Chapter III Chapter III

incidence and levy of tax

1[(1) Every dealer shall pay for each year tax on his taxable turnover at the rate of

2[twelve percent]

at the point of first sale.]

3[Provisos x x x]

¹ Substituted by Act 11 of 1993 w.e.f. 1.4.1993.

² Substituted by Act 3 of 1998 w.e.f. 1.4.1998 and again Substituted by Act 5 of 2002 w.e.f. 1.4.2002

and again substituted by Act 30 of 2003 w.e.f. 1.6.2003 again substituted by Act 26 of 2004 w.e.f. 1.8.2004. 3. Provisoes were inserted and omitted by Acts 18 of 1994 and 6 of 1995 w.e.f. different dates.

¹ Inserted by Act 15 of 1988 w.e.f. 1.4.1988 & omitted by Act 5 of 2000 w.e.f. 1.4.2000.

1[(1-A) x x x]

1[(1-B) Notwithstanding anything contained in sub-section (1), in the case of

3[x x x] glass bottles, the tax shall be payable by a dealer, at every point of sale at the rate of

¹ Substituted by Act 11 of 1993 w.e.f. 1.4.1993.

² Substituted by Act 3 of 1998 w.e.f. 1.4.1998 and again Substituted by Act 5 of 2002 w.e.f. 1.4.2002

³ Omitted by Act 5 of 1996 w.e.f. 1.4.1996.

2[twelve per cent] on the taxable turnover, in each year relating to such goods.]

1[

2[(1-C) Notwithstanding anything contained in sub-section (1), in the case of silk fabrics, the tax shall be payable by a dealer, at every point of sale at the rate of four percent on the taxable turnover in each year relating to such goods: Provided where the own manufactured silk fabrics are sold to a dealer liable to tax under this Act, the sale of such silk fabrics shall not be deemed to be a sale by a dealer liable to tax under this Act.]

1957: KAR. ACT 25] Sales Tax Explanation.—For the purpose of this sub-section and sub-section

1. (8) of section 17, "silk fabrics" means 3[silk fabrics in which the proportion of silk is sixty percent or more by weight of the total fibre content] but excluding any cloth on which a duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Central Act 58 of 1957), has been levied.] 1[(1-D x x x ] 1[(2) Notwithstanding anything contained in sub-section (5), 2[every dealer,] shall, whatever be the quantum of his total turnover, be liable to pay tax at the rate specified in this Act, 3[on the sale of any goods which he has purchased in the course of inter-State trade or commerce in respect of which the concessional rate of tax under clause (b) of sub-section (1) of section 8 of the Central Sales Tax Act, 1956, has been levied.] ]
2. (3) Notwithstanding anything contained in sub-section (1), the tax under this Act shall be levied—
   • (a) in the case of the sale of any of the goods mentioned in column (2) of the Second Schedule, by the first or the earliest of successive dealers in the State who is liable to tax under this section, a tax at the rate specified in the corresponding entry of column (3) of the said Schedule, on the 1[taxable turnover] of sales of such dealer in each year relating to such goods: 1[Provided that in respect of sale by the State Government of any of the goods mentioned in 2[Serial Number 6 of Part `L' and Serial Number 2 of Part `O'] of the Second Schedule, the State Government shall be deemed to be the first dealer in the State and shall be entitled to collect the tax under section 19:] 1[2nd proviso x x x] 1[Explanation x x x] 1[Proviso x x x] 1[Provided also that in respect of sale of goods mentioned in 2[Serial Number 11-A of Part `F', Serial Number 12 of Part `M' and 3[Serial Number

¹ Inserted by Act 1 of 1996 w.e.f. 1.4.1995.

² Substituted by Act 3 of 1998 w.e.f. 1.4.1998.

³ Substituted by Act 15 of 1996 w.e.f. 1.4.1995.

¹ Inserted by Act 4 of 1999 w.e.f. 1.4.1999 & Omitted by Act 5 of 2000 w.e.f. 1.4.2000.

¹ Substituted by Act 31 of 1958 w.e.f. 1.1.1959.

² Substituted by Act 11 of 1993 w.e.f. 1.4.1993.

³ Substituted by Act 3 of 1966 w.e.f. 1.3.1966 by notification. Text of notification is at the end of the Act.

¹ Substituted by Act 9 of 1964 w.e.f. 1.4.1964.

¹ Inserted by Act 32 of 1958 w.e.f. 1.10.1957.

² Substituted by Act 15 of 1988 w.e.f. 1.4.1988.

¹ Omitted by Act 15 of 1988 w.e.f. 1.4.1988.

¹ Omitted by Act 15 of 1988 w.e.f. 1.4.1988.

¹ Inserted by Act 7 of 1981 and omitted by Act 10 of 1983 w.e.f. 1.4.1983.

Sales Tax [1957: KAR. ACT 25

¹ Inserted by Act 27 of 1985 w.e.f. 1.8.1985.

² Substituted by Act 5 of 1996 w.e.f. 1.4.1996.

³ Substituted by Act 7 of 1997 w.e.f. 1.4.1997.

5 of Part `P' and Serial Number 1 of Part `K'] ,] of the Second Schedule, the sale by one oil company to another oil company shall not be deemed to be a sale by the first or the earliest of successive dealers in the State but the sale by the latter company to another person not being an oil company shall be deemed to be the sale by the first or the earliest of successive dealers in the State liable to tax.]

1[

2[Provided further that where any goods liable to tax under this Act are produced or manufactured by a dealer with the

3[brand name or trade mark] , of any other dealer and which are not used by the latter as

4[raw materials, component parts or packing materials] as defined under the explanation to section 5-A, the sale of such goods by the dealer who has produced or manufactured to the dealer who is the brand name or trade mark holder, shall not be deemed to be, but the subsequent sale of such goods by the dealer having the right either as proprietor or otherwise to use the said name or the trade mark, either directly or through another, on his own account or on account of others shall be deemed to be the sale by the first dealer liable to tax under this section.]

¹ Inserted by Act 14 of 1987 w.e.f. 1.4.1987.

² Substituted by Act 4 of 1992 w.e.f. 1.4.1987.

³ Substituted by Act 4 of 1999 w.e.f. 1.4.1999.

⁴ Substituted by Act 4 of 1992 w.e.f. 1.4.1990.

Illustration.—`A' has registered a Trade Mark for manufacture of certain goods. He gets the said goods manufactured by `B' under the said Trade Mark. The sale by `B' to `A' of the said goods is not the first sale but the sale by `A' or by any other person on his account is the first sale.]

¹ Inserted by Act, 7 of 2003 w.e.f. 1.4.1995 and Omitted by Act, 7 of 2003 w.e.f. 1.4.96

1[Proviso xxx]

¹ Inserted by Act 18 of 1999 w.e.f. 1.4.1996.

1[Provided also that no tax under this sub-section shall be payable on the currency notes printed by the Bharatiya Reserve Bank Note Mudrana Limited, Mysore and sold to the Reserve Bank of India.]

1[Provided also that where for any reason, the goods sold under the brand name have been subjected to tax at the hands of the producer or the manufacturer of such goods the tax payable under clause (a) on subsequent sale of such goods by the trademark holder or the brand name holder or any other dealer having the right either as proprietor or otherwise to use the said name or trade mark either directly or through another on his own account or on account of others, shall be reduced by the amount of tax already paid on the sale of such goods by such producer or the manufacturer and the said producer or manufacturer shall not be entitled to refund of such tax paid by him.]

¹ Inserted by Act 18 of 1999 w.e.f. 1.9.1999 by notification. Text of notification is at the end of the Act.

