The main legal point established in the judgment is that the exclusion of packing charges from the taxable turnover was a mistake apparent from the record and justified the rectification orders to include the packing charges in the taxable turnover.

( 1 ) NOTICE regarding Rule was issued and on appearance, by consent these petitions were finally heard. The petitioner is a manufacturer and dealer in cement and is an assessee under the Karnataka sales Tax Act, 1957 (hereinafter referred to as "the Act" ). These petitions relate to assessment years 1980-81, 1981-82, 1982-83, 1983-84 and 1984-85 and involve a common question of law. The petitioner has filed these writ petitions challenging the five orders of rectification made under section 25a adding packing regarding cement to the taxable turnover. The petitioner contends that the assessment orders do not suffer from any mistake apparent from the record and consequently the orders of rectification are without jurisdiction and without authority of law.

( 2 ) THE petitioner was initially assessed to tax in regard to the said five years by orders dared May 27, 1988, May 27, 1988, May 28, 1988, July 20, 1988 and July 20, 1988. On appeal by the petitioner, the appellate authority set aside the said orders by order by order dated January 12, 1989 and remanded the matters for fresh assessment. On such remand, the petitioner filed revised returns and the assessing authority passed fresh orders of assessment respectively dated april 30, 1992, September 30, 1991, May 25, 1992, May 26, 1992 and May 26, 1992. In these orders, the assessing authority deducted the following amounts being the packing charges relating to cement, from the total turnover ad thereby excluded the said amounts from the taxable turnover of the assessee :

Year Amount

1980-81 Rs . 2,05,39,940. 25

1981-82 Rs . 2,09,00,929. 12

1982-83 Rs . 2,50,86,247. 62

1983-84 Rs . 3,58,10,709. 18

1984-85 Rs . 6,01,74,906. 93

( 3 ) THE assessing authority thereafter issued notices dated December 23, 1992, under section 25a of the Act proposing to rectify the assessments completed as aforesaid, by including packing charges in the taxable turnover of the petitioner. The assessing authority proposed to rectify the orders of assessment on the ground that there was an error apparent from the record regarding packing charges, for the following reasons :

" (1) The assessee has sold cement after packing in gunny bags or container. (2) The expenditure incurred towards the packing material gunny bag in which cement is packed and sold before the same is made available to the customers and such expenses would not come within the meaning of 'charges for packing materials' as specified under rule 6 (4) (ff) of the karnataka Sales Tax Rules, 1957. (3) Further, cement could not be sold without a container for consumption by the general public and the sale of cement in bags themselves for which the consumer had paid. As such, once the cost of bags had been recovered from purchaser as part of sale price, there was no way by which it could be excluded from the taxable turnover. "

( 4 ) THE petitioner filed objections to the proposed rectification contending :

(a) Deduction of packing charges from the total turnover to arrive at the taxable turnover was justified under rule 6 (4) (ff) of the Karnataka Sales Tax Rules, 1957 ("the Rules" for short); (b) Whether packing charges relating to cement has not be excluded or included in the taxable turnover is a question of fact, to be decided in each case; (c) The assessing authority having decided that packing charges are to be deducted from total turnover, while passing the orders of assessment, there was no "mistake apparent from the record" which could be rectified under section 25a of the Act.

After considering the objections, the assessing authority passed orders of rectification on April 2, 1993 holding that the deduction of packing charges from the total turnover, was a "mistake apparent from the record" and rectified the orders by including the packing charges in the taxable turnover of the assessee. Aggrieved by the said rectification orders, the petitioner had flied has filed these petitions.

( 5 ) SRI Kishore Mallya, leaned counsel

Click Here to Read the rest of this document