LexThe KARNATAKA SALES TAX ACT, 1957
Karnataka · state statute
Open in Lexace · Ask the AI about this act1957: KAR. ACT 25] Sales Tax 229
THE KARNATAKA SALES TAX ACT, 1957
Arrangement of sections
Statements of Objects and Reasons
Sections:
CHAPTER I
preliminary
1. Short title, extent and commencement
2. Definitions
CHAPTER II
authorities and appellate tribunal.
3. Appointment of Commissioner, Additional Commissioner, Joint
Commissioners of Commercial Taxes, Deputy Commissioner of
Commercial Taxes, Assistant Commissioner of Commercial Taxes, a
State Representative and Commercial Tax Officer.
3A. Instructions to subordinate authorities.
3B. Jurisdiction of officers.
3C. Change of incumbent of an office.
4. Provision for clarification and advance rulings.
CHAPTER - IIA
Settlement of Cases
4A. Definitions
4B. Constitution of Sales Tax Settlement Commission
4C. Place of sitting of Settlement Commission
4D. Decision to be by majority
4E. Application for settlement of cases
4F. Procedure on receipt of an application
4J. Powers and procedure of Settlement Commission
4K. Inspection, etc., of reports
4L. Power of Settlement Commission to grant immunity from prosecution
and penalty
4M. Power of Settlement Commission to send a case back if the applicant
does not co-operate
4N. Order of settlement to be conclusive
4O. Proceedings before Settlement Commission to be judicial proceedings
Sales Tax [1957: KAR. ACT 25 230
CHAPTER III
incidence and levy of tax.
5. Levy of tax on sale or purchase of goods.
5A. Taxation of Industrial Inputs.
5B. Levy of tax on transfer of property in goods (whether as goods or in
some other form) involved in the execution of works contracts.
5C. Levy of tax on the transfer of the right to use any goods.
6. Levy of purchase tax under certain circumstances.
6A. Burden of proof.
6B. Levy of Re-sale tax.
6BB. Omitted.
6C. Levy of Additional Tax.
6D. Levy of Road cess.
6E. Levy of Infrastructure cess
7. Liability to taxation under this Act of transactions.
8. Exemption of tax.
8A. Power of State Government to notify exemptions and reductions of tax.
9. Act to apply to non-resident dealers with certain modifications and
additions.
CHAPTER IV
registration and grant of licences.
10. Registration of dealers, commission agents, etc.
10A. Procedure for registration.
10B. Suo motu registration.
11. Agents liable to pay tax.
CHAPTER V
Returns, assessments, payment, recovery, composition and collection
of tax
12. Returns and assessment.
12A. Assessment of escaped turnover.
12AA. Assessment in cases of price variation or price revision.
12B. Payment of tax in advance.
12C. Self assessment in the case of certain dealers.
12D. Cancellation of assessment in certain cases.
12E. Re-assessment in certain cases.
1957: KAR. ACT 25] Sales Tax 231
12F. Assessment of Corporate Bodies.
13. Payment and recovery of tax.
13A. Payment of interest.
13B. Power to withhold refund in certain cases.
13C. Purchase by the State Government in auction of property.
13D. Special powers for recovery of amounts due to Government.
14. Recovery of tax or penalty or any other amount from certain other
persons.
14A. Issuance of clearance certificates to registered dealers.
15. Tax payable on transfer of business, etc.
16. Assessment of legal representatives.
17. Composition of tax.
17A. Rounding off of tax, etc.
18. Collection of tax by dealers.
18A. Penalty for collection in contravention of section 18.
18AA. Payment and disbursement of amounts wrongly collected by dealer
as tax.
19. Certain dealers to collect and pay tax.
19A. Deduction of tax at source (in case of works contract).
19AA. Deduction of tax at source in other cases.
19B. Power of Government to notify deferred payment of tax, etc., for sick
industries and riot affected industries.
19C. Power of Government to notify exemption of tax or deferred payment
of tax for new industries.
CHAPTER VI
appeal and revision
20. Appeals.
21. Revisional powers of Joint Commissioners.
21A. Deferment of refund in certain cases.
22. Appeal to the Appellate Tribunal.
22A. Revisional powers of Additional Commissioner and Commissioner.
22B. Limitation in regard to passing of orders in respect of certain
proceedings.
23. Revision by High Court in certain cases.
24. Appeal to High Court.
Sales Tax [1957: KAR. ACT 25 232
24A. Objections to Jurisdiction.
25. Petitions, applications and appeals to High Court to be heard by a
Bench of not less than two Judges.
CHAPTER VII
Miscellaneous
25A. Rectification of mistakes.
25B. Levy of tax on sugarcane.
26. Accounts to be maintained by dealers.
26A. Audit of account.
27. Certain dealers to issue and obtain Bill or Cash Memorandum.
28. Powers to order production of accounts and powers of entry,
inspection and seizure.
28A. Establishment of checkpost or barrier and inspection of goods while in
transit.
28AA. Transit of goods by road through the State and issue of transit pass.
28AAA. Power to purchase in case of undervaluation of goods to evade tax.
