Chapter II Chapter II

authorities and appellate tribunal.

3. Appointment of Commissioner,

1[

2[Additional Commissioner] ] ,

2[Assistant Commissioner of Commercial Taxes] , a

3[State Representative]

and

2[Commercial Tax Officer]

.-

4[(1)] The State Government may appoint a Commissioner of Commercial Taxes and as many

1[

2[Additional Commissioner] ] of Commercial Taxes,

2[Joint Commissioners]

of Commercial Taxes,

3[Assistant Commissioner of Commercial Taxes] ,

3[a State Representative]

and

2[Commercial Tax Officers]

, as they think fit for the purpose of performing the functions respectively conferred on them by or under this Act

5[or by or under any other law for the time being in force.]

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

² Substituted by Act 5 of 1993 w.e.f. 9.11.1992.

³ Inserted by Act 9 of 1970 w.e.f. 1.4.1970.

6[x x x]

⁵ Inserted by Act 30 of 1962 w.e.f. 1.10.1962 by notification. Text of the notification is at the end of the

⁶ Omitted by Act 9 of 1964 w.e.f. 27.2.1964.

Act.

1[(1-A) The Commissioner may, empower an officer not below the rank of a

3[Assistant Commissioner of Commercial Taxes]

¹ Inserted by Act 36 of 1986 w.e.f. 8.10.1986.

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

³ Substituted by Act 5 of 1993 w.e.f. 9.11.1992.

2[or an Advocate or a Chartered Accountant or a Sales Tax Practitioner enrolled in the prescribed manner] to perform the functions of a State Representative.]

1[(2) In proceedings before the Appellate Tribunal, the State Representative shall be competent,—

1957: KAR. ACT 25] Sales Tax

1. (i) to prepare and sign applications, appeals and other documents;
2. (ii) to appear, represent, act and plead;
3. (iii) to receive notices and other processes; and
4. (iv) to do all other acts connected with such proceedings, on behalf of the State Government or any officer appointed under this Act.] 1[ 2[3A. Instructions to subordinate authorities.- (1) The State Government and the Commissioner may from time to time, issue such orders, instructions and directions to all officers and persons employed in the execution of this Act as they may deem fit for the administration of this Act, and all such officers and persons shall observe and follow such orders, instructions and directions of the State Government and the Commissioner: 1. Sections 3A, 3B, 3C inserted by Act 9 of 1964 w.e.f. 27.2.1964. Provided that no such orders, instructions, or directions shall be issued so as to interfere with the discretion of any Appellate Authority in the exercise of its appellate functions.

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

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

1. (2) Without prejudice to the generality of the foregoing power, the Commissioner may, on his own motion or on an application by a registered dealer liable to pay tax under the Act, 1[or a recognized association or a body representing a class of dealers] if he considers it necessary or expedient so to do, for the purpose of maintaining uniformity in the work of assessments and collection of revenue, clarify the rate of tax payable under this Act in respect of goods liable to tax under the Act, and all officers and persons employed in the execution of this Act shall observe and follow such clarification. 1[Provided that no such application shall be entertained unless it is accompanied by proof of payment of such fee, paid in such manner, as may be prescribed.]
2. (3) All officers and persons employed in the execution of this Act, shall observe and follow such administrative instructions as may be issued to him for his guidance by the 1[Additional Commissioner] 2[Joint Commissioner] within whose jurisdiction he performs his functions.]

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

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

¹ Inserted by Act 5 of 2002 w.e.f. 1.4.2003.

² Substituted by Act 5 of 1993 w.e.f. 9.11.1992.

3B. Jurisdiction of officers.- (1)

2[(a) The

1[Additional Commissioners] shall perform their functions in respect of such areas or of such dealers or classes of dealers or of such cases or classes of cases as the

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

3[Commissioner] may direct.]

² Inserted by Act 10 of 1983 w.e.f. 1.4.1983 & substituted by Act 9 of 1986 w.e.f. 1.4.1983.

³ Substituted by Act 15 of 1996 w.e.f. 5.9.1996.

Sales Tax [1957: KAR. ACT 25

¹ Inserted by Act 9 of 1986 w.e.f. 1.4.1986 & omitted by Act 15 of 1996 w.e.f. 5.9.1996.

1[(b) x x x]

1[(c)] The

2[Joint Commissioners]

shall perform their functions in respect of such areas or of such dealers or classes of dealers or of such cases or classes of cases as the

² Substituted by Act 5 of 1993 w.e.f. 9.11.1992.

