Returns and assessment.-

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.