28B. Transporter, etc., to furnish information.
28C. Omitted.
29. Offences and penalties.
30. Cognizance of offences.
30A. Summary disposal of certain cases.
31. Composition of offences.
31A. Offences by companies.
32. Assessment, etc., not to be questioned in prosecution.
33. Bar of certain proceedings.
34. Limitation for certain suits and prosecutions.
35. Courts not to set aside or modify assessments except as provided in
this Act.
36. Appearance before any Authority in proceedings.
36A. Power to summon persons to give evidence.
37. Disclosure of information respecting assesses.
38. Power to make rules.
39. Laying of rules and notifications before the State Legislature.
40. Repeal and savings.
1957: KAR. ACT 25] Sales Tax 233
41. Power to remove difficulties.
42. Provisions relating to Appellate Tribunal.
43. Assessments to tax or taxes in certain cases.
Schedules
First Schedule
Second Schedule
Third Schedule
Fourth Schedule
Fifth Schedule
Sixth Schedule
Seventh Schedule
Eighth Schedule
Ninenth Schedule - Omitted
*****
STATEMENT OF OBJECTS AND REASONS
I
Act 25 of 1957.—Five different sets of laws on Sales Tax are now in
operation in the areas forming the new Mysore State. This has led to
Administrative inconveniences as well as inconvenience to several dealers.
Therefore, the need for unification of the Sales Tax law in the new State is
too obvious to require any explanation. In view of these, the Government
announced their intention to introduce a uniform law on the subject. The
present Bill is the result of Government's decision to have a uniform law on
Sales Tax in the new State.
2. In bringing about uniformity, due regard has been paid not only to
the revenue aspect, but also to the likely repercussions of the tax on trade
and commerce in the new State. This opportunity has also been availed of
to remove some of the difficulties in the working of the Sales Tax Acts now
in force and to redress the legitimate grievances of the dealers to the extent
possible. The Bill has been prepared taking into consideration the pattern of
taxation prevailing in the adjoining States, and the provisions of the newly
enacted Central Sales Tax Act.
3. Though the taxable annual turnover limit is proposed to be
reduced from Rs. 7,500 to Rs. 5,000, provision has been made for
composition of tax in regard to annual turnovers of R s. 20,000 and below.
Exemptions have been limited in the light of the recommendations of the
Taxation Enquiry Commission to a few articles essential for the life of the
community.
(Published in the Karnataka Gazette (Extraordinary) Part IV-2A, as No. 240,
p. 59, Notification No. 10415 LA, dated 5.8.1957.)
Sales Tax [1957: KAR. ACT 25 234
II
Amending Act 9 of 1958. — 1. At the Conference of Finance
Ministers held at Delhi in November 1957, it was agreed that the States
should discontinue the levy of State Sales Tax on textiles (Other than pure
silk cloth), tobacco and its products and sugar, so as to enable the Central
Government to levy additional excise duties on these commodities and to
distribute the proceeds to the various States. As the Central Government
proposed to bring new arrangement into force from 14th December 1957
this Government had to exempt those commodities from sales tax from that
date. To give effect to these decisions, Ordinance No. 9 of 1957 was
promulgated by the Governor on 13th December 1957. By the same
Ordinance electrical energy was included in the list of goods exempted from
sales tax and gur, garlic, onion, potatoes, turmeric, sweet potatoes and
products of pulses were included among the commodities subject to one per
cent turnover tax. The present Bill is mainly for replacing the Ordinance.
2. Since the promulgation of the Ordinance, a copy of the Additional
Duties of Excise (Goods of Special Importance) Act, 1957, has been
received from the Government of India. This Act lays down that a State
Government will not be entitled to its share of additional excise duties if the
State levies any sales or purchase tax on any form of tobacco or on cotton
or artificial silk or woolen fabrics. It has become necessary, therefore, to
remove licence fee on handloom cloth and sales tax on cigarette and pipe
tobacco as well as on beedies and snuff and other products of tobacco,
mentioned in item 42 in Second Schedule to the Mysore Sales Tax Act,
1957. The Bill provides for exemption from licence fee and sales tax of
these commodities also.
(Published in the Gazette (Extraordinary) Part IV -2A dated 4-3-1958 as No.
53)
III
Amending Act 31 of 1958. — This Bill is intended to implement the
decisions of the Conference of Finance Ministers held at Delhi in November
1957, regarding uniform taxation of certain luxury goods and to remove
certain difficulties which have been felt in implementing the Mysore Sales
Tax Act, 1957. The main provisions of the Bill are :-
(1) Turmeric power and dals, flour and husk of pluses will be taxed at
one per cent in the same way as turmeric and pluses.
(2) The rate of tax on bullion and specie and certain luxury articles is
enhanced.
(3) Voluntary payment of sales tax by Commission Agents is
provided for.
(4) Cocoanut and copra are brought within the definition of oil-seeds.
(5) Books meant for reading, canteen stores, fresh fruits, hosiery
cloth in lengths and all cloth (including pure silk) made on handlooms, are
exempted from sales tax.
