The Karnataka Tax on Entry of Goods Act, 1979

Short title, extent and commencement.

1. (1) This Act may be called the Karnataka Tax on Entry of Goods Act, 1979.
2. (2) It extends to the whole of the State of Karnataka.
3. (3) It shall come into force on the first day of October, 1980.

Definitions.-

1. (A) In this Act, unless the context otherwise requires,-

1. (1) agricultural produce or horticultural produce shall not include tea, beedi leaves, coffee, rubber, cashew, cardamom, pepper and cotton ; and such produce as has been subjected to any physical, chemical or other process for being made fit for consumption, save mere cleaning, grading sorting or drying; (1a) “Appellate Tribunal” means the Appellate Tribunal constituted under the Karnataka Appellate Tribunal Act, 1976 (Karnataka Act 10 of 1976); (1b) “assessee” means a person by whom tax is payable;
2. (2) “Assessing Authority” means any officer empowered to make an assessment under the Karnataka Sales Tax Act 1957 or this Act by the Government or the Commissioner (2a) Deputy Commissioner and the Deputy Commissioner of Commercial Taxes appointed under the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957) (2b) business includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern and any transaction in connection with or incidental or ancillary to such trade, commerce, manufacture, adventure or concern.
3. (3) “Commissioner” means the person appointed to be the Commissioner of Commercial Taxes in the State; (3a) “Joint Commissioner” means the Joint Commissioner of Commercial Taxes appointed under the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957) ;
4. (4) ‘dealer’ means any person who in the course of business, whether on his own account or on account of a principal or any other person, brings, or causes to be brought into a local area any goods or takes delivery or is entitled to take delivery of goods on its entry into a local area and includes an occasional dealer. Explanation I.- An industrial, commercial or trading undertaking of the Government of Karnataka, the Central Governement or any other State Government, a local authority, a company, a Hindu undivided family, an Aliyasanthana family, a firm, a society, a club or an association which carries on such business shall be deemed to be a dealer for purposes of this Act. Explanation II.- A society (including a co-operative society) club or firm or an association which, whether or not in the course of business, buys, sells, supplies or distributes goods from or to its members for cash, or for deferred payment or for commission, remuneration or other valuable consideration, shall be deemed to be a dealer for the purposes of this Act. Explanation III.- The Central Government or a State Government other than the Government of Karnataka which whether or not, in the course of business, buys, sells, supplies or distributes goods, directly or otherwise, for cash or deferred payment or for commission, remuneration or other valuable consideration shall be deemed to be a dealer for the purposes of this Act. Explanation IV.- When a consignee does not take delivery of goods upon its entry into a local area and such goods are sold under the provisions of any law, the buyer who takes delivery of such goods upon the goods being sold shall be deemed to be the dealer thereof. Explanation V.- A person undertaking the execution of works contract involving the use or consumption of goods entering into a local area shall be deemed to be the dealer thereof. Explanation VI.- Any person who brings or causes to be brought any goods into a local area but resides out side the State of Karnataka (hereinafter referred to as a non-resident dealer) including his agent or manager shall be deemed to be the dealer thereof. Exception.- Any agriculturist who brings exclusively agricultural produce grown on land cultivated by him personally shall not be deemed to be a dealer within the meaning of this clause. (4a) goods means all kinds of moveable property (other than newspapers, actionable claims, stocks and shares and securities) and includes livestock; (4b) ‘goods vehicle’ means any kind of vehicle used for carriage of goods either solely or in addition to passengers (other than aeroplanes and rail coaches) and includes push cart, animal drawn cart, tractor-trailer and the like. (4c) “Additional Commissioner” means the Additional Commissioner of Commercial Taxes appointed under the Karnataka Sales Tax Act, 1957 (Karnataka Act of 1957);
5. (5) ‘local area’ means an area within the limits of the city under the Karnataka Municipal Corporations Act, 1976 (Karnataka Act 14 of 1977), a Municipality under the Karnataka Municipalities Act, 1964 (Karnataka Act 22 of 1964), a Notified Area Committee, a Town Board, a Sanitary Board or a Contonment Board constituted or continued under any law for the time being in force and a Mandal under the Karnataka Zilla Parishads Taluk Panchayat Samithis, Mandal Panchayats and Nyaya Panchayats Act, 1983 (Karnataka Act 20 of 1985) and panchayat area under the Karnataka Panchayat Raj Act, 1993 (Karnataka Act 14 of 1993). (5a) ‘occasional dealer’ means any person who, in the course of occasional transactions of business nature whether on his own account or an account of a principal, or any other person bring or causes to be brought into a local area any goods or takes delivery or is entitled to take delivery of goods on its entry into local area. (5b) ‘place of business’ means any place where a dealer is doing business and includes,-
   • (i) any warehouse, godown, or other place where the dealer stores or processes his goods ;
   • (ii) any place where the dealer produces or manufactures goods;
   • (iii) any place where the dealer keeps his books of accounts ;
   • (iv) any place where the dealer carries on business through an agent (by whatever name called), the place of business of such agent;
6. (6) “registered dealer” means a dealer registered under this Act;
7. (7) “Schedule” means a schedule appended to this Act;
8. (8) “tax” means tax leviable under this Act; (8a) 'Value of the goods' shall mean the purchase value of such goods, that is to say, the purchase price at which a dealer has purchased the goods inclusive of charges borne by him as cost of transportation, packing, forwarding and handling charges, commission, insurance, taxes, duties and the like , or if such goods have not been purchased by him, the prevailing market price of such goods in the local area. (8b) "works contract" means any agreement for carrying out for cash, deferred payment or other valuable consideration, the construction, fitting out, improvement or repair of any building, road, bridge or any other immovable property, or manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair, conversion or commissioning of any movable property.
9. (9) 'year' means the year commencing on the first day of April
   • (B) Words and expressions used in this Act, but not defined, shall have the meaning assigned to them in the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957.)

