LexM/S MALNAD ARECA PROCESSING & MKTG. LTD. versus THE DY. COMMISSIONER OF COMMERCIAL TAXES (ASSESSMENT) AND ORS.
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[2008] 5 S.C.R. 571 M/S MALNAD ARECA PROCESSING & MKTG. LTD. A v. THE DY. COMMISSIONER OF COMMERCIAL TAXES (ASSESSMENT) AND ORS. (Civil Appeal No. 2225 of 2008) MARCH 28, 2008 B ...._ [DR. ARIJIT PASAYAT AND D.K. JAIN, JJ.] Sales Tax: Karnataka Sales Tax Act, 1957 - ss. 5 and 6 - New c Industrial Policy, 1996 - Clause 5 - Sales Tax concession for new industrial units - Assessee purchasing arecanut from members-growers and selling it outside the State - Purchase tax leviab/e u/s 6 - Exemption - Entitlement of - Held: Not • entitled - Under the Notification, tax leviable u/s 5 on goods D -~ manufactured and sold by industrial units is only exempted - Government order No. Cl. 30SPC. 96(1) dated 15. 3. 1996 as amended by Government Order No. Cl. 30SPC. 96(1) dated 14.5.1996 -Notification dated 15.11.1996. Words and Phrases: E 'Sales tax' and 'Sales tax deferral' - Meaning of The question which arose for consideration in this appeal was whether assessee was eligible for exemption F from purchase tax levied under section 6 of the Karnataka ".:.... Sales Tax Act, 1957 on the value of arecanut purchased from member-growers and consignment of arecanut outside the State for sale by virtue of the Notification issued by the State Government pursuant to Government order No. Cl. 30SPC. 96(1) dated 15.3.1996 as amended by G Government Order No. Cl. 30SPC. 96(1) dated 14.5.1996. I Dismissing the appeal, the Court -r HELD: 1.1 A sale and a purchase are two different 571 H 572 SUPREME COURT REPORTS [2008] 5 S.C.R. A aspects of the same transaction. Whether sale or purchase, it will have same ingredients, both in common law and also under Sale of Goods Act. In the field of taxation, it is recognized that the power to classify the objects or persons to be taxed or exempted from levy is B with the legislature. It also enjoys the power to select persons or trransactions. Therefore, a law of the State could levy tax both at the sale point and at the purchase point. [Para '17] [577-F, G; 578-A] 1.2 Undler the Government Order, the policy of the C Government as spelt out is, that tiny and small scale industries and medium and large scale industries may exercise theiir option either for sales tax exemption or sales tax deferment both under the Karnataka Sales Tax Act, 1957 and Central Sales Tax Act, for number of years 0 prescribed im the Government Order itself. In the context in which these expressions are used, they only mean 'sales tax holiday' or exemption from payment of sales tax for number of years specified, depending on where the tiny or !Small scale industry is located. 'Sales tax' refers to any tax which includes within its scope all 'business of E sale of goods' specified in the Schedule. Similarly, 'Sales tax deferral' only means the aforesaid industries are entitled t:o collect tax but they need not pay sales tax collected immediately to the State. If understo,ad in this manner and thereafter the New Industrial Policy of the F State Government for the years 1993-1998 and the exemption notification is looked into, the only conclusion that cam be drawn is, what is exempted under the notification issued by the State Government is tax leviable under Section 5 of the Act on the goods manufactured G and sold by an industrial unit. Therefore, the notification is in nci way in variance or contrary to the industrial policy for the years 1993-1998. The High Court rightly highlighted the above position. Thus, there is no infirmity in the impugned order of the High Court. [Paras 17 and 18] H [578-A, B, C, D, E, F, G] • T M/S MALNAD ARECA PROCESSING & MKTG. LTD. v. 573 THE DY. COMMNR. OF COMM. TAXES [PASAYAT, J.) Devi Dass Gopal Krishnan v. State of Punjab AIR 1967 A SC 1895 - referred to. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2225 of 2008. From the final Judgment and Order dated 02.01.2006 of B the High Court of Karnataka at Bangalore in W.P. No. 18392 of 2005 (T-KST) C/W Sales Tax Revision Petition 91/04 (STRP No. 91-92 of 2004). G. Sarangan, Sanjay Kunur and N.N. Keshwani for the Appellant. c Sanjay R. Hegde for the Respondents. The Judgment of the Court was delivered by DR. ARIJIT PASAYAT, J. 1. Leave granted. D .... 2. Challenge in this appeal is to the order passed by a Division Bench of the Karnataka High Court dismissing the Writ Petition and the Sales Tax Revision Petition filed by the appellant. 3. The Writ Petiti
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