the karnataka entry tax law issues and...
TRANSCRIPT
7/23/2013
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A
Presentation
For Bangalore ICAI Branch on 17/7/2013
The Karnataka Entry Tax law – Issues and Concerns
By CA Annapurna Kabra
The enactment of levy of entry tax by State legislature
Legislature powers conferred by Article 246(2) read with Entry 52- List II of the VII Schedule of constitution of India
Entry 52 of List II of the VII schedule to the Constitution read as follows:
TAXES ON ENTRY OF GOODS INTO A LOCAL AREA FOR CONSUMPTION, USE OR SALE THEREIN
Applicable to whole state of Karnataka
Rate of tax not exceeding 5%
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The Act received the assent of president of India under Article 304(b) of the Constitution on 17.5.1979
The object is to compensate the loss of octroi revenue suffered by local authorities on account of abolition of octroi
It is enacted with effect from 01.6.1979
The High Court has struck down the enactment on the ground that it is discriminatory and unconstitutional (Hansa Corporation Vs State of Karnataka 1980(1) Kar 165)
On Appeal to the Supreme Court by the State, the Supreme Court upheld the constitutional validity of the Act. (State of Karnataka and Others Vs Hansa Corporation AIR 1981 SC 463)
The Karnataka High Court on 30.03.2007 struck down section 3 of Karnataka special Entry Tax Act
on the grounds that it is discriminatory and unconstitutional.
The court has quashed all the assessments and the demands raised under the section by the commercial tax department.
As a result the department will now have to refund the taxes collected under the impugned provisions of the law.
Difference between Entry tax law and Special entry tax law
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(Section 2(4) ):Dealer means :Any person who in the course of business whether on his own account or on account of a principal or any other person, brings or causes to be brought into a Local area any goods or takes delivery or is entitled to take delivery of goods on its entry into a local area and includes occasional dealer
A dealer includes
consignee, any person taking delivery other than dealer
Agent, occasional dealer,
society,
works contractor,
the central Government and the state government other than government of Karnataka
A radiologist is not a dealer as preparing an X- ray photo is a service contract and as such the provisions of Entry Tax Act does not apply to the purchase of X-ray unit causing entry into local area
Government of India Department are not liable to pay entry tax (Deputy Director of Income Tax (Investigation)).
The test regarding liability to pay entry tax is not where the sale took place and the title to the goods passed. The test is who caused entry into local area (State of Karnataka and Others Vs Wipro Ge Medical systems Limited Bangalore 2006(60))
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Section 8-a :
Value at the time of entry of goods
Purchase Value includes
cost of transportation,
packing and forwarding and handling charges,
commission,
insurance,
taxes, duties and the like
If goods are brought not as a result of purchase/Sale -Prevailing market price in the local area (Generally purchase price by the dealer which includes his cost and margin)
Notified goods : Machinery and parts Usage : As a capital item Price of machinery : Rs. 20,000/- Freight charges : Rs. 2,500/- VAT/CST : Rs. 1,500/- Insurance : Rs. 100/- Packing & forwarding : Rs. 75/- Unloading charges : Rs. 100/- Capitalised Value : Rs. 24,275/- Rate of entry tax : 2%
Value of the goods for Entry tax Rs. 24,175/- Entry tax at 2% on Rs. 24,175/- Rs. 484/- Unloading charges is incurred after the machinery
has landed in the factory. Entry tax is only on Landed cost
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Custom duty and other expenses incurred and paid on the imported schedule goods forms part of the value of goods for the purpose of levy of entry tax (M/s Monotype India Limited Vs State of Karnataka 1991 (35) Kar L.J 365 (Tri)(DB)
The expression ad valorem means not only the purchase price as per the purchase invoice but it also includes transportation charges and other incidental charges paid for causing entry of the goods into local area. (Iron and Steel Industrial consumers cooperative society)
For determining the value of goods for levy of tax under KTEG Act 1979, MODVAT credit availed by assessee on such goods cannot be deducted (BPL Limited Bangalore).
