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Karnataka High Court
Judges : R.V.Raveendran,H.Billappa
BHANDARI METALS - Appellant
Versus
STATE OF KARNATAKA - Respondent
T. A. E. T 1 Of 2001
Decided On : 03/08/2004
ENTRY TAX - Non-ferrous metal scrap - Section 3(1), Section 15(2) of the Karnataka Entry Tax Act, 1979 - Summary: The court discussed the interpretation of non-ferrous metal scrap falling under Entry-29a of the Act, and the appellant's challenge to the levy and collection of entry tax. The court highlighted the popular sense of the term 'scrap' and its treatment as metal in its primary form, emphasizing that metal scrap intended to be melted to produce metal or metal product falls under Entry 29a of the Act, exempt from Entry Tax.
Fact of the Case:
The appellant, a manufacturer of non-ferrous metal rods and wires, filed returns and paid entry tax for non-ferrous metal scrap, assuming it was taxable. The Additional Commissioner revised the order, subjecting the turnover to entry tax, leading to the appeals.
Finding of the Court:
The court found that non-ferrous metal scrap falls under Entry-29a of the Act and that the appellant's voluntary filing of returns and payment of entry tax did not bar it from challenging the assessment in appeal.
Issues: Interpretation of non-ferrous metal scrap under the Act, and the appellant's right to challenge the assessment despite voluntary filing of returns and payment of entry tax.
Ratio Decidendi: The court held that metal scrap intended to be melted to produce metal or metal product falls under Entry 29a of the Act, exempt from Entry Tax. It also ruled that the appellant's voluntary actions did not preclude it from challenging the assessment in appeal.
Final Decision: The court set aside the revisional authority's order and restored the order of the appellate authority, allowing the appeals.
( 1 ) THESE two appeals arc filed under Section 16 (1) of the Karnataka Entry Tax Act, 1979 ('act' for short) against the order dated 31-01-2001 passed by the Additional Commissioner of commercial Taxes, Zone II, Bangalore in SMR/kteg/2o-BD/2000-01/1420-2000-2001 passed in exercise of suo moto revision power under Section 15 (2) of the Act, in regard to 1995-96 and 1996-97.
( 2 ) THE Appellant is a manufacturer of non-ferrous metal (copper/ brass) Rods and wires. The appellant purchases non-ferrous metal scrap from outside the State and causes their entry into local area for being used in the manufacture of rods and wires. For the assessment year 1995-96, the appellant filed a return disclosing the entry of non-ferrous metal scrap of the value of Rs. 1,73,93,625/- and paid entry tax at the rate of 1% under the Act in regard to the said value. In regard to assessment year 1996-97, the appellant filed a return disclosing the entry of non-ferrous metal scrap of the value of Rs. 1,86,78,549/-and paid entry tax at the rate of 1% under the Act on the said Act. The Assessing Authority accepting the returns and passed two orders of assessment dated 28-3-2000 in regard to the years 1995-96 and 1996-97.
( 3 ) SECTION 3 (1) of the Act, which is the charging Section provides that there shall be levied and collected a tax on entry of any goods specified in the First schedule to the Act, into a local area for consumption, use or sale therein, at such rates not exceeding the specified percentage of the value of the goods, from such date as may be specified by the State Government by Notification. Sub-section (6) of Section 3 provides that, no tax shall be levied under the Act on any goods specified in the Second Schedule on its entry into a local area for consumption, use or sale therein. Between 1-5-1992 to 31-3-1994, the I schedule to the Act contained following Entry at sl. No. 60:
"non-ferrous castings and ingots and scrap base metals (other than iron and steel scrap) and alloys thereof. From 1-4-1995, Entry 60 in the First Schedule was deleted and the following entry was added as entry 29 (A) in the Second schedule (which enumerates the goods which are exempt from entry tax):"all non-ferrous metal including ores and concentrates. "
( 4 ) THE appellant submits that the effect of deletion of Entry-60 in First schedule and insertion of entry-29a in the Second schedule is that no entry tax was leviable on the entry of non-ferrous metal scrap from outside the State into local area for use. Appellant claims that the said amendments made with effect from 1-4-1995 was not known to it immediately. Therefore, in ignorance, it submitted returns for the years 1995-96 and 1996-97 proceeding on the assumption that the non-ferrous metal scrap continued to be exigible to entry tax. The appellant submits that its mistake resulted in paying the Entry tax also on the turnover; and that when it learnt about the said amendments and realised that it was not liable to pay tax, it filed appeals before the Joint commissioner in regard to the assessment years 1995-96 and 1996-97. The Appellate authority by a common order dated 29-11-2000 allowed the appeals holding that the turn over relating to non- ferrous metal scrap was exempt from tax.
( 5 ) THE Additional Commissioner of Commercial Taxes Zone 11, Bangalore exercising his suo moto power under Section 15 (2) of the Act issued a notice to appellant proposing to revise the order of the Joint Commissioner in regard to assessment years 1995-96 and 1996-97, being of the view that the order of the Appellate authority was erroneous and prejudicial to the interest of the revenue. The appellant filed objections dated 27-01-2001. Thereafter, the revisional authority passed the impugned order dated 31-01-2001 in regard to both the years, setting aside the order of the Appellate authority and restoring the order of the Assessing Authority subjecting the turn over relating to purchase of non-ferro
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