1957: KAR. ACT 25] Sales Tax 235
(6) Provision is made for validating the rules already made and for
the reduction of registration fee in particular classes of cases and for
presiding fees for the grants of copies documents.
(7) The point of levy of purchase tax is changed from the last
purchase point to first purchase point, in the case of declared goods.
(Published in the Gazette (Extraordinary) Part IV -2A dated 5- 5-1958 as No
99.)
IV
Amending Act 32 of 1958.— Not Available
V
Amending Act 11 of 1961. —In order to have a uniform law in the
State in respect of the levy of cess on sugarcane the Mysore Sugarcane
Cess Act was passed in the year 1958. Under this Act, the cess is levied on
the entry of sugarcane into the factory the area comprised in which is
treated as a local area. The cess is in the nature of octroi falling under entry
52 of the State List, that is, taxes on the entry of goods into a local area for
consumption, use or sale therein. The Allahabad and the Mysore High
Courts had held that this levy was valid. But the Supreme Court has held
that the local area referred to in entry 52 of the State List means the area
within the jurisdiction of a local authority, and that therefore a State Act
imposing a tax on entry of sugarcane into a factory, is unconstitutional. They
have accordingly held the U.P. Sugarcane Cess Act, 1956, and the Madras
Sugar Factories Control Act, 1949, as amended by the Madras Sugar
Factories Control (Mysore Amendment and Validation of Levy of Cess) Act,
1959, as invalid.
Since under entry 97 of the Union List, Parliament can impose any
tax not enumerated in any of the Lists, the levy and collection of cess under
the U.P. Acts have been validated by Parliament by the enactment of the
U.P. Sugarcane Cess Validation Act, 1961. The Government of India have
been requested to undertake similar legislation for the validation of the levy
and collection of sugarcane cess under the State Acts.
As regards the future levy, it is proposed to levy a tax at the rate of
fifteen per cent on the turnover of the last dealer in the State in respect of
the purchase of sugarcane, by amending the Third Schedule to the Mysore
Sales Tax Act, 1957.
Hence this Bill.
(Published in Karnataka Gazette (Extraordinary) Part IV-2A dated
14-4-1961 as No. 59 at page 2 & 3.)
VI
Amending Act 12 of 1961. —Under the Mysor e Sales Tax Act,
1957, pure silk fabrics are taxable at the first stage of sale at 9 per cent in
Sales Tax [1957: KAR. ACT 25 236
respect of cloth other than cloth woven by powerlooms and handlooms and
4 per cent on cloth woven on powerlooms. The Government of India have
decided that the sales-tax on pure silk fabrics may be replaced by additional
duties of excise, the proceeds thereof being distributable to the States
according to the formulae of distribution of net proceeds on the same lines
as applicable to duties on other varieties of textiles. They have accordingly
levied excise duty on pure silk fabrics with effect from the first March 1961. It
is therefore necessary for the State Government to exempt pure silk fabrics
on which excise duty is levied from sales -tax from first March 1961. The
excise duty is not payable on the stocks with the dealers, and on this stock it
is considered necessary to levy sales -tax. Since there is no provision in the
Act empowering the State Government to grant exemption by notification
and for assessing the floating stocks, sections 5, 8 and 18 of the Act are
proposed to be amended.
At present sub-section (8) of section 5 of the Mysore Sales Tax Act,
1957, provides for making provisional assessment. In the light of the
observations of the High Court in a batch of writ petitions challenging
provisional assessments, the Advocate- General suggested the omission of
sub-section (8) and inserting a separate section relating to provisional
assessments. Provision has accordingly been made in clauses 2 (2) and 4
of the Bill.
Section 43 of the Act provides for payment of tax on the turnover or
turnovers during the assessment year ending on the date of commencement
of the Act. As the Act came into force on 1st October 1957, assessments
have been made on the basis of the turnover of dealers up to that date. In
respect of the turnover of dealers from 1st October 1957 up to the
commencement of the next assessment year also, it is necessary to make
specific provision for assessment. Provision has therefore been made in
clause 6 of the Bill.
The assessments made on the basis of rule 6 of the
Mysore Sales Tax Rules, as amended in May 1959, have been questioned,
and it is considered necessary to declare that the amendment is valid.
Provision for this purpose is made in clause 7. It is also considered
necessary to validate the assessments already made.
Necessary provision for this purpose has been made in clause 8.
(Published in Karnataka Gazette (Extraordinary) Part IV 2-A dated 14th April
1961 as No. 60, at page. 6.)
VII
Amending Act 28 of 1961.— It is generally felt that there is much
scope for evasion of Sales tax and that effective action is required to be
taken to prevent evasion.
The question of setting up of Intelligence and Enforcement Section in
the Commercial tax Department and establishing check posts at key points
to detect and prevent evasion has been under consideration. One of the
1957: KAR. ACT 25] Sales Tax 237
effective methods of minimizing evasion is to keep track of goods coming
into and going out of the State. For this purpose, check posts are required to
be set up as has been done in the neighbouring States of Madras, Kerala
and Andhra Pradesh. The Offices of the department would require legal
sanction for stopping the vehicles and checking the goods and the relevant
documents in order to satisfy themselves that sales tax leviable on those
transactions is not evaded. There is no provision in the existing law for such
a check. It is therefore, proposed to amend the Act to enable Government to
establish check posts wherever necessary and to authorise the officers of
the Department to stop the vehicle and check the goods and relevant
documents carried by them. Hence the Bill.
