Chapter V Chapter V

Returns, assessment, payment, recovery, composition and collection of tax

1[(1) Notwithstanding anything contained in section 12-B, every registered dealer and every dealer who is liable to get himself registered under sub-section (1) or (2) of section 10, shall submit such return or returns relating to his turnover, in such manner and within such period as may be prescribed.]

2[Provided that nothing contained in this sub-section shall apply to a dealer who is registered under the Karnataka Value Added Tax Act, 2003 (Karnataka Act 32 of 2004) and who is not a dealer in petrol, diesel, aviation turbine fuel, lottery tickets and sugarcane.]

3[Provided that the specified class of dealers as may be notified by the Commissioner shall submit the return in the prescribed form, electronically through internet in the manner specified in the said notification.]

¹ Substituted by Act 8 of 1990 w.e.f. 1.4.1990.

³ Inserted by Act 5 of 2010 w.e.f.01.04.2010.

2. Deemed to have been inserted w.e.f. 1.4.2005 by Act 5 of 2006.

1[(1A) Before any dealer submits any return under sub-section (1), he shall, in the prescribed manner, pay in advance the full amount of tax payable by him on the basis of such return as reduced by any tax already paid under section 12B and shall furnish along with the return satisfactory proof of the payment of such tax,

2[and the tax so payable shall for the purposes of section 13 be deemed to be the tax due under this Act from such dealer] . After the final assessment is made, the amount of tax so paid shall be deemed to have been paid towards the tax finally assessed.]

Sales Tax [1957: KAR. ACT 25

3[Provided that the specified class of dealers as may be notified by the Commissioner shall pay the tax payable on the basis of the return under sub-section (1), by electronic remittance through internet in the manner specified in the said notification.]

¹ Inserted by Act 5 of 1972 w.e.f. 14.8.1972.

² Inserted by Act 8 of 1984 w.e.f. 1.4.1984.

³ Inserted by Act 5 of 2010 w.e.f.1.4.2010.

1[(1-B) If default is committed in the payment of full amount of tax payable in advance for any year as reduced by any amount of tax already paid under Section 12B, beyond thirty days after the close of the year, whether or not a return as required under sub-section (1) is filed; or if the amount of tax paid is less than the amount of tax so payable, the dealer defaulting payment of tax or making short payment of tax shall, in addition to the tax, pay interest calculated at the rate of two per cent per month from the thirty first day to the date of payment of such tax or upto the date specified for payment of tax assessed under section 12, as the case may be.]

¹ Inserted by Act, 5 of 2001 w.e.f. 1.4.2001.

1. (2) If the assessing authority is satisfied that any return submitted under sub-section (1) is correct and complete, he shall assess the dealer on the basis thereof.
2. (3) If no return is submitted by the dealer under sub-section (1) before the date prescribed or specified in that behalf, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall assess the dealer to the best of his judgment, recording the reasons for such assessment: Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of proving the correctness and completeness of the return submitted by him. 1[(4) When making an assessment under sub-section (3), the assessing authority may also direct the dealer to pay in addition to the tax assessed, a penalty,— 1. Sub-sections (4), (5), (6) and (7) substituted by Act 27 of 1985 w.e.f. 1.8.1985.
   • (a) not exceeding 1[an amount equivalent to the tax due] 2[but not less than one half of] the amount of tax due on the turnover that was not disclosed by the dealer in his return; or
   • (b) not exceeding 1[an amount equivalent to the tax due] the tax assessed in the case of failure to submit a return; or
   • (c) not exceeding 1[an amount equivalent to the tax due] 2[but not less than one half of] the amount of tax due on the turnover which in the opinion of the assessing authority would not have been disclosed voluntarily 1957: KAR. ACT 25] Sales Tax by the dealer in his return if such turnover was not noticed by any of the authorities empowered under this Act. 1[Provided that no penalty shall be levied on any turnover that has been subject to penalty under sub-section (3-A) of Section 12-B.]
3. (5) No assessment under this section for any year shall be made after a period of 1[three years] from the date on which the return under sub- section (1) for that year is submitted by a dealer: 1[ 2[Provided that assessment proceedings relating to any year ending before the date of commencement of the Karnataka Taxation Laws (Amendment) Act, 1997 in respect of which a return under sub-section (1) has been submitted before such commencement, shall be completed within a period of 3[three years] from the date of such commencement.] Provided further that nothing in this sub-section limiting the time within which assessment may be made, shall apply to an assessment made in consequence of, or to give effect to, any findings, directions or orders made under section 20, 21, 22 or 22A or any judgment or order made by any Court.] 1. Provisos inserted by Act 8 of 1989 w.e.f. 1.8.1985. 2. Proviso substituted by Act 7 of 1997 w.e.f. 1.4.1997.
4. (6) In computing the period of limitation for assessment under this section,—
   • (a) the time during which the proceedings for assessment in question have been deferred on account of any stay order granted by any Court or any other authority shall be excluded;
   • (b) the time during which the assessment has been deferred inanycaseor class of casesby the 1[JointCommissioner] for reasons to be recorded in writing shall be excluded: 1[(c) in the case of a dealer who has been issued with eligibility certificate extending tax concessions under any of the package of incentives and concessions offered by the State and where such certificate issued is under dispute and such dispute has been referred to the authority constituted to resolve such disputes or the authority issuing such certificate, the time taken in such case to resolve such dispute shall be excluded.] 1[Provisos x x x]

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

² Inserted by Act 4 of 1999 w.e.f. 1.4.1999.

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

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

² Inserted by Act 4 of 1999 w.e.f. 1.4.1999.

¹ Inserted by Act 5 of 2001 w.e.f. 1.4.2001.

¹ Substituted by Act 4 of 1999 w.e.f. 1.4.1997.

³ Substituted by Act 4 of 1999 w.e.f. 1.4.1997.

¹ Substituted by Act 5 of 1996 w.e.f. 1.4.1996.

¹ Inserted by Act 5 of 2000 w.e.f. 1.4.1997.

¹ Omitted by Act 8 of 1989 w.e.f. 1.8.1985.

Sales Tax [1957: KAR. ACT 25

¹ Substituted by Act 8 of 1989 w.e.f. 1.8.1985.

1[(7) Where an assessment under this section is not concluded within the time specified in sub-section (5), the total and the taxable turnover declared by a dealer in his annual return shall be deemed to have been assessed for that year on the basis of the said return and the provisions of this Act relating to assessment of escaped turnover, payment and recovery, appeal and revision shall mutatis mutandis apply to such deemed assessment.] ]

1[12-A. Assessment of escaped turnover.-

2[(1) If the assessing authority has reason to believe that the whole or any part of the turnover of a dealer in respect of any period has escaped assessment to tax or has been under- assessed or has been assessed at a rate lower than the rate at which it is assessable under this Act or any deductions or exemptions have been wrongly allowed in respect thereof, the assessing authority may, notwithstanding the fact that the whole or part of such escaped turnover was already before the said authority at the time of the original assessment or re- assessment but subject to the provisions of sub-section (2), at any time within a period of

3[eight years] from the expiry of the year to which the tax relates, proceed to assess or re-assess to the best of its judgment the tax payable by the dealer in respect of such turnover after issuing a notice to the dealer and after making such enquiry as it may consider necessary.]

² Substituted by Act 10 of 1983 w.e.f. 1.4.1983.

³ Substituted by Act 15 of 1988 w.e.f. 1.4.1988.

1. Section 12A inserted by Act 9 of 1970 w.e.f. 1.10.1957.

(1-A) In making an assessment under sub-section (1) the assessing authority may, if it is satisfied that the escape from assessment is due to wilful non-disclosure of assessable turnover by the dealer, direct the dealer to pay, in addition to the tax assessed under sub-section (1), a penalty not exceeding

1[an amount equivalent to the tax but not less than one half of]

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

the tax so assessed: Provided that no penalty under this sub-section shall be imposed unless the dealer affected has had a reasonable opportunity of showing cause against such imposition.

