JUDGMENT

Dr. Arijit Pasayat, J. — Leave granted in special leave petitions.

2. Challenge in these appeals is to the legality of the judgment rendered by a Division Bench of the Karnataka High Court holding that the Circular dated 23.10.1999 (Circular No.31/1999-2000) is valid and Circular No.5/1996-97 dated 12.4.1996 was inoperative.

3. Background facts in a nutshell are as follows:

Appellants are dealers registered under the Karnataka Sales Tax Act, 1957 (in short the ‘Act’). Their business activities inter-alia include business of leasing machinery, equipment and motor vehicles.

Section 5-C of the Act deals with levy of tax on transfer of the right to use the goods which is treated as a transfer for the purpose of levy of sales tax within the State.

4. Originally the levy was on “taxable turnover”. An amendment was brought in 1992 to the said provision substituting the expression “total turnover” for “taxable turnover”. The same was questioned by several assessees. A Division Bench of the High Court by its judgment in Shetty Leasing India Pvt. Ltd. vs. Union of India and Ors. (1996 (100) STC 533) struck down the provision. On 1.4.1986, Section 5-C was again amended with retrospec