1957: KAR. ACT 25] Sales Tax

1[Provided also that where goods are sold, under a brand name by the trade mark holder or the brand name holder or any other dealer having the right as proprietor or otherwise to use the said name or trade mark either directly or through another on his own account or on account of others, exclusively to a marketing agent or distributor or wholesaler or any other dealer, subsequent sale of such goods by the latter shall also be liable to tax under this Section and the tax so payable shall be reduced by the amount of tax already paid on the sale of such goods by the former.]

¹ Inserted by Act 5 of 2002 w.e.f. 1.4.2002.

1[Proviso xxx] 1. Seventh Proviso Inserted w.e.f. 1.4.1995 and deemed to have been omitted w.e.f. 1.4.1996 by Act 7 of 2003 w.e.f. 1.4.2003.

¹ Inserted by Act 7 of 2003 w.e.f. 1.4.2000.

Provided also that the taxable turnover in respect of sale of Beer shall be arrived at by deducting the charges levied as litre fee under sub- rule (3) of rule 2 of the Karnataka Excise (Duties and Fees) Rules, 1968.

1. (b) in the case of purchase of any of the goods mentioned in column

1. (2) of the Third Schedule, at the rate and only at the point specified in the corresponding entries of columns (4) and (3) of the said Schedule, on the dealer liable to tax under this Act, on his 1[taxable turnover] of purchases in each year relating to such goods. 1[Proviso x x x] 1[(c) x x x] 1[Explanation II.— For the purpose of the 2[second] proviso to clause (a), the expression "oil company" namely means:—
   • (a) The Indian Oil Corporation Limited;
   • (b) The Bharath Petroleum Corporation Limited;
   • (c) The Hindustan Petroleum Corporation Limited; 3[(d) Indo-Burma Petroleum Company;
   • (e) Mangalore Refinery and Petrochemicals Limited;] and includes any other oil company which the Government of Karnataka may by notification, specify.] 1[Explanation III.- For the purpose of the sixth proviso to clause (a), where goods are sold, under a brand name by the trade mark holder or the brand name holder or any other dealer having the right as proprietor or otherwise to use the said name or trade mark either directly or through

¹ Substituted by Act 9 of 1964 w.e.f. 1.4.1964.

¹ Inserted by Act 4 of 1992 w.e.f. 3.3.1992 & omitted by the same Act w.e.f. 31.3.1992.

¹ Inserted by Act 30 of 1987 w.e.f. 21.4.1987 & omitted by Act 4 of 1992 w.e.f. 1.4.1992.

¹ Inserted by Act 27 of 1985 w.e.f. 1.8.1985.

² Substituted by Act 7 of 1997 w.e.f. 1.4.1997.

³ Inserted by Act 7 of 1997 w.e.f. 1.4.1997.

Sales Tax [1957: KAR. ACT 25

¹ Inserted by Act 5 of 2002 w.e.f. 1.4.2002.

another on his own account or on account of others, who is exempt from tax by any notification issued under Section 8-A or Section 19-C, the expression “tax already paid” means the tax payable under this Section on such sale if the sale had been effected by any other dealer.]

¹ Inserted by Act 5 of 2000 w.e.f. 1.4.2000.

1[(3A) Notwithstanding anything contained in clause (a) of sub- section (3) of this section, in the case of sale of Indian made liquor (other than beer) held in opening stock as on the date of commencement of the Karnataka Taxation Laws (Amendment) Act, 2000 by a dealer holding licence in CL-I under the Karnataka Excise (Sale of Indian and Foreign liquor) Rules, 1968, tax at the rate of sixty per cent shall be levied on the taxable turnover of sales of such dealer relating to such goods : Provided that the tax payable on the sale of such liquor shall be reduced by an amount of tax paid on such liquor at the immediately preceding point of sale.]

¹ Omitted by Act 10 of 1983 w.e.f. 1.4.1983.

1[(3B) x x x]

1[(3-C) Notwithstanding anything contained in sub-section (3), in the case of sale of any of the goods mentioned in column (2) of the Eighth Schedule which has already been subjected to tax under

section (3) by a dealer liable to tax under this Act, a tax at the rate specified in the corresponding entry of column (3) of the said schedule shall be levied at the point of last sale in the State on the taxable turnover of sales of such dealer in each year relating to such goods.]

¹ Inserted by Act 27 of 1985 w.e.f. 1.8.1985 & substituted by Act 9 of 1986 w.e.f. 1.4.1986

² Inserted by Act 15 of 1988 w.e.f. 1.4.1988 & omitted by Act 5 of 2000 w.e.f. 1.4.2000.

¹ Inserted by Act 4 of 1992 w.e.f. 1.4.1992 & substituted by Act 5 of 2000 w.e.f. 1.4.2000.

1[Explanation. —For the purposes of this sub-section last sale shall be the sale by the retailer to a consumer and shall not include the first sale in the State.]

(3-CC)

1[x x x] 1. Subsection (3-CC) Inserted by Act 5 of 2001 w.e.f. 1.4.2001 and Omitted by Act, 5 of 2002 w.e.f. 1.4.2002.

1[(3-D) Notwithstanding anything contained in this Act, where goods sold or purchased are contained in containers or are packed in any packing materials liable to tax under this Act, the rate of tax and the point of levy applicable to turnover of such containers or packing materials as the case may be, shall, whether the containers or the packing materials have already been subjected to tax under this Act or not or whether the price of the containers or of the packing materials is charged for separately or not, be the same as those applicable to goods contained or packed: Provided that no tax under this sub-section shall be leviable if the sale or purchase of goods contained in such containers or packed in such packing materials is exempt from tax under this Act.]

¹ Inserted by Act 9 of 1986 w.e.f. 1.4.1986.

1957: KAR. ACT 25] Sales Tax

³ Inserted by Act 5 of 2000 w.e.f. 1.4.2000.

1[(3E) Notwithstanding anything contained in sub-section (1) or (3), every dealer who purchases goods without a brand name or a trade mark assigned to such goods and sells such goods after assigning a brand name or a trade mark either directly or through another on his own account or on account of others, shall, irrespective of the goods so purchased without a brand name or a trade mark have already been subjected to tax under the said sub-sections, be liable to pay tax at such rates as applicable to such goods under the Act on the turnover relating to sale of such goods: Provided that the tax payable under this sub-section shall be reduced by an amount of tax which is already paid or has become payable under any of the said sub-sections on the corresponding value of the goods so purchased without the brand name or the trade mark: Provided further that the burden of proving that the tax under any of the said sub-sections has already been paid or has become payable and of establishing the exact quantum of tax so paid or payable as the case may be, on goods purchased without a brand name or a trade mark shall be on the dealer claiming reduction.]

1[(4) Notwithstanding anything contained in sub-section (1)

2[or section 5-B or section 5-C] a tax under this Act shall be levied in respect of the sale or purchase of any of the declared goods mentioned in column (2) of the Fourth Schedule at the rate

4[xxx] specified in the corresponding entries of columns (4) and (3) of the said Schedule on the dealer liable to tax under this Act on

3[his taxable turnover]

² Inserted by Act 27 of 1985 w.e.f. 1.8.1985.

³ Substituted by Act 9 of 1964 w.e.f. 1.4.1964.

⁴ Omitted by Act, 5 of 2002 w.e.f. 1.4.2002.

of sales or purchases in each year relating to such goods: 1. Subsection (4) Substituted by Act 31 of 1958 w.e.f. 1.1.1959.