1. (2) In computing the period of limitation for assessment of the escaped turnover under this section, the time during which an assessment has been deferred on account of any stay order granted by any Court or other authority in any case, or by reason of the fact that an appeal or other proceeding is pending before the Appellate Tribunal or the High Court or the Supreme Court, shall be excluded: Provided that nothing contained in this section limiting the time within which any action may be taken or any order, assessment or re-assessment may be made, shall apply to an assessment or re-assessment made on the assessee or any person in consequence of, or to give effect to, any finding, direction or order made under section 20, 21, 22, 1[22A] , 23 or 24 or any judgment, or order made by the Supreme Court, the High Court, or any other Court.] 1957: KAR. ACT 25] Sales Tax

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

1[12-AA. Assessment in cases of price variation or price revision.- (1)

Notwithstanding anything contained in sub-section (1) of section 12A,—

1. (a) If a dealer receives or pays in any year any amount due to price variations or price revisions which would have been included in his turnover for any previous year, if it had been received or paid during that year he shall, within thirty days from the date on which such amount is received or paid submit a return in the prescribed form to the assessing authority and pay the full amount of tax payable by him 2[at such rate as was applicable during such previous year on such turnover] : 1. Section 12AA inserted by Act 27 of 1985 w.e.f. 1.8.1985. Provided that if the amount so received or paid in any year relates to two or more previous years, separate returns shall be submitted for each such year.
2. (b) If the assessing authority is satisfied that any return submitted under clause (a) is correct and complete, he shall assess the dealer on the basis thereof;
3. (c) If the return submitted by a dealer under clause (a) appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such inquiry as he may consider necessary and after taking into account all relevant materials gathered by him, assess the dealer to the best of his judgment: Provided that before taking action under this clause the dealer shall be given a reasonable opportunity to prove the correctness and completeness of the return:

² Substituted by Act 4 of 1992 w.e.f. 1.4.1992.

1. (2) In making an assessment under this section the assessing authority may also direct the dealer to pay in addition to the tax assessed, a penalty not exceeding one and a half times the amount of tax due on the turnover not disclosed by the dealer in his return or in the case of failure to submit the return, a penalty not exceeding one and a half times the tax assessed as the case may be: Provided that no penalty under this sub-section shall be imposed unless the dealer affected has had a reasonable opportunity of showing cause against such imposition.] 1[12-B. Payment of tax in advance.- 2[(1) Subject to such rules as may be prescribed, every dealer shall send every month 6[xxx] a statement containing such particulars as may be prescribed including the taxable turnover during the preceding month and shall pay in advance the full amount of 3[tax payable by him 4[under this Act within twenty days after the close of the preceding month to which such tax relates on the basis of the turnover particulars shown in the statement] ] and the amount so payable shall for the purposes of 5[x x x] section 13 be deemed to be an amount due under this Act from such dealer.] 1. Section 12B inserted by Act 12 of 1961 w.e.f. 8.6.1961 & substituted by Act 9 of 1970 w.e.f. 1.4.1970.

² Substituted by Act 5 of 1972 w.e.f. 14.8.1972.

³ Substituted by Act 7 of 1981 w.e.f. 4.4.1981.

⁴ Substituted by Act 27 of 1985 w.e.f. 1.8.1985.

⁵ Omitted by Act 23 of 1983 w.e.f. 18.11.1983.

⁶ Omitted by Act 26 of 2004 w.e.f. 1.8.2004.

Sales Tax [1957: KAR. ACT 25

1[

2[Provided that,—

1. (i) in the case of a dealer where payment by way of composition under sub-section (1) of section 17 is accepted, the provisions of sub- section (1) shall not apply; and
2. (ii) in the case of a dealer being a small scale industry registered with the Director of Industries and Commerce, Government of Karnataka, such dealer shall send such a statement in accordance with sub-section (1) but shall pay in advance the full amount of tax payable for every quarter within twenty days after the close of that quarter.] 3[(iii) in the case of a dealer whose total turnover in any year is not more than seven lakh fifty thousand rupees shall submit statements for each month in accordance with sub-section (1) once in a quarter and pay in advance the full amount of tax payable for every quarter within twenty days after the close of that quarter to which such tax relates.] Provided further that the full amount of tax payable by a dealer in advance for the year as reduced by the amount of tax already paid under this section shall be paid within thirty days after the close of the year to which such tax relates.] 1. Provisos inserted by Act 9 of 1986 w.e.f. 1.4.1986. 1[Provided also that where the tax payable for any quarter by a small scale industrial undertaking is not paid within thirty days after the close of the quarter to which such tax relates, such undertaking shall be liable to pay tax thereafter as provided under this sub-section excluding the first proviso.] 1[Provided also that nothing contained in this sub-section shall apply to a dealer who is registered under the Karnataka Value Added Tax Act, 2003 (Karnataka Act 32 of 2004) and who is not a dealer in petrol, diesel, aviation turbine fuel, lottery tickets and sugarcane.] 1. Deemed to have been inserted w.e.f. 1.4.2005 by Act 5 of 2006. 1[Provided also that the specified class of dealers as may be notified by the Commissioner shall submit the statement in the prescribed form, electronically through internet and also pay the tax payable on the basis of the statement, by electronic remittance through internet, in the manner specified in the said notification.] 1[(2) If default is committed in the payment of tax for any month or quarter as the case may be, beyond ten days, whether or not a statement as required under sub-section (1) is filed; or if the amount of tax paid is less than the amount of tax payable for any month or quarter as the case may be, the dealer defaulting payment of tax or making short payment of tax 1957: KAR. ACT 25] Sales Tax shall in addition to the tax, pay interest calculated at the rate of 3[one and a quarter per cent] per month from the date of such default or short payment to the date of payment of such tax 2[or upto the date specified for payment of tax assessed under section 12, as the case may be.] ] 1.4.2000. 1[ 2[(3)] If no such statement is submitted by a dealer under sub- section (1) before the date prescribed or if the statement submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority may assess the dealer provisionally for that month to the best of his judgment, recording the reasons for such assessment, and proceed to demand and collect the tax on the basis of such assessment : Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of being heard.] 2. Re-numbered by Act 7 of 1997 w.e.f. 1.4.1997. 1[(3A) When making assessment under sub-section (3), the assessing authority may also direct the dealer to pay in addition to tax assessed a penalty.-

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

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

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

¹ Inserted by Act 5 of 2010 w.e.f. 1.4.2010.

¹ Inserted by Act 7 of 1997 w.e.f. 1.4.1997 & substituted by Act 5 of 2000 w.e.f.

² Inserted by Act 5 of 2001 w.e.f. 1.4.2001.

³ Substituted by Act 11 of 2005 w.e.f. 1.4.2005

¹ Inserted by Act 7 of 1981 w.e.f. 4.4.1981.

1. (a) not exceeding one and a half times but not less than one half of the amount of tax due on turnover that was not disclosed by the dealer in his statement; or
2. (b) not exceeding one and half times the tax assessed in the case of failure to submit a statement.] 1[ 2[(4)] If at the end of the year it is found that the amount of tax paid in advance by any dealer for any month or quarter or for the whole year in the aggregate was less than the tax payable for that month or quarter or the tax for the whole year as finally assessed, as the case may be, by more than fifteen per cent, the assessing authority may direct such dealer to pay, in addition to the tax, a penalty 3[which shall not be less than one half of the tax so paid in short, but not exceeding 4[xxx] the amount by which the tax so paid fall short] of the tax payable for the month or quarter or for the whole year as the case may be:] 2. Re-numbered by Act 7 of 1997 w.e.f. 1.4.1997. Provided that no penalty under this sub-section shall be imposed unless the dealer affected has had a reasonable opportunity of showing cause against such imposition.] 1[Provided further that no penalty shall be levied under this sub-section after a period of eight years from the close of the year to which any tax paid in short relates.]

¹ Inserted by Act 5 of 2001 w.e.f. 1.4.2001.

¹ Substituted by Act 4 of 1999 w.e.f. 1.4.1999.

³ Substituted by Act 5 of 2000 w.e.f. 1.4.2000 and again substituted by Act 5 of 2001 w.e.f. 1.4.2001.

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

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

Sales Tax [1957: KAR. ACT 25

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

1[Explanation.— For the purpose of this section "quarter" means the period of three months ending on 31st day of May, 31st day of August, 30th day of November and 28th day (or 29th day) of February.]

