1. Coated Aluminium products

They are different from aluminium household utensils. Satilon coating makes all the difference and such goods would fall in entry 104 of Kerala General Sales Tax Act relating to “Pressure cooker, Cook and serve ware to keep food warm, casseroles, etc or similar home appliances.

Hawkins Cookers Ltd. v. State of Kerala (2008) 14 VST 375 (S.C.)

2. Concept of mutuality

The Calcutta HC held that supply of food, drinks by a members’ club to its members was not includible in the deemed definition of “sale” since collection from members was not towards payment of price of drinks/food but reimbursement of expenses met from the fund of the club, which has been contributed by members themselves. Mere fact of presentation of bills and striking off of membership in the event of default by member does not bring about change in law. The HC held that in the absence of mention of supply irrespective of payment in sub clauses (e) and (f) of clause (29A) of Article 366, the concept of mutuality cannot be said to have been obliterated.

State of West Bengal v. Calcutta Club Ltd. (2008) 14 VST 499 (Cal)

3. Construction and sale of flats not a service / works contract

The petitioner was engaged in the business of development and sale of immovable property which was effected by entering into Flat Purchase agreements with various flat buyers. The title in flats / apartments passed to the buyers only on execution of Sale Deeds and registration thereof. The flats were being constructed by the petitioner in his individual capacity and there was evidence to show that the construction was undertaken for and on behalf of the proposed customers / allottees. The construction work was the petitioners’ own work and it was only the completed construction work in the form of flats that was sold by the petitioners to the buyers who may have entered into the agreements either before, during or at the end of the construction. The progressive payments received from the buyers were nothing but instalments towards purchase of flat. Assotech Realty P. Ltd. v. State of U.P. (2007) 8 VST 738 (All.) was followed and K. Raheja Development Corporation v. State of Karnataka (2005) 141 STC 298 (S.C.) was distinguished. The Court also clarified as to what constitutes service. Service can be defined as an act of helpful activity, an act of doing something useful, rendering assistance or help. Service does not involve supply of goods – service connotes transformation of use / user of goods as a result of voluntary intervention of service provider and is an intangible commodity in the form of human effort.

Magus Construction P. Ltd. vs. Union of India (2008) 15 VST 17 (Gauhati).

4. Dealer

1. VAT Act

The Commissioner, under section 80 of the Gujarat VAT Act, held that a general hospital conducted by Charitable Trust, duly registered under the Public Charitable Trust Act and enjoying income tax exemption, was a dealer for running a medical store supplying medicines and surgical goods to indoor patients as well as to outsiders. It was in that connection held that such an activity was a commercial activity and therefore the said hospital was required to be registered under the VAT Act and consequently liable to tax under Gujarat VAT Act, 2003.

M/s Bhailal Amin General Hospital, Baroda.

Source : Sales Tax Journal, Vol. 47, Part 4, Page 242.

2. Financial company

The West Bengal Taxation Tribunal, considering the inclusive part of the definition under the amended West Bengal Taxation Law 1941, held that a company even though not engaged in the business of selling and purchasing goods, was still a dealer qua its transaction of sale of office materials, waste paper, broken furnitures and other unserviceable materials.

M/s Peerless General Finance & Investment Company Ltd & Another vs. State of West Bengal & Another (2008) 52 S.T.A. – 18.

Person engaged in repairs of tyres and conveyor belts was held to be a dealer since the activity entailed purchase / use of rubber, chemicals, etc and after the repairs, the material stood transferred to the contractees.

Tip Top General Agencies P. Ltd. v. CTO (2008) 14 VST 153 (M.P.)

5. Entries in Schedule

1. Hair dye

The Supreme Court held that a colouring material used for blackening grey hair was not hair lotion required for cleansing the hair or for skin disorders, but was taxable under the residuary entry 68 of the Excise Act.

M/s Godrej Industries Ltd vs. Shri D. G. Ahire, Asstt. Collector of Central Excise JT 2008 (7) SC 628.