Provided that where

sale or purchase of any of the declared goods under this sub-section and such goods are subsequently sold in the course of inter-State trade or commerce,

2[and tax has been paid under the Central Sales Tax Act, 1956 (Central Act 74 of 1956), in respect of the sale of such goods in the course of inter-State trade or commerce, the tax paid under this Act]

3[

4[shall be

¹ Substituted by Act 7 of 2003 w.e.f. 1.4.2000.

² Substituted by Act 7 of 1973 w.e.f. 1.1.1959.

³ Substituted by Act 29 of 1961 w.e.f. 7.12.1961.

⁴ Substituted by Act 7 of 1973 w.e.f. 1.4.1973.

reimbursed to the person making such sale in the course of inter-State trade or commerce,] in such manner and subject to such condition as may be prescribed.]

¹ Omitted by Act 9 of 1970 w.e.f. 1.4.1970.

1[Proviso x x x]

Sales Tax [1957: KAR. ACT 25

¹ Omitted by Act 30 of 1962 w.e.f. 1.10.1962.

1[Provisoes x x x]

1[Provided further that in respect of the sale of cereals mentioned in Serial Number 9 of the Fourth Schedule, made by any person to a procurement agent appointed by the Government of Karnataka or to any sub-agent of such procurement agent in pursuance of the Karnataka Rice Procurement (Levy) Order, 1981 or any other Foodgrains Procurement

1. (Levy) Order of the Government of Karnataka for the time being in force, such sale shall not be deemed to be, but the subsequent sale by the said procurement agent or sub-agent shall be and shall be deemed to be the point at which the tax under this Act shall be levied:] 1[Provided also that where tax has been paid under this sub-section on the purchase of paddy and such paddy is either subsequently sold to or is hulled and the resultant rice is sold to a procurement agent appointed by the Government of Karnataka or to any sub-agent of such procurement agent in pursuance of the Karnataka Rice Procurement (Levy) Order, 1984 or any other Foodgrains Procurement (Levy) Order of the Government of Karnataka for the time being in force, the tax paid under this Act on the purchase of such paddy shall be reimbursed to the person making such sale to such procurement agent or his sub-agent, as the case may be, in such manner and subject to such conditions as may be prescribed.] Explanation.—The expression "declared goods" means goods declared under section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), to be of special importance in inter-State trade or commerce.] 1. Subsection (4) Substituted by Act 31 of 1958 w.e.f. 1.1.1959. 1[Provided also that in respect of goods specified at sub-item (i) of item (a) of serial number 5 of Fourth Schedule and on purchase of which no tax under this Act is leviable or levied on or before first day of April 1992 on the ground that such purchase was not the last purchase in the State, a dealer holding such goods in stock on the said date shall be deemed to be the last purchaser in the State liable to tax at the rates applicable as on the first day of April 1992 on such goods irrespective of the fact whether such stock of goods held as on the first day of April 1992 attained the character of last purchase in the State or otherwise.] 1[Proviso x x x] 1[(5)(a) A dealer whose total turnover in any year is less than 2[two lakh] rupees shall not be liable to pay tax for that year. 3[(b) Notwithstanding anything contained in clause (a),—
   • (i) every casual trader in any of the goods other than those specified in the Fifth Schedule shall be liable to pay tax at the rate specified in this Act on his taxable turnover of sales or purchases in each year whatever his total turnover during the year may be; 1957: KAR. ACT 25] Sales Tax 1[(i -a) Every dealer engaged in the execution of works contract mentioned in Sixth Schedule shall be liable to pay tax at the rate specified in the said schedule on his taxable turnover of transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract in each year whatever be the quantum of his total turnover during the year.]
   • (ii) every 4[x x x] manufacturer, dealer in liquor and beer and dealer who brings any goods into the State or to whom any goods are dispatched from any place outside the State shall be liable to pay tax at the rate specified in this Act on his taxable turnover of sales or purchases in each year if his total turnover during the year is not less than one lakh rupees.] ] 1. Sub-section (5) substituted by Act 9 of 1964 w.e.f. 1.4.1964. 1[(5A), (5B) x x x]

¹ Inserted by Act 3 of 1983 w.e.f. 1.1.1959.

¹ Inserted by Act 30 of 1987 w.e.f. 1.4.1987.

¹ Inserted by Act 4 of 1999 w.e.f. 2.4.1992.

¹ Inserted by Act 4 of 1999 w.e.f. 1.4.1998 & omitted by same Act w.e.f. 24.11.1998.

¹ Inserted by Act 26 of 2004 w.e.f. 1.8.2004

² Substituted by Act 4 of 1992 w.e.f. 1.10.1991.

³ Substituted by Act 4 of 1992 w.e.f. 1.4.1992.

⁴ Omitted by Act 6 of 1995 w.e.f. 1.4.1995.

¹ Omitted by Act 7 of 1966 w.e.f. 1.4.1966.

1. (6) For the purposes of this section and other provisions of this Act, 1[the total turnover, taxable turnover or turnover] shall be determined in accordance with such rules as may be prescribed.
2. (7) The tax shall be assessed, levied and collected in such manner and in such instalments, if any, as may be prescribed: Provided that in respect of the same transaction of sale, the buyer or the seller, but not both, as determined by such rules as may be prescribed, shall be taxed: 1[Proviso x x x] 1[(8) x x x]
3. (9) Subject to such rules as may be prescribed, the assessing authority may assess a dealer for any year as if his transactions in such year had been the same as in the previous year. 1[5-A. Taxation of Industrial Inputs.-(1) Notwithstanding anything

¹ Substituted by Act 9 of 1964 w.e.f. 1.4.1964.

¹ Omitted by Act 9 of 1964 w.e.f. 1.10.1957.

¹ Omitted by Act 12 of 1961 w.e.f. 8.6.1961.

contained in Section 5, the tax payable by a registered dealer, in respect of the sale of any industrial input liable to tax under the Act to another registered dealer for use by the latter as a component part or raw material or packing material of any other goods which he intends to manufacture inside the State for sale or in respect of sale of consumables liable to tax under the Act to another registered dealer for use in such manufacture, shall be at the rate of four percent or the rate specified in Section 5, whichever is lower, on the taxable turnover relating to such sale. Provided that where the rate of tax in respect of such industrial input as specified in Section 5 is four percent and above , the provisions of this

Sales Tax [1957: KAR. ACT 25 sub-Section shall not apply, unless the dealer selling the industrial inputs furnishes to his assessing authority in the prescribed manner a declaration by the buying dealer in the prescribed form obtained from the prescribed authority or where the buying dealer’s total turnover for the year ending thirty first day of March 2001 as declared in the return for such period exceeds one hundred lakhs rupees, such buying dealer shall give a declaration in such form and in such manner as may be prescribed. Provided further that if any dealer, after purchasing any inputs, in respect of which he has furnished a declaration under the first proviso to this Sub-section fails to make use of the whole or part of such inputs in the manufacture of other goods specified in the declaration before the expiry of the accounting year immediately succeeding the one in which such inputs are purchased, either due to cessation of his manufacturing activity or for any other reason, but has not sold away such inputs, he shall be liable to pay the difference between the tax payable at the rate specified under

Section 5 and the tax computed at the rate of four percent on the turnover relating to the sale of such quantity of these inputs to him as have remained unutilized with him for the declared purpose at the end of the period specified above.

1. (2) Notwithstanding anything contained in clause (b) of sub-Section (3) of Section 5 or Section 6, the tax payable by a registered dealer in respect of the purchase of any Industrial input liable to tax under the Act for use by him

as a component part or raw material or packing material of any other goods which he intends to manufacture inside the State for sale shall be at the rate of four percent or the rate specified in Section 5, whichever is lower, on the taxable turnover relating to such purchase.