The law in the latter part of section 2-A(8-a) of KTEG Act 1979 is that if the entry of the goods is caused other than by way of purchase, the entry tax is leviable on the prevailing market price of such goods into the local area and not on the market price shown in the stock transfer documents (Voltas Limited Bangalore)
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Area within the City Limits specified under the Karnataka Municipal Corporation Act, 1976,
A Municipality under the Karnataka Municipalities Act 1964
A Notified Area Committee
A Town Board
A Sanitary Board
A Cantonment Board
A Mandal under the Karnataka Zilla Parishads,
Taluk Panchayat Samithis,
Mandal Panchayats and Nyaya Panchayats Act 1983 and Panchayat area under the Karnataka Panchayat Raj Act 1993
Eg: Your unit in Nelamangala (assuring it to be outside municipality limits
of Bangalore city) purchases machinery for own use
Nelamangala
Koramangala
Not Liable
Liable Purchase outside the city limit
under Nelamangala Panchayat
Purchase within Nelamangala
Panchayat
From Entry Tax Reason
The entire area of the State is covered within the limits of some local area or the other
The taxable event is accordingly is not the entry of notified goods in any area of the state but in a local area (Shakti kumar M Sancheti Vs State of Maharashtra (1995)96 STC 659 (SC)
After causing entry of aviation fuel into local area and supplied to air craft just prior to departure is not liable to entry tax as the fuel so supplied is not meant for consumption within the local area. (Hindustan Petroleum Corporations Limited Vs Director of Entry Tax and Others (1995) 96 STC 178 (WBTT)
Scheduled goods sold after causing entry of goods into local area and then the goods are taken outside the local area is liable to entry tax – Kothari Brothers Vs State of Madhya Pradesh and Others (1995) 96 STC 69
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If the goods purchased are supplied by the dealers located outside the local area in terms of the pre existing contract even though the outside dealers themselves brought the goods and delivered the goods to the assessee place, the assessee is liable to pay entry tax in respect of those goods (M/s Sudharshan feeds, Hubli)
Entry of textiles for the purpose of embroidery work and return is liable to entry tax. After the process of embroidery, a different commercial commodity emerges which not the same textile which has undergone the process of embroidery. (Craig more Textiles Private Limited , Bangalore V/s. State of Karnataka, 2007(63)Kar.L.J 207 (Tri) DB)).
The registration under the entry tax is required where the dealer is already registered under the local law that is KST Act or KVAT Act. But Such dealer under KVAT Act need not pay registered fees.
Where the manufacturer is making the entry of any goods which is not exceeding rupees one lakh, then he is not required to pay entry tax.
In case of other dealer, he is not required to pay the entry tax where the entry of any goods is not exceeding rupees five lakh.
No registration limit to Works contractor, non resident dealer, manager or agent of a non resident dealer, Casual/ occasional dealer
REGISTRATION PROCEDURE
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It can be levied retrospectively or prospectively
by the state government by notification
different dates and different rates may be specified
in respect of different goods or different classes of goods or different local areas.
Entry tax shall not be levied where the Entry tax has been paid or has become payable in any other local area
For the purpose of levy of entry tax the real test which the law requires is as to where has the ultimate use or consumption of the goods taken place. Where the facts reveal that the goods were sold and consumed outside local area the goods would have to be exempted from the levy of entry tax. (Gururaj stores Chitradurga)
Mere physical entry of goods into the octroi local area limits would not attract levy of octroi unless goods are brought in for use or consumption or sale. (Mafatlal industries Limited…..)