1[12-C. Self-assessment in the case of certain dealers.-

1. (1) Notwithstanding anything contained in sub-section (3) of Section 12, the assessing authority in respect of any year commencing from the First day of April, 2000 shall assess a dealer engaged in,
   • (a) Selling of goods 1[whose total turnover in a year is not morethan fifty lakh rupees] on the basis of return submitted in accordance with sub-section (1) of section 12 without requiring his presence or production of books of accounts subject to the conditions that. -
     • (i) such goods do not include Cement sold by a first seller, Iron and Steel, Liquor including Beer, Wine and Fenny, Spirits and Alcohol;
     • (ii) such dealer is not an oil company or is engaged in the execution of any works contract;
     • (iii) such dealer has furnished declarations or certificates prescribed along with the return or within a period of six months from the close of the assessment year or before the completion of assessment proceedings whichever is later, in case of claim to exemption from tax or concessional rate of tax on turnovers relating to sales in terms of section 5-A or sales or purchases covered by notifications issued under section 8-A or 19C;
     • (iv) such dealer has furnished declarations or certificates prescribed along with the return or within a period of six months from the close of the assessment year or before the completion of assessment proceedings whichever is later, in case of claim to exemption from tax or concessional rate of tax or non-liability to tax on sales or purchases or despatches referred to in Central Sales Tax Act, 1956 (Central Act 74 of 1956).

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

¹ Inserted by Act 5 of 2002 w.e.f. 1.4.2002 and omitted by Act 26 of 2004 w.e.f. 1.8.2004.

1[(v) xxx]

1. (b) processing or manufacturing goods whose total turnover in any year is not more than 1[one hundred lakhs] , on the basis of return submitted in accordance with sub-section (1) of section 12 without requiring his presence or production of books of accounts subject to the conditions that.-
   • (i) such dealer has furnished declarations or certificates prescribed along with the return or within a period of six 1957: KAR. ACT 25] Sales Tax months from the close of the assessment year or before the completion of assessment proceedings whichever is later, in case of claim to exemption from tax or concessional rate of tax on turnovers relating to sales in terms of section 5-A or sales or purchases covered by notifications issued under section 8-A or 19C;
   • (ii) such dealer has furnished declarations or certificates prescribed along with the return or within a period of six months from the close of the assessment year or before the completion of assessment proceedings whichever is later, in case of claim to exemption from tax or concessional rate of tax or non-liability to tax on sales or purchases or dispatches referred to in Central Sales Tax Act, 1956 (Central Act 74 of 1956). 1[(iii) xxx]

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

¹ Inserted by Act 5 of 2002 w.e.f. 1.4.2002 and omitted by Act 26 of 2004 w.e.f. 1.8.2004.

1. (2) Where before completion of self-assessment, return submitted or any compliance furnished under sub-section (1) is found to involve mistake apparent on record, the assessing authority shall afford opportunity to the dealer to submit revised return or to rectify such mistake.
2. (3) Self-assessment under sub-section (1) shall not be made in respect of a dealer for any year if;
   • (i) the return filed or any compliances furnished as required by sub-section (1) for any year is incomplete or incorrect or defective, save for mistakes apparent on record;
   • (ii) it is found that the dealer attempted to conceal any turnover to evade tax, for that year;
   • (iii) the dealer has ceased to do any business or has closed down business, for that year.
3. (4) Notwithstanding anything contained in sub-section (1), the Commissioner shall, within a period of seventy five days from the close of the year to which the assessment relates, notify selection of cases for the purpose of scrutiny in entirety of the assessment records and in respect of such cases so found warranted, shall direct the assessing authority concerned to make assessment under sub-section (3) of Section 12.
4. (5) The assessing authority shall, within a period of sixty days from the date of notification of cases for the purpose of scrutiny assessment under sub-section (4), serve upon the dealer, notice as prescribed demanding payment of tax or issue order of refund as prescribed, on the basis of self-assessment or communicate initiation of proceedings of scrutiny assessment under sub-section (4).
5. (6) If on scrutiny assessment in cases falling under sub-section (4), it is found that the amount of tax paid by any dealer for any year was less than the tax payable for that year as assessed by more than fifteen per cent, the

Sales Tax [1957: KAR. ACT 25 assessing authority shall direct such dealer to pay, in addition to the tax, a penalty equivalent to three times the amount of the tax so paid in short.

1. (7) Every assessment completed under sub-section (1) shall be subject to the provisions of Sections 12-A, 21, 22-A and 25-A.] . 1. Section 12-C Inserted by Act 10 of 1983 w.e.f. 1.4.1983 and Substituted by Act, 7 of 1987 w.e.f. 1.4.1997 and again Substituted by Act, 5 of 2001 w.e.f 1.4.2001. 1[(8) Notwithstanding anything contained in this Section or Section 12, the Government may notify, subject to such conditions as may be specified, that assessment of any specified class of dealers for any year shall be deemed to have been made on the basis of the return submitted in accordance with sub-section (1) of Section 12 without requiring the presence of the dealer or production of books of account by the dealer.] 1[12-D. Cancellation of assessment in certain cases.- (1) Where an assessee within one month from the service of a notice of demand makes an application and satisfies the assessing authority that he was prevented by sufficient cause from appearing as required under section 12, or that he did not receive the notice issued under that section 2[x x x] the assessing authority shall cancel the assessment and proceed to make a fresh assessment in accordance with the provisions of section 12: 1[Provided that no application under this sub-section shall be entertained by the assessing authority if tax admitted in the return of turnover is not paid;]
2. (2) Nothing contained in sub-section (1) shall apply to an assessment which has been made the subject-matter of an appeal under section 20.
3. (3) No appeal shall lie under section 20 against an order passed under this section.
4. (4) Every order passed under this section shall, subject to the provisions of sections 22 to 24 and 25-A, be final.]

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

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

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

¹ Inserted by Act 18 of 1994 w.e.f. 1.4.1994.

1[12-E. Re-assessment in certain cases.- (1) Where an assessee within one year from the service of a notice of demand makes an application that failure to furnish declarations prescribed under Section 5-A prevented him from claiming the concessional rate of tax on sale of inputs, the assessing authority shall cancel the assessment and proceed to re-assess such assessee to the extent of claims made under Section 5-A. Provided that no application under this sub-section shall be entertained by the assessing authority if the tax assessed is not paid and the declarations prescribed under section 5-A are not furnished together with such application.

1957: KAR. ACT 25] Sales Tax

1. (2) Nothing contained in sub-section (1) shall apply to an assessment which has been made the subject – matter of an appeal under Section 20.
2. (3) No appeal shall lie under Section 20 against an order passed under this Section.
3. (4) Every order passed under this Section, shall subject to the provisions of Sections 22, 23, 24 and 25-A, be final.] Inserted by Act 5 of 2002 w.e.f. 1.4.2002. 1[12-F. Assessment of corporate bodies.- Notwithstanding anything contained in this Act, where a dealer is a body corporate and has more than one place of business, Commissioner may, subject to such conditions as may be prescribed and with the consent of the dealer, treat each of such places of business as a separate unit for the purposes of levy, assessment and collection of tax and thereupon all the provisions of this Act regarding registration, filing of returns, assessment and collection of tax, shall apply as if each of such places of business is a separate unit.]

¹ Inserted by Act 18 of 1994 w.e.f. 1.4.1994 and omitted by Act 5 of 2001 w.e.f. 1.4.2001 and again

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

1[(1) The Tax

under this Act shall be paid in such manner

3[in such

¹ Substituted by Act 32 of 1958 w.e.f. 1.1.1959.

² Inserted by Act 23 of 1983 w.e.f. 18.11.1983.

³ Substituted by Act 13 of 1982 w.e.f. 1.4.1982.

instalments, subject to such conditions, on payment of such interest] and within such time, as may be prescribed.]

1[Provided that where the amount paid falls short of the aggregate of the tax or any other amount due and interest payable, the amount so paid shall first be adjusted towards interest payable and the balance, if any, shall be adjusted towards the tax or any other amount due.]

¹ Inserted by Act 5 of 2001 w.e.f. 1.4.2001.

1[Provided further that the specified class of dealers as may be notified by the Commissioner shall pay the tax or any other amount due under this Act, by electronic remittance through internet in the manner specified in the said notification.]

¹ Inserted by Act 5 of 2010 w.e.f. 1.4.2010.

(2)

¹ Substituted by Act 32 of 1958 w.e.f. 1.1.1959.

1[If default is made in making payment in accordance with sub- section (1),] -

1. (i) the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax 1[or any other amount due] under this Act; and

¹ Inserted by Act 8 of 1984 w.e.f. 1.4.1984.

Sales Tax [1957: KAR. ACT 25

1[(ii) the person or persons liable to pay the tax

2[other than tax payable in advance for any year under sections 12 and 12B] or any other amount due under this Act shall pay a

3[interest] equal to

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

² Inserted by Act 5 of 2001 w.e.f. 1.4.2001.