2. Plastic hangers

The West Bengal Taxation Tribunal held that the plastic hangers used basically for keeping the readymade garments in a crease-free condition, cannot be treated as packing material and therefore was liable to be taxed @ 12.5% under the West Bengal VAT Act, 2003.

M/s Thakur Das Chotrani vs. S. T. O., Rajakatra Charge & Others (2008) 52 S. T. A. – 62.

3. Ayurvedic medicine

In a proceeding under section 80 of the Gujarat VAT Act 2003, it was held that Vicco Vajradanti ayurvedic paste and Vicco Vajradanti ayurvedic powder were covered by entry 28A(1) relating to drugs, medicines etc. and therefore were liable to be taxed @ 4%.

M/s Kunj Corporation Agency, Jetalpur, Ahmedabad.

Source : Sales Tax Journal, Vol. 47, Part 4, Page 245.

4. Electronic cash register

In the proceedings under section 80 of the Gujarat VAT Act, 2003, it was held that electronic cash register was nothing but IT product covered by entry 45 of Schedule II and hence liable to be taxed @ 4%.

M/s Prompt Sales and Service, Old Wataj, Ahmedabad.

Source : Sales Tax Journal, Vol. 47, Part 4, Page 248.

5. Steel tubes

In the proceedings under section 80 of the Gujarat VAT Act 2003, held that steel tubes, welded and seamless of all diameters and lengths including the tube fittings, were declared goods covered by entry 46 of Schedule II read with notification under section 5(2) of the said Act and therefore liable to be taxed @ 4%.

M/s Parekh Engineering Co., Rajkot.

Source : Sales Tax Journal, Vol. 47, Part 4, Page 260.

6. Orthopaedic appliances

In the proceeding under section 40 of the Gujarat VAT Act, 2003, it was held that orthopaedic electric heating belt / pad were covered by the notification dated 31st March, 2006 relating to orthopaedic & fracture appliances and therefore liable to be taxed @ 4% under entry 28 of Schedule II.

M/s Home Care Remedies, Valsad.

Source : Sales Tax Journal, Vol. 47, Part 4, Page 264.

7. Stirring machine

In the proceedings under section 80 of the Gujarat VAT Act, 2003, it has been held that the Stirring machine with 1 HP electric motor and working on 250W electricity with the capacity of stirring 100 litres curd and butter in one hour was nothing but machinery covered by entry 58 of Schedule II liable to be taxed @ 4% along with the liability of 1% additional tax from 1st April, 2008.

M/s Shrirang Industries, Visanagar, Gujarat.

Source : Sales Tax Journal, Vol. 47, Part 4, Page 269.

6. Exemption – Scrap

Before the Supreme Court, the assessee had claimed exemption on the clearance of steel bars, rods and steel ingots manufactured by them on the footing that the input material were duty paid goods.

The goods so purchased were iron and steel scraps including turning and boring, old dismantled machinery, old broken engineering goods, punch steel metal, containers and other broken articles of iron and steel including small pieces of rods, flats end cutting. The Supreme Court, considering the language of the notification granting exemption, held that the materials so purchased cannot be proved to have been duty paid goods and therefore, the exemption was held to have been correctly disallowed.

M/s Bhupendra Steel (P) Ltd. vs. Commissioner of Central Excise JT 2008 (7) SC 520.

7. Export

The West Bengal Commercial Tax Appellate & Revisional Board held that in absence of the original documents showing sale in the course of export to Bhutan, the xerox copies thereof along with affidavit was sufficient compliance in view of the fact that Article 286(1b) was applicable to such transactions.

M/s Garden Reach Ship Builders & Engineers Ltd. vs. D.C.C.T. Corporate Division (2008) 52 S. T. A. – 85.

8. ‘F’ Form – Transfer for job work

The Allahabad High Court stayed the operation of the order passed under Central Sales Tax Act, raising demand in absence of Form ‘F’ for the return of the goods to the owner from another State after doing the job work. The impugned order was passed on the basis of the division bench judgment of the Allahabad High Court in the case of M/s Ambica Steels Ltd (12 VST 216). However, the said decision was not accepted to be the correct interpretation of section 6A of the Central Sales Tax Act by other States leading to the inability of the transferee branch or principal to issue the Form for the job work so done.