(Published in the Mysore Gazette (Extraordinary) Part IV -2A dated 10- 11-
1961 as No 142 at page 4.)
VIII
Amending Act 29 of 1961.—It is considered necessary to designate
"Inspecting Officers" as "Assistant Commissioners of Commercial Taxes"
and empower them to hear appeals against the orders of Assistant
Commercial Tax Officers. Provision has accordingly been made in clauses
2, 3, 6, 7 and 8 of the Bill.
Under the Central Sales Tax Act, 1956, certain goods like cotton and
oil seeds have been declared to be of special importance in inter-State trade
or commerce. According to section 15 of the said Act, the tax payable by
any dealer under the State Sales Tax Act, in respect of any sales or
purchases in respect of declared goods, shall not exceed two per cent and
such tax shall not be levied at more than one stage in the State. Under the
Mysore Sales Tax Act, cotton and groundnut including groundnut seed are
subject to a purchase tax and the purchase tax has to be paid by the last
dealer in the State liable to tax under the Act. Since tax cannot be levied in
respect of declared goods at more than one stage in t he State, it is
necessary to provide for refund of tax paid by a dealer in a year in respect of
purchase of such goods, if such goods are subsequently sold to any other
dealer in the State, who is liable to pay the tax. Provision has accordingly
been made in item (i) of clause 4. By item (ii) of clause 4, the first proviso to
section 5(4) of the Act is proposed to be amended to prescribe by rules the
manner and conditions subject to which the tax paid under section 5(4) shall
be refunded.
The High Court of Mysore has recently held sub- section (3) of
section 18 of the Mysore Sales Tax Act to be unconstitutional and invalid as
it does not provide for refund of tax to a customer, who though not required
by law to pay the tax, has paid the tax. It is therefore considered necessary
to provide for refund of tax in such cases and also to specify the period
within which the customer should claim refund. Provision has accordingly
been made in clause 5 of the Bill. In another case the High Court has held
that beer manufactured in India does not fall under entry 38 of the Second
Sales Tax [1957: KAR. ACT 25 238
Schedule to the Act and that the tax collected at 25 per cent on the sale of
such beer is not valid. Since the intention was that beer whether
manufactured in India or abroad should be subjected to tax at 25 per cent,
entry 38 and Explanation II of the Second Schedule are proposed to be
amended. The levy and collection of tax at 25 per cent on such beer and the
tax forfeited under section 18(3) are also proposed to be validated.
Provision for this purpose has been made in clause 10 of the Bill.—
(Published in Karnataka Gazette (Extraordinary) Part IV -2A dated 20th
November 1961 as No. 151, at page. 5.)
IX
Amending Act 26 of 1962.—In the light of certain decisions of the
Mysore High Court, it has become necessary to amend sections 7, 12A and
40 of the Mysore Sales Tax Act, 1957. It is also necessary to validate rule 6
of the Mysore Sales Tax Rules with retrospective effect. Hence this Bill.
(Published in Karnataka Gazette (Extraordinary) Part IV-2A dated 27th April
1962 as No. 82, at page. 8.)
X
Amending Act 30 of 1962.— The State Government are committed
to raise a sum of Rs. 42 crores for the Third Five- Year Plan by additional
taxation. In order to meet the commitments of the schemes in the Second
Five-Year Plan and implementation of schemes in the Third Five- Year Plan,
the resource of the State have to be augmented. The Mysore Resources
and Economy Committees have made certain recommendations for this
purposes, With reference to l evy of sales tax, they have inter alia made the
following recommendations:-
(i) the removal of exemption of cereals from payments of sales tax
and subjecting them to tax one per cent to multi point;
(ii) chillies, now taxed at single point of first purchased, may be taxed
to multi point;
(iii) the present rate of tax on timber at three per cent at first point of
sale, be raised to four per cent;
(iv) raw silk may be taxed at point of last purchase at one half per
cent;
(v) tamarind seeds may be taxed at the point of last purchase;
(vi) certain commodities, such as, aerated water, heavy chemical,
granite slabs, mosaic tile and chips, cement and asbestos sheets and
chicory now taxed at two per cent at multi point under section 5(1) may be
brought under s ingle point levy at three per cent at the point of first sale in
the State;
(vii) all kinds of yarn, except cotton yarn covered by the Fourth
Schedule may be taxed at two per cent, the rate of three -fourths per cent
being made applicable only to pure silk yarn;
1957: KAR. ACT 25] Sales Tax 239
(viii) exemption of firewood and charcoal for domestic use may be
removed;
(ix) exemption of dried vegetables may be removes;
(x) existing rates of tax in the case of certain commodities may be
slightly enhanced to the level of those prevailing in the neighbouring States;
(xi) the rate of tax on pluses and on gold and silver articles may be
raised from one to two per cent;
(xii) concessions allowed under the second and third provisions to
section 5(4) of the Sales tax Act amy be withdrawn; and
(xiii) the rate of ales tax on hotel turnover under section 5(1) be
raised from two to three per cent.