³ Substituted by Act 5 of 2001 w.e.f. 1.4.2001.

⁴ Substituted by Act 11 of 2005 w.e.f. 1.4.2005

of the amount of tax or any other amount due remaining unpaid for each month after the expiry of the time specified under sub- section (1)]

1[Explanation

3[1] .— For purposes of clause (ii), the

2[interest]

¹ Inserted by Act 16 of 1967 w.e.f. 1.1.1968.

² Inserted by Act 5 of 2001 w.e.f. 1.4.2001.

payable for a part of a month shall be proportionately determined.]

3. Re-numbered by Act 5 of 2002 w.e.f. 1.4.2002.

1[Explanation – II. – For the purpose of this sub-Section non-

payment during any period during which recovery of any tax or other amount due under the Act is stayed by an order of any authority or Court in any appeal or other proceedings disputing such tax or amount, shall be deemed to be a ‘default’.]

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

1[(2A) Notwithstanding anything contained in sub-section (2),

2[where the amount of

3[interest] does not exceed rupees five lakh the Commissioner and in other cases the State Government] may, subject to such conditions as may be prescribed, remit the whole or any part of the

3[interest] payable in respect of any period by any person or class of persons.]

¹ Inserted by Act 3 of 1966 w.e.f. 1.3.1966.

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

³ Substituted by Act 5 of 2001 w.e.f. 1.4.2001.

1. (3) Any tax assessed, or any other amount due under this Act from a dealer 1[or any other person] may without prejudice to any other mode of collection be recovered—
   • (a) as if it were an arrear of land revenue, or 1[(aa) by attachment and sale or by sale without attachment of any property of such dealer or any other person by the assessing authority or the prescribed officer in accordance with such rules as may be prescribed;] 1[(aaa) as if it were an arrear of excise revenue under the Karnataka Excise Act, 1965 (Karnataka Act 21 of 1966) in the case of a dealer engaged in the manufacture or sale of liquor including beer, spirit and alcohol; or] Act. 1957: KAR. ACT 25] Sales Tax (b) 1[notwithstanding anything contained in 2[the Code of Criminal Procedure, 1973 (Central Act 2 of 1974)] , on application to any Magistrate] by such Magistrate as if it were a fine imposed by him: 1[Provided that where a dealer or other person who has appealed or applied for revision of any order made under this Act and has complied with an order made by the appellate or the revising authority in regard to the payment of the tax or other amount, no proceedings for recovery under this sub-section shall be taken or continued until the disposal of such appeal or application for revision.] 1[(4) The High Court may either suo motu or on an application by the Commissioner or any person aggrieved by the order revise any order made by a Magistrate under clause (b) of sub-section (3).] 1[13-A. Payment of interest.- Where any amount refundable to any person under an order made under any provision of this Act is not refunded to him within ninety days,—
   • (a) of the date of such order, if that order is made by the refunding authority; or
   • (b) of the date of receipt of such order by the refunding authority, if that order is made by an authority other than the refunding authority, the refunding authority shall pay such person simple interest at the rate of 1[six percent] per annum on the said amount from the day immediately following the expiry of the said ninety days to the day of the refund: Provided that the interest calculable shall be on the balance of the amount remaining after adjusting out of the refundable amount any tax, penalty or other amount due under this Act, for any year by the person on the date from which such interest is calculable. Explanation I.—If the delay or any part thereof in granting the refund within the aforesaid period of ninety days is attributable to the person to whom the refund is payable the period of such delay shall be excluded for the purpose of calculation of interest. Explanation II.—The expression "refunding authority" means an 1[Commercial Tax Officer] or 1[Assistant Commissioner of Commercial Taxes] or any other officer of the Commercial Taxes Department authorised to make any assessment or to levy penalty or both by or under this Act. Explanation III.—The interest payable for a part of a month shall be proportionately determined.]

¹ Inserted by Act 9 of 1970 w.e.f. 1.10.1957.

¹ Inserted by Act 5 of 1972 w.e.f. 14.8.1972.

¹ Inserted by Act 21 of 2000 w.e.f. 11.1.2001 by notification. Text of the notification is at the end of the

¹ Substituted by Act 7 of 1972 w.e.f. 29.9.1972.

² Substituted by Act 18 of 1978 w.e.f. 1.9.1978.

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

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

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

¹ Substituted by Act 5 of 1996 w.e.f. 1.4.1996 and again substituted by Act 26 of 2004 w.e.f. 1.8.2004.

¹ Substituted by Act 5 of 1993 w.e.f. 9.11.1992.

Sales Tax [1957: KAR. ACT 25

1[13-B. Power to withhold refund in certain cases.- (1) Where an order giving rise to refund is the subject-matter of an appeal or further proceeding or where any other proceeding under this Act is pending, and the authority competent to grant such refund is of the opinion that the grant of refund is likely to adversely affect the revenue, such authority may, with the previous approval of the Commissioner, withhold the refund till such time as the Commissioner may determine.

1. (2) Where a refund is withheld under sub-section (1), the State Government shall pay interest in accordance with section 13-A on the amount of refund ultimately determined to be due to the person as a result of the appeal or further proceeding, for the period from the date immediately following the expiry of ninety days from the date of the order referred to in sub-section (1) to the date of refund.] 1[13-C. Purchase by the State Government in auction of property.-
2. (1) When any immovable property is brought for sale by auction for recovery of any dues under this Act, then notwithstanding anything contained in this Act, the Deputy Commissioners of the Revenue District or any officer authorised by the State Government, subject to any general or special order of the State Government in this behalf, be entitled to bid at such auction and purchase the property on account of the State Government.
3. (2) Where any property is purchased by the State Government under sub- section (1), then, notwithstanding anything in the Karnataka Land Revenue Act, 1964 or any other law, it shall be lawful for the State Government to dispose of such property in such manner as it deems fit.
4. (3) The purchase and disposal of the property under this section shall not be questioned in any court of law.] 1[13-D. Special powers for recovery of amounts due to Government.- Notwithstanding anything contained in this Act and the rules made thereunder, where any tax payable under this Act by a dealer has been deferred under section 19-C and where such deferred tax has been converted into loan by the Department of Industries and Commerce, Government of Karnataka, and upon such amounts becoming due, the assessing authority or any other officer exercising powers under section 13 may recover such amounts from such dealer as if it were an amount due under this Act.]

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

¹ Inserted by Act 18 of 1994 w.e.f. 1.4.1994.

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

1[or penalty or any other amount] from certain other persons.- (1) The assessing authority may at any time or from time to time, by notice in writing (a copy of which shall be forwarded to the dealer at his last address known to the assessing authority) require any person from whom money is due or may become due to the dealer or any person who holds or may subsequently hold money for or on account of the dealer to pay to the assessing authority, either forthwith upon the money becoming

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

1957: KAR. ACT 25] Sales Tax due or being held at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the dealer in respect of arrears of tax or penalty or the whole of the money when it is equal to or less than that amount.

1. (2) The assessing authority may at any time or from time to time amend or revoke any such notice or extend the time for making any payment in pursuance of the notice.
2. (3) Any person making any payment in compliance with a notice under this section shall be deemed to have made the payment under the authority of the dealer and the receipt of the assessing authority shall constitute a good and sufficient discharge of the liability of such person to the extent of the amount referred to in the receipt.
3. (4) Any person discharging any liability to the dealer after receipt of the notice referred to in this section shall be personally liable to the assessing authority to the extent of the liability discharged or to the extent of the liability of the dealer for the amount due under this Act, whichever is less.
4. (5) Where any person to whom a notice under this section is sent objects to it on the ground that the sum demanded or any part thereof is not due by him to the dealer or that he does not hold any money for or on account of the dealer, then nothing contained in this section shall be deemed to require such person to pay the sum demanded or any part thereof, to the assessing authority.
5. (6) Any amount which a person is required to pay to the assessing authority or for which he is personally liable to the assessing authority under this section shall, if it remains unpaid, be a charge on the properties of the said person and may be recovered as if it were an arrear of land revenue.

1[Explanation I]

.—For the purposes of this section, the amount due to a dealer or money held for or on account of a dealer by any person shall be computed after taking into account such claims, if any, as may have fallen due for payment by such dealer to such person and as may be lawfully subsisting. 1. Re-numbered by Act 14 of 1987 w.e.f. 1.4.1987.

1[Explanation II.—Notwithstanding anything contained in this Act, for the purpose of this section, the expression "assessing authority" shall include

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

² Inserted by Act 4 of 1992 w.e.f. 1.4.1992.