Mere Possession of scheduled goods does not attract entry tax (State of West Bengal )
Entry tax is not attracted when the goods brought into local area only for the purpose of weighment at the weighbridge (western coalfields limited)
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Where the consignor desires to take back the goods which was held up at check post and the consignee do not want to bear the entry tax and therefore entry tax need not be paid as goods have not entered local area (Jeevan diesels and Electricals Limited Vs Sales tax inspector 2002)
Entry tax cannot be levied on goods which are imported into a local area merely for the purpose of re-export or on goods merely passing through a local area by vehicles plying on highways (Gurudayal gangabuse Private limited)
Power to levy sale tax and the power to levy entry tax are derived from two different entries in the constitution and hence the incidence of taxation in both the cases is different. (Geo Miller and Company)
Out of the 103 class of commodities specified in the First Schedule to the Act, the only commodities that have been selected and notified by the Government in the Official Gazetted are liable for levy of tax.
which attract the levy of tax under the Act as on date, are the one that have been notified in Notification No. FD 11 CET 2002, dated 30-3-2002 issued under section 3(1) of the Act. Hence, as on date the commodities that attract levy of tax under the Act and the rates of tax applicable thereon are as under.
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Sl No COMMODITY Rate of
tax
(1)
(i) Crude oil 2%
(ii) Petrol 5%
(iii) Diesel 5%
(iv) Super Light Diesel Oil 5%
(iv) Furnace oil 5%
(v) Naphtha other than for use in manufacture of fertilizers 5%
(vi) Low Sulphur Heavy Stock 5%
(vii) Rectified Spirit, Neutral Spirit, Ethyl Alcohol 4%
(viii) Petroleum products: that is to say:
a. Lubricating oil,
b. Transformer oil,
c. Brake fluid or Clutch fluid,
d. Bitumen (asphalt),
e. Tar and others
Excluding Liquefied Petroleum Gas (LPG), Aviation Fuel and Kerosene
5%
(2) Rubber and other tyres, tubes and flaps other than those specified in Section 14 of the Central Sales Tax Act, 1956
2%
(3) Sugar other than levy sugar, confectionary and the like 1%
SL.No COMMODITY Rate of
tax
(4)
Textiles, namely, cotton, woolen or silk or artificial silk including Rayon or nylon
and other man-made or synthetic fabrics manufactured in mills or power looms and
hosiery cloth in length; and including fabrics coated with or impregnated with PVC
or cellulose derivatives (whether or not manufactured in mills or power looms)
1%
(5) Tobacco products of all descriptions including cigarettes, cigars, churuts, zarda, quimam, etc., but excluding Snuff
4 %
Gutkha 4 %
Beedies 1 %
(6) Diesel Captive Generation Sets (exempted w.e.f. 01.10.2004)
(7) Machinery (all kinds) and parts and accessories thereof but excluding agricultural machinery
2 %
(8) Films (all kinds) including x-ray films and Photographic paper 5 %
(9) Lifts, elevators and escalators (whether operated by electricity or hydraulic power) and parts and accessories thereof
5 %
(10) Cement (omitted w.e.f. 01.08.2004)
(11) Raw Materials and inputs, which are used in the manufacture of Tobacco Products and Liquor.
1 %
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Explanation I: No tax shall be payable by a dealer on the goods specified in serial number 2, 3, 4, 7,8 and 9 in the table above when brought by him into a local area for consumption or use as raw material, component parts and inputs in the manufacture of an intermediate or finished product but excluding when brought for use in the manufacture of tobacco products and liquor
If any of the notified goods are used as raw material or the component part for the manufacture of the finished goods then it is not liable to entry tax except when used for manufacture of tobacco products and liquor
Explanation II: If any of the goods specified in serial numbers 1 to 10 in the above table are brought into a local area for use are consumption as raw materials and inputs in the manufacture of tobacco products and liquor, the tax leviable and collectible on such goods shall be at the rate specified in such serial numbers
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Rate of tax on crude oil (petroleum) reduced to 1% in terms of Notification No FD 115 CET 2007(15) dated 30.3.2007
Rate of tax on tobacco products and Ghutka reduced to 2% in terms of Notification No FD 86 CSL 10 dated 31.3.2010
Beedies and Beedies leaves exempted
Diesel Captive generation Set (Notification No FD 147 CET 2004 dated 29.12.2004)
Machineries and Equipment brought into a local area by Central Institute of plastics, Engineering Technology for training purpose only
Notified goods brought into a local area by units located in SEZ or developers of SEZ (Notification No FD 96 CSL 2003(3) dated 5.6.2003
Notified goods brought into a local area by Reserve Bank of India, Nrupathanga Road, Bangalore (Notification No FD 13 CET 2002 dated 18.11.2002)
Machinery and parts thereof brought into a local area by an importer who is an independent power producer subject to terms and conditions specified in the Notification No FD 5 CET 2008(II) dated 23.4.2008
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SL. No 2 (Rubber…) SL.No 3 (sugar…) Sl no 4 (Textiles…) Sl no 7 (Machinery, parts and accessories) Sl no 8 (Films…) Sl no 9 (Lifts, elevators and escalators…)
Purpose of bringing in goods into local area should be:
for Consumption or use as raw materials,
As component parts and inputs in the manufacture of an intermediate or finished product
Eg: Machinery parts purchased in Knocked down condition for assembling the Final Product - Machinery
Not Liable
Machinery purchased for purpose of re-sale Liable
Goods specified in the Second Schedule
Goods specified in the First schedule not notified
There is no entry caused in local area
Notified goods already suffered tax in other local area
Notified goods by defence units
Notified goods where it is less than 5 lakh
Raw materials and inputs other than the one used in manufacture of liquor and tobacco product
Agriculture machinery
Handloom textiles, Snuff, LPG(both auto and domestic), aviation turbine fuel (ATF), Kerosene, Naphtha used in manufacture of chemical fertilizers
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The taxable event is entry of goods into a local area for consumption, use or sale
The coupling of three words consumption, use or sale connotes that the goods are taxable under this entry only if the title of the ownership is transferred to another person or the commodity cease to exist in its original form (SM Ramlal and company)
The following observation in the case of M/s Aqueous Victuals Private Limited Vs State of Uttar Pradesh and Others AIR 1998 SC 2278 is relevant “ The underlying common idea behind all the three relevant words “ sale”, consumption or use within the municipal limits of imported commodity so as to attract the levy of octroi thereon would require proof of the fact that the commodity concerned got consumed within the municipal limits or was used for an indefinite period in such a way that it comes to rest finally and permanently within the municipal limits or was sold within the municipal limits”
The terms “use” need not always be understood as “used up”. Causing entry of industrial machinery for the purpose of the job work is liable to entry tax.(J.S. Auto Machine Shop Vs State of Karnataka and Another, 1991 (35) Kar. L.J (HC)(DB): 1993 90 STC 121 (Kar)
Where the goods are imported and kept in the warehouse and yet to be cleared by customs for home clearance, it cannot be said that the entry of goods is caused. (Tarajyot Polymers Limited V/s. Deputy Commissioner Tax Officer, Chennai and Another, (2005) 140 STC 239 (Mad)).
Purpose for which goods are brought into local area and subsequent use of goods for such purpose, held, is relevant. (State of Karnataka V/s. R.K. Powergen Private Limited, Hiriyur, Chitradurga District, 2012(74) Kar.L.J. 296C (HC) (DB)).
Any particular term used to specify an item of goods on which tax is levied should be understood according to meaning ascribed to it in common parlance. (Bharath Nestle India Limited, Bangalore V/s. State of Karnataka, 2012 (72) Kar.L.J 329B (HC) (DB)).
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In view of the provisions of section 3-A of the KTEG Act, a dealer registered under the KTEG Act and liable to pay tax under the said Act, can pass on the incidence of tax to the purchasing dealer by collecting the same as tax in the sale bill or sale invoice.
The Central Government or the State Government shall be entitled to collect by way of tax any amount which a registered dealer would be entitled to collect by way of tax under this Act.
It is the Normal presumption is that the dealers have passed on the burden of levy of entry tax to the purchaser/Consumer - Unjust enrichment (Entry Tax Officer, Bangalore Vs Chandanmal Champalal and Company (1994) 95 STC 5 (SC)
By merely mentioning the element of entry tax in the manufacturing account it cannot be said that the tax is passed on to the consumers.(Kwality biscuits private limited)
If any person contravenes any of the provisions of Section 3-A, the Assessing Authority may, after giving such person a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one and a half times such amount.
No prosecution for an offence under section 21 if penalty is imposed.
If excess tax collected then it should be remitted within twenty days
If tax is excess paid which was not liable then application for refund can be claimed by filing in Form 42.
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Goods have to be entered from outside the local area. It can be within the state or outside the state or outside the country.
Form 40 has to be obtained by the selling dealer from the assessing authority on production of details of payment of Entry tax
Form 40 should be given to the purchasing dealer whereby it will exempt the purchasing dealer from payment of Entry tax
The declaration issued in Form 40 shall be serially machine numbered for each year and the dealer issuing the same shall maintain a day to day account thereof in a register in Form 41.
Entry tax shall not be levied where the Entry tax has been paid or has become payable in any other local area
Dealer preferring the above exemption should obtain Form 40 from the selling dealer and furnish to the assessing authority
Eg: X Company, Nelamangala purchases diesel for own use from Y Company in Peenya who in turn has purchased from Z company Mumbai.
Y Company has paid Entry Tax on diesel purchased from Z Company. Instead of claiming as re-export it has collected Entry tax from X company in the sale invoice
Y company has to obtain Form 40 from department and give to X company. X company can claim exemption based on Form 40 received.
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Therefore Entry tax is leviable only on first entry into any local area and subsequent entry into any other local area is not liable.
Filing of Form 40 is mandatory. When statutory forms are prescribed no other alternative evidence is permitted to be filed. (MK Kalligudda Vs State of Karnataka 2002 (52)
Section 3(1) of the KTEG Act 1979 is not applicable where the schedule goods are within the same local area and delivered in the same local area i.e where there is no entry of goods is caused into the local area. Therefore furnishing declaration in Form 40 does not arise. (BASF India Limited Mangalore)
Declaration in Form 40 required to be filed under section 3(3) of the KTEG Act only when any dealer claims that some other dealer in some other local area has already paid entry tax on such goods which have subsequently being brought into the local area of the purchaser. Where the goods are directly consigned by the manufacturer to its branch or agent in another local area for storing and packing purpose, the question of filing Form 40 does not arise especially when manufacturer has paid entry tax (Vinpack (India) Private Limited
Entry tax paid on local purchases in the absence of declaration Form 40, which become excess tax after filing Form 40, is refundable. There is no undue enrichment on the ground of passing on the element of tax on the sale of goods manufactured out of such goods. (Naphtha Resins and Chemicals (Private) Limited, Bangalore V/s. State of Karnataka, 2009(67) Kar.L.J. 438 (Tri) (DB)).
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Following should be deducted from total purchase price of all notified goods
Purchases made within the local area from a registered dealer doing business in the same local area
The purchases against Form 40 has been obtained
The purchases which are returned within a period of six months
The value of goods purchased/received from outside the Local area but subsequently sent out of the local area other than by way of sale (eg:stock transfer) if such goods are sent outside the local area within a period of six months from date of entry into local area.
Sales return within a period of six months
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Tax is payable even when goods are brought into the area for sale within the area to an ultimate consumer for consumption or use, though he may consume or use the same outside the area .However no tax is payable in respect of goods which was brought into local area and were exported either by itself or through dealers outside local area. Entry tax cannot be levied on the goods re-exported outside the local area. Burmah Shell Oil Storage and Distributing Company Of
India Limited v. Belgaum Borough Municipality AIR 1963 SC 906
Entry tax is not attracted in respect of goods that have entered into local area and subsequently re-exported outside that area. (M/s Bombay Silk supply Vs State of
Karnataka 1992(36) Kar.L.J. 92 (Tri)(DB)
No Entry tax is leviable on the goods exported outside the limits of the local area for use of the ultimate user outside the local area.(Sidhagiri Wholesale dealers and distributors)
The onus of proof shifts completely to the assessee to establish to the complete satisfaction of the department that the goods received are resold/re-exported out of the local area and that the entry tax is not payable (Ms/ Sanghvi Hubli)
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If X company, Peenya purchases Notified goods from Y company, Tumkur and sells
Within Local area i.e, Vijaynagar only
Liable
Outside Local area say, Mysore
Not Liable
Thus if purchase from outside the local area is meant for sale within the local area then it is liable for entry tax. Thus re-export of notified goods is not liable to ET.
Burman Shell Oil Storage and Distributing Company Of India Limited v. Belgaum Borough Municipality AIR 1963 SC 906 – the case was for levy of octroi.
Every dealer registered under the KTEG Act shall furnish to the Assessing Authority a monthly statement in Form 3 which shall be accompanied by a proof of payment admitted amount of tax liability in such a statement in Form 3
The time-limits for filing of the monthly statement in Form-3 under the KTEG Act, 1979/KST Act, 1957 (combined return) or in Form VAT 100 (Combined return), is within 20 days after the end of the month to which the return pertains/relates.
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Every dealer registered under the KTEG Act shall compulsorily file annual return in Form 5 before the Assessing Authority/LVO/Sub-LVO, as the case may be on or before 30th April, every year.
Assessment period is Financial year and not monthly period (VAT law)
In case of delay in Payment of Entry Tax, 2% interest per month from the date of such default or short payment to the date of payment of such tax is payable
Dealer who purchases goods from manufacturer and who causes an entry into local area shall be liable to pay tax at the rates prescribed under the Act.
The said provision even does not specify as to for what purpose the levy is attracted. The manufacturer who sells sugar is made liable to collect entry tax from the purchases and then deliver the sugar.
In case delivery is made without payment by the purchaser such amount shall be deemed to be due from such manufacturer. This means that if sugar is delivered, it is the responsibility of the manufacturer to pay the entry tax.
SHREE RENUKA SUGARS LIMITED, BELGAUM Vs STATE
OF KARNATAKA AND OTHERS – 2013 (75) Kar.L.J 164
(HC)
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Analysis by the Hon’ble High Court
The Court analyzed the said charging section in the light of Entry 52 of List II of the Seventh Schedule of the Constitution which reads as follows-
“52. Taxes on the entry of goods into local area for consumption use or sale therein”
Accepting the principle of ‘reading down’ the court held that Section 8-B of the Act is not applicable for the sugar purchased by any dealer form any manufacturer in the State of Karnataka, if that sugar is not indented to be taken into any local area in the State of Karnataka for consumption, use or sale therein. Since, the entry tax is only on causing an entry of goods into local area for consumption, use or sale therein.
Analysis by the Hon’ble High Court
Remedy suggested by Hon’ble High Court
Sugar manufacturer shall take a certificate form purchaser specifying that the sugar so purchased will not enter into local area within the State of Karnataka for consumption, use or sale therein and that will be taken outside the State of Karnataka for consumption, use or sale therein.
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Application in FORM 43 with reference to Section 12-C
Advance Ruling Authority will clarify the rate of tax applicable and exigibility of any transactions to tax under the Act on an application by dealer registered under the Act
Fees- Rs. 1000
RELEVANT ADVANCE RULINGS
Diesel, Super light diesel and other petroleum products are liable to tax at the rates specified therein. Hence both diesel and light diesel oil are liable to entry tax at 5% even if they are used as inputs in generation of power/energy
Only parts of machinery including spare parts used in the manufacture of an intermediate or finished product is covered under serial no 7 and machinery and parts including spare parts put to any other use is liable to tax at 2%
Purchases of bitumen by the applicant for use in the manufacture as a raw materials are not exigible to tax under KTEG Act 1979
No Advance Ruling Authority For Special Entry tax
Generators are electrical goods. Since electrical goods are not notified under the notification they are not liable under entry tax. Authority Rules that parts and accessories of hydroelectric generators are not liable to entry tax.
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Machinery of all kinds and parts and accessories thereof excluding agricultural machinery. Thermal Power generation unit is component of machinery and liable to entry tax. Therefore Turbine, Water system plant, Generator and coal handling system required for Thermal power Generator units are liable to entry tax at 2% under KTEG Act.
Rectified spirit is exempt from entry tax as it has suffered Additional Excise duty and Additional Countervailing duty under excise Rules Otherwise it is liable to tax at 4% on raw material for liquor
Purchase of iron and steel and electrical items by the applicant are not liable for entry tax. However parts and accessories of lifts and elevators purchased and entered into another local area are liable for entry tax
Purchase of Machinery and its parts imported from out of country for use in the running of machinery for manufacture of cement is liable to tax at 2%
Base oil is a raw material for lubricating oil and transformer oil and therefore it is not a petroleum product and not liable to entry tax.
The Tyre mounted Earth moving machines which are adopted for use on road are exempt from payment of entry tax
Coffee vending machine is an electrical appliance is not liable to tax under KTEG Act 1979
Cutting tools such as diamond segments, polishing Bricks and Diamond saw blades fall under entry “ Machinery of all kinds, parts and accessories thereof”
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HS diesel is liable to entry tax at 5% and other raw material used in the manufacture of footwear and on which clarification is sought are not liable to entry tax.
Printing Machinery and printing machinery spare parts are liable to entry tax at 2%
Flour Milling Pulveriser, seed roasting machine, vegetable cutting machine and chapatti/paper making machinery are liable to entry tax at 2%.
Domestic Flour Mill, heavy Duty Mixer Grinder are liable to entry tax at 2%
Parts of Earthmovers such as Dumpers, Dippers, Bulldozers adopted for use on road are not liable to entry tax.
Unmanufactured tobacco in sachets is liable to entry tax at 2%
Natural gas is liable to entry tax at 5% under sl 1, (viii), (e)
Coolant is a lubricating oil and as a petroleum product is liable for entry tax at 5%
Parts of lifts, elevators and escalators into a local area for use, consumption or sale therein other than for consumption or use as raw material, component parts and inputs in the manufacture of an intermediate or finished product is liable to tax at 5%
Rubber process oil used as lubricating agent in manufacture of rubber products is liable to entry tax at 5%.
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When grey fabric is brought into local area for use as raw material in the manufacture of ready to cut fabrics which is different from tobacco products and liquor, no entry tax is payable.
The tax is payable by the applicant on entry of machinery into local area though it is executing the contract for industrial unit who is claiming exemption under industrial policy and concessions.
The Karnataka High Court has abolished the levy of Entry Tax on Motor Vehicle in the landmark judgment
on petition by [2010] 027 VST 0447-[Karnataka High Court] L & T Case Equipment Pvt. Limited v. State of Karnataka and another (and other cases)
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Rule 127: Adjustments: (1) Any dealer, in whose case the input tax deductible exceeds the output tax payable by him as specified under sub section (5) of section 10 on the basis of the return submitted for any month or quarter during a year or where any dealer in whose case the input tax deductible exceeds the output tax payable by him on the basis of any final return, such dealer may adjust such amount towards the tax payable by him under the Act or the CST Act 1956 for any other month or quarter or seek adjustment of such amount towards the tax payable by him under the KST Act 1957 or KTEG Act 1979 or the Karnataka Special Tax on Entry of Goods Act 2004.
Revisional Powers under section 15 of the KTEG Act 1979 can be exercised even in cases where appeal is filed against the assessment orders under section 14 of the said Act (M/s Veneer Mills, Mysore)
(Section 21 (Offences and Penalties )): Tax cannot be demanded straightaway by issuing a notice under section 21 of KTEG Act 1979 (Nikhil Prabhakar Bhosekar)
Section 23(b) (Rs. 2000): The levy of excess compounding fee is refundable
The claim for refund of tax which was collected without the authority of law, where the tax burden has been passed on by the assessee to the ultimate consumer is not admissible. (Devichand Misrimal and Company Bangalore)
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The assessee cannot be aggrieved by levy of penalty by way of forfeiture of the excess amount by tax collected (retrospective amendment)- (M/s V.D.Shah Nipani
In the absence of any forfeiture of excess tax collected by the assessee prayer for refund of tax cannot be placed by the assessee in terms of section 3-BB of the KTEG Act 1979 (Mysore Cements Limited Bangalore)
Goods cannot be detained at the check post for the reason that the consignment attracts liability of entry tax under the Entry Tax Act (PRP Granites)
Shortening the period of exemption by the Government under notification from four years to three years without any reason is not sustainable in law. (Afcons Infrastructure Limited, Mumbai)
There is no condition in Rule 11 of the KTEG Rules that an application for Condonation of delay in filing the appeal is required to be filed. Where the appellant has made an oral submission before the Appellate Authority for Condonation of delay, it should be considered. (H.M.Shantappa V/s. State of Karnataka, 2009 (66) Kar.L.J 313 (Tri)(DB)).
Limitation is not applicable to cases of dealers who have not filed annual return of turnover. (Mumtaz Leather Company, Bangalore V/s. State of Karnataka, 2011 (70) Kar.L.J. 96B (Tri) (DB)).
Penalty is leviable only if Assessing Authority finds itself satisfied that escape from assessment is due to willful non-disclosure of entry of goods by dealer. (Koutons Retail India Limited, Bangalore)
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The assessee cannot be aggrieved by levy of penalty by way of forfeiture of the excess amount by tax collected (retrospective amendment)- (M/s V.D.Shah Nipani
In the absence of any forfeiture of excess tax collected by the assessee prayer for refund of tax cannot be placed by the assessee in terms of section 3-BB of the KTEG Act 1979 (Mysore Cements Limited Bangalore)
Goods cannot be detained at the check post for the reason that the consignment attracts liability of entry tax under the Entry Tax Act (PRP Granites)
Shortening the period of exemption by the Government under notification from four years to three years without any reason is not sustainable in law. (Afcons Infrastructure Limited, Mumbai)
State Industrial Policy 2009-14 (Benefits to Export
undertakings)
Exemption from payment of Entry tax:-
Government of Karnataka No. FD 05 CET 2009
Karnataka Government Secretariat, Bangalore, dated
03.06.2009.
100% exemption from payment of entry tax on plant and
machinery and capital goods for an initial period of three
years from the date of commencement of project
implementation is available to all 100% EOU manufacturing
Micro, Small and Medium Enterprises and Large and Mega
Industries both for establishment of new enterprises or for
expansion, diversification and modernization of existing
industries irrespective of Zones (For both own/Financed
enterprises)
7/23/2013
30
State Industrial Policy 2009-14 (Benefits to Export
undertakings)
Government of Karnataka, No. FD 05 CET 2009
Karnataka Government Secretariat, Bangalore, dated
03.06.2009.
For other manufacturing MSME, large and Mega (both own
and financed) new or
expansion/modernization/Diversification EOU (minimum
export obligation of 25% of their total turnover) 100%
exemption is available from payment of entry tax on raw
materials, inputs, components, parts and consumables
(excluding petroleum products) for an initial period of three
years from the date of commencement of commercial
production in Zone 1, 2 and 3 and 50% in Zone 4
If the CST is reimbursed by the dealer, then such component will not be considered for arriving at the value for calculating Entry tax
Adjustment of input tax credit
Interest rate dispute
Classification disputes
QUESTIONS?????????????????????????????
