M/S. INDIAN DAIRY MACHINERY CO. LTD. vs. ASST. COMMNR. OF COMMERCIAL TAXES

C.A. No.-000584-000584 - 2008Supreme Court22 January 2008Bench: DR. ARIJIT PASAYAT P. SATHASIVAM3 pages
For Petitioner: SUBHASH SHARMAFor Respondent: ANITHA SHENOY
AI SummaryDismissed

What were the facts?

The appellant, Indian Dairy Machinery Co. Ltd., a sub-contractor for Larsen and Toubro Ltd., had its registered office in Gujarat and a branch in Bangalore, Karnataka. For the assessment year 2002-2003, the appellant sought to opt for composition of tax under Section 17(6) of the Karnataka Sales Tax Act, 1957. However, this benefit was denied due to an amendment to Section 17(7) of the Act, effective from April 1, 2002. The appellant had received goods from its head office in Gujarat for executing works contracts in Karnataka. The departmental authorities, the Karnataka Appellate Tribunal, and the Karnataka High Court all upheld the denial of the composition benefit.

What did the Supreme Court hold?

The Supreme Court held that the amendment to Section 17(7) of the Karnataka Sales Tax Act, effective from April 1, 2002, clearly applies to the assessment year 2002-2003, irrespective of when the agreements were entered into. The Court reasoned that the option to opt for composition under Section 17(6) is exercised annually and is governed by the rules in force for that assessment year. The amended Section 17(7) explicitly states that a dealer who purchases or receives goods from outside the State for use in works contracts is not eligible for the composition benefit. The Court found the language of the amended provision to be very clear, and that the expression 'receives' encompasses receipt by way of stock transfer from a branch. Therefore, the appellant was disentitled from claiming the composition benefit. Both questions raised were answered against the assessee.

What were the issues?

1. Whether the Karnataka Appellate Tribunal was correct in concluding that the amendment to Section 17(7) of the Karnataka Sales Tax Act, effective from April 1, 2002, applies to agreements entered into prior to that date. (Question of law) 2. Whether the Karnataka Appellate Tribunal was correct in holding that even transfers to stock are covered by the amendment to Section 17(7) of the Karnataka Sales Tax Act, effective from April 1, 2002. (Question of mixed law and fact) Assessee's Contention: The appellant argued that the receipt of goods from its head office did not constitute 'receiving of goods' in a manner that would disentitle it from the composition benefit. They also implicitly argued that the amendment should not apply to pre-existing agreements. Revenue's Contention: The respondent-State supported the High Court's judgment, contending that the amended Section 17(7) clearly applied and disentitled the appellant from the composition benefit.

Which sections of the Income-tax Act were involved?

Section 17(6),Section 17(7),Section 5-B

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3 CASE NO.: Appeal (civil) 584 of 2008 PETITIONER: Indian Dairy Machinery Co. Ltd. RESPONDENT: Assistant Commissioner of Commercial Taxes DATE OF JUDGMENT: 22/01/2008 BENCH: Dr. ARIJIT PASAYAT & P. SATHASIVAM

JUDGMENT: J U D G M E N T (Arising out of S.L.P (C) No.12791 of 2006) (With Civil Appeal No. 585/08 @ SLP (C) No. 12792/2006 With Civil Appeal No. 586/08 @ SLP (C) No. 12793/2006 With Civil Appeal No.589/08 @ SLP (C) No. 12794/2006) Dr. ARIJIT PASAYAT, J.

1.

Leave granted in SLP (C) Nos. 12791-12794 of 2006

2.

Challenge in these appeals is to the judgment of a Division Bench of the Karnataka High Court dismissing the Revision Petition filed under Section 23(1) of the Karnataka Sales Tax Act, 1957 (in short the \021Act\022).

3.

The controversy relates to assessment year 2002-2003. The appellant had filed the Revision Petitions questioning correctness of the order passed by the Karnataka Appellate Tribunal (in short the \021Tribunal\022) in STA Nos798-801 of 2003. The appeals were filed before the Tribunal under Section 22(1) of the Act against the order passed by the Joint Commissioner of Commerci

The order continues below.

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