2[any officer empowered to levy tax or penalty under any of the provisions of this Act, or] any other officer exercising powers under clause (aa) of sub- section (3) of section 13.]

4[14-A. Issuance of Clearance Certificates to registered dealers.- Where for the purpose of complying with the requirement of any law for the production of a clearance certificate with respect to payment of tax or any other amount under this Act, a registered dealer makes an application

Sales Tax [1957: KAR. ACT 25

¹ Inserted by Act 5 of 1996 w.e.f. 1.4.1996.

to the assessing authority of the area, the assessing authority shall, if no amount of assessed tax or any other amount under this Act is due by or any tax payable in accordance with the provisions of sub-section (1) of section 12-B is outstanding from such registered dealer, issue a clearance certificate in the prescribed form.]

2[(1) When the ownership of the business of a dealer is transferred, the transferor and the transferee shall jointly and severally be liable to pay any tax or penalty or any other amount remaining unpaid at the time of transfer or that may become payable in respect of such business after the date of transfer but relating to the years upto the date of transfer and for the purpose of recovery from the transferee, such transferee shall be deemed to be the dealer liable to pay the tax or penalty or other amount due under this Act.]

¹ Substituted by Act 5 of 1972 w.e.f. 1.10.1957

² Substituted by Act 5 of 2000 w.e.f. 1.4.2000.

1. (2) When a firm liable to pay the tax, or penalty is dissolved, the assessment of the tax and imposition of penalty shall be made as if no dissolution of the firm had taken place, and every person who was at the time of dissolution a partner of the firm and the legal representative of any such person who is deceased, shall be jointly and severally liable to pay the tax or penalty assessed or imposed. 1[(2A) Where any firm is liable to pay any tax or penalty or any other amount under this Act, the firm and each of the partners of the firm shall be jointly and severally liable for such payment. (2B) Where a partner of a firm liable to pay any tax or penalty or any other amount under this Act retires, he shall, notwithstanding any contract to the contrary, be liable to pay any tax or penalty or any other amount remaining unpaid at the time of his retirement and any tax or penalty or any other amount due upto the date of retirement, though unassessed.] 1. Subsections (2A) and (2B) Inserted by Act 23 of 1983 w.e.f. 18.11.1983.
2. (3) When an undivided Hindu family or Aliyasanthana family liable to pay the tax or penalty is partitioned, the assessment of the tax and the imposition of penalty shall be made as if no partition of the family had taken place, and every person who was a member of the family before the partition shall be jointly and severally liable to pay the tax or penalty assessed or imposed.]

Where a dealer dies, his executor, administrator or other legal representative shall be deemed to be the dealer for the purposes of this Act and the provisions of this Act shall apply to him in respect of the business of the said deceased dealer, provided that, in respect of

1[any tax, penalty or fee] assessed as payable by any such dealer or

¹ Substituted by Act 17 of 1976 w.e.f. 1.10.1957.

1[any tax, penalty or fee] which would have been payable by him under this Act if he had not died, the executor, administrator or other legal representative shall be liable only to the extent of the assets of the deceased in his hands.

1957: KAR. ACT 25] Sales Tax

2[x x x] .-

3[(1) Subject to such conditions and in such circumstances as may be prescribed, the assessing authority may, if a dealer whose total turnover in a year is not exceeding

4[rupees ten lakh]

and who is liable to tax under sections

¹ Substituted by Act 32 of 1958 w.e.f. 1.4.1959.

² Omitted by Act 9 of 1970 w.e.f. 1.4.1970.

⁴ Substituted by Act 3 of 1998 w.e.f. 1.4.1998.

⁵ Substituted by Act 18 of 1997 w.e.f. 1.4.1997.

5[5, 5-A, 6 and 6-B] , so elects, accept in lieu of the amount of tax payable by him under this Act, during any year, by way of composition, an amount at the following rates, namely:— 3. Sub-sections (1), (2), (3) substituted by Act 7 of 1997 w.e.f. 1.4.1997.

TABLE

Sl. No. Total Turnover Rates

1. (i) Where the total turnover does not exceed three lakh rupees.

One thousand five hundred rupees.

1. (ii) Where the total turnover exceeds three lakh rupees but does not exceed five lakh rupees.

One thousand five hundred rupees plus two per cent of the turnover exceeding three lakh rupees.

1[(iii)

Where the total turnover exceeds five lakh rupees but does not exceed ten lakh rupees Five thousand five hundred rupees plus three percent of the turnover exceeding five lakh rupees.]

¹ Inserted by Act 3 of 1998 w.e.f. 1.4.1998.

Provided that this sub-section shall not apply to,-

1. (i) dealers in liquor and/or beer;
2. (ii) dealers operating hotels, restaurants or bars and restaurants;
3. (iii) dealers purchasing goods in the course of inter-State trade or commerce against declarations in Form-C, or obtaining goods from sources outside the State against declarations in Form-F;
4. (iv) dealers whose total turnover in the immediately proceeding year as declared in the return or determined in the assessment order was more than 1[ten lakh rupees] .

¹ Substituted by Act 3 of 1998 w.e.f. 1.4.1998.

1. (2) (a) Any dealer eligible for composition of tax under sub-section (1) and who estimates his total turnover for a year to be not more than 1[ten lakh rupees] , may apply to the assessing authority to permit him to pay the amount under this section and on being so permitted, he shall pay the amount due in advance during the year in quarterly instalments and shall submit a return as specified in sub-section (1) of section 12.

¹ Substituted by Act 3 of 1998 w.e.f. 1.4.1998.

Sales Tax [1957: KAR. ACT 25

1. (b) The amount paid under clause (a) shall be subject to such adjustment as may be prescribed on the completion of final assessment.

1. (3) Every dealer complying with the provisions of clause (a) of sub-section
2. (2) shall be assessed on the basis of return submitted in accordance with sub-section (1) of section 12, and such dealer shall not be required to appear or produce the books of accounts before the assessing authority.] 1[Explanation.- x x x] ] 1[(3A) x x x] 1[(4) 2[(i) Notwithstanding anything contained in sub-sections (1) to (3), but subject to such conditions and in such circumstances as may be prescribed, the assessing authority of the area may, if a hotelier or a restaurateur (other than a hotelier or a restaurateur engaged in reselling of goods purchased by him in the course of inter-State trade or commerce or a dealer engaged in vending of liquor including beer 6[or a hotelier or a restaurateur operating in the same premises or a premises attached to a place where liquor including beer is served] 3[a dealer running a sweet meat stall or ice cream parlour] 4[or a dealer catering food and drinks in places other than where liquor including beer is served (excluding in the premises of a club registered under the Karnataka Societies Registration Act, 1960) or a Registered club including a dealer serving food and drinks in the premises of such club] ), 7[xxx] , so elects, accept in lieu of the amount of tax payable by him under this Act during any year, by way of composition, an amount at the rate of 5[four per cent] of his total turnover.]
   • (ii) Any hotelier or restaurateur 1[or a dealer running a sweet stall or ice cream parlour] 1 2 [or a dealer catering food and drinks or a registered club including a dealer serving food and drinks in such club] may apply to the assessing authority to be permitted to pay the amount under clause (i) and, on being so permitted, he shall pay the amount due in advance during the year in equal monthly instalments on or before the 3[20th] of the month following each month and for that purpose shall submit such statements or returns in such manner as may be prescribed; 1957: KAR. ACT 25] Sales Tax
   • (iii) The amount paid under clause (ii) shall be subject to such adjustment as may be necessary on the completion of final assessment.] 1[(iv) x x x] 1[(5) Notwithstanding anything contained in this Act, where a dealer has opted for payment of tax by way of composition in any year, the rate at which such tax is payable shall be the rate provided for such payment in this section at the commencement of the year.] 1[(6) 2[(i) Notwithstanding anything contained in section 5-B, but subject to such conditions and in such circumstances as may be prescribed, the assessing authority of the area may, if a dealer liable to tax under section 5- B so elects, accept in lieu of the amount of tax payable by him during the year under this Act, by way of composition an amount on the total consideration for the works contracts executed by him in that year in the State in respect of Works contract specified in column (2) of the Sixth Schedule 3[at the rate of four per cent] .]
   • (ii) Any dealer may apply to the assessing authority to be permitted to pay the amount under clause (i) and, on being so permitted he shall pay tax in advance as provided for under section 12-B and all the provisions of section 12B mutatis-mutandis shall apply to this sub-section.] 1[(iii) the amount paid under clause (ii), shall be subject to such adjustment as may be necessary on completion of final assessment.] 1[Explanation.— No tax shall be payable under this sub-section on the turnovers relating to amounts paid to sub-contractors as consideration for execution of works contract whether wholly or partly subject to production of proof that such sub-contractor is a registered dealer liable to tax under the Act and that the turnover of such amounts is included in the monthly statements or return of turnover, as the case may be, filed by such sub- contractor.] 1[(7) Nothing contained in sub-Section (6) shall apply to a dealer who purchases or receives goods from outside the State for the purpose of using such goods in the execution of works contract.] 1[(8) Subject to such conditions and in such circumstances as may be prescribed, the assessing authority of the area may, if a dealer carrying on the business in silk fabrics so elects, accept in lieu of the amount of tax payable by him, during any year, under this Act, by way of composition, an

¹ Omitted by Act 18 of 1994 w.e.f. 1.4.1994.