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

3[Commissioner] may direct. 1. Re-lettered by Act 9 of 1986 w.e.f. 1.4.1986.

1[(d)] Where any directions issued under

2[clause (c)]

have assigned to two or more

3[Joint Commissioners]

² Substituted by Act 9 of 1986 w.e.f. 1.4.1986.

³ Substituted by Act 5 of 1993 w.e.f. 9.11.1992.

, the same area or the same dealers or classes of dealers, or the same cases or classes of cases, they shall perform their functions in accordance with any orders which the Commissioner may make for the distribution and allocation of the work to be performed. 1. Re-lettered by Act 9 of 1986 w.e.f. 1.4.1986.

1. (2) (a) The 1[Deputy Commissioners] shall perform their functions in respect of such areas or of such dealers or classes of dealers or of such cases or classes of cases as the 2[Commissioner] may direct.
   • (b) Where any directions issued under clause (a) have assigned to two or more 1[Deputy Commissioners] , the same area or the same dealers or classes of dealers or the same cases or classes of cases, they shall perform their functions in accordance with any orders the Commissioner may make for the distribution and allocation of the work to be performed.
2. (3) (a) The 1[Commercial Tax Officers] and the 1[Assistant Commissioner of Commercial Taxes] shall perform their functions in respect of such areas or of such dealers or classes of dealers or such cases or classes of cases as the Commissioner may direct.
   • (b) Where any directions issued under clause (a) have assigned to two or more 1[Commercial Tax Officers] or 1[Assistant Commissioner of Commercial Taxes] , as the case may be, the same area or the same dealers or classes of dealers or the same cases or classes of cases, they shall perform their functions in accordance with any orders which the Commissioner may make for the distribution and allocation of the work to be performed.
3. (4) (a) The Commissioner may, by general or special order in writing, direct that the powers conferred on the 1[Assistant Commissioner of Commercial Taxes] by or under this Act, shall, in respect of any specified case or 1957: KAR. ACT 25] Sales Tax classes of cases or any specified dealers or classes of dealers be exercised by the 1[Deputy Commissioner.]
   • (b) Where an order under clause (a) is issued, then for the purposes of any case or dealer in respect of which any such order applies, reference in this Act or in any rule made thereunder to the 1[Assistant Commissioner of Commercial Taxes] or assessing authority shall be deemed to be references to the 1[Deputy Commissioner.] Explanation.—In this section, the word "case" in relation to any dealer specified in any order or direction issued thereunder means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year. 3C. Change of incumbent of an office.- Whenever in respect of any proceeding under this Act, an assessing authority or any officer ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the authority or officer so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor: Provided that the assessee concerned may demand that before the proceeding is so continued the previous proceeding or any part thereof be re-opened or that before any order of assessment is passed against him, he be re-heard.]

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

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

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

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

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

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

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

Advance Rulings’, (here in after referred to in this section as Authority) consisting of three Additional Commissioners, to clarify the rate of tax applicable under this Act in respect of any goods liable to tax under the Act or the exigibility of any transaction to tax under the Act on an application by a dealer registered under the Act.

1. (2) The application shall be in such form and shall be accompanied by proof of payment of such fee, paid in such manner, as may be prescri bed.
2. (3) An applicant may withdraw an application within thirty days from the date of application.
3. (4) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the assessing or registering authority concerned and call for 1[its finding on the clarification sought or question raised and also] any information or records.
4. (5) The Authority may, after examining the application and any records called for, by order, either, 1[admit] or reject the application.

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

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

Sales Tax [1957: KAR. ACT 25

Provided that the Authority shall not allow the application where the question raised in the application,-

1. (i) is already pending before any officer or authority of the Department or Appellate Tribunal or any Court;
2. (ii) relates to a transaction or issue which is designed apparently for the avoidance of tax. Provided further that no application shall be rejected under this sub- Section unless an opportunity has been given to the applicant of being heard and where the application is rejected, reasons for such rejections

shall be recorded in the order.

1. (6) A copy of every order made under sub-Section (5) shall be sent to the applicant and the officer concerned.
2. (7) Where an application is 1[admitted] under sub-Section (5), the Authority shall after examining such further material as may be placed before it by the applicant or obtained by the Authority, pass such order as deemed fit on the questions specified in the application, after giving an opportunity to the applicant of being heard, if he so desires 2[and also to the assessing authority or registering authority concerned]

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

² Inserted by Act 26 of 2004 w.e.f. 1.8.2004.