1. (3) If any person :
   • (i) not having his manufacturing unit inside the State , purchases any inputs by furnishing a declaration under the first proviso to sub-

Section (1) or pays tax on purchase of inputs under sub-Section (2); or

(ii)having his manufacturing unit inside the State and having purchased any inputs by furnishing a declaration under the first proviso to Sub-section (1) or paying tax on purchase of any inputs under sub- Section (2), sells away such inputs contrary to such declaration or condition, the assessing authority, after giving such person a reasonable opportunity of being heard, shall, by order in writing, impose upon him by way of penalty a sum, which shall not be less than the amount of tax leviable under Section 5 on the sale of the inputs so purchased or tax leviable under clause (b) of sub-Section (3) of Section 5 or Section 6 on the inputs so purchased, but which shall not exceed one and half times the amount of such tax;

1. (iii) having his manufacturing unit inside the State and having purchased any inputs by furnishing a declaration under first proviso to sub-Section (1) or having paid tax on any inputs under sub- Section (2), uses such inputs contrary to such declaration or , the assessing authority, after giving such person a reasonable 1957: KAR. ACT 25] Sales Tax opportunity of being heard, shall, by order in writing, impose upon him by way of penalty a sum which shall not be less than twice the amount of tax leviable under Section 5 or 6 but not exceeding two

and half times the amount of such tax on the inputs so purchased.

¹ Inserted by Act 26 of 2004 w.e.f. 1.8.2004

1[Provided that no penalty shall be levied under this sub- section after a period of eight years from the close of the year to which the purchase relates]

1. (4) (a) Every dealer who, during the course of the year, purchases any inputs by furnishing a declaration under the first proviso to sub-Section (1), shall maintain in the prescribed manner a regular account of the receipt and

issue of such declaration forms as are received or issued by him.

1. (b) Every such dealer shall also submit a statement as prescribed containing particulars of such purchases in any month to the assessing authority along with the statement to be submitted under section 12-B.
2. (c) Every such dealer shall also maintain in the prescribed manner an account giving the opening balance, purchases, consumption and closing balance of every input, which is purchased by him by furnishing a declaration under the first proviso to sub-Section (1) or purchased by him under sub-Section (2).
3. (d) If any dealer fails to maintain, in the prescribed manner, true and complete accounts or submit a statement as required by clause (a) or clause (b) or clause (c) of this sub-Section, the assessing authority shall, after giving such dealer a reasonable opportunity of being heard pass an order,-
   • (i) disentitling such dealer from making use of any declaration forms prescribed under the first proviso to sub-Section (1) and requiring him to surrender forthwith the declaration forms already issued to him, if any or disentitling such dealer to pay tax on inputs under sub-Section (2); and
   • (ii) imposing upon him a penalty not below one half of the amount of tax payable but not exceeding the amount of tax leviable, under the provisions of Section 5 on the sale value of the inputs already purchased by him against prescribed declaration forms up to the date of surrender of the unused forms by him or under the provision of Section 5 or Section 6 on the purchase value of inputs already purchased by him under sub-Section (2) up to the date of disentitlement.
4. (e) If any dealer, in respect of whom an order has been passed under clause (d), of this sub-Section, pays the penalty and complies with other terms of such order, the assessing authority may, in his discretion, permit such dealer, to obtain the prescribed declaration forms afresh or issue the prescribed declaration forms and to make use of the same for the purchase of inputs in the State at concessional rate of tax or to pay tax under sub- Section (2) on purchase of inputs.

Sales Tax [1957: KAR. ACT 25

¹ Inserted by Act 26 of 2004 w.e.f. 1.8.2004

1[Provided that no penalty shall be levied under this sub-section after a period of eight years from the close of the year to which the purchase relates] Explanation :

1. (1) For the purpose of this Section, the expressions `industrial inputs` or inputs, mean either a `Component part` or `raw material` or packing material, but do not include Cement, and inputs falling under Serial Number 12 of Part `S` and Serial Number 10 of Part `M` of the Second Schedule.
2. (2) The expression `component part` means an article which forms an identifiable constituent of the finished product and which along with others, goes to make up the finished product.
3. (3) The expression `raw material` means any material-
   • (a) from which another product can be made, through the process of manufacture, either by itself or in combination with other raw materials; or
   • (b) a processing or any other chemical solvent (including chemicals used for testing, analysis or research) used in the solvent extraction process or a catalyst required in the manufacturing process, but it

does not include fuels, and consumable stores of similar type.

1. (4) The expression `Consumables` does not include petroleum products falling under Serial Number 11-A of Part ‘F’, Serial Number 12 of Part ‘M’ and Serial Number 5 of Part ‘P’ of Second Schedule.] 1. Subsituted Act 5 of 2002 w.e.f. 1.4.2002. 1[(5) (xxx)] 1. Deemed to have been inserted w.e.f 1.4.2002 and shall be deemed to have been omitted w.e.f. 16.11.2004.

1[(5) xxx)]

1. Deemed to have been inserted w.e.f 1.4.2002 and deemed to have been omitted w.e.f. 16.11.2004 by Act 5 of 2006.

1[Explanation-II (xxx)]

1. Deemed to have been inserted w.e.f 1.4.2001 and shall be deemed to have been omitted w.e.f. 1.04.2002 by Act 5 of 2006.

1[Explanation-III (xxx)]

1. Deemed to have been inserted w.e.f 1.4.83 and shall be deemed to have been omitted w.e.f. 1.04.2001 by Act 5 of 2006.

1[5-B. Levy of tax on transfer of property in goods (whether as goods or in some other form) involved in the execution of works contracts.- Notwithstanding anything contained in sub-section (1) or

2[sub-section (3) or sub-section (3-C) of section 5, but subject to sub-section (4), (5) or (6)] of the said section, every dealer shall pay for each year, a tax under this Act on his taxable turnover of transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract mentioned in

1957: KAR. ACT 25] Sales Tax column (2) of the Sixth Schedule at the rates specified in the corresponding entries in column (3) of the said Schedule.

² Substituted by Act 4 of 1992 w.e.f. 1.4.1986.

³ Substituted by Act 5 of 1996 w.e.f. 1.4.1986.

3[5-C. Levy of tax on the transfer of the right to use any goods.- Notwithstanding anything contained in sub-section (1) or sub-section (3) of section 5, but subject to sub-sections (4), (5) and (6) of the said section, every dealer shall pay for each year a tax under this Act on his taxable turnover in respect of the transfer of the right to use any goods mentioned in column (2) of the Seventh Schedule for any purpose (whether or not for a specified period) at the rates specified in the corresponding entries in column (3) of the said Schedule:] ] 1. Sections 5B and 5C inserted by Act 27 of 1985 w.e.f. 1.4.1986 by notification. Text of the notification is at the end of the Act.

¹ Inserted by Act 5 of 2000 w.e.f. 1.4.2000.

1[Provided that no tax shall be levied under this section if the goods in respect of which the right to use is transferred, have been subjected to tax under section 5.]