¹ Inserted by Act 9 of 1986 w.e.f. 1.10.1978 & omitted by the same Act w.e.f. 31.3.1981.

¹ Inserted by Act 7 of 1981 w.e.f. 4.4.1981.

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

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

⁴ Inserted by Act 5 of 2000 w.e.f. 1.4.2000 and again substituted by Act, 5 of 2002 w.e.f. 1.4.2002.

⁵ Substituted by Act 4 of 1999 w.e.f. 1.4.1999 and again substituted by Act 5 of 2001 w.e.f. 1.4.2001.

⁶ Inserted by Act 5 of 2001 w.e.f. 1.4.2001.

⁷ Omitted by Act 5 of 2001 w.e.f. 1.4.2001.

¹ Inserted by Act 4 of 19`99 w.e.f. 1.4.1999.

² Inserted by Act 5 of 2000 w.e.f. 1.4.2000 and substituted by Act 5 of 2002 w.e.f. 1.4.2002.

³ Substituted by Act 9 of 1986 w.e.f. 1.4.1986.

¹ Inserted by Act 27 of 1985 w.e.f. 7.9.1978 & omitted by the same Act w.e.f. 2.2.1983.

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

¹ Inserted by Act 14 of 1987 w.e.f. 1.4.1988 by notification. Text of the notification is at page 431.

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.

¹ Inserted by Act 8 of 1990 w.e.f. 1.4.1990.

¹ Inserted by Act 15 of 1991 w.e.f. 1.4.1991.

¹ Inserted by Act 4 of 1999 w.e.f. 1.4.1999 and Substituted by Act 5 of 2002 w.e.f. 1.4.2002.

Sales Tax [1957: KAR. ACT 25

¹ Inserted by Act 1 of 1996 w.e.f. 1.4.1995 & substituted by Act 3 of 1998 w.e.f. 1.4.1998.

amount at the rate of half percent of his total turnover in respect of silk fabrics;]

¹ Omitted by Act 3 of 1998 w.e.f. 1.4.1998.

1[Explanation I.- x x x Explanation II.- x x x]

1[(9) (i) Notwithstanding anything contained in sub-sections (1) to (3), but subject to such conditions and in such circumstances as may be prescribed, the assessing authority of the area may, if a dealer being mechanized crushing unit producing granite metals so elects, accept in lieu of the amount of tax payable by him under any other provisions of this Act, during any year, by way of composition, an amount at the following rates, namely:- Sl.No. Capacity Rates

1. (i) For each crushing machine of size 36" x9" Rs. 1,00,000 per annum
2. (ii) For each crushing machine of size 16" x 9" Rs. 50, 000 per annum
3. (iii) For each crushing machine of size 12" x 9" Rs. 25, 000 per annum.
4. (ii) Any dealer eligible for composition of tax under clause (i), may apply to the assessing authority to permit to pay the amount under this sub-section and on being so permitted, he shall pay the amount due in advance during the year in equal monthly installments on or before the twentieth day of month following each month and for that purpose shall submit such statements or returns in such manner as may be prescribed.
5. (iii) The amount paid under clause (ii), shall be subject to such adjustment as may be necessary on the completion of final assessment.] 1[(10) Subject to such conditions and such circumstances as may be prescribed, the Assessing Authority of the area may, if a dealer carrying on business in lottery tickets so elects, accept in lieu of the amount of tax payable by him during any year, under this Act, by way of composition, an amount at the following rates, namely,- 1. Subsections (10) and (11) Inserted by Act 5 of 2001 w.e.f. 1.4.2001. 1[TABLE Sl.no TYPE OF DRAW RATE PER DRAW 1. Weekly Draw Fifteen thousand rupees 2. Fortnightly Draw including any draw the period which is more than a week but less than a fortnight. Forty thousand rupees 3. Monthly Draw including monthly Bumper Draw and every draw the Seventy thousand rupees 1957: KAR. ACT 25] Sales Tax period of which is more than a Fortnight but less than a month. 4. Special Bumper Draw or Festival Bumper Draw including any other draw not covered by any other category and any draw the period of which is more than a month. One lakh and seventy five thousand rupees]

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

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

1. (11) Notwithstanding anything contained in any other provisions of this Act, the tax payable under sub-section (10) shall be paid ten days prior to the draw.] 1[17-A. Rounding off of tax, etc.- The amount of tax (including tax payable in advance), penalty or any other amount payable and the amount of refund due, under this Act shall be rounded off to the nearest rupee and, for this purpose, where such amount contains a part of a rupee consisting of paise, then, if such part is fifty paise or more, it shall be increased to one rupee and if such part is less than fifty paise, it shall be ignored.]

¹ Inserted by Act 5 of 1972 w.e.f. 14.8.1972.

(1) (a) A person who is not a registered dealer liable to pay tax shall not collect any amount by way of tax or purporting to be by way of tax under this Act; nor shall a registered dealer collect any amount by way of tax or purporting to be by way of tax at a rate or rates exceeding the rate or rates 2[at which he is liable to pay tax under the provisions of this Act.] 3[x x x] 1. Substituted by Act 18 of 1978 w.e.f. 1.9.1978. 2. Substituted by Act 4 of 1992 w.e.f. 1.4.1992. 3. Inserted by Act 8 of 1984 w.e.f. 1.4.1984 & omitted by Act 9 of 1986 w.e.f. 1.4.1986. (b) No person shall collect any amount by way of tax or purporting to be by way of tax in respect of sales of any goods 1[or any transaction] on which no tax is payable by him under the provisions of this Act. 1. Deemed always to have been Inserted by Act 5 of 2001 w.e.f. 1.10.1957. (2) Notwithstanding anything contained in sub-section (1), a dealer who has been permitted to pay any amount by way of composition 1[under sub- section (1) 2[x x x] 3[ 4[x x x] or sub-section (8)] of section 17] or a dealer who is exempted from sales tax by virtue of recognition granted under the provisions of this Act, shall not collect any amount by way of tax or purporting to be by way of tax on the sales or purchases of goods made during the period to which such composition or recognition applies. 1[(3) Notwithstanding anything contained in sub-sections (1) and (2), no dealer who is liable to pay additional tax under section 6-C shall collect any amount by way of such additional tax or purporting to be by way of such additional tax payable by him.] 1. Substituted by Act 15 of 1988 w.e.f. 1.4.1988. 2. Omitted by Act 5 of 2000 w.e.f. 1.4.2000. 3. Inserted by Act 1 of 1996 w.e.f. 5.3.1996. 4. Omitted by Act 7 of 1997 w.e.f. 1.4.1997. 1. Omitted by Act 5 of 2002 w.e.f. 1.4.2002 and again Inserted by Act 30 of 2003 w.e.f. 1.6.2003. Sales Tax [1957: KAR. ACT 25 18-A. Penalty for collection in contravention of section 18.- If any person contravenes any of the provisions of section 18, the assessing authority may, after giving such person reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding 1. Substituted by Act 5 of 2002 w.e.f. 1.4.2002. 1[not less than one half but not exceeding an amount equivalent to] such amount: 1. Omitted by Act 23 of 1983 w.e.f. 18.11.1983 and again Inserted by Act 26 of 2004 w.e.f. 1.8.2004. 1[Provided that no penalty shall be levied under this section after a period of eight years from the close of the year to which the contravention relates.] Provided further that no prosecution for an offence under section 29 shall be instituted in respect of the same facts on which a penalty has been imposed under this section.] 1. Inserted by Act 4 of 1992 w.e.f. 1.4.1992. 1[18-AA. Payment and disbursement of amounts wrongly collected by dealer as tax.- (1) Where any amount is collected by way of tax or purporting to be by way of tax from any person by any dealer in contravention of section 18, whether knowingly or not, such dealer shall pay the entire amount so collected, to the assessing authority within twenty days after the close of the month in which such amount was collected, notwithstanding that the dealer is not liable to pay such amount as tax or that only a part of it is due from him as tax under this Act. (2) If default is made in payment of the amount in accordance with sub- section (1),- (i) the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the dealer; (ii) the dealer liable to pay the amount shall pay interest at the rate of 1[one and a quarter percent] of such amount for each month of default; and (iii) the whole of the amount remaining unpaid along with the interest calculated under clause (ii) of this sub-section shall be recoverable in the manner specified in section 13. 1[Explanation.- For the purpose of this sub-section, non-payment during any period during which recovery of any amount due under this Section is stayed by an order of any authority or Court in any appeal or other proceedings disputing such amount, shall be deemed to be a ‘default’, unless such appeal or other proceeding is allowed by such Authority.] (3) Notwithstanding anything contained in this Act, or in any other law for the time being in force, any amount paid or payable by any dealer under sub- section (1) shall, to the extent it is not due as tax be forfeited to the State Government and be recovered from him and such payment or recovery shall discharge him of the liability to refund the amount to the person from whom it was collected. 1957: KAR. ACT 25] Sales Tax (4) Where any amount is paid or recovered by or from any dealer under sub- section (1) or (3), a refund of such amount or any part thereof can be claimed from Government by the person from whom, it was realised by way of tax provided an application in writing in the prescribed form is made to the Commissioner, within two years from the date of the order of forfeiture. On receipt of any such application, the Commissioner shall hold such inquiry as he deems fit and if the Commissioner is satisfied that the claim is valid and admissible and that the amount so claimed as refund is actually paid or recovered, he shall refund the amount or any part thereof, which is found due to the person concerned. (5) Where any amount is collected by way of tax or purporting to be by way of tax in contravention of section 18 at any time before the commencement of the Karnataka Sales Tax (Amendment) Act, 1992, the provisions of sub- sections (3) and (4) shall apply to such amount collected.] 1. Substituted by Act 11 of 2005 w.e.f. 1.4.2005 1. Inserted by Act by Act 11 of 2005 w.e.f. 1.10.1957