Levy of tax.-

1. (1) There shall be levied and collected a tax on entry of any goods specified in the FIRST SCHEDULE into a local area for consumption, use or sale therein, at such rates not exceeding five percent of the value of the goods as may be specified retrospectively or prospectively by the State Government by notification and different dates and different rates may be specified in respect of different goods or different classes of goods or different local areas.
2. (2) The tax levied under sub-section
3. (1) shall be paid by every registered dealer or a dealer liable to get himself registered under this Act or the Central Government or a State Government other than the State Government of Karnataka who brings or causes to be brought into a local area the goods whether on his own account or on account of his principal or any other person or who takes delivery or is entitled to take delivery of such goods on its entry into a local area. Explanation.- Where the goods are taken delivery of on its entry into a local area or brought into a local area by a person other than a dealer, the dealer who takes delivery of the goods from such person shall be deemed to have brought or caused to have brought the goods into the local area.
4. (3) Notwithstanding anything contained in sub-section
5. (1) or sub-section (2), no tax shall be levied on and collected from a dealer who brings or causes to be brought into a local area any goods,-
   • (i) in respect of which tax has been paid or has become payable in any other local area under sub-section (1), or
   • (ii) other than Gutkha in respect of which tax has been paid or has become payable under section 4-B of the Karnataka Tax on Luxuries Act, 1979 (Karnataka Act 22 of 1979).
6. (4) The provisions of sub-sections
7. (3) shall not apply unless the dealer preferring claim under the said sub-section furnishes to the assessing authority declaration in the prescribed form issued by the dealer who is liable to pay tax on such goods under this Act or the stockist who is liable to pay tax on such goods under the Karnataka Tax on Luxuries Act, 1979 (Karnataka Act 22 of 1979), as the case may be.

(4A) Notwithstanding anything contained in sub-sections

1. (2) and (3), where a dealer purchases any scheduled goods within the same local area from another dealer having more than one place of business in two different local areas, he shall not be eligible for preferring claim under sub-section
2. (3) of section 3 unless such dealer furnishes to the assessing authority a declaration in the prescribed form obtained from the selling dealer.
3. (5) Where a dealer brings or causes to be brought goods into a local area and claims exemption by furnishing a declaration as provided in sub-section
4. (4) and it is found that the said declaration is false, he shall be liable to pay the tax on such goods in addition to the penalty if any payable under section 28A.
5. (6) No tax shall be levied under this Act on any goods specified in the SECOND SCHEDULE on its entry into a local area for consumption, use or sale therein. (6A) No tax shall be levied on a defence unit which causes entry of any goods liable to tax under the Act, into a local area for use by it in the manufacture, repair or research and development of defence and defence related goods.
6. (7) Every manufacturer who brings or causes to be brought any goods into a local area or every dealer who brings or causes to be brought any goods into the State, the aggregate value of which is not less than one lakh rupees in a year and any other dealer who brings or causes to be brought any goods into a local area, the aggregate value of which is not less than two lakh rupees, shall not be liable to pay tax for that year: Provided that every non-resident dealer including his agent or manager, or every occasional dealer shall be liable to pay the tax each year at the rates specified irrespective of the aggregate value of the goods brought or caused to be brought into the local area during the year.
7. (8) The tax shall be assessed, levied and collected in such manner and in such installments if any, as may be prescribed.
8. (9) Subject to such rules as may be prescribed the Assessing Authority may assess a dealer for any year as if, the aggregate value of the goods brought or caused to be brought into local area in such year had been received as in the previous year.

