Court. These writ petitions are allowed and the respondent-State is directed not to collect the amounts of sales tax that have become payable only by reason of the order quashing the notifications under Section 8-A of the Karnataka Sales Act, 1957 issued on 23rd June, 1986 and 28th March, 1987 fixing reduced rates of sales tax payable by dealers in television sets and components manufactured in Karnataka. No order as to costs".
The appellant filed its return of turnover declaring gross turnover and taxable turnover at Rs. 476,02,83,578.29 and Rs. 33,92,93,296.69 respectively. Later on revised return of turnover was filed declaring gross turnover and taxable turnover at Rs. 479,12,12,337.29 and Rs. 33,67,49,169.00 respectively. According to the appellant he had collected from the purchaser in the course of inter-State sales, sales tax at the rate of 3% in respect of sales effected on TV picture tubes. In the return filed, the appellant claimed concessional rate of tax at 3% on the said turnover in accordance with the notification during 1986-87.
Appellant''s contention was that as he had collected the tax from the purchasers at the rates specified in the notification, he should be assessed at that rate otherwise he would suffer for no fault of his. Contention of the appellant was rejected by the Assessing Officer. It was assessed to tax at 6% in respect of such sales overruling the objection on the ground that the notification having been quashed by the High Court in the case of Solidaire India Limited, supra, was no longer in operation. The assessee could not derive any benefit of the notification. In terms of the orders passed above, a demand was raised regarding additional tax being difference between 3% tax and 6%. The copy of the assessment order and demand notice is Annexures-A and A1.
Instead of filing the appeal provided under the Act, writ petition was filed on the ground that the jurisdiction of the Appellate Authority was confined to the merits of the decision in the light of the notification quashed by the High Court and the Appellate Authority could not go into the aspect that the appellant should not be burdened with additional tax demand on equitable grounds.
Single Judge has dismissed the writ petition holding that since the notification had been quashed on 8-10-1990 and the period in question being subsequent to the quashing of the notification, the appellant was not entitled to the relief claimed for.
By looking at the original record in the writ appeals filed against the order of the Single Judge in Solidaire India Limited, supra, we have verified that the Division Bench had not granted interim stay of the order of the Single Judge. The order quashing the notification on 8-10-1990 continued to be in operation during the pendency of the writ appeal. The directions given by the Supreme Court in British Physical Laboratories case, supra, can be of no avail to the appellant as in the said case, the period in question was prior to the quashing of the notification on 8-10-1990. The position would have been different had the period in question in this case been prior to the quashing of the notification on 8-10-1990. On quashing of the notification, it ceased to be in operation and cannot be made applicable for the period subsequent to the quashing of the notification.
Submission of the Counsel for the appellant that the appellant did not come to know about the quashing of the notification cannot be accepted. The notification was bad in law and it was so declared by the High Court on 8-10-1990. The declaration was in rem and would be uniformly applicable to all the dealers. The plea that the appellant collected the tax at a concessional rate owing to ignorance and that the law declared by the High Court had not come to its notice cannot offset the declaration given by this Court.
For the reason stated above, we do not find any merit in this appeal and dismiss the same with no order as to costs.