LexM/S. BINANI INDUSTRIES LIMITED versus ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, VI CIRCLE, BANGALORE AND ORS.
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MIS. BINANI INDUSTRIES LIMITED v. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, VI CIRCLE, BANGALORE AND ORS. APRIL 04, 2007 [DR. ARIJIT PASA Y AT AND S.H. KAPADIA, JJ.] Karnataka Sales Tax Act, 1957: Sections 3-A, 5 and 5-C. A B Sales Tax-A Ys 1987-88 to 1996-97-Levy of sales tax-The assessee C was a dealer registered under the Sales Tax Act-His business activities inter-alia included business of leasing machinery, equipment and motor vehicles-Section 5-C of the Act dealt with levy of tax on transfer of the right to use the goods which were treated as a transfer for the purpose of levy of sales tax within the State-Originally, the levy was on "taxable turnover"- D An amendment was brought in 1992 to the said provision substituting the expression ''total turnover'' for ''taxable turnover' '-The same was questioned by several assesses-A Division Bench of the High Court struck down the provision-On 1.04.1986, Section 5-C was again amended with retrospective effect restoring the original position i.e. substituting the expression "taxable turnover" for "total turnover"-On 12.04.1996, a Circular was issued in E terms of Section 3-A of the Act providing that the goods which have suffered tax under Section 5 of the Act could not be again taxed in terms of Section 5-C-!n other words, where the goods had suffered tax on the actual sale cannot attract levy of tax again-The Circular was issued under Section 3- A of the Act read _with Rule 6(4) of Sales Tax Rules-Subsequently, on F 23.10.1999 another Circular was issued stating that the earfier Circular did not reflect the actual position in law and, therefore, there was no bar on the transaction being taxed in terms of Sections 5 and 5-C-On 1.04.2000, Section 5-C was amended by insertion of a proviso which in essence reiterated the view expressed in the Circular dated 12.04.1996-Keeping in view the directions contained in the Circular of 23.10.1999 reassessment proceedings G were initiated and/or action in terms of Section 21 for revision was initiated- A Single Judge while dealing with the challenge to the Circular dated 23.10.1999 held that the Circular of 12.04.1996 did not indicate the correct position in law and, therefore, there was no bar in the Circular dated 797 H 798 SUPREME COURT REPORTS [2007) 4 S.C.R. A 23.10. 1999 clarifying the position and indicating the correct position- However, it was held that the revenue was bound by the incorrect Circu/ar- Therefore, for the assessment years 1996-97 to 1999-2000 till the date of the subsequent Circular, no action could be taken against the assessee-But the position prior to that i.e. from 1.04.1986 till 31.03.1996 the assessee was not B entitled to any relief-However, The Division Bench held that the incorrect Circular did not bind the revenue and that the law declared by this Court had a binding effect-Correctness of-Held: Reopening of an assessment is not permissible by mere change of the opinion of the assessing officer-The Circular dated 23.10.1999 was on account of change of opinion of the Commissioner and that too while reviewing the earlier Circular-High Court's C judgment set aside-Karnataka Sales Tax Rules, 1957, R. 6(4). Interpretation of Statutes: Provisd-Meaning and effect of-Held: Normally, a proviso does not travel beyond the provision to which it is a proviso-It carves out an D exception to the main provision to which it is a proviso and to no other provision. Words & Phrases: ''Taxable turnover' '-Meaning of-In the context of Section 5-C of the E Karnataka Sales Tax Act, 1957. The appellants were dealers registered under the Karnataka Sales .Tax Act, 1957. Their b\lsiness activities inter-at;a included business of leasing machinery, equipment and motor vehicles. p Section 5-C of the Act dealt with levy of tax on transfer of the right to use the goods which were treated as a transfer for the purp<)se of levy of sales tax within the State. Originally, the levy was on "taxable turnover". An amendment was brought in 1992 to the said provision substituting the expression "total G turnover" for "taxable turnover". The same was questioned by several assessees. A Division Bench of the High Court struck down the provision. On 1.04.1986, Section 5-C was again amended with retrospect~ve effect i restoring the original position i.e. substituting the expression "taxable · ~- turnover" for "total turnover". On 12.04.1996, a Circular was mued in terms H
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