M/s P. Tax Industries Ltd & Another vs. Union of India & Others VSTI 2008 ... B-379.

9. Furnace oil qualifies as “input”

Furnace oil was a “consumable” directly used in processing or manufacturing of finished goods. Consumables need not directly go into the composition of the finished products – the very expression “consumables” postulates that such articles are destroyed or used upon processing or manufacturing of goods. Hence, consumables by an inclusive definition are included in the definition of “input”, the Legislature did not insist upon requirement which appears in the earlier clauses that such goods must go into the composition of the finished products. The expressions “directly go into the composition of finished product” and “directly used in manufacturing or processing of finished product” are not the same.

Reliance Industries Ltd. v. ACST (2008) 15 VST 228 (Orissa)

10. Inclusive definition

While deciding whether optic fibres, cables, and accessories could be covered in the inclusive entry, “Sound transmitting equipment including telephones, mobile phones, pagers and components and parts thereof, the Gauhati HC has held that it was not necessary that the word, “include” or “including” would invariably be aimed at expanding the meaning of the term. If the words were used in interpretation clauses for the purpose of including particular items which would otherwise also fall within such term, the use of the words “include” would imply exhaustiveness and limitations. In the present case, the Court held that optic fibres, cables would not be covered by Sound transmitting equipment.

Sterlite Optical Technologies Ltd. v. Oil India Ltd. & Ors (2008) 14 VST 9 (Gauhati)

11. Input credit on Furnace oil (Consumables)

Under WBVAT Rules, input credit was disallowed on stock of furnace oil as on April 1, 2005 on the ground that it was used as fuel for running machinery and had no direct relation to use in manufacturing. The Court held that “Direct relation” means “without which the manufacture of end-product was not feasible at all. Furnace oil purchased for use in boiler for incessant running of the plant for conversion of raw material to finished goods was necessarily consumable goods and in the absence of furnace oil manufacture of the end product would become commercially inexpedient.

Consolidated Fibres Chemicals Ltd. v. ACST (2008) 15 VST 222 (WBTT)

12. Inter state sale or Branch transfer

Goods were manufactured at T.N. specifically for brandname holder situate in Kerala. The goods could be marketed only by the brandname holder. The goods were not sold to the brand holder in Kerala. The scheme led to undervaluation of first sales in Kerala. On the facts of the case, it was held that the inter state movement of goods was under a contract of sale u/s 3(a) of the CST Act taxable in T.N. The Court held that it was a fit case for levy of penalty on the petitioner as well as brandname holder for attempting evasion of tax.

Argus International v. A.C. (Assmt), Ernakulam (2008) 14 VST 171 (Kerala)

13. Interest of refund under CST Act

The Gujarat VAT Tribunal, while disposing of several Second Appeals, held that after the amendment of the CST Act by Finance Act, 2000, the assessee was entitled to get the refund with interest for its delayed grant as provided
under section 54 of the Gujarat Sales Tax Act, 1969.

M/s Jagdish Export Industries, Ahmedabad Vs State of Gujarat & Others.

Source : Sales Tax Journal, Vol. 47, Part 4, Page 279.

14. Judicial discipline

The Supreme Court held that the High Court ought to have referred the ratio of the decision of the co-ordinate bench in relation to the earlier assessment years when the same was brought to its notice. The Supreme Court, therefore, observed that judicial discipline having not been adhered to, the judgment of the High Court was set aside.

CCT Orissa & Others vs. M/s Indian Explosives Ltd. VSTI 2008 B-350.

15. Jurisdiction – Taxation Tribunal

The Supreme Court held that the West Bengal Taxation Tribunal do not have any jurisdiction, power and authority over any investigation, enquiry or proceeding conducted under Criminal Procedure Code, nor does it have any power to interfere with the order of the lower court even up to the stage of commencement of the trial also.

State of West Bengal vs. Mr Pranab Kumar Saha. VSTI 2008 B-348.

16. Liability for lease transaction

The West