While setting aside the order of the High Court, the two-judge bench of the Supreme Court has categorically held that polished Granite Slabs are subject to sales tax under the relevant provisions of Karnataka Sales Tax Act, 1957. Earlier, the High Court, on an appeal preferred by the Revenue had opined that imposition of levy under the KST would amount to double taxation since the same are already subjected to Central Sales Tax.
The factual settings of the case are that, the assessee is engaged in the business of manufacturing and trading in granite stone. Initially, the assessing authority allowed exemption on the sale of polished granite stones on ground that the same is produced from out of granite slabs that had suffered tax as rough granite blocks. The revisional authority by invoking its powers conferred under section 12A of the Act, set aside the said order by holding that the same is erroneous since polished and unpolished granite stones have separate entries in the said schedule and, therefore, treating of said sale of polished granite stone within the State which is obtained out of unpolished granite stone as sales suffered would not be correct.
The appellate authorities including the High Court quashed the orders by relying upon the decision in M/s. Vishwakarma Granites v. Commissioner of Commercial Taxes.The revenue approached the Apex Court impugning the order of the High Court.
The bench comprising of Justice Dipak Misra and Justice Shiva Kirthi Singh found that the decision in Vishwakarma Granites cannot be applied to the facts of the case. While confirming the levy f sales tax on the goods, the Court noted that there is a distinction between polished granite stone or slabs and tiles. “If a polished granite stone is used in a building for any purpose, it will come under Entry 17(i) ofPart S of the second schedule, but if it is a tile, which comes into existence by different process, a new and distinct commodity emerges and it has a different commercial identity in the market. The process involved is extremely relevant. That aspect has not been gone into. The Assessing Officer while framing the assessment order has referred to Entry 17(i) of Part S but without any elaboration on Entry 8. Entry 8 carves out tiles as a different commodity. It uses the words “other titles”. A granite tile would come within the said Entry if involvement of certain activities is established. To elaborate, if a polished granite which is a slab and used on the floor, it cannot be called a tile for the purpose of coming within the ambit and sweep of Entry 8. Some other process has to be undertaken. If tiles are manufactured or produced after undertaking some other activities, the position would be different. A finding has to be arrived at by carrying out due enquiry and for that purpose appropriate exercise has to be undertaken. In the absence of that, a final conclusion cannot be reached.”
Read the full text of the Judgment below.