With certain variations, it is proposed to implement the
recommendations of the Committee. Hence this Bill. In the case of timber,
instead of levy of tax at the first point of sale at four per cent as
recommended by the Committee, it is proposed to levy multi point tax at two
per cent. In respect of raw silk it is proposed to levy tax at one per cent at
the point of last purchase instead of one half per cent as recommended by
the Committee. In respect of mosaic tiles and chips and chicory, it is
proposed to levy tax at the point of first sale at the rate of four per cent and
five per cent, respectively, instead of three percent recommended by the
Committees. In respect of yarn, a uniform rate of two per cent has been
proposed in respect of both mill yarn and thrown silk, instead of three-
fourths per cent as at present. The recommendation of the Committee to
enhance the rate of tax leviable in resp ect of certain commodities is
proposed to be implemented bye levy of slightly higher rate in respect of
some of those commodities. The rate of tax on pluses has not been
enhanced to two per cent as recommended by the Committee, as this
commodity has to be treated in the same manner as cereals. Similarly the
rate of tax on hotel turnover has not been enhanced to three per cent as
recommended by the Committee, since it will increase the tax burden on
persons who have to take food and other eatables in hotels.
(Published in the Mysore Gazette (Extraordinary) Part IV -2A dated 27 -8-
1962 as No. 166 at page 5-6.)
XI
Amending Act 9 of 1964. — The Select Committee which
considered the Mysore Sales Tax (Second Amendment) Bill, 1962 had
recommended inter alia that, Government might consider separate
legislation for enhancing the rates of tax on certain goods. It was decided
early this year that the States should revise the rates of tax on certain luxury
goods uniformly from seven per cent to ten per cent. In the Budget Speech
the enhancement of rates on luxury goods was also mentioned. There have
been several representations for replacement of the existing levy of licence
fee on food grains by tax in view of the inconveniences involved in the
present levy. It is therefore proposed to levy tax on the sale of food grains in
Sales Tax [1957: KAR. ACT 25 240
section 5 (1) of the Act. This is also considered necessary for increasing the
State's resources.
2. The existing rates of tax on electrical earthen porcelain goods and
toilet soaps are likely to produce adverse effects on the industries
manufacturing these goods in the State. It is, therefore, proposed to reduce
the rates of tax suitably in respect of the goods affected. Several
representations are being received that the sale of potatoes, sweet
potatoes, green chillies, gotta and nakki may be exempted from tax. As it is
proposed to levy tax on sale of food-grain under section 5 (1), it is proposed
to exempt sale of these goods from tax.
3. At present appeals are provided only against orders objecting to
assessment. It is proposed to enlarge the scope of the relevant provisions
so as to make all orders appealable and to provide for second appeals
against orders not relating the assessment also. At present a large number
of orders applicable to the Tribunal are being questioned by revision petition
before the Commissioner, thereby considerably increasing the quasi -judicial
functions to be performed by the Commissioner and making it difficult for
him to give the attention and time necessary for the proper administration
and enforcement of the Acts dealt with by the Commercial Taxes
Department. It is therefore considered that in cases in which assesses can
prefer appeal to the Tribunal, the alternative procedure of filing revision
petitions before t he Commissioner should be deleted, retaining power with
the Commissioner to revise orders only when he considers that such order
are prejudicial to the revenue.
4. Provision is made in sub- section (5A) and (5B) of section 5 of the
Act for levy of tax on t he sale or purchase of the goods held by a dealer on
14-12-1957 and 1- 3-1961 on which excise duty or additional excise duty
levied by the Central Government from those dates had not been levied. In
a recent decision, the High Court has held that sub- section (5A) as worded
has not the effect of making such goods liable to tax. It is considered
necessary to ensure that the tax payable on those goods are realised by the
State.
5. In another decision, it has been held by the High Court that where
a dealer who is not himself liable to pay tax collects any amount from the
purchaser as tax, such amount cannot be considered to be amount
collected 'by way of the tax' as contemplated by sub- section (3) of section
18 as the dealer himself is not liable to tax. Consequently in such cases, the
amount will neither be refunded to the purchaser nor paid to the State. It is
therefore, necessary to provide that the amount will be payable to the State
whether it is collected by way of tax or purporting to be by way of tax. Sub-
section (3) of section 18 is accordingly proposed to be amended.
6. The other amendments proposed to be made intended to remove
certain difficulties experienced in the working of the Act.
7. The provisions made in the Bill do not involve additional
expenditure from the Consolidate Fund of the State.
