Karnataka Sales Tax Act, 1957

The appellant, Sree Balaji Rice Mill, challenged a penalty imposed by the Additional Commissioner under Section 18A of the Karnataka Sales Tax Act, which was levied suo motu in revision proceedings under Section 22A after the Assessing Authority had failed to impose any penalty. The High Court had held that the assessm…

The case concerned the interpretation of Customs Notification No. 20/1999, under which the respondents claimed a concessional customs duty rate for imported vitamin E50 feed powder. The Customs department denied the benefit, classifying the goods under a higher duty heading, leading to a series of appeals up to the Sup…

The appellant, Deputy Commissioner of Commercial Taxes, challenged the exemption granted to Mis Hindustan Lever Ltd under the Karnataka Sales Tax Act, 1957, on the ground that the company fixed a uniform maximum retail price (MRP) for tea packets that were marked "inclusive of all taxes" despite some units being tax‑ex…

Andhra Steel Corporation, a dealer under the Karnataka Sales Tax Act, purchased iron scrap both within and outside Karnataka to manufacture steel products. The Act's Section 5(4) together with Schedule IV, Item 2 and Explanation II (applicable before 1‑April‑1978) exempted sales of steel semis made from scrap on which …

The Supreme Court examined the constitutional validity of Entry 25 of Schedule VI of the Karnataka Sales Tax Act, 1957, which levies tax on the processing and supply of photographs, photo prints and photo negatives. The issue centered on whether the State could tax the goods component of a works contract after the 46th…

The appellants, Karnataka Pawnbrokers Association, challenged the liability to pay sales tax on the sale of unredeemed pledged goods disposed of through public auction. The issue was whether a pawnbroker, by virtue of statutory authority to sell defaulted pledges, qualifies as a "dealer" and carries on "business" withi…

M/s Achal Industries, a manufacturer registered under the Karnataka Sales Tax Act, 1957, challenged turnover tax assessments for the years 1990‑91 to 1999‑2000, arguing that the tax should be levied on "taxable turnover" rather than "total turnover" as defined in Section 6‑B(1). The appellant contended that allowing de…

M/s Malnad Areca Processing & Marketing Ltd, a newly established industrial unit engaged in processing arecanut purchased from member‑growers and exporting the product, claimed exemption from purchase tax under Section 6 of the Karnataka Sales Tax Act, 1957, relying on a Government Order and a notification that provide…

The Supreme Court examined whether agreements between a developer and flat purchasers constitute "works contracts" under Art.366(29‑A)(b) and whether the State can levy sales tax on the goods used in such contracts. It held that a construction agreement, even when coupled with a transfer of immovable property, remains …

The Karnataka Legislature enacted the Tax on Entry of Goods into Local Areas Act, 1979 to replace octroi by levying a tax of up to 2% ad valorem on specified goods (textiles, tobacco, sugar) entering 27 selected local areas. The State notified the areas and rates, and several petitions challenged the Act on the grounds…

Dena Bank had taken a mortgage over the property of the partnership firm Mis Bhikhabhai Prabhudas Parekh & Co. and its partners. While the suit was pending, the State of Karnataka attached and auctioned the mortgaged property to recover arrears of sales tax. The trial court granted a decree to the bank but dismissed th…

Xerox Modicorp Ltd entered into Full Service Maintenance Agreements (FSMA) and Spares and Service Maintenance Agreements (SSMA) with customers after selling Xerox machines. The dispute concerned whether the supply of spare parts, toners and developers under these agreements amounted to a sale liable to Karnataka sales …

The assessees, owners of rice mills, bought paddy from agriculturists (who were exempt from sales tax) and milled it into rice for sale. The Karnataka Sales Tax Authority levied purchase tax on the paddy under section 6(i) of the Karnataka Sales Tax Act, 1957. The assessees contended that paddy and rice are the same co…

Whirlpool of India Ltd., a licensed user of the "Whirlpool" trademark, entered into an OEM agreement with Applicomp India Ltd. to manufacture appliances under the brand. Applicomp was exempt from sales tax under a State Government notification issued under Section 19C of the Karnataka Sales Tax Act, 1957. The dispute c…

The appellants, coffee growers, filed writ petitions seeking to restrain the Coffee Board from using the Pool Fund, created under Section 30 of the Coffee Act, 1942, to pay the purchase tax imposed by the Karnataka Sales Tax Act, 1957. The High Court held that the growers were not liable to pay the tax and that the Boa…

M/s Indian Dairy Machinery Co. Ltd., a dealer with a branch in Karnataka, entered into a works contract and received goods from its head office in Gujarat via stock transfer. The company claimed the benefit of composition tax under Section 17(6) of the Karnataka Sales Tax Act, 1957, but the assessing authority denied i…

