The judgment established the interpretation of the provisions of Section 15 and Section 15-B of the Karnataka Tax on Entry of Goods Act, 1979, regarding the exercise of revisional powers, time limitation for initiating and completing proceedings, and the retrospective nature of Section 15-B.

JUDGMENT

KAPADIA, J.

1. This civil appeal is filed by the assessee and is directed against the judgment and order delivered by the Division Bench of the Karnataka High Court on 5.8.2006 in Tax Appeal No. 22/1996 holding the proceedings under Section 15(2) of Karnataka Tax on Entry of Goods Act, 1979 ("the said 1979 Act") are not barred by time.

2. A short question which arises for determination in this civil appeal is: Whether mere calling for the records for examination of the case on 16.3.1996 by Additional Commissioner constituted exercise of power within the meaning of Section 15 (4) of the said 1979 Act so as to fall within limitation period specified therein?

3. The appellant is the manufacturer of branded agaraba this having its manufacturing unit at Mysore. It causes entry of various raw materials into the local area of Mysore. For the Assessment Years 1986-87 to 198990, the Assessing Officer (“AO”) passed an order of assessment levying tax on all the items imported into the local area, of Mysore. According to the appellant, packing material was not to be taxed as raw material. This was not accepted by the AO. Aggrieved by the said decision, an appeal was filed. The Appellate Authority excluded the packing material from taxation. The decision of the Appellate Authority was delivered on 28.3.1992. On 20.5.1996 a show cause notice was given to the appellant assessee by the Additional Commissioner under Section 15(1) stating that, upon scrutiny of the records, he found the order dated 28.3.1992 to be erroneous and prejudicial to the Revenue for the reason that as per serial No. 16-A of the Schedule to the 1979 Act, packing material was liable to be taxed @ 2%, which has not been noticed by the First Appellate Authority and, therefore, it had committed an error in setting aside the tax levied by the AO on the value of packing material. In the circumstances, the Additional Commissioner called upon the assessee to show cause as to why the order of the First Appellate Authority should not be set aside and restore the Assessment Order levying tax on the value of packing materials. In the show cause notice, the Additional Commissioner stated that the order of the First Appellate Authority was examined on 16.3.1996 and, therefore, the revision proceedings were within time.

4. As stated above, the short point which arises for determination in this civil appeal is whether mere calling for records of the case for examination on 16.3.1996 amounts to exercise of power under Section 15(4) of the said 1979 Act.

5. To complete the chronology of events, it may be noted that the order of the First Appellate Authority was dated 28.3.1992, the order calling for the records by the Additional Commissioner was around 16.3.1996, the decision, on the question of error in the order of the First Appellate Authority and the loss to the revenue consequent thereto, was dated 16.3.1996, the show cause notice was dated 20.5.1996 and the same was received by the assessee on 24.5.1996. The order ultimately passed by the Additional Commissioner under Section 15(1) was of 14/15.10.1996. Therefore, according to the assessee, mere calling for the records for examination around 16.3.1996 did not amount to exercise of power within the meaning of Section 15(4) of the said 1979 Act and if that be the case then, according to the assessee, issuance of the show cause notice on 20.5.1996 was beyond the prescribed period of 4 years from the date of the order passed by the First Appellate Authority on 28.3.1992. According to the assessee, in the present case, the Additional Commissioner had initiated proceedings by way of show cause notice on 20.5.1996. According to the assessee, proceedings under Section 15(1) could only be initiated by issuance of a show cause notice. According to the assessee, a mere consideration by the Additional Commissioner in his Chamber on 16.3.1996 regarding error in the order of the First Appellate Authority and the loss to the revenue cannot co