Subject to the provisions of sub-section (5) of section 5, every dealer who in the course of his business purchases any taxable goods in circumstances in which no tax under section 5 is leviable on the sale price of such goods and, (i) either consumes such goods in the manufacture of other goods for sale or otherwise 2[or consumes otherwise,] or disposes of such goods in any manner other than by way of sale in the State, or (ii) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under section 5: Provided that this section shall not apply,— 3[(i) in respect of sale or purchase of goods specified in the Fourth Schedule,— (a) which are taxable at the point of purchase; and (b) which have already been subjected to tax under sub-section (4) of section 5.] (ii) in respect of sale or purchase of goods specified in the Second Schedule which have already been subject to tax under clause (a) of sub-section (3) of section 5.] 1[Provided further that no tax shall be payable under this section on the purchase of sowing seeds] 1. Substituted by Act 9 of 1970 w.e.f. 1.4.1970. 2. Inserted by Act 8 of 1989 w.e.f. 8.9.1988. 3. Substituted by Act 78 of 1976 w.e.f. 7.12.1976. 1. Inserted by Act 7 of 2003 w.e.f. 1.4.1999. Sales Tax [1957: KAR. ACT 25 1[x x x] 1. Clauses (iia), (iii), (iv), (v) and proviso inserted and omitted by Acts 6 of 1995, 27 of 1985 and 14 of 1987 w.e.f. different dates. 1. Inserted by Act 8 of 1989 w.e.f. 1.4.1970. 1[Explanation.— For the purpose of this section "consumes such goods in the manufacture" shall include goods consumed for ancillary purposes in or for such manufacture.] 1[6-A. Burden of proof.- (1) For purposes of assessment of tax under this Act, the burden of proving that any transaction or any turnover of a dealer is not liable to tax shall lie on such dealer. (2) Notwithstanding anything contained in this Act or in any other law, a dealer in any of the goods liable to tax in respect of the first sale or first purchase in the State shall be deemed to be the first seller or first purchaser, as the case may be, of such goods and shall be liable to pay tax accordingly on his turnover of sales or purchases, relating to such goods, unless he proves that the sale or purchase, as the case may be, of such goods had already been subjected to tax under this Act.] 1[Provided that where goods liable to tax are iron and steel mentioned in serial number 2 of the Fourth Schedule, oil seeds mentioned in serial number 5 of the Fourth Schedule, bauxite, chromite, iron, manganese and other ores mentioned in serial number 1 of Third Schedule or hydrogenated oils and cooking medium mentioned in serial number 1 of Part `E' of Second Schedule, 2[or any other goods liable to tax as may be notified by the Commissioner] every dealer in such goods shall furnish a declaration duly filled and signed by the registered dealer from whom such goods are purchased containing the prescribed particulars in a prescribed form obtained from the assessing authority to prove that the sale or purchase, as the case may be, of such goods had already been subjected to tax and the seller of such goods shall issue the declaration to the buying dealer;] 1[Provided further that, in respect of any assessments other than an assessment already completed, for the years ending Thirty First day of March, 1996 and Thirty First day of March 1997, the buying dealer may prove, in the prescribed manner, that the goods purchased have already been subjected to tax notwithstanding his failure to furnish the declaration specified.] 1. Deemed always been Inserted by Act 5 of 2002 w.e.f. 1.10.1957. 1[(3) Where a dealer knowingly issues or produces a false bill, voucher, declaration, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him or any other dealer, is not liable to be taxed, 2[or liable to tax at a lower rate] the assessing authority shall, on detecting such issue or production, direct the dealer issuing or producing such document to pay as penalty,— (i) in the case of first such detection, three times the tax due in respect of such transaction; and 1957: KAR. ACT 25] Sales Tax (ii) in the case of second or subsequent detection, five times the tax due in respect of such transaction: Provided that before issuing any direction for the payment of the penalty under this section, the assessing authority shall give to the dealer an opportunity of making representation against the levy of such penalty.] 1[Provided further that no penalty shall be levied under this Section after a period of eight years from the close of the year to which the transaction relates] 1[6-B. Levy of resale tax.- Every registered dealer and every dealer who is liable to get himself registered under sub-Sections (1) and (2) of Section 10 whose total turnover in a year is not less than the turnovers specified in the said sub-Sections, shall be liable to pay tax at the rate of one and half per cent of such portion of the total turnover which is not liable 1. Inserted by Act 9 of 1964 w.e.f. 1.10.1957. 1. Inserted by Act 6 of 1995 w.e.f. 1.4.1995. 2. Inserted by Act 15 of 1996 w.e.f. 5.9.1996. 1. Inserted by Act 23 of 1983 w.e.f. 18.11.1983. 2. Inserted by Act 18 of 1994 w.e.f. 18.11.1983. 1. Inserted by Act 26 of 2004 w.e.f. 1.8.2004. to tax under Sections 5, 5-A, 5-B, 5-C or 6. Provided that no tax under this sub-Section shall be payable on that part of such turnover which relates to,- (i) sale or purchase of goods specified in the Fifth Schedule; (ii) sale or purchase of goods in the course of interstate trade or commerce; (iii) sale or purchase of goods in the course of export out of the territory of India or sale or purchase in the course of import into the territory of India; (iv) all amounts collected by way of tax under the provisions of this Act or the Central Sales Tax Act, 1956 (Central Act 74 of 1956); (v) all amounts falling under the head `Freight`, when specified and charged for by the dealer separately without including such amounts in the price of the goods sold; (vi) all amounts allowed as discount, provided that such discount is allowed in accordance with the regular practice of the dealer or is in accordance with the terms of a contract or agreement entered into a particular case and provided also that the accounts show that the purchaser has paid only the sum originally charged less discount; (vii) (a) all amounts allowed to purchasers in respect of goods returned by them to the dealer when the goods are taxable on sales provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was made; (b) all amounts received from the sellers in respect of goods returned to them by the dealer, when the goods are taxable on the purchase value provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts Sales Tax [1957: KAR. ACT 25 show the date on which the goods were returned and the date on which and the amount for which refund was received; (viii) such amounts towards labour charges and other like charges not involving any transfer of property in goods, actually incurred in connection with the execution of works contract, or calculated at the rates prescribed; (ix) all amounts realized by a dealer by the sale of his business as a whole; (x) the total amount paid or payable by the dealer as a consideration for the purchase of any of the goods in respect of which tax is leviable at the point of sale; (xi) the total amount paid or payable to the dealer as a consideration for the sale of any of the goods in respect of which tax is leviable at the point of purchase; Provided further that, save as otherwise provided in this sub- Section, no other deduction shall be made from the total turnover of a dealer for the purposes of this Section. (2) The provisions of this Act and the rules made thereunder shall, so far as may be, apply in relation to the assessment, collection or refund of the resale tax, as they apply in relation to the assessment, collection or refund of tax under the other provisions of this Act.] again substituted by Act, 5 of 2002 w.e.f. 1.4.2002. 1[6BB. x x x] 1[6-C. Levy of additional tax.- Every registered dealer and every dealer who is liable to get himself registered under sub-sections (1) and (2) of section 10 whose total turnover in a year is not less than the turnovers specified in the said sub-sections, shall be liable to pay tax at the rate of one per cent of such portion of the total turnover which is liable to tax under 1. Inserted by Act 16 of 1975 w.e.f. 1.4.1975 and Substituted by Act, 13 of 1982 w.e.f. 29.3.1981 and 1. Inserted by Act 18 of 1994 w.e.f. 1.4.1994 and omitted by Act 1 of 1996 w.e.f. 13.10.1995. section 5, 5-B, 5-C or 6. Provided that no tax under this section shall be payable on that part of such turnover which relates to,- (i) sale or purchase of goods specified in the Fifth Schedule; (ii) sale or purchase of goods in the course of interstate trade or commerce; (iii) sale or purchase of goods in the course of export out of the territory of India or sale or purchase in the course of import into the territory of India; (iv) all amounts collected by way of tax under the provisions of this Act or the Central Sales Tax Act, 1956 (Central Act 74 of 1956); (v) all amounts falling under the head ‘Freight‘, when specified and charged for by the dealer separately without including such amounts in the price of the goods sold; 1957: KAR. ACT 25] Sales Tax (vi) all amounts allowed as discount, provided that such discount is allowed in accordance with the regular practice of the dealer or is in accordance with the terms of a contract or agreement entered into a particular case and provided also that the accounts show that the purchaser has paid only the sum originally charged less discount; (vii) (a) all amounts allowed to purchaser in respect of goods returned by them to the dealer when the goods are taxable on sales provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was made; (b)all amounts received from the sellers in respect of goods returned to them by the dealer, when the goods are taxable on the purchase value provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was received; (viii) such amounts towards labour charges and other like charges not involving any transfer of property in goods, actually incurred in connection with the execution of works contract, or calculated at the rates prescribed; (ix) all amounts realized by a dealer by the sale of his business as a whole; (x) the total amount paid or payable by the dealer as a consideration for the purchase of any of the goods in respect of which tax is leviable at the point of sale; (xi) the total amount paid or payable to the dealer as a consideration for the sale of any of the goods in respect of which tax is leviable at the point of purchase; Provided further that, save as otherwise provided in this section, no other deduction shall be made from the total turnover of a dealer for the purposes of this Section. (2) The provisions of this Act and the rules made thereunder shall, so far as may be, apply in relation to the assessment, collection or refund of the additional tax, as they apply in relation to the assessment, collection or refund of tax under the other provisions of this Act.] of 2003 w.e.f. 1.6.2003. 1[6-D. Levy of road cess.- (1) In addition to the tax payable under 1. Inserted by Act 13 of 1994 and omitted by Act 7 of 1997 w.e.f. 1.4.1997 and again Inserted by Act 30 section 5 or 5-A or 5-B or 5-C or 6, there shall be levied and collected by way of cess for the purpose of establishing a Road Maintenance Fund, a tax on sale or purchase effected by any dealer, at the rate of ten per cent of tax payable under the said sections: Sales Tax [1957: KAR. ACT 25 Provided that no tax shall be payable under this section on sale or purchase in respect of which no tax is payable under section 5 or 5-A or 5-B or 5-C or 6. (2) Nothing contained in this section shall apply to the goods specified in the Fourth Schedule. (3) The provision of this Act and the rules made thereunder, shall so far as may be apply in relation to the levy, assessment, collection or refund of the cess, as they apply in relation to the levy, assessment, collection or refund of tax under the other provisions of this Act. 6-E. Levy of infrastructure cess.- (1) In addition to the tax payable under section 5 or 5-A or 5-B or 5-C or 6, there shall be levied and collected by way of cess for the purpose of various infrastructure projects across the State, equity investment in Bangalore Mass Rapid Transit Limited and establishing a Mukhya Manthri Grameena Rasthe Abhivruddhi Nidhi in the proportion of 57:28:15 respectively, a tax, on sale or purchase effected by any dealer, at the rate of five per cent of tax payable under the said sections: Provided that no tax shall be payable under this section on sale or purchase in respect of which no tax is payable under section 5 or 5-A or 5-B or 5-C or 6. (2) Nothing contained in this section shall apply to the goods specified in the Fourth Schedule. (3) The provision of this Act and the rules made thereunder, shall so far as may be apply in relation to the levy, assessment, collection or refund of the cess, as they apply in relation to the levy, assessment, collection or refund of tax under other provisions of this Act.] 1. Sections 6-D and 6-E Inserted by Act 2 of 2004 w.e.f. 1.2.2004 .