Collection of tax by registered dealer.-

1. (1) A person who is not a registered dealer 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 specified in a notification issued under section 3.
2. (2) No dealer shall collect any amount by way of tax or purporting to be way of tax in respect of the entry of any goods on which no tax is payable by him under the provisions of this Act.

Penalty for collection in contravention of section 3A.- If any person contravenes any of the provisions of section 3A the assessing authority may, after giving such person a reasonable opportunity of being heard by order in writing, impose upon him by way of penalty a sum not exceeding one and a half times of such amount :

Collection of tax by Central Government or State Government.- Notwithstanding anything contained in this Act, the Central Government or the State Government shall be entitled to collect by way of tax any amount which a registered dealer would be entitled to collect by way of tax under this Act.

Payment and disbursement of amounts wrongly collected by dealers as tax Payment and disbursement of amounts wrongly collected by dealers as tax.-

1. (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 3A, 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. (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 one and a quarter per cent 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 8. 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 the appeal or other proceeding is allowed by such Authority.
3. (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
4. (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.
5. (4) Where any amount is paid or recovered by or from any dealer under sub-section
6. (1) or (3), a refund of such amount or any part thereof can be claimed from the State Government by the person from whom it was realised by way of tax provided an application in writing in the prescribed from 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 admissable and that amount as claimed as refund is actually paid or recovered, he shall refund the amount or any part thereof, which is found due to the persons concerned.
7. (5) Where any amount is collected by way of tax or purporting to be by way of tax in contravention of section 3A at any time before the commencement of the Karnataka Taxation Laws (Amendment) Act, 1994 the provisions of sub-sections
8. (3) and
9. (4) shall apply to such amounts collected. 3C. Omitted 1[3C. x x x]1

¹ Inserted by Act 18 of 1989 and omitted by Act 5 of 1993 w.e.f.9.11.1992

1[4. Registration of dealers.-

1. (1) Every dealer,-
   • (a) who buys or receives goods liable to tax under this Act and who is doing business in a local area and 2[is registered or is liable for registration under section 10 of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957) 3[or section 22 of the Karnataka Value Added Tax Act, 2003 (Karnataka Act 32 of 2004)]3]2 or
   • (b) who brings or causes to be brought such goods into a local area or takes delivery or is entitled to take delivery of such goods, the aggregate value of which is not less than 1[two lakhs]1 rupees in a year. shall get himself registered under this Act in such manner on payment of such fee and within such period as may be prescribed. The registration shall be renewed from year to year on payment of the prescribed fee until it is cancelled. 1[ Provided that every manufacturer who buys or causes to be brought any goods into a local area or every dealer who brings or causes to be brought any goods into the State, shall get himself registered under this Act, if the aggregate value of such goods brought into a local area or into the State, as the case may be, is not less than one lakh rupees in a year.]1
2. (2) Notwithstanding anything contained in sub-section (1),-
   • (i) every dealer undertaking execution of works contract involving the use or consumption of goods entering into a local area;
   • (ii) every non-resident dealer ;
   • (iii) every occasional dealer ;
   • (iv) every manager or agent or a non-resident dealer ; other than a dealer dealing exclusively in the goods specified in the schedule, shall get himself registered irrespective of the value of such goods;
3. (3) No dealer who is already registered under the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957) 1[or the Karnataka Value Added Tax Act, 2003 (Karnataka Act 32 of 2004)]1, shall be required to pay registration or renewal fee under this Act.
4. (4) Nothing contained in this section shall apply to any State Government or the Central Government.]1 CHAPTER IIA [NO TITLE]

1[CHAPTER IIA 1. Chapter IIA Sections 4A to 4E inserted by Act 45 of 1994 w.ef.1-4-1995