1957: KAR. ACT 25] Sales Tax 241
(Published in the Karnataka Gazette (Extraordinary) Part IV-2A dated 6-9-
1963 as No. 114)
XII
Amending Act 29 of 1964. —In accordance with the decision at a
conference of Chief Ministers, the rate of tax leviable on certain luxury
goods has already been raised from seven per cent to ten per cent. It is now
proposed to raise the rate of tax leviable under the Second Schedule to the
Mysore Sales Tax Act, 1957, in respect of cigar and cigarette cases, lighters
and holders of cigar and cigarettes from seven per cent to ten per cent.
Under the Fourth Schedule to the Act, a tax at the rate of two per
cent on the point of first purchase is leviable on hides and skins. In view of
representations made in this behalf, it is now proposed to levy tax at the rate
of one per cent at the point of last purchase.
The Government of India had suggested exemption being given to
food grains sold by the Central Government and by a wholesale Central Co-
operative Society. On an earlier occasion, the Government of India had also
suggested exemption being given in respect of goods sold to Indian Aid
Mission, Nepal. It is also considered necessary to grant exemption to goods
sold by canteens run under the auspices of the Central Government or State
Government Offices for the benefit of the members of the staff. It is
therefore proposed to amend the Fifth Schedule to the Act.
Hence this Bill.
As no expenditure is involved, financial memorandum is not given. There is
also no delegated legislation.
(Published in Karnataka Gazette (Extraordinary) Part IV-2A dated 16th June
1964, as No. 147, at page 4.)
XIII
Amending Act 3 of 1966. — With a view to augmenting the
resources of the State, it is considered necessary to rationalise and remove
the differences in the rate structure as compared to rates of tax in the
neighbouring State. The opportunity has been taken to make certain other
amendments considered necessary.
Hence this Bill.
(Published in Karnataka Gazette (Extraordinary) Part IV-2A dated 16th
October 1965 as No. 200, at page. 7.)
XIV
Amending Act 7 of 1966. — For the implementation of
Fourth Five- Year Plan, the State has to raise sufficient resources. These
resource have to be raised mostly by additional taxation and it has therefore
become necessary to make an upward revision of the rates of sales tax so
as to get more revenue from this source. Many other States in India have
already taken steps to enhance the rates of sales tax. The present Bill is
Sales Tax [1957: KAR. ACT 25 242
mainly intended to enhance the rate of sale tax on luxury goods from 10% to
12% and on goods liable to multi - point tax and also on most of the goods
other than luxury goods coming under the Second Schedule by 1/2%. It is
also proposed to give a rebate of 1% in respect of luxury goods imported
from outside the State as they will have been subjected to Central Sales Tax
during the course of import.
Some of the lacunae notice in the course of implementing the Act
are also proposed to be rectified. Industrial, Commercial or tradi ng
undertaking of the State Government are getting themselves registered as
dealers under Mysore Sales Tax Act, to become eligible for registration
under the Central Sales Tax Act also and get the benefit of concessional
rates applicable to registered deal ers in respect of inter -state transaction.
The definition of "dealer" is proposed to be amplified to include such
undertakings also.
The minimum turnover which would render a dealer liable to registration and
to payment of tax is proposed to enhanced from Rs. 7,500 to Rs.10,000.
Hence this Bill.
XV
Amending Act 16 of 1967. —Consequent on the amendment of the
Central Sales Tax Act by the Parliament providing for the enhancement of
the rates of tax applicable to the declared goods under the local sales tax
laws, it has become necessary to amend the IV Schedule which specifies
the declared goods and the rates of tax applicable to them. The rates of tax
applicable to the declared goods specified therein are now being enhanced
accordingly.
The Government was considering the question of granting certain
concessions to new industries with a view to encourage development of
industries in the State. The Government recently took a decision that in
respect of new industries exemption from the payment of Sales Tax sh ould
be provided for an initial period of two years. The manner in which that
exemption should be provided was examined and it was thought that it can
be best done by means of Notifications issued from time to time whenever
occasion arises. Since the Act did not contain a provision empowering the
State Government to issue such notifications it is now intended to insert a
provision empowering the Government to notify exemptions and reduction of
tax rates. Such a provision exists in the Sales Tax Laws of the Neighbouring
States also.
This occasion is also utilised to make certain minor amendments
relating to procedural matters and also to provide for concessional rate of
tax for vermicelli and to reduce the rates of tax on sugarcane and to exempt
Amber Charkas, Druggets, Durries and Carpets. The benefit of exemption
granted to bona fide producers under item 28 of the V Schedule is proposed
to be limited to persons who produce goods exclusively coming under
village industry.
(Published in Karnataka Gaz ette (Extraordinary) Part IV -2A dated 12th
December 1967 as No. 278, at page. 10.)