1. (i) either consumes such goods in the manufacture of other goods for sale or otherwise 2[or consumes otherwise,] or disposes of such goods in any manner other than by way of sale in the State, or
2. (ii) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under section 5: Provided that this section shall not apply,— 3[(i) in respect of sale or purchase of goods specified in the Fourth Schedule,—

1. (a) which are taxable at the point of purchase; and
2. (b) which have already been subjected to tax under sub-section (4) of section 5.]
   • (ii) in respect of sale or purchase of goods specified in the Second Schedule which have already been subject to tax under clause (a) of sub-section (3) of section 5.] 1[Provided further that no tax shall be payable under this section on the purchase of sowing seeds]

¹ Substituted by Act 9 of 1970 w.e.f. 1.4.1970.

² Inserted by Act 8 of 1989 w.e.f. 8.9.1988.

³ Substituted by Act 78 of 1976 w.e.f. 7.12.1976.

¹ Inserted by Act 7 of 2003 w.e.f. 1.4.1999.

Sales Tax [1957: KAR. ACT 25

1[x x x] 1. Clauses (iia), (iii), (iv), (v) and proviso inserted and omitted by Acts 6 of 1995, 27 of 1985 and 14 of 1987 w.e.f. different dates.

¹ Inserted by Act 8 of 1989 w.e.f. 1.4.1970.

1[Explanation.— For the purpose of this section "consumes such goods in the manufacture" shall include goods consumed for ancillary purposes in or for such manufacture.]

1[6-A. Burden of proof.- (1) For purposes of assessment of tax under this Act, the burden of proving that any transaction or any turnover of a dealer is not liable to tax shall lie on such dealer.

1. (2) Notwithstanding anything contained in this Act or in any other law, a dealer in any of the goods liable to tax in respect of the first sale or first purchase in the State shall be deemed to be the first seller or first purchaser, as the case may be, of such goods and shall be liable to pay tax accordingly on his turnover of sales or purchases, relating to such goods, unless he proves that the sale or purchase, as the case may be, of such goods had already been subjected to tax under this Act.] 1[Provided that where goods liable to tax are iron and steel mentioned in serial number 2 of the Fourth Schedule, oil seeds mentioned in serial number 5 of the Fourth Schedule, bauxite, chromite, iron, manganese and other ores mentioned in serial number 1 of Third Schedule or hydrogenated oils and cooking medium mentioned in serial number 1 of Part `E' of Second Schedule, 2[or any other goods liable to tax as may be notified by the Commissioner] every dealer in such goods shall furnish a declaration duly filled and signed by the registered dealer from whom such goods are purchased containing the prescribed particulars in a prescribed form obtained from the assessing authority to prove that the sale or purchase, as the case may be, of such goods had already been subjected to tax and the seller of such goods shall issue the declaration to the buying dealer;] 1[Provided further that, in respect of any assessments other than an assessment already completed, for the years ending Thirty First day of March, 1996 and Thirty First day of March 1997, the buying dealer may prove, in the prescribed manner, that the goods purchased have already been subjected to tax notwithstanding his failure to furnish the declaration specified.] 1. Deemed always been Inserted by Act 5 of 2002 w.e.f. 1.10.1957. 1[(3) Where a dealer knowingly issues or produces a false bill, voucher, declaration, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him or any other dealer, is not liable to be taxed, 2[or liable to tax at a lower rate] the assessing authority shall, on detecting such issue or production, direct the dealer issuing or producing such document to pay as penalty,—
   • (i) in the case of first such detection, three times the tax due in respect of such transaction; and 1957: KAR. ACT 25] Sales Tax
   • (ii) in the case of second or subsequent detection, five times the tax due in respect of such transaction: Provided that before issuing any direction for the payment of the penalty under this section, the assessing authority shall give to the dealer an opportunity of making representation against the levy of such penalty.] 1[Provided further that no penalty shall be levied under this Section after a period of eight years from the close of the year to which the transaction relates] 1[6-B. Levy of resale tax.- Every registered dealer and every dealer who is liable to get himself registered under sub-Sections (1) and (2) of Section 10 whose total turnover in a year is not less than the turnovers specified in the said sub-Sections, shall be liable to pay tax at the rate of one and half per cent of such portion of the total turnover which is not liable

¹ Inserted by Act 9 of 1964 w.e.f. 1.10.1957.