4A. Definitions.- In this Chapter, unless the context otherwise requires,-

1. (a) "accessories" means air-conditioners, music system and any other articles fitted to a motor vehicle and which are not included in the original invoices ;
2. (b) "entry of motor vehicle into a local area from outside the State" with all its grammatical variations and cognate expressions, means entry of motor vehicle into a local area from any place outside the State for use or sale therein;
3. (c) "importer" means a person who brings a motor into a local area from any place outside the State for use or sale therein and who owns the vehicle at the time of its entry into a local area;
4. (d) "motor vehicle" means a motor vehicle as defined in clause

1. (28) of section 2 of the Motor Vehicles Act, 1988 ;
   • (e) "person" includes any company or association or body of individuals whether incorporated or not and also a Hindu Undivided family, a firm, a society, a club, an individual, the Central Government or the Government of any other State, Union Territory, or a local Authority ;
   • (f) "purchase value" means the value of motor vehicle as ascertained from the invoice and includes the value of accessories fitted to the vehicle, insurance, excise duty, countervailing duties, sales tax, transport fee, freight charges and all other charges incidently levied on the purchase of a motor vehicle : Provided that, where purchase value of a motor vehicle is not ascertainable on account of non-availability or non-production of invoice or when the invoice produced is proved to be false or if the motor vehicle is acquired or obtained otherwise than by way of purchase, then the purchase value shall be at the value or price of being sold in open market ;
   • (g) "State" means the State of Karnataka.

1[4B. Levy of Tax.-

1. (1) Notwithstanding anything contained in Section 3, there shall be levied and collected a tax on the purchase value of a motor vehicle an entry of which is effected into a local area for use or sale therein and which is liable for registration or assignment of a new registration mark in the State under the Motor Vehicles Act, 1988, at such rate as may be fixed retrospectively or prospectively by the State Government by notification but not exceeding the rates specified in respect of motor vehicles under the Karnataka Sales Tax Act, 1957: 1[or the Karnataka Value Added Tax Act, 2003]1 Provided that, no tax shall be levied and collected in respect of a motor vehicle which is registered in any Union Territory or any other State under the Motor Vehicles Act, 1988 fifteen months prior to the date on which a new registration mark is assigned in the State under the said Act.
2. (2) The tax levied under the section shall be paid by the importer in such manner and within such time as may be prescribed.

1[CHAPTER IIA 1. Chapter IIA Sections 4A to 4E inserted by Act 45 of 1994 w.ef.1-4-1995 4A. Definitions.- In this Chapter, unless the context otherwise requires,- (a) "accessories" means air-conditioners, music system and any other articles fitted to a motor vehicle and which are not included in the original invoices ; (b) "entry of motor vehicle into a local area from outside the State" with all its grammatical variations and cognate expressions, means entry of motor vehicle into a local area from any place outside the State for use or sale therein; (c) "importer" means a person who brings a motor into a local area from any place outside the State for use or sale therein and who owns the vehicle at the time of its entry into a local area; (d) "motor vehicle" means a motor vehicle as defined in clause (28) of section 2 of the Motor Vehicles Act, 1988 ; (e) "person" includes any company or association or body of individuals whether incorporated or not and also a Hindu Undivided family, a firm, a society, a club, an individual, the Central Government or the Government of any other State, Union Territory, or a local Authority ; (f) "purchase value" means the value of motor vehicle as ascertained from the invoice and includes the value of accessories fitted to the vehicle, insurance, excise duty, countervailing duties, sales tax, transport fee, freight charges and all other charges incidently levied on the purchase of a motor vehicle : Provided that, where purchase value of a motor vehicle is not ascertainable on account of non-availability or non-production of invoice or when the invoice produced is proved to be false or if the motor vehicle is acquired or obtained otherwise than by way of purchase, then the purchase value shall be at the value or price of being sold in open market ; (g) "State" means the State of Karnataka.

Exemption of tax in certain circumstances.

Restriction of registration etc.

BB. Reduction of tax liability.-

1. (1) Where a person liable to pay tax under this Act becomes liable to pay tax under the Karnataka Sales Tax Act, 1957 1[or the Karnataka Value Added Tax Act, 2003]1 on t

Returns and assessment.

Security deposit.

Self-assement in the case of certain dealers.

Cancellation of assessments in certain cases.

Returns and assessment.

Security deposit.

Self-assement in the case of certain dealers.

Power to withhold refund in certain cases.

Recovery of tax from certain other persons.

9A.

Liability of firms Liability of firms.

Assessment of legal representative.

Tax payable on transfer of business, etc.

Power of State Government to exempt or reduce tax.

Liability of firms.