1957: KAR. ACT 25] Sales Tax 243
XVI
Amending Act 17 of 1969. —Clause ( j) of sub- rule (4) of Rule 6 of
the Mysore Sales Tax Rules, 1957 provided for the exclusion of excise duty
paid by a dealer from the c omputation of his taxable turnover. By
Government Notification No. GSR 882, dated 16th March 1966, this clause
was deleted from the rules with the object of recovering sales tax even on
the excise duty portion of the turnover of dealers. In respect of arrack which
falls under entry relating to Sl. No. 39 of the Schedule, sales are made by
Government to licensed contractors and sales tax was recovered from them
at 6½% on the total amount payable by them including the excise duty from
1st April 1966. The Mysore High Court in W. P. No. 644/66 D. Cawasji &
Co., and others vs. the State of Mysore (1968 16 LR 64) held that on the
sales of arrack, the sales tax cannot be collected on the total amount but
has to be collected only on the basic price excluding excise duty on the
ground that the duty in such a case does not form part of the sale price but
is a separate "levy" made by the Government at the time of releasing the
stocks from the Government Bonded Warehouse. Consequently, a
considerable amount already recovered may become refundable. In order to
get over the effects of the High Court decision and retain the money already
recovered by the Government, it is proposed to enhance the rate of tax on
arrack to 45% with retrospective effect from 1st April 1966. The enhanced
rate of tax on the basic price would be absorbed in the price already
recovered, and no additional tax is expected to be realised from this Bill.
Since the Legislature was not in session and in view of urgency, an
Ordinance was promulgated. The Bill is to replace the Ordinance.
(Published in Karnataka Gazette (Extraordinary) Part IV -2A dated 14th
August 1969, as No. 400, at page. 4.)
XVII
Amending Act 27 of 1969.— In sub-sections (4) to (7) of Section 28-
A of the Mysore Sales Tax Act, 1957, a provision was made to confiscate
the goods by the Check -post Officer, whenever the goods under transport
are not covered by proper documents to show that the goods in question
have already been subjected to sales tax. If the party desired to releas e the
goods on the sport itself, he was to pay ten per cent of the estimated value
of the goods. The High Court of Mysore in Venkatachalpathy vs.
Commercial Tax Inspector and other (1965_16 S.T.C. 894), while upholding
the validity of sub- sections (1), (2) and (3) of the said section, have struck
down the provisions of sub-sections (4), (5), (6) and (7).
It, is, therefore, proposed to substitute new sub- sections (4), (5), (6) and (7)
providing for,—
(1) levy of penalty;
(2) the limits upto which the penalty may be levied;
(3) the procedure to be followed when the penalty is not paid; and
(4) an appeal by the aggrieved person.
Sales Tax [1957: KAR. ACT 25 244
Provision has also been made that the officer-in-charge of the check post or
barrier shall be an officer not below the rank of an Assistant Commercial
Tax Officer and not higher in rank than an Assistant Commissioner of
Commercial Taxes.
In order to ensure that there is no evasion of tax, a new section 28C is also
proposed to be incorporated in the Act, requiring submission of the
documents referred to in sub-section (2) of Section 28A or copies thereof by
the owner or other person in charge of a goods vehicle or boat in respect of
the goods under transport to the Commercial Tax Officer.
(Published in Karnataka Gazette (Extraordinary) Part IV -2A dated 14th
August 1969 as No. 398, at page. 5.)
XVIII
Amending Act 31 of 1969. — While considering methods by which
delays in the disposal of cases can be reduced and the time of the courts
can be saved in trying a large volume of petty ca ses, the Law Commission
of India in their fourteenth Report recommended the adoption of the
procedure laid down in section 130 of the Motor Vehicles Act, 1939. Section
130 of the Motor Vehicles Act, 1939 provides for the summary disposal of
cases arising under that Act in respect of specific class of offences
thereunder. In accordance with that section, the accused person can plead
guilty to the charge by registered letter and remit to the court as fine such
sum as the court may specify. The Commission has recommended that this
procedure may be extended to minor offences under other Acts.
After examining the suggestion of the Law Commission of India, it has
been decided to make a provision in the Mysore Sales Tax Act, 1957
(Mysore Act 25 of 1957) and the Mysore Entertainments Tax Act, 1958
(Mysore Act 30 of 1958) similar to section 130 of the Motor Vehicles Act,
1939 to deal with the offences prescribed under section 29 (1) of the Mysore
Sales Tax Act, 1957 and section 12 (1) ( b) (ii) of the Mysore Entertainments
Tax Act, 1958.
Hence this Bill.
(Published in Karnataka Gazette Part IV-2A dated 13th February 1969, at
page. 32.)
XIX
Amending Act 9 of 1970. —In the Budget speech it was indicated
that the Mysore Taxation and Resources Enquiry Committee' s Report on
Sales Tax, copies of which were already circulated among the members of
the Legislature, has been accepted by the Government with certain
modifications. This Bills is intended to implement these decisions. The more
important of these decisions are:—
(1) Enhancement of the minimum limit of turnover for tax liability from Rs.
10,000 to Rs. 25,000.
1957: KAR. ACT 25] Sales Tax 245
(2) Raising the maximum limit of turnover for composition benefits to Rs.
75,000.
(3) Repeal of the Mysore Sales of Motor Spirit Taxation Act, 1957 a nd
bringing the sales of Motor Spirits within the preview of the Mysore Sales
Tax Act, 1957.
(4) Rationalisation of the tax rates.
This opportunity is also being availed of to include in this Bill certain other
amendments which are found necessary.
Hence the Bill.
