- (1.) The appellant is a dealer registered under the provisions of the Karnataka Sales Tax Act, 1957 (for short hereinafter referred to as 'the Act'). The assessment period is for the year 1998-99. The assessee while filing his return of turnover had claimed certain exemptions in respect of the purchases on goods which figured in Entry 3 of Fifth Schedule of the Act such as :- 3. All varieties of textiles namely, cotton, woolen or artificial silk including rayon or nylon whether manufactured in mills, power looms or in handloom and hosiery cloth in lengths (produced or manufactured in India) as described from time to time in Column 2 of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957. and the total turnover attributable to such purchases was to the extent of Rs. 10,86,65,740/- for the period concerned. The assessing officer concluded the assessment as per his assessment vide order dated 24.6.1999 u/s. 12(2) of the Act and so far as this appeal is concerned, accepted the claim of the assessee regarding exemption in respect of its turnover relatable to the purchase of textiles as one covered under Entry 3 of Schedule V of the Act and therefore, not getting into Entry No. 7-A of Part 'T' of Second Schedule to the Act.
(2.) The Joint Commissioner in exercise of his powers u/s.21(2) of the Act proposed to revise this order on the premise that, when the assessee has not made good his claim for exemption as, he being a dealer in manufacturing of hosiery could have used for manufacturing purposes and might not have sold it as free flowing cloth and therefore, show cause notice dt. 30.3.2001 was issued to the assessee. The assessee responded to this notice reiterating that he is entitled for exemption etc.
(3.) The Joint Commissioner in terms of his order dated 24.7.2004 dropped the show cause notice being of the opinion that he was now convinced with the assessee having sold fabrics/textiles and as the show cause notice was merely on a hunch, that it might have been used in the manufacture of hosiery etc and opined that as the assessee had satisfied him that it has been sold as it is, no need to disturb the assessment order.;