2[at which he is liable to pay tax under the provisions of this Act.]

3[x x x]

¹ Substituted by Act 18 of 1978 w.e.f. 1.9.1978.

² Substituted by Act 4 of 1992 w.e.f. 1.4.1992.

³ Inserted by Act 8 of 1984 w.e.f. 1.4.1984 & omitted by Act 9 of 1986 w.e.f. 1.4.1986.

1. (b) No person shall collect any amount by way of tax or purporting to be by way of tax in respect of sales of any goods 1[or any transaction] on which no tax is payable by him under the provisions of this Act. 1. Deemed always to have been Inserted by Act 5 of 2001 w.e.f. 1.10.1957.

1. (2) Notwithstanding anything contained in sub-section (1), a dealer who has been permitted to pay any amount by way of composition 1[under sub- section (1) 2[x x x] 3[ 4[x x x] or sub-section (8)] of section 17] or a dealer who is exempted from sales tax by virtue of recognition granted under the provisions of this Act, shall not collect any amount by way of tax or purporting to be by way of tax on the sales or purchases of goods made during the period to which such composition or recognition applies. 1[(3) Notwithstanding anything contained in sub-sections (1) and (2), no dealer who is liable to pay additional tax under section 6-C shall collect any amount by way of such additional tax or purporting to be by way of such additional tax payable by him.]

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

² Omitted by Act 5 of 2000 w.e.f. 1.4.2000.

³ Inserted by Act 1 of 1996 w.e.f. 5.3.1996.

⁴ Omitted by Act 7 of 1997 w.e.f. 1.4.1997.

¹ Omitted by Act 5 of 2002 w.e.f. 1.4.2002 and again Inserted by Act 30 of 2003 w.e.f. 1.6.2003.

Sales Tax [1957: KAR. ACT 25

18-A. Penalty for collection in contravention of section 18.- If any person contravenes any of the provisions of section 18, the assessing authority may, after giving such person reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding

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

1[not less than one half but not exceeding an amount equivalent to] such amount:

¹ Omitted by Act 23 of 1983 w.e.f. 18.11.1983 and again Inserted by Act 26 of 2004 w.e.f. 1.8.2004.

1[Provided that no penalty shall be levied under this section after a period of eight years from the close of the year to which the contravention relates.] Provided further that no prosecution for an offence under section 29 shall be instituted in respect of the same facts on which a penalty has been imposed under this section.]

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

1[18-AA. Payment and disbursement of amounts wrongly collected by dealer as tax.- (1) Where any amount is collected by way of tax or purporting to be by way of tax from any person by any dealer in contravention of section 18, whether knowingly or not, such dealer shall pay the entire amount so collected, to the assessing authority within twenty days after the close of the month in which such amount was collected, notwithstanding that the dealer is not liable to pay such amount as tax or that only a part of it is due from him as tax under this Act.

1. (2) If default is made in payment of the amount in accordance with sub- section (1),-
   • (i) the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the dealer;
   • (ii) the dealer liable to pay the amount shall pay interest at the rate of 1[one and a quarter percent] of such amount for each month of default; and
   • (iii) the whole of the amount remaining unpaid along with the interest calculated under clause (ii) of this sub-section shall be recoverable in the manner specified in section 13. 1[Explanation.- For the purpose of this sub-section, non-payment during any period during which recovery of any amount due under this Section is stayed by an order of any authority or Court in any appeal or other proceedings disputing such amount, shall be deemed to be a ‘default’, unless such appeal or other proceeding is allowed by such Authority.]
2. (3) Notwithstanding anything contained in this Act, or in any other law for the time being in force, any amount paid or payable by any dealer under sub- section (1) shall, to the extent it is not due as tax be forfeited to the State Government and be recovered from him and such payment or recovery shall discharge him of the liability to refund the amount to the person from whom it was collected. 1957: KAR. ACT 25] Sales Tax
3. (4) Where any amount is paid or recovered by or from any dealer under sub- section (1) or (3), a refund of such amount or any part thereof can be claimed from Government by the person from whom, it was realised by way of tax provided an application in writing in the prescribed form is made to the Commissioner, within two years from the date of the order of forfeiture. On receipt of any such application, the Commissioner shall hold such inquiry as he deems fit and if the Commissioner is satisfied that the claim is valid and admissible and that the amount so claimed as refund is actually paid or recovered, he shall refund the amount or any part thereof, which is found due to the person concerned.
4. (5) Where any amount is collected by way of tax or purporting to be by way of tax in contravention of section 18 at any time before the commencement of the Karnataka Sales Tax (Amendment) Act, 1992, the provisions of sub- sections (3) and (4) shall apply to such amount collected.]

¹ Substituted by Act 11 of 2005 w.e.f. 1.4.2005

¹ Inserted by Act by Act 11 of 2005 w.e.f. 1.10.1957

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

Notwithstanding anything contained in this Act, the Central Government, a State Government, a statutory body or a local authority shall in respect of any sale of goods effected by them be entitled to collect by way of tax any amount which a registered dealer effecting such sale would have been entitled to collect by way of tax under this Act and shall pay the tax so collected into the Government Treasury.]

1[19-A. Deduction of tax at source (in case of works contract).-(1) Notwithstanding anything contained in this Act, the Central Government, or any State Government, or an industrial, commercial or trading undertaking of the Central Government or of any State, or any such undertaking in joint sector or any other industrial, commercial or trading undertaking or any other person or body as may be notified by the Commissioner from time to time or a local authority or a statutory body, shall deduct out of the amounts payable by them to a dealer in respect of works contracts of the nature specified in the Sixth Schedule executed for them in the State, an amount equivalent to the tax payable by such dealer under the Act. Provided that no such deduction shall be made if the amounts payable by them are in respect of sales of any goods, in the course of inter-State trade or commerce or, in the course of export out of the territory of India or, import into the territory of India or, outside the State.