1[ninety days] of the receipt of any application and a copy of such order shall be sent to the applicant and to the officer concerned.

1. (8) No officer or any other authority of the Department or the Appellate Tribunal shall proceed to decide any issue in respect of which an application has been made by an applicant under this Section and is pending.
2. (9) The order of the Authority shall be binding only,-
   • (i) on the applicant who had sought clarification;
   • (ii) in respect of the goods or transaction in relation to which a

clarification was sought; and

1. (iii) on all the officers other than the Commissioner.

1. (10) The order of the Authority under sub-section (7) shall be binding as aforesaid unless there is a change in law or facts on the basis of which the order was passed.
2. (11) Where the Authority on a representation made to it by any officer or otherwise finds that an order passed by it was obtained by the applicant by fraud or mis-representation of facts, it may, by order, declare such order to be void ab initio and thereupon all the provisions of this Act shall apply to the applicant as if such order had never been made.
3. (12) A copy of the order made undser sub-Section (11) shall be sent to

the applicant and the Commissioner or the officer concerned.]

¹ Omitted by Act 27 of 1985 w.e.f. 1.8.1985 and again inserted by Act 5 of 2002 w.e.f. 1.4.2002.

1957: KAR. ACT 25] Sales Tax

1[(13) Notwithstanding any clarification or any ruling given by the ‘Authority for Clarification and Advance Rulings’ under sub-section (7) pertaining to any particular goods, the rate of tax payable in respect of such goods by the applicant shall be at such rate as may be clarified by the Commissioner under sub-section (2) of section 3-A, from the date of its publication in the official Gazette]

¹ Inserted by Act 53 of 2013 w.e.f. 01.08.2013

1[CHAPTER - IIA SETTLEMENT OF CASES

1. (a) “case” means any proceeding under this Act by way of appeal or revision in connection with such assessment, reassessment, levy of penalty or interest payable which may be pending before a Sales Tax authority or Appellate Tribunal on the date on which an application is made under sub-section (1) of section 4E; Provided that where an appeal has been preferred after the expiry of the period specified for the filing of such appeal under this Act and which has not been admitted, such appeal shall not be deemed to be a proceeding pending within the meaning of this clause; Provided further that any ex-parte proceeding under this Act for assessment or re-assessment of tax, levy of penalty or interest on any person for any year, where no appeal has been preferred or where an appeal filed has been rejected, shall be deemed to be pending before the Sales Tax Authority for a limited purpose of this chapter.
2. (b) “Chairman” means the Chairman of the Settlement Commission;
3. (c) “Member” means a Member of the Settlement Commission and includes the Chairman;
4. (d) “Settlement Commission” means the Sales Tax Settlement Commission constituted under section 4B;
5. (e) “Sales Tax Authority” means a Sales Tax authority specified in sub-

section (1) of section 3.

State Government may by notification constitute a “ Sales tax Settlement Commission” for settlement of cases under this Act;

1. (2) The Settlement Commission shall consist of a Chairman and two other Members.
2. (3) The Chairman of the Settlement Commission shall be appointed by the State Government from amongst the retired Judges of the High Court of Karnataka;
3. (4) The State Government shall appoint officers not below the rank of Additional Commissioners to be the members of the Settlement Commission.
4. (5) Terms and conditions of service of, and salary and allowances payable to the chairman and other members shall be as may be prescribed.

Sales Tax [1957: KAR. ACT 25

Commission shall ordinarily sit at Bangalore and at such other places as it deems fit.

The decision of the Settlement Commission shall be according to the opinion of the majority.

(1) An assessee or an aggrieved person may at any stage of a case relating to him, make an application to the Settlement Commission in such form and in such manner as may be prescribed in respect of each assessment year, to have the case settled and any such application shall be disposed of in the manner hereinafter provided; Provided that no such application shall be made unless, the tax payable on the turnover or the penalty or interest sought to be settled in the application exceeds twenty five thousand rupees.

