Sri Vijayalaxmi Steel House vs The State of Karnataka

Huluvadi G. Ramesh, J.—Petitioner has sought for a writ of certiorari to quash the Notification issued at Annexure ''D'' the clarification issued by the 2nd Respondent at Annexure ''B'' and the reassessment order and the consequential demand notice issued by the 3rd Respondent at Annexure ''E'' and ''F'' respectively.

Petitioner is a dealer registered under the Karnataka Value Added Tax Act of 2003 dealing in iron and steels products and apart from that, he has also undertaken sale of old cars. The 3rd Respondent issued a notice proposing to levy tax @ 4% on the sale of used cars on the basis of notification dated 30.3.2007 issued by the Government against which, Petitioner approached the 2nd Respondent-Commissioner of Commercial Taxes, for clarification as to the rate of tax wherein the 2 Respondent having confirmed the notice, levied the tax at 4% on the sale of used cars by issuing a clarification based on which, reassessment order has been passed by the 3rd Respondent as per Annexure ''E'' for the month of March 2008 and also issued a demand notice. Hence, Petitioner is before this Court.

Heard.

According to the Petitioner''s Counsel, the tax is to be imposed on the sale of old cars based on the difference between the taxable turn over and tax paid on the purchase value. Without taking into consideration the notification at Annexure ''A* and other notifications which does provide for exemption, the impugned order has been passed at Annexure ''E'' by way of reassessment dated 30.6.2010 and also consequently, demand notice is issued as per Annexure ''F''

At the time of reassessment, the Respondent-authority ought to have taken note of several notifications which reduced the rate of tax payable by the dealer on the sale of used cars based on the difference between the taxable turn over and tax paid on the purchase value. The authority has levied the tax as if it is a sale of new ear without extending the benefit of deductions and without taking into consideration the difference between the taxable turn over and the tax that has already been paid at the time of purchase while passing the reassessment order, which appears to be erroneous.

Accordingly, petition is allowed and the impugned orders at Annexures E and F are quashed. The matter is remitted to the Respondent-authority for disposal of the same in accordance with law. Petitioner to appear before the Respondent-authority within one month from the date of receipt of this order, who shall in turn, dispose of the matter pursuant to the notification issued by the Government and also by considering the grievance of the Petitioner regarding levying of tax based on the difference between the taxable turn over and the tax paid on the purchase value.