Singanamla Enterprises vs The Additional Commissioner of Commercial Taxes, Zone-I

N. Kumar, J.—This appeal is preferred against the order passed by the Additional Commissioner of Commercial Taxes, Zone-1, Vanijya Terige Karyalaya, Bangalore, u/s 22-A(1) of the Karnataka Sales Tax Act, 1957. The material on record discloses, the Assessing Authority reopened the original assessment orders on the ground that the appellant has purchased iron ore worth Rs. 1,31,80,735/- respectively from local registered dealers. On such purchase turnover of iron ore, resale tax at 1.5% is leviable u/s 6-B of the KST Act, 1957 which has escaped assessment tax in the original assessment order for the assessment year 2004-2005. Hence, the Assessing Authority levied resale tax at 1.5% at Rs. 1,97,711/- on the purchase turnover of iron ore. Aggrieved by the said order of reassessment, the assessee preferred an appeal before the Joint Commissioner of Commercial Taxes (Appeals), Davanagere, who set aside the order of reassessment and allowed the appeal and deleted the resale tax. The Additional Commissioner of Commercial Taxes, invoking his powers u/s 22-A(1) of the KST Act, 1957, issued a notice to the assessee on the ground that the order of the Appellate Authority is illegal, improper and prejudicial to the interest of Revenue. After service of notice, the assessee appeared before him and brought to his notice that he is not liable to pay resale tax u/s 6-B of the Act. However, overruling the said objections, the Revisional Authority set aside the order of the Appellate Authority and restored the order of the Original Authority. It is against the said order, present appeal is filed.

The question whether the raw material like iron ore is liable for resale tax u/s 6-B of the Act was the subject-matter of the appeal before, this Court in Mfar Constructions Limited Vs. Commissioner of Commercial Taxes (Karnataka), Vanijya Therige Karkalaya, Bangalore, . This Court after considering the aforesaid provision and the other provisions has held at para 10 as under:

Therefore, resale tax is not leviable on such goods which has suffered tax under clause (x) of the proviso. Though Sections 5, 5-A, 5-B, 5-C, 6 and 6-B of the Act are independent charging sections, if a registered dealer has paid the tax under any one of those sections, he is not liable to pay resale tax on that turnover which forms part of levy under the aforesaid provisions and is liable to pay resale tax only on such portion of the total turnover which has not yet suffered tax....

The principle of single point taxation, which is the object behind the enactment of value added tax, is to be respected. There was no intention to levy double tax on dealers and the object is only to tax that portion of the turnover which has not suffered tax under the Act. The tax is made collectable from the customers. Therefore it was held that resale tax is only on such portion of the turnover which is liable to tax u/s 5-B of the Act in the case of a works contract. In other words, that portion of the turnover, which is liable to tax u/s 5-B of the Act, is not liable to resale tax u/s 6-B of the Act. Clause (x) of the proviso to Section 6-B(1) of the Act, exempts resale tax on consideration paid on purchase of goods, i.e., turnover of goods which are liable to tax on the first point of sale. The tax paid by the registered dealer on the turnover which is the subject-matter of tax u/s 5-B of the Act, and the tax paid by the registered dealer which is the subject-matter of clause (x) of the proviso to Section 6-B(1) are to be excluded from the purview of Section 6-B of the Act. Admittedly, in this case the tax paid by the assessee under clause (xi) of the proviso to Section 6-B(1) is not liable to resale tax. Therefore, the Revenue has not suffered any loss as held by the Revisional Authority. Therefore, the impugned order is unsustainable. Accordingly, it is hereby set aside. Hence, we pass the following order:

The appeal is allowed.

The impugned order is hereby set aside. The order of the Appellate Authority is restored.

Learned Counsel for the appellant submits that Misc. Cvl. No. 100319 of 2010 has become infructuous. In view of the same, Misc. Cvl. No. 100319 of 2010 is dismissed as having become infructuous.