1. (2) Every application made under sub-section (1) shall be accompanied by such fees as may be prescribed.
2. (3) An application made under sub-section (1) shall not be withdrawn by the applicant, except with the permission of the Settlement Commission and the Settlement Commission shall make an order thereof.
3. (4) A copy of the application made under sub-section (1) shall be sent by the Settlement Commission to the Sales Tax Authority or the Appellate Tribunal, as the case may be. The Sales Tax Authority or the Appellate Tribunal shall keep the case pending up to the date of order under sub- section (3), if the application is permitted to be withdrawn or up to the date of order under sub-section (1) of section 4F, if the application is rejected, or up to ninety days from the date of order of the Settlement Commission, if the application is disposed of under sub-section (4) of section 4F.

(1) On receipt of an application under sub-section (1) of section 4E, the Settlement Commission shall call for a factual report from the Sales Tax Authority in respect of matters pending before such Authority and from the Commissioner in respect of matters pending before the Appellate Tribunal and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Settlement Commission shall, by an order within thirty days of the application, admit the application to be proceeded with or reject the application: Provided that an application shall not be rejected under this sub- section unless an opportunity of being heard has been given to the applicant: Provided further that the Sales Tax Authority or the Commissioner shall furnish the report within a period of fifteen days of the receipt of communication from the Settlement Commission and if the report is not furnished within the said period, the Settlement Commission may make an order of admission or rejection of application without such report.

1957: KAR. ACT 25] Sales Tax

1. (2) A copy of every order under sub-section (1) shall be sent to the applicant and to the Sales Tax Authority or the Tribunal, as the case may be.
2. (3) Where an application is allowed to be proceeded with under sub- section (1), the Settlement Commission may call for the relevant records from the Sales Tax Authority or the records of the Sales Tax Authority available with the Appellate Tribunal and after examination of such records, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Sales Tax Authority to make or cause to be made such further enquiry or investigation and furnish a report on the matters covered by the application and any other matters relating to the case.
3. (4) After examination of the report and the records of the Sales Tax Authority received under sub-section (1) and sub-section (3) and after giving an opportunity to the applicant and to the Sales Tax Authority or the State Representative authorised under section 3, to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may settle and pass such order as it thinks fit by re- determining the turnovers, taxes payable, penalties and interest on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Sales Tax Authority under sub-section (1) or sub-section (3). The order shall be pronounced in the open court on the date posted for orders and such pronouncement shall be deemed to be a communication. A copy of the order shall also be sent to the applicant and the Sales Tax Authority or the Appellate Tribunal.
4. (5) The Sales Tax Authority or the Appellate Tribunal shall dispose of the case before them after the expiry of ninety days from the date of order under sub-section (4). The quantum of turnover taxes, penalties or interest, etc. settled under this section shall be adopted as such by the Sales Tax Authorities or the Appellate Tribunal while disposing of the case before them, if the settlement does not get annulled as provided under sub-section
5. (8) and the matters not covered in order of settlement under sub-section (1) shall be disposed of by the Sales Tax Authority or the Appellate Tribunal in

accordance with law. The matters referred to in the application under sub-

section (1) of section 4E shall be disposed, along with other matters by the Sales Tax Authority or the Appellate Tribunal, in accordance with law, in the event if the settlement gets annulled under sub-section (8).

1. (6) Every order passed under sub-section (4) shall provide for the terms of settlement including any demand by way of tax, penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresentation of facts.
2. (7) The settlement commission shall annul the settlement order passed under sub-section (4), after hearing the parties if the settlement has been obtained by fraud or misrepresentation of facts.

Sales Tax [1957: KAR. ACT 25

1. (8) Where any tax, penalty or interest etc payable in pursuance of an order under sub-section (4) is not paid by the applicant within ninety days of the pronouncement of order, the settlement stands annulled and the case shall be deemed to be restored to the stage as it stood immediately prior to the date on which an application under sub-section (1) of section 4E was made.
2. (9) Where a settlement has been annulled as provided under sub- section (7), the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the Sales Tax Authority or Appellate Tribunal concerned, may, notwithstanding anything contained in any other provision of this Act, proceed and complete such proceedings at any time before the expiry of two years from the end of the financial year in which the settlement has been annulled.
3. (10) Where an application under sub-section (1) of section 4E is rejected under sub-section (1) of section 4F or allowed to be withdrawn under sub-section (3) of section 4E by the Settlement Commission, the period of time elapsed between the date of filing the application under sub- section (1) of section 4E and the date of communication of the order of rejection or withdrawal, to the Sales Tax Authority or the Appellate Tribunal shall be excluded for the purpose of computing the period of time prescribed for completing any proceedings under the Act in relation to the case.
4. (11) Where a settlement gets annulled as provided under sub-section (8), the period of time elapsed between the date of filing the application under sub-section (1) of section 4E and up to ninety days from the date of order under sub-section (4) shall be excluded for the purpose of computing the limitation of time prescribed for initiating or completing any proceedings under the Act in relation to the case.
5. (12) An application for settlement of a case shall be disposed of by the Settlement Commission, within ninety days from the date of order of admission under sub-section (1).