1. (2) The deduction under sub-section (1) shall be made by an authority on the basis of tax payable as calculated by the dealer. Provided that where it is found that the tax payable as calculated by any dealer was less than the tax payable for the works contract executed by more than fifteen per cent and being so informed, the authority shall make deduction out of any amounts payable subsequently based on the certificate issued by the assessing authority of the area or the assessing authority of the dealer on an application to be made by the authority or dealer which shall be disposed of by the assessing authority within ten days from the date of its receipt, failing which deduction shall be made as calculated by the dealer till issue of a certificate.

Sales Tax [1957: KAR. ACT 25

1. (3) The authority making deduction under sub-section (1), shall send every month to the prescribed authority a statement in the prescribed form containing particulars of tax deducted during the preceding month and pay full amount of the tax so deducted by it within twenty days after the close of the preceding month in which such deductions were made and the amount so payable shall for the purposes of Section 13 be deemed to be an amount due under this Act: Provided that where default is made in complying with the provisions of this sub-section, the prescribed authority may, after such enquiry as it deems fit and after giving opportunity to the concerned authority of being heard, determine to the best of its judgment, the amount payable under this sub- section by such authority and the amount so determined shall be deemed to be an amount due under the Act for the purposes of Section 13.
2. (4) If default is committed in the payment of tax deducted beyond ten days after the expiry of the period specified under sub-section (3), the authority making deductions under sub-section (1) shall pay, by way of penalty, a sum equal to the penalty specified under clause (ii) of sub-section (2) of Section 13 during the period in which such default is continued.
3. (5) The authority making deduction under sub-section (1) shall furnish to the dealer from whom such deduction is made, a certificate obtained from the prescribed authority containing such particulars as may be prescribed.
4. (6) Payment by way of deduction in accordance with sub-section (3), shall be without prejudice to any other mode of recovery of tax due under this Act from the dealer executing the works contract.
5. (7) Where tax in respect of the works contract is remitted under sub-section (3), the tax payable by the dealer for any month, quarter or for the whole year, as the case may be in respect of such works contract shall be reduced by the amount of tax already remitted under the said sub-section: Provided that the burden of proving that the tax on such works contract has already been remitted and of establishing the exact quantum of tax so remitted shall be on the dealer claiming the reduction.] substituted by Act 26 of 2004 w.e.f. 1.8.2004. 1[19-AA. Deduction of tax at source in other cases.- (1) Notwithstanding anything contained in this Act, the Government of Karnataka, 2[and Zilla Panchayats] shall deduct out of the amounts payable by them to a dealer in respect of the purchase of goods, other than Petrol and High Speed Diesel, made by them for their bona fide use, an amount at the rate of four per cent or at the rate applicable for the goods so purchased whichever is lower: Provided that,—
   • (a) no such deductions shall be made if the amount payable to the dealer by the authorities mentioned in this sub-section is less than one thousand rupees; or 1957: KAR. ACT 25] Sales Tax 1[(aa) x x x] 1[(aaa) no such deduction shall be made in respect of dealers as may be notified by the Commissioner from time to time.] 1[b) no amount shall be deducted under this sub-section, if any of the goods purchased by the authorities mentioned in this sub-section is not liable to tax either on account of said goods being exempt from tax or not liable to tax at the hands of the selling dealer on the ground that the said goods have been subjected to tax at the hands of the earlier seller, or if the tax payable by the selling dealer on any goods is deferred or exempted by the State Government in pursuance of its Industrial Policy and upon being so certified by the Assessing Authority of the area on an application made by the dealer, which shall be disposed of by the Assessing Authority within one month from the date of receipt, either by issue of certificate as aforesaid or by intimating to the dealer his in-eligibility to such a certificate, as the case may be;]
6. (2) The authority making deduction under sub-section (1), shall send every month to the prescribed authority a statement in the prescribed form containing particulars of tax deducted during the preceding month and pay full amount of the tax so deducted by it or a receipt from a Government Treasury for having remitted the tax so deducted by it within twenty days after the close of the preceding month in which such deductions were made and the amount so payable shall for the purposes of section 13 be deemed to be an amount due under this Act: Provided that where default is made in complying with the provisions of this sub-section, the prescribed authority may, after such enquiry as it deems fit and after giving an opportunity to the concerned authority of being heard, determine to the best of its judgment, the amount payable under this sub- section by such authority and the amount so determined shall be deemed to be an amount due under the Act for the purposes of section 13. 1[(2A) If default is committed in the payment of tax deducted beyond ten days after the expiry of the period specified in sub-section (2), the authority making deductions under sub-section (1) shall pay by way of penalty a sum equal to the penalty specified under clause (ii) of sub-section (2) of section 13 during the period in which such default is continued.]
7. (3) The authority making deduction under sub-section (1) shall furnish to the dealer from whom such deduction is made, a certificate obtained from the prescribed authority containing such particulars as may be prescribed.
8. (4) Payment by way of deduction in accordance with sub-section (1) shall be without prejudice to any other mode of recovery of tax due under this Act from the dealer effecting the sales to the authorities mentioned in sub- section (1).

¹ Inserted by Act 15 of 1988 w.e.f. 1.4.1988 & substituted by Act 7 of 1997 w.e.f. 1.4.1997 and again

¹ Inserted by Act 3 of 1998 w.e.f. 1.4.1998.

² Substituted by Act 5 of 2000 w.e.f. 1.4.2000.

¹ Inserted by Act 20 of 1998 w.e.f. 1.4.1998 & omitted by Act 5 of 2000 w.e.f. 1.4.2000.

¹ Inserted by Act 4 of 1999 w.e.f. 1.4.1999.

¹ Substituted by Act 4 of 1999 w.e.f. 1.4.1999.

¹ Inserted by Act 4 of 1999 w.e.f. 1.4.1999.

Sales Tax [1957: KAR. ACT 25

1. (5) Where tax in respect of the purchases is remitted under sub- section (2), the tax payable by the dealer for any month, quarter or for the whole year, as the case may be, in respect of such sales shall be reduced by the amount of tax already remitted under the said sub-section: Provided that the burden of proving that the tax on such sales has already been remitted and of establishing the exact quantum of tax so remitted shall be on the dealer claiming the reduction.] 1[19-B. Power of Government to notify deferred payment of tax, etc., for sick industries 2[and riot affected industries] .- Notwithstanding anything contained in this Act or in the rules made thereunder, but subject to such conditions as may be specified, the State Government may, by notification issued prospectively or retrospectively, in respect of 3[any industry which is declared by the State Government as riot affected industrial unit or any industry considered] as a sick unit under the Sick Industrial Companies (Special Provision) Act, 1985, grant permission to pay in instalments the whole or any part of the tax payable by such unit for any period or defer payment of such tax.] 1[19-C. Power of Government to notify 2[exemption of tax or] deferred payment of tax for new industries.- (1) The Government may, in such circumstances and subject to such conditions as may be prescribed, by notification defer payment by any new industrial unit of the whole or any part of the tax payable in respect of any period 2[or exempt the whole or any part of the tax payable by a new industrial unit in respect of any period.] 1[Provided that notwithstanding anything contained in this Act or in the rules made thereunder but subject to such conditions as the State Government may, by general or special order specify, where a dealer to whom incentives by way of deferment offered by the State Government in its orders issued from time to time has been granted by virtue of eligibility certificate and where liability equal to the amount of any such tax payable by such dealer has been created as loan by the Department of Industries and Commerce. Government of Karnataka, then such tax shall be deemed, in public interest, to have been paid.]
2. (2) Notwithstanding anything contained in this Act, the deferred payment of tax under sub-section (1) shall not attract penalty under clause
   • (ii) of sub-section (2) of section 13, provided the conditions laid down for payment of the tax deferred are satisfied.] 1[Explanation.— For the purpose of this section, `New Industrial unit' 2[shall not include a new industrial unit which uses trade mark or the brand name of any product of an existing industrial unit, but includes] ,—
   • (i) an industrial unit undertaking investment in expansion, diversification or modernisation; 1957: KAR. ACT 25] Sales Tax
   • (ii) an Oil Company marketing products manufactured in the State by another Oil Company, the latter being a new industrial unit.]

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

² Inserted by Act 6 of 1995 w.e.f. 1.4.1995.

³ Substituted by Act 6 of 1995 w.e.f. 1.4.1995.

¹ Inserted by 18 of 1994 w.e.f. 1.4.1994.

² Inserted by Act 6 of 1995 w.e.f. 1.4.1995.

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

¹ Inserted by Act 6 of 1995 w.e.f. 1.4.1994 & substituted by Act 7 of 1997 w.e.f. 1.4.1997.

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