Penalty for collection in contravention of section 3A.- If any person contravenes any of the provisions of section 3A the assessing authority may, after giving such person a reasonable opportunity of being heard by order in writing, impose upon him by way of penalty a sum not exceeding one and a half times of such amount : Provided that no prosecution for an offence under section 21 shall be instituted in respect of the same contravention for which a penalty has been imposed under this section.

Assessment of legal representative.

Tax payable on transfer of business, etc.

Power of State Government to exempt or reduce tax.

TAX AUTHORITIES

The Authorities [Section text not available in the official gazette publication.]

1[12-C. Provision for clarification and advance rulings.- The ‘Authority for Clarification and Advance Rulings’, (hereinafter referred to in this section as Authority) constituted under section 4 of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957) (hereinafter referred to as the ‘said Act’) shall be authorized 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) All the provisions of the said Act including 2[provisions relating to appeal and]2 the rules made thereunder relating to the manner of making an application for issue of clarification, payment of fee, disposal and implementation of the order passed by the Authority shall mutatis mutandis apply to this section] 1

¹ Inserted by Act 7 of 2003 w.e.f. 1.4.2003

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

APPEAL AND REVISION

Appeal to the Appellate Tribunal.-

1. (1) Any person objecting to an order affecting his interests passed under the provisions of this Act by the Assistant Commissioner of Commercial Taxes or the Deputy Commissioner of Commercial Taxes, may appeal to the Appellate Tribunal.
2. (2) The appeal shall be in such form, verified in such manner, and be accompanied by such fee, as may be prescribed.
3. (3) The Appellate Tribunal shall, after giving both parties to the appeal a reasonable opportunity of being heard, pass such orders thereon as it thinks fit: Provided that the Appellate Tribunal may, before disposing of the appeal, consider and determine any question of law that may be raised by either party to the appeal, which may not have been raised before the lower authorities.
4. (4) The Appellate Tribunal may, at any time within such period as may be prescribed, rectify any mistake apparent from the record of the appeal, and shall, within a like period, rectify any such mistake which has been brought to its notice by the appellant or the Assessing Authority: Provided that no such rectification shall be made which has the effect of enhancing the tax or reducing the amount of refund, unless the appellant and the Assessing Authority have been given notice of such intention and have been allowed a reasonable opportunity of being heard.
5. (5) The copy of every order passed under this section shall be communicated to the appellant, the assessing authority, the Assistant Commissioner of Commercial Taxes or the Deputy Commissioner of Commercial Taxes and the Commissioner.
6. (6) The order passed by the Appellate Tribunal shall, subject to the provisions of section 16, be final.

Revisional powers of Commissioner, Additional Commissioner, Joint Commissioner and Deputy Commissioner.-

1. (1) The Commissioner may on his own motion call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by any officer who is not above the rank of the Joint Commissioner is erroneous in so far as it is prejudicial to the interest of the revenue, he may, if necessary, stay the operation of such order for such period as he deems fit and after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment or directing a fresh assessment.
2. (2) The Additional Commissioner, Joint Commissioner or the Deputy Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by any officer subordinate to him is erroneous in so far as it is prejudicial to the interest of the revenue, he may, if necessary, stay the operation of such order for such period as he deems fit and after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment or directing a fresh assessment: Provided that no order shall be passed under this sub-section increasing or modifying any assessment if the order has been made more than four years prior to the date on which the order is sought to be revised.
3. (3) Any person objecting to an order passed under sub-section
4. (1) or sub-section
5. (2) may appeal to the Appellate Tribunal within thirty days of the date on which the order is communicated to him.
6. (4) In relation to an appeal under sub-section (3), the Appellate Tribunal shall have the same powers as it has in relation to appeals filed under section 14.
7. (5) No order under this section shall be passed by the Commissioner, Additional Commissioner, Joint Commissioner or the Deputy Commissioner in respect of any issue if an appeal against the order of the subordinate officer is pending before the Appellate Tribunal.

Rectification of mistakes [Section text not available in the official gazette publication.]

MISCELLANEOUS

Powers to order production of accounts and powers of entry, inspection and seizure.

Recognition of sales tax check posts or barriers for the purposes of the Act.

Offences by Companies.

Assessment, etc., not to be questioned in prosecution.

Bar of certain proceedings.

Courts not to set aside or modify assessment except as provided in this Act.

Omitted.

Burden of proof.

Refund of tax in certain cases.

Assignment of proceeds of the tax.