(Published in Karnataka Gazette (Extraordinary) Part IV -2A dated 26th
March 1970, as No. 105, at page 21.)
XX
Amending Act 15 of 1970. —Consequent upon the amendment of
the Central Sales Tax Act, 1956 by the Central Sales Tax (Amendment) Act,
1969, proceedings for the rectification of assessment and appellate orders
were taken under rule 38 of the Mysore Sales Tax Rules. In respect of
rectification proceedings taken by the appellate authorities, the validity of
rule 38 was questioned in certain writ petitions. In view of the decision of the
High Court with reference to section 12A in Lakshmi Bags Manufacturing
Co., v. State of Mysore [1969 (1 Mys L.J. 425], it was considered necessary
to make specific provision for appeals against or ders of rectification of the
appellate authorities. As there are many cases in which the rectification
proceedings have been challenged and the collection of tax had to be
expedited, it was considered necessary to make provision in the Act itself for
rectification of assessment and appellate orders. As the matter was urgent
and as both the Houses of Legislature were not in Session, the Mysore
Sales Tax (Amendment) Ordinance was promulgated on 9th June 1970,
Provision was made by this amendment empowering the assessing
authority, appellate authority, the revising authority, the Appellate Tribunal
and the High Court to rectify any mistake apparent from the record.
This Bill is intended to replace the Ordinance.
(Published in Karnataka Gazette (Extraordinary) Part IV -2A, dated 11th
September 1970 as No. 389, at page. 7.)
XXI
Amending Act 18 of 1971. — In order to raise additional resources
to be utlised exclusively for the relief of Bangla Desh refugees, the
Government of Mysore has proposed to levy an additi onal tax at the rate to
two paise in the rupee on the sales tax or purchase tax or both payable by
all dealers liable to pay tax under the Mysore Sales tax Act, 1957. The
present measure is being enacted to give effect to the said proposed.
2. The Committee constituted under the proviso to sub- section (2) of
section 3 of the Mysore State Legislature (Delegation of Powers) Act, 1971
(23 of 1971), has been consulted before enactment of this measure as a
President's Act.
Sales Tax [1957: KAR. ACT 25 246
XXII
Amending Act 5 of 1972. —In the budget speech, certain changes
in the sales tax rates and rationalisation of composition rates have been
announced. The Bill is intended to give effect to these changes. Opportunity
has been taken to make other amendments with a view to remove certain
difficulties and also tighten up the procedure regarding collections.
Hence this Bill.
(Published in Karnataka Gazette (Extraordinary) Part IV -2A dated 19th July
1972, as No. 285, at page 9.)
XXIII
Amending Act 7 of 1972. —Section 13 (3) ( b) of t he Mysore Sales
Tax Act, 1957, authorises recovery of the tax assessed or any other amount
due under that Act, on application to any Magistrate, by such Magistrate as
if it were a fine imposed by him. Accordingly, for purposes of expeditious
recovery of arrears proceedings were being taken by making applications to
Magistrates.
In a recent case, namely, Messrs, Mohanlal Premchand Vs.
Commercial Tax Officer and another [1971 (1) Mysore Law Journal 72], the
High Court of Mysore held that under section 32 of the Code of Criminal
Procedure, a Magistrate of the First Class has jurisdiction to impose a fee
not exceeding two thousand rupees, that the power of the Magistrate under
section 386 of the Code of Criminal Procedure to recover the fine was
circumscribed by the limits of the power to impose a fine, and that therefore,
by assorting to the procedure under section 386 of the Code of Criminal
Procedure, a Magistrate under section 13 (3) ( b) of the Act, in the absence
of any other provisions, cannot recover any amount as if it were a fine, in
excess of the limit prescribed under section 32 of the Code of Criminal
Procedure; and consequently, quashed the recovery warrants issued by the
Magistrate for recovery of the tax exceeding two thousand rupees. Similar
orders were passed in other cases.
Appeals have been preferred to the Supreme Court questioning the
correctness of the decision of the High Court. As the disposal of the appeals
by the Supreme Court may take some time, and as the recovery of arrears
has to be effected as expeditiously as possible, it is considered necessary to
amend the Act to make it clear.
(Published in Karnataka Gazette (Extraordinary) Part IV-2A dated 19th July
1972 as No. 286, at page. 3.)
XXIV
Amending Act 4 of 1973.—President's Acts 14 of 1971, 16 of 1971,
17 of 1971 and 18 of 1971 had been enacted to raise additional resources
for the relief of Bangla Desh Refugees. They expire on 24th March 1973.
It is proposed that while the additional levies for the relief of Bangla
Desh Refugees may cease, the levies may be retained till 31st March 1974
1957: KAR. ACT 25] Sales Tax 247
to raise additional resources to meet the cost of `People's Housing
Programme' to be undertaken by the State Government.
Hence the Bill.
(Published in Karnataka Gazette (Extraordinary) Part IV -2A dated 13th
March 1973 as No. 253, at page. 5.)
XXV
Amending Act 7 of 1973.—SectExcerpt shown. Open the full act in Lexace.