The case concerned the Karnataka Tax on Entry of Goods Act, 1979 and its amendment in 1993 which inserted the words "retrospectively or prospectively" in Section 3(1). The petitioners challenged the validity of the amendment for lack of the President's assent under Article 304(b) of the Constitution, and also questione…

Sterling Foods, a partnership dealing in shrimp, prawns and lobsters, purchased raw seafood for export, processed it by cutting, peeling, deveining, cleaning and freezing, and claimed exemption from purchase tax under the Karnataka Sales Tax Act, 1957 relying on sub‑section 5(3) of the Central Sales Tax Act, 1956. The …

The appellants, processors of cashew nuts in Kerala and Karnataka, purchased raw cashew nuts imported by the Cashew Corporation of India (CCI), a canalising agency, and argued that these purchases were "in the course of import" and thus exempt from state sales tax under Section 5(2) of the Central Sales Tax Act, 1956. …

The Additional Commissioner of Commercial Taxes allowed exemption on sales of polished granite stones, but later reopened the assessment and disallowed the exemption, contending that polished and unpolished granite fall under separate entries of the Karnataka Sales Tax Act. The assessee argued that polished granite sto…

Vasavadatta Cements, a cement manufacturer, challenged the constitutional validity of Section 5(3‑D) of the Karnataka Sales Tax Act, 1957, which made packing material (gunny/plastic bags) taxable. The Karnataka High Court dismissed the challenge, relying on Ranganatha Associates and the Supreme Court’s decision in Rajs…

The Builders' Association of India, an association of contractors, challenged the Karnataka Sales Tax Act, 1957, specifically Explanation 3(c) to Section 2(t) and Section 5‑B with the Sixth Schedule, alleging that they converted inter‑state sales into intra‑state sales and imposed tax on the value of works contracts in…

Azad Coach Builders was contracted by an exporter to fabricate bus bodies according to a foreign buyer’s specifications, after which the bodies were mounted on chassis and exported as complete buses. The assessee claimed exemption from State sales tax under Section 5(3) of the Central Sales Tax Act, arguing that the sa…

The State of Karnataka appealed against Sunagar Bros., who had challenged a best judgment assessment for the year 1972-73. The first and second appellate authorities dismissed the appeal on the ground that the assessee had not paid the tax "not disputed in appeal". The Karnataka High Court reversed this, holding that t…

M/s. A & G Projects & Technologies Ltd., a dealer registered under the Central Sales Tax Act, 1956, entered into three contracts for supplying capacitor banks to Karnataka Power Transmission Corporation Ltd. (KPTCL). The goods were procured from a manufacturer in Tamil Nadu via an EPC contractor outside Karnataka, with…

The appellant, Mis. Balkrishna Hatcheries, sold dressed chicken in polythene bags that were closed by stapling, crimping, or a rubber band. The Karnataka Sales Tax Act, 1957 exempts meat sold in non‑sealed containers, but imposes tax on meat sold in sealed containers. The issue was whether such bags constitute "sealed …

The Supreme Court examined whether iron and steel reinforcement used in building works contracts retains its identity as "declared goods" under the Central Sales Tax Act, 1956, and consequently whether it is taxable at the restricted 4% rate prescribed in Section 15. The Court held that the 46th Constitution Amendment …

The Coffee Board challenged the levy of purchase tax on coffee it received from growers under the compulsory delivery provision of the Coffee Act, 1942, arguing that the transaction was a compulsory acquisition and not a sale. The Karnataka High Court held that an element of consensuality existed, making it a sale liab…

The appellants, dealers under the Karnataka Sales Tax Act, challenged the retrospective operation of an Explanation inserted in 1996 to the first proviso of Section 5(1‑A), arguing that it imposed a new tax burden they could not pass on to consumers and was therefore unreasonable and arbitrary. The State contended that…

The appellants, leasing companies, entered into master lease agreements for equipment and were taxed by several states on the transfer of the right to use the goods. The states relied on explanations in their sales tax statutes that deemed the taxable event to occur where the goods were used, irrespective of where the …

M/s Imagic Creative Pvt Ltd, an advertising agency, filed returns for service tax under the Finance Act, 1994 and for VAT under the Karnataka Value Added Tax Act, 2003. The VAT authority classified the entire transaction, including the concept‑creation service for which service tax had already been paid, as a single in…

The appellants, Lipton India Ltd., challenged a Karnataka High Court judgment that was based on an affidavit filed by the State Government asserting that a sales‑tax Government Order had not been published in the Official Gazette nor laid before the Legislature. The affidavit, verified by Deputy Commissioner R. Krishna…

