Judgment:
R.V. Raveendran, J.
1. Sri S. Subbanna, learned H.C.G.P., is directed to take notice on behalf of the respondent.
2. The petitioner is a registered dealer under the Karnataka Sales Tax Act, 1957 ('the Act', for short) dealing in optical frames, spectables, etc. In regard to the period April 1, 1992 to March 31, 1993, petitioner claimed exemption from payment of all taxes, relying on Notification No. FD 72 CSL 92(XXII) dated March 30, 1992, issued by the State Government which reads as follows :
'In exercise of the powers conferred by section 8A of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957), the Government of Karnataka hereby exempts with effect from the first day of April, 1992, the tax payable under section 5 of the said Act by a dealer on the sale of spectables, sun-glasses, goggles, lenses and frames (other than those imported from outside the country).'
The assessing authority (respondent) passed an order of assessment dated May 27, 1995 (annexure B) holding that the entire turnover was exempted from payment of sales tax payable under section 5 of the Act. But he held that the petitioner's turnover is subject to turnover tax at 1.25 per cent under section 6B of the Act.
3. According to the petitioner, its turnover cannot be subjected to turnover tax as the notification dated March 30, 1992, exempts not only the sales tax payable under section 5 payable under the Act by a dealer on the sale of spectacles, sun-glasses, goggles, lenses and frames, but all taxes payable under the Act including turnover tax. Hence the petitioner has filed this petition for quashing the assessment order and consequential demand notice dated May 27, 1995 (annexure B and C and) seeking a direction restraining the respondent from levying turnover tax under section 6B.
4. The petitioner relied on three decisions in support of his case. The first is the decision in Kodar v. Kerala reported in [1974] 34 STC 73 where the Supreme Court constitutional validity of the Tamil Nadu Additional Sales Tax Act (Act No. 14 of 1970) which imposed an additional tax on the turnover of dealers. The said tax is similar to the turnover tax imposed under section 6B of the Karnataka Sales Tax Act. While repelling a contention that the turnover tax amounted to tax on the income of the dealer, the Supreme Court held that the turnover tax was really a tax on the said decision, the petitioner contended that though the tax under section 6B of the Karnataka Sales Tax Act was called as 'turnover tax', it was really an additional sales tax.
4.1 The second is the decision of this Court in Jain Book Manufacturers v. Commercial Tax Officer reported in [1989] 75 STC 126, wherein this Court considered a notification issued under section 8A exempting the tax payable under the Act in regard of sale of student note books, etc., and held that the words 'tax payable under the Act' included all taxes leviable under the Act including turnover tax.
4.2. The last decision relied on by the petitioner is v. Radhakrishnaih Setty and Sons v. Commissioner of Commercial Taxes [1994] 94 STC 226. In that decision, this Court held that the words 'tax levied under the Act' occurring in Explanation No. 8 to the Second Schedule of the Act, included turnover tax.
4.3. It is true turnover is in fact an additional tax under the Act. It is also true the words 'tax under the Act' will include not only sales tax or purchase tax leviable under section 5 or section 6, but also turnover tax leviable under section 6B. But these decisions are of no assistance to the petitioner, as the subject-matter of exemption under the notification dated March 30, 1992, is not 'tax payable under the Act', considered in Jain Book Manufactureres' case : 1989(2)KarLJ317 and Radhakrishnaih Setty and Sons' case [1994] 94 STC 226 (Kar) but tax payable under section 5 of the said Act.
5. While the words 'tax payable under the Act' would certainly include the turnover tax, the words 'tax payable under section 5 of the Act' cannot by any interpretative process be construed as tax payable under section 6B of the Act. If the intention of the State Government was to give exemption to turnover tax also, it would have used the words 'tax payable under the Act' or used the words 'tax payable under sections 5 and 6B of the Act'. The use of the words 'tax payable under section 5 of the Act' shows the intention was to exempt only the tax under section 5 and not the turnover tax under section 6B of the Act.
6. The principles regarding interpretation of exemption provisions in taxation laws are culled out in Sri Neelakanteshwar Oil Industries v. State of Karnataka reported in : ILR1995KAR52 . Relevant portions thereof are extracted below :
'....... When the words used are plain and clear, they have to be construed in the ordinary sense. There is no occasion to resort to any interpretative process, if the words clearly, unambiguously and directly convey the meaning ....... all exemptions from tax must also be strictly construed and limited to the exemption itself; that is, there can be no extension or widening of the ambit of exemption at the stage of applicability of exemption.'
Hence, there is no scope for widening the scope of exemption by including the turnover tax levied under section 6B, when the notification refers to only tax under section 5.
7. The decision in Radhakrishnaih Setty and Sons' case relied on by the petitioner in fact supports the view 'tax payable under section 5 of the Act' cannot include turnover tax. The decision makes it clear that because the language used was not 'tax under section 5 of the Act', but 'tax under the Act', the court held that the exemption included turnover tax and if the words 'tax under section 5 of the Act' had been used, then turnover tax would have been excluded. The relevant portion is extracted below :
'Explanation VIII does not say that - 'no tax under section 5' shall be levied; instead, it says 'no tax shall be levied'. Therefore, prima facie, the language of the explanation, provides for the non-levy of 'tax' (as defined in the Act) ....... Second Schedule has several explanations appended thereto. The language employed in explanations I, III, V and VII discloses that wherever levy of tax is exempted in respect of the goods referred to therein, exclusion from the levy is confined to the levy of tax under section 5 only, or the levy of tax under a particular item. Explanation VIII stands by itself in the matter of the language used in the legislation, by not restricting the exempted tax to any particular section or item. This is a strong circumstance justifying the claim of the petitioners that the exemption from the levy of tax provided for by explanation VIII is an exemption from the levy of tax under the Act and not merely the levy of tax under section 5.'
8. As the notification relied on, does not exempt turnover tax levied under section 6B, petitioner's contention is liable to be rejected. The impugned order of assessment is in accordance with law. Consequently, the petition is rejected.
Shri S. Subbanna, H.C.G.P. is permitted to file memo of appearance within six weeks.
9. Petition dismissed.