VINU & VIJU Vs. ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) THESE two appeals are preferred by the Revenue against the order passed by the revisional authority who has disallowed the benefit of exemption granted by the appellate authority to the assessees. As the question involved in both the appeals are one and the same, they are taken up together for consideration and disposed of by this common order. The assessees in both these cases are registered dealers trading in arecanut and black pepper. They are effecting both local sales and consignment sales in the course of inter -State trade and commerce. The assessees availed of transitional relief on the sales tax suffered arecanut and black pepper, which was held in stock during the period from April 1, 2004 to April 1, 2005.

(2.) ON verification of books of accounts, on the ground that the assessees are not entitled to transitional relief, proceedings were initiated under section 39(1) of the Karnataka Value Added Tax Act, 2003. In the said proceedings, the assessing authority allowed the exemption from payment of Central sales tax as per notification dated May 31, 2003 for stock purchase prior to April 1, 2004. However, the said benefit was not extended for purchase of arecanut during the period from April 1, 2004 to April 1, 2005, which was sold subsequent to April 1, 2005 in the course of inter -State trade. Thus, he disallowed the exemption claimed during the transitional period on the ground that he has already availed of the benefit under the Karnataka Value Added Tax Act. Aggrieved by the said order, the assessees preferred appeals to the Joint Commissioner of Appeals. The Joint Commissioner held that by virtue of section 18 of the KVAT Act, the benefit to which the assessees are entitled to under the notification dated May 31, 2002 was available to all purchases made which suffered KST during the period April 1, 2004 to April 1, 2005 and the assessees are not liable to pay Central sales tax, if the said goods are sold outside Karnataka and therefore, he granted the relief and set aside the order of the assessing authority. The Additional Commissioner of Commercial Taxes initiated suo motu proceedings of revision under section 64(1) of the Act on the ground that the benefit of the notification cannot be availed of from April 1, 2005. Rule 166(5A) inserted from April 1, 2006 is effective for the period during which the transit relief under section 18 read with rule 166 is applicable. The transit relief is no longer applicable from January 1, 2006 as per the provisions of section 18 read with rule 166 and consequently, this rule inserted is only clarificatory in nature and does not have retrospective effect. After hearing the assessees, he proceeded to set aside the order passed by the appellate authority and restored the order of assessing authority and in fact, he also directed that the exemption granted for inter -State sales prior to April 1, 2005 should be collected. Aggrieved by the said order, the assessees are in appeals before this court.

(3.) THE exemption which is claimed by the assessee read as under: