Karnataka HC sets aside 2007 amendment of KVAT
Bengaluru, Jan 22: The High Court of Karnataka has set aside an amendment to the Karnataka Value Added Tax Act by a discriminatory taxation which encouraged businesses to make purchases from outside the state.
Setting aside the 2007 amendment by which the clause 15(5)(e) was inserted in the KVAT Act, a division bench of Justices PS Dinesh Kumar and CM Poonacha recently said, "We are of the opinion that the Amendment is discriminatory in nature and also not in favour of the welfare of the economy of the State as it encourages purchases from outside the State."
The 2007 amendment had a retrospective effect from April 1, 2006.
A single judge bench had upheld the validity of Section 15(5)(e) but ruled it was prospective in nature.
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The businesses which had challenged the amendment filed the appeals before the High Court.
"The effect of Amendment of Section 15(5)(e) is that, if a dealer who has opted for the composition scheme, purchases goods from an unregistered dealer, he has to pay tax payable on such purchase in addition to the composition tax," the court noted.
The businesses contended that when they made purchases from unregistered dealers in Karnataka, they were made to pay the additional tax.
However, if the purchases were made from outside Karnataka, no such additional taxes were imposed.
The state contended that the clause was inserted so that unregistered dealers in Karnataka register under the KVAT.
The HC, however, said that the State should use its officers to enforce the KVAT rather than target registered users.
It said in the judgement, "We find merit in the argument of the assessees, because the object sought to be achieved by the Amendment is to encourage purchase from registered dealers. This object will fail and instead encourage purchase from dealers outside the State since goods purchased within the State are only taxable and therefore, the object sought to be achieved will not be fulfilled.
We may record that the State has all the machinery such as Tax Inspectors, Flying Squads etc. to identify the URDs and to register them as dealers."
Allowing a batch of appeals, the HC said, "Section 15(5)(e) of the KVAT Act is declared ultra vires Constitution of India."
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KSDL invites innovative technology to check sandalwood theft
Bengaluru (PTI): The Karnataka government has invited farmers, scientists and organisations to come up with innovative technologies to prevent sandalwood theft in the state.
The state-owned Karnataka Soaps and Detergents Limited (KSDL), which manufactures Mysuru Sandal Soap has also planned sandalwood cultivation, state Large and Medium Industries Minister M B Patil said on Thursday.
"In a bid to promote sandalwood cultivation, the KSDL has planned a major initiative. As part of it, farmers, scientists, and organisations possessing information on advanced equipment or innovative technologies to prevent sandalwood theft have been invited to approach KSDL and share the details," Patil said in a statement.
Those interested in this initiative will be given an opportunity to demonstrate such technologies before the organisation, the minister said, adding if the proposed solutions are found suitable and effective, steps will be taken for consideration and implementation.
Patil stated that the cost involved in deploying technologies aimed at preventing sandalwood theft would be borne by KSDL.
Further, with a view to encouraging sandalwood cultivation, four farmers who have supplied the highest quantity of sandalwood to KSDL will be honoured with awards on the occasion of the birth anniversary of Nalwadi Krishnaraja Wadiyar on June 4, he said.
On the same occasion, police personnel and forest officials who have made notable progress in apprehending sandalwood thieves and registering cases, along with members of the public who have provided credible information leading to such action, will also be recognised and rewarded, the minister added.
Patil observed that farmers cultivating sandalwood trees on their lands have been facing increasing threats due to theft in recent years. Illegal felling and theft of sandalwood trees have continued for decades.
Although stringent laws are in place to curb such activities, the number of cases resulting in convictions remains very low, he noted.
"In this context, it becomes the responsibility of the organisation to extend both legal and technical support to farmers and encourage them to take up sandalwood cultivation on a larger scale," he said.
According to him, over the past three years, KSDL has procured 174.5 metric tonne of sandalwood directly from farmers across the state and transferred Rs 6.08 crore to their respective accounts.
