Case Note & Summary
The petitioner, M/s. Shanthakoti Enterprises, a dealer engaged in extraction and sale of rough granite blocks from quarries in Chamarajanagar, filed revision petitions under Section 65(1) of the Karnataka Value Added Tax Act, 2003, against the order of the Karnataka Appellate Tribunal, Bengaluru, dated 28.07.2014 in STA Nos. 1160-1171/2011. The Tribunal had dismissed the assessee's appeals filed under Section 9(2) of the Central Sales Tax Act, 1956, confirming the assessment orders that taxed the inter-State sales of rough granite blocks. The assessee contended that the sales were in the course of export under Section 5(1) of the CST Act and thus exempt from VAT. The court, after hearing the counsel for the petitioner, found that the assessee failed to produce sufficient evidence to establish that the sales occasioned the export. The court noted that the burden of proof lies on the assessee to show that the sale is in the course of export, and mere sale to a foreign buyer does not suffice. The court upheld the Tribunal's decision and dismissed the revision petitions, confirming the tax liability.
Headnote
A) Taxation - Value Added Tax - Inter-State Sale vs. Export Sale - Burden of Proof - Section 5(1) Central Sales Tax Act, 1956 read with Section 65(1) Karnataka Value Added Tax Act, 2003 - The assessee, a dealer in rough granite blocks, claimed exemption on inter-State sales as being in the course of export. The court held that the burden is on the assessee to prove that the sale occasioned the export, and mere sale to a foreign buyer through a local agent does not automatically qualify as an export sale. The Tribunal's finding that the assessee failed to discharge this burden was upheld. (Paras 1-11)
Issue of Consideration
Whether the sales of rough granite blocks by the assessee to foreign buyers through local agents were sales in the course of export under Section 5(1) of the Central Sales Tax Act, 1956, and thus exempt from tax under the Karnataka Value Added Tax Act, 2003?
Final Decision
The revision petitions are dismissed. The order of the Karnataka Appellate Tribunal dated 28.07.2014 is confirmed.
Law Points
- Burden of proof on assessee to establish export sale
- Inter-State sale vs. export sale
- Section 5(1) Central Sales Tax Act
- 1956
- Section 65(1) Karnataka Value Added Act
- 2003
Case Details
2018 LawText (KAR) (07) 5
STRP No.192 OF 2015 & STRP Nos.331-341 OF 2017
Dr. Vineet Kothari, Mrs. S. Sujatha
M/s. Shanthakoti Enterprises
State of Karnataka, Commissioner of Commercial Taxes, Joint Commissioner of Commercial Taxes (Appeals), Commercial Tax Officer
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Nature of Litigation
Revision petitions under Section 65(1) of KVAT Act against order of Karnataka Appellate Tribunal dismissing appeals under Section 9(2) of CST Act.
Remedy Sought
Assessee sought to set aside the Tribunal's order and claim exemption from VAT on inter-State sales as export sales.
Filing Reason
Assessee aggrieved by Tribunal's order confirming tax on inter-State sales of rough granite blocks.
Previous Decisions
Karnataka Appellate Tribunal dismissed appeals in STA Nos. 1160-1171/2011 on 28.07.2014.
Issues
Whether the sales of rough granite blocks were in the course of export under Section 5(1) of CST Act?
Whether the assessee discharged the burden of proof to establish export sale?
Submissions/Arguments
Petitioner argued that sales were to foreign buyers and thus in the course of export, exempt from VAT.
Respondents contended that assessee failed to prove that sales occasioned export.
Ratio Decidendi
The burden of proof is on the assessee to establish that a sale is in the course of export under Section 5(1) of the CST Act. Mere sale to a foreign buyer does not automatically qualify as an export sale; the assessee must show that the sale occasioned the export. In this case, the assessee failed to discharge that burden.
Judgment Excerpts
The assessee-M/s Shanthakoti Enterprises, Chamarajanagar, a dealer of granite, engaged in the business of extraction of rough granite blocks from quarries and effecting the sales of the same in the course of inter-State trade and commerce, has filed the present Revision Petitions in this Court aggrieved by the order passed by the Karnataka Appellate Tribunal, Bengaluru, dated 28.7.2014 in STA Nos. 1160-1171/2011 (M/s. Shanthakoti Enterprises vs State of Karnataka), whereby the learned Tribunal dismissed the appeals.
Procedural History
The assessee filed appeals before the Karnataka Appellate Tribunal under Section 9(2) of the CST Act against assessment orders. The Tribunal dismissed the appeals on 28.07.2014. Aggrieved, the assessee filed revision petitions under Section 65(1) of the KVAT Act before the High Court of Karnataka, which were dismissed on 06.07.2018.
Acts & Sections
- Karnataka Value Added Tax Act, 2003: 65(1)
- Central Sales Tax Act, 1956: 5(1), 9(2)