¹ Inserted by Act 6 of 1995 w.e.f. 1.4.1995.

² Inserted by Act 15 of 1996 w.e.f. 5.9.1996.

¹ Inserted by Act 23 of 1983 w.e.f. 18.11.1983.

² Inserted by Act 18 of 1994 w.e.f. 18.11.1983.

¹ Inserted by Act 26 of 2004 w.e.f. 1.8.2004.

to tax under Sections 5, 5-A, 5-B, 5-C or 6.

Provided that no tax under this sub-Section shall be payable on that part of such turnover which relates to,-

1. (i) sale or purchase of goods specified in the Fifth Schedule;
2. (ii) sale or purchase of goods in the course of interstate trade or commerce;
3. (iii) sale or purchase of goods in the course of export out of the territory of India or sale or purchase in the course of import into the territory of India;
4. (iv) all amounts collected by way of tax under the provisions of this Act or the Central Sales Tax Act, 1956 (Central Act 74 of 1956);
5. (v) all amounts falling under the head `Freight`, when specified and charged for by the dealer separately without including such amounts in the price of the goods sold;
6. (vi) all amounts allowed as discount, provided that such discount is allowed in accordance with the regular practice of the dealer or is in accordance with the terms of a contract or agreement entered into a particular case and provided also that the accounts show that the purchaser has paid only the sum originally charged less discount;
7. (vii) (a) all amounts allowed to purchasers in respect of goods returned by them to the dealer when the goods are taxable on sales provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was made;

1. (b) all amounts received from the sellers in respect of goods returned to them by the dealer, when the goods are taxable on the purchase value provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts

Sales Tax [1957: KAR. ACT 25 show the date on which the goods were returned and the date on which and the amount for which refund was received;

1. (viii) such amounts towards labour charges and other like charges not involving any transfer of property in goods, actually incurred in connection with the execution of works contract, or calculated at the rates prescribed;
2. (ix) all amounts realized by a dealer by the sale of his business as a whole;
3. (x) the total amount paid or payable by the dealer as a consideration for the purchase of any of the goods in respect of which tax is leviable at the point of sale;
4. (xi) the total amount paid or payable to the dealer as a consideration for the sale of any of the goods in respect of which tax is leviable at the point of purchase; Provided further that, save as otherwise provided in this sub- Section, no other deduction shall be made from the total turnover of a dealer for the purposes of this Section.

1. (2) The provisions of this Act and the rules made thereunder shall, so far as may be, apply in relation to the assessment, collection or refund of the resale tax, as they apply in relation to the assessment, collection or refund of tax under the other provisions of this Act.] again substituted by Act, 5 of 2002 w.e.f. 1.4.2002. 1[6BB. x x x] 1[6-C. Levy of additional tax.- Every registered dealer and every dealer who is liable to get himself registered under sub-sections (1) and (2) of section 10 whose total turnover in a year is not less than the turnovers specified in the said sub-sections, shall be liable to pay tax at the rate of one per cent of such portion of the total turnover which is liable to tax under

¹ Inserted by Act 16 of 1975 w.e.f. 1.4.1975 and Substituted by Act, 13 of 1982 w.e.f. 29.3.1981 and

¹ Inserted by Act 18 of 1994 w.e.f. 1.4.1994 and omitted by Act 1 of 1996 w.e.f. 13.10.1995.

such turnover which relates to,-

1. (i) sale or purchase of goods specified in the Fifth Schedule;
2. (ii) sale or purchase of goods in the course of interstate trade or commerce;
3. (iii) sale or purchase of goods in the course of export out of the territory of India or sale or purchase in the course of import into the territory of India;
4. (iv) all amounts collected by way of tax under the provisions of this Act or the Central Sales Tax Act, 1956 (Central Act 74 of 1956);
5. (v) all amounts falling under the head ‘Freight‘, when specified and charged for by the dealer separately without including such amounts in the price of the goods sold; 1957: KAR. ACT 25] Sales Tax
6. (vi) all amounts allowed as discount, provided that such discount is allowed in accordance with the regular practice of the dealer or is in accordance with the terms of a contract or agreement entered into a particular case and provided also that the accounts show that the purchaser has paid only the sum originally charged less discount;
7. (vii) (a) all amounts allowed to purchaser in respect of goods returned by them to the dealer when the goods are taxable on sales provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was made; (b)all amounts received from the sellers in respect of goods returned to them by the dealer, when the goods are taxable on the purchase value provided that the goods were returned within a period of six months from the date of delivery of the goods and the accounts show the date on which the goods were returned and the date on which and the amount for which refund was received;
8. (viii) such amounts towards labour charges and other like charges not involving any transfer of property in goods, actually incurred in connection with the execution of works contract, or calculated at the rates prescribed;
9. (ix) all amounts realized by a dealer by the sale of his business as a whole;
10. (x) the total amount paid or payable by the dealer as a consideration for the purchase of any of the goods in respect of which tax is leviable at the point of sale;
11. (xi) the total amount paid or payable to the dealer as a consideration for the sale of any of the goods in respect of which tax is leviable at the point of purchase;

Provided further that, save as otherwise provided in this section, no other deduction shall be made from the total turnover of a dealer for the purposes of this Section.

1. (2) The provisions of this Act and the rules made thereunder shall, so far as may be, apply in relation to the assessment, collection or refund of the additional tax, as they apply in relation to the assessment, collection or refund of tax under the other provisions of this Act.] of 2003 w.e.f. 1.6.2003. 1[6-D. Levy of road cess.- (1) In addition to the tax payable under

¹ Inserted by Act 13 of 1994 and omitted by Act 7 of 1997 w.e.f. 1.4.1997 and again Inserted by Act 30

section 5 or 5-A or 5-B or 5-C or 6, there shall be levied and collected by way of cess for the purpose of establishing a Road Maintenance Fund, a tax on sale or purchase effected by any dealer, at the rate of ten per cent of tax payable under the said sections:

Sales Tax [1957: KAR. ACT 25

Provided that no tax shall be payable under this section on sale or purchase in respect of which no tax is payable under section 5 or 5-A or 5-B or 5-C or 6.

1. (2) Nothing contained in this section shall apply to the goods specified in the Fourth Schedule.
2. (3) The provision of this Act and the rules made thereunder, shall so far as may be apply in relation to the levy, assessment, collection or refund of the cess, as they apply in relation to the levy, assessment, collection or refund of tax under the other provisions of this Act.

6-E. Levy of infrastructure cess.- (1) In addition to the tax payable under section 5 or 5-A or 5-B or 5-C or 6, there shall be levied and collected by way of cess for the purpose of various infrastructure projects across the State, equity investment in Bangalore Mass Rapid Transit Limited and establishing a Mukhya Manthri Grameena Rasthe

Abhivruddhi Nidhi in the proportion of 57:28:15 respectively, a tax, on sale or purchase effected by any dealer, at the rate of five per cent of tax payable under the said sections: Provided that no tax shall be payable under this section on sale or purchase in respect of which no tax is payable under section 5 or 5-A or 5-B or 5-C or 6.

1. (2) Nothing contained in this section shall apply to the goods specified in the Fourth Schedule.
2. (3) The provision of this Act and the rules made thereunder, shall so far as may be apply in relation to the levy, assessment, collection or refund of the cess, as they apply in relation to the levy, assessment, collection or

refund of tax under other provisions of this Act.]