M/s Sri Chamundeswari Sugar Ltd., a sugar manufacturer, purchased sugarcane from growers and paid the Statutory Minimum Price fixed by the Central Government together with the State Advised Price (SAP) fixed by Karnataka. The assessing authority levied purchase tax on the total amount, including SAP, under the Karnatak…

The appellant, Mis. My Con Construction Ltd., challenged the constitutional validity of sub‑section 6 of Section 17 of the Karnataka Sales Tax Act, 1957 as amended by Act 5 of 1996 and its further amendment by Act 7 of 1997 which made the provision retrospective. It argued that the State lacked competence to levy sales…

Larsen & Toubro Ltd., a contractor, executed works contracts and assigned portions of the work to registered sub‑contractors who paid sales tax on their own turnover. The issue was whether the payments made to these sub‑contractors should be included in L&T's total turnover for computing turnover tax under Section 6‑B …

The appellant, Mis. K. Raheja Development Corporation, entered into development agreements with land owners and sale agreements with prospective purchasers to construct residential and commercial units for consideration. The State of Karnataka assessed turnover tax under the Karnataka Sales Tax Act, 1957, contending th…

The Karnataka Government issued an order on 30 June 1969 granting cash refunds of sales tax to new industries as an incentive, which was later limited by a 12 January 1977 order citing alleged misuse. Several industrialists who had relied on the 1969 concessions filed writ petitions claiming that the government was est…

The State of Karnataka appealed against Shreyas Papers Pvt. Ltd., which had purchased the land, building, plant and machinery of a defaulting company after the Karnataka State Industrial Investment and Development Corporation took over those assets under the State Financial Corporation Act. The Commercial Tax Officer i…

The Great Eastern Shipping Co. Ltd., owner of a tug, entered into a six‑month time charter agreement with New Mangalore Port Trust. The Karnataka tax authorities directed the company to register under the Karnataka Sales Tax Act, 1957, claiming the agreement attracted tax under section 5C, which taxes the transfer of t…

The appellant, a chartered accountant, was appointed as a non‑official member of the Karnataka Sales Tax Appellate Tribunal under Section 4(2) of the Karnataka Sales Tax Act, 1957, with his tenure periodically extended. Upon retirement he claimed a superannuation pension under the Mysore Civil Service Rules, 1957, argu…

Binani Industries Ltd, a dealer engaged in leasing machinery and vehicles, challenged the Karnataka Revenue Department’s reopening of its sales‑tax assessments for assessment years 1996‑97 to 1999‑2000 on the ground that the later circular of 23 Oct 1999, which overruled the earlier 12 Apr 1996 circular, could not be u…

M/s Ravi Prakash Refineries (P) Ltd. sold Sunflower De‑oiled Cake (SF DOC) in inter‑State trade and claimed a reduced central sales tax rate of 2% by producing Form C under Notification No. FD 119 CSL 2002(2). The assessing officer initially accepted the claim, but a later officer reopened the assessment, asserting tha…

Hindustan Lever Ltd., a tea manufacturer, claimed exemption from entry tax on packing materials used for tea under a 1993 notification and a reduced rate under a 1998 notification. The issue was whether packing material could be classified as "raw materials, component parts or inputs" within Entry 80 of Schedule I of t…

Mangalore Chemicals & Fertilisers Ltd sought to adjust cash refunds of sales tax on raw materials against its tax liability under the Karnataka Sales Tax Act, 1957, based on a 1969 government notification granting such refunds to new industries. A later 1975 notification required the dealer to obtain prior permission f…

M/S Craft Interiors Ltd., a dealer in interior decoration, claimed deductions under Rule 6(4)(m)(i) of the Karnataka Sales Tax Rules for goods purchased from registered dealers and used in works contracts in the same form. The assessing authority denied the deduction, issuing provisional assessment notices under Sectio…

M/S Kumar Motors, Bareilly purchased auto‑rickshaw chassis and bodies separately and assembled them before sale. The issue was whether this assembly amounted to "manufacture" under Section 2(e‑1) of the U.P. Sales Tax Act, 1948 and consequently attracted purchase tax under Section 3‑AAAA despite the use of Form III‑A. …

B.G. Shirke Construction Technologies (P) Ltd, a dealer engaged in constructing houses for the Karnataka Housing Board, purchased tower cranes in 1995-96 and claimed a concessional 4% sales tax rate under Notification FD.43.CSL 94(iv) by filing Form 37. The assessing authority held that the company did not satisfy the …

The Supreme Court examined whether the freely transferable "replenishment licences" (R.E.P. licences) and later "Exim Scrips" issued under the Imports and Exports (Control) Act, 1947 constitute "goods" for the purpose of state sales‑tax statutes. The Court held that these licences have an independent market value, are …