(1) In the absence of any express direction to the contrary issued by the Settlement Commission, nothing contained in this Chapter shall affect the operation of any provision of this Act requiring the applicant to pay taxes or any amount due in relation to the matters before the Settlement Commission. (2) For the removal of doubt, it is hereby declared that, in the absence of any express direction by the Settlement Commission to the contrary, nothing in this chapter shall affect the operation of the provisions of this Act in so far as they relate to any matters other than those before the Settlement Commission. (3) The Settlement Commission shall, subject to the provisions of this chapter, have power to regulate its own procedure in all matters arising out of the exercise of its powers or of the discharge of its functions.

1. (2) For the removal of doubt, it is hereby declared that, in the absence of any express direction by the Settlement Commission to the contrary, nothing in this chapter shall affect the operation of the provisions of this Act in so far as they relate to any matters other than those before the Settlement Commission.
2. (3) The Settlement Commission shall, subject to the provisions of this chapter, have power to regulate its own procedure in all matters arising out of the exercise of its powers or of the discharge of its functions.

No person shall be entitled to inspect or obtain copies of any reports made by any Sales Tax Authority or the Commissioner, to the Settlement Commission; but the Settlement

1957: KAR. ACT 25] Sales Tax Commission may, in its discretion, furnish copies thereof to any such person on an application made to it in this behalf and on payment of the prescribed fee;

(1) If the Settlement Commission, is satisfied that any person who made the application for settlement under this section has co-operated with the Settlement Commission in the proceedings before it, the Settlement Commission may grant to such person, subject to such conditions as it may think fit to impose, immunity from prosecution for any offence under this Act, and also (either wholly or in part) from the imposition of any penalty under this Act, with respect to the matters in the case covered by the settlement: Provided that no such immunity shall be granted in cases where the proceedings for the prosecution for any such offence has been instituted before the date of receipt of the application under sub-section (1) of section 4E.

1. (2) An immunity granted to a person under sub-section (1) shall stand withdrawn if such person fails to pay any sum specified in the order of settlement passed under sub-section (5) of section 4F, within the time specified or fails to comply with any other condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted.
2. (3) An immunity granted to a person under sub-section (1), may, at any time, be withdrawn by the Settlement Commission, if it is satisfied that such person had, in the course of the settlement proceedings, concealed any particulars or material from the Settlement Commission or had given false evidence, and thereupon such person may be tried for any other offence of which he appears to have been guilty in connection with the settlement and shall also become liable to imposition of any penalty under this Act to which such person would have been liable, had not such immunity been granted.

applicant does not co-operate.- (1) If the Settlement Commission is of opinion that any person who made an application for settlement under sub- section (1) of section 4E has not co-operated with it in the proceedings before it, the Settlement Commission may by an order send the case, back to the Sales Tax Authority or the Appellate Tribunal which shall thereupon dispose of the case in accordance with provisions of this Act as if no application under sub-section (1) of section 4E had been made.

1. (2) For the purposes of sub-section (1), the Sales Tax Authority or the Appellate Tribunal shall be entitled to use all the materials and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it as if such materials, information, inquiry and evidence had been produced before the Sales Tax Authority or the Appellate Tribunal or held or recorded by it in the course of the proceedings before it.

Sales Tax [1957: KAR. ACT 25

1. (3) Where a case is sent back to the Sales Tax Authority or the Appellate Tribunal under sub-section (1), the period of time elapsed between the date of filing the application under sub-section (1) of section 4E and the date of communication of the order under sub-section (1) to the Sales Tax Authority or the Appellate Tribunal, as the case may be, shall be excluded for the purpose of computing the period prescribed for initiating or completing any proceeding under the Act in relation to the case.

Every order of settlement passed under sub-section (4) of section 4F shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force.

(1) Any proceeding under this chapter before the Settlement Commission shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purposes of section 196 of the Penal Code (Central Act 45 of 1860).]

¹ Inserted by Act, 3 of 2004 w.e.f. 29.1.2004.