1. Sections 6-D and 6-E Inserted by Act 2 of 2004 w.e.f. 1.2.2004 .

The tax under this Act shall be levied on any transaction of sale or purchase deemed to take place inside the State under this Act or any other law for the time being in force. 1. Substituted by Act 26 of 1962 w.e.f. 1.10.1957. 1[The provisions of this Act relating to taxation on sales or purchases inside the State only at a single point or only at one or more stages apply to sales or purchases inside the State.]

¹ Substituted by Act 26 of 1962 w.e.f. 1.10.1957.

1[The provisions of this Act relating to taxation on sales or purchases inside the State only at a single point or only at one or more stages apply to sales or purchases inside the State.]

1[(1)] No tax shall be payable under this Act on the sale of goods specified in the Fifth Schedule subject to the conditions and exceptions, if any, set out therein. 1. Re-numbered by Act 9 of 1958 w.e.f. 14.12.1957.

¹ Inserted by Act 9 of 1958 w.e.f. 14.12.1957 & omitted by Act 7 of 1966 w.e.f. 1.4.1966.

1[(2) x x x]

¹ Inserted by Act 12 of 1961 w.e.f. 1.3.1961 & omitted by Act 7 of 1966 w.e.f. 1.4.1966.

1[(3) x x x]

1[8-A. Power of State Government to notify exemptions and reductions of tax.- (1) The State Government may, by notification, make an

1957: KAR. ACT 25] Sales Tax exemption, or reduction in rate,

¹ Inserted by Act 16 of 1967 w.e.f. 1.1.1968 by notification. Text of Notification is at the end of the Act.

2[xxx] in respect of any tax payable under this Act,— 2. Deemed to have been Inserted w.e.f. 1.4.2000 and omitted by Act 5 of 2001 w.e.f. 1.4.2001.

1. (a) on the sale or purchase of any specified goods or class of goods, at all points in the series of sales by successive dealers; or
2. (b) by any specified class of persons, in regard to the whole or any part of their turnover; 1[or] 1[(c) on the sale or purchase of any specified class of goods by any specified class of dealers in regard to the whole or part of their turnover.]

¹ Inserted by Act 27 of 1985 w.e.f. 1.8.1985.

¹ Inserted by Act 27 of 1985 w.e.f. 1.8.1985.

1. (2) Any exemption from tax or reduction in the rate of tax, notified under sub-section (1) may be subject to such restrictions and conditions as may be specified in the notification. 1[(2A) The State Government may, by notification, transpose any entry or part thereof from one schedule to another schedule and alter the point of levy of sale or purchase, but not so as to enhance the rate of tax in any case: Provided that where the point of levy is altered under this sub- section in respect of any goods and if such goods have been subjected to tax under the unaltered entry, then such goods shall not be subjected to tax under the transferred entry.]
2. (3) The State Government may, by notification, cancel or vary any notification 2[xxx] issued under sub-section (1) 1[or sub-section (2-A)] . 3[Provided that where Government has withdrawn the scheme of giving exemption of tax to any class or category of new investors in general by way of general or special order and in pursuant to such order, the Government may, by notification, withdraw such exemption including exemption granted by special order, if any, from a retrospective date. However, such date shall not be beyond the date of such general or special order.] 2. Deemed to have been Inserted w.e.f. 1.4.2000 and omitted by Act 5 of 2001 w.e.f. 1.4.2001. 1[(3A) x x x] 1[Proviso x x x]
3. (4) If any restriction or condition specified under sub-section (2) is contravened or is not observed by a dealer, the sales or purchases of such dealer may, with effect from the commencement of the year in which such

¹ Inserted by Act 16 of 1989 w.e.f. 1.4.1989.

¹ Inserted by Act 16 of 1989 w.e.f. 1.4.1985.

³ Inserted by Act 5 of 2007 w.e.f. 1.1.2000.

¹ Inserted by Act 7 of 1981 w.e.f. 1.1.1968 & omitted by Act 8 of 1984 w.e.f. 1.4.1984.

¹ Inserted by Act 10 of 1983 w.e.f. 1.4.1983 & omitted by Act 8 of 1984 w.e.f. 1.4.1984.

Sales Tax [1957: KAR. ACT 25 contravention or non-observance took place, be assessed to tax or taxes under the appropriate provisions of this Act as if the provisions of the notification under sub-section (1) did not apply to such sales or purchases.]

1[(5)(a) Where any restriction or condition specified under subsection

1. (2) in respect of goods taxable at the point of sale is contravened or is not observed by the purchaser of such goods, notwithstanding that such a purchaser is not a dealer or that the sale value of such goods is less than the turnover specified in sub-section (5) of section 5, such purchaser shall be liable to pay an amount equal to the difference between the tax payable at the rates specified under the Act and the tax paid at the rates specified under the notification on the goods purchased in respect of which such contravention or non-observance has taken place, as if the provision of the notification under sub-section (1) did not apply to such purchases and in addition, such purchaser shall also be liable to pay by way of penalty a sum 2[not less than one half but] not exceeding the amount equivalent to the amount of tax leviable on the sale price of such goods. 1[(aa) Where the purchaser is a registered dealer, the assessing

¹ Inserted by Act 4 of 1992 w.e.f. 1.4.1992.

² Inserted by Act 5 of 2002 w.e.f. 1.4.2002.

authority of such purchaser and in other cases the Assistant Commissioner of Commercial Taxes of the area or any officer empowered under sub- section (1) of Section 28, may levy penalty under this sub-section.” Provided that no penalty shall be levied under this sub-section after a period of eight years from the close of the year to which the purchase relates.]

¹ Inserted by Act 26 of 2004 w.e.f. 1.8.2004.

1. (b) The difference of the tax amount and the penalty levied under this sub-section shall be recovered in the manner specified under section 13.] 1[(6) Any notification issued under sub-section (1) or sub-section (2-A) shall be valid until it is cancelled under sub-section (3), notwithstanding that the tax payable in accordance with such notification in respect of any specified goods or class of goods or by any specified class of persons or on the sale or purchase of any specified class of goods by any specified class of dealers, is modified by an amendment to this Act.] 1[Explanation.- x x x]

¹ Inserted by Act 5 of 1993 w.e.f. 1.4.1984.

¹ Inserted by Act 36 of 1986 w.e.f. 8.5.1975 & omitted by the same Act w.e.f. 1.4.1984.

In the case of any person carrying on the business of buying or selling goods

1[or of transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract or of delivery of goods on hire purchase or any system of payment of instalments or of transfer of the right to use any goods for any purpose]

in the

2[State of Karnataka]

(hereinafter in this section referred to as a "non-resident"), the provisions of

¹ Inserted by Act 27 of 1985 w.e.f. 1.8.1985.

1957: KAR. ACT 25] Sales Tax this Act shall apply subject to the following modifications and additions, namely:— 2. Adapted by the Karnataka Adaptation of Laws Order, 1973 w.e.f. 1.11.1973.

1. (i) In respect of the business of the non-resident, his manager or agent residing in the 1[State of Karnataka] shall be deemed to be the dealer; 1. Adapted by the Karnataka Adaptation of Laws Order, 1973 w.e.f. 1.11.1973.
2. (ii) The manager or agent of a non-resident shall be assessed to tax under this Act at the rate or rates leviable thereunder in respect of the business of such non-resident in which the manager or agent is concerned, irrespective of the amount of the turnover of such business being less than the minimum specified in sub-section (5) of section 5 1[or section 6B;]
3. (iii) Without prejudice to his other rights, any manager or agent of a non-resident who is assessed under this Act in respect of the business of such non-resident may retain out of the moneys payable to the non-resident by the manager or agent a sum equal to the amount of tax assessed on or paid by the manager or agent.

¹ Inserted by Act 13 of 1982 w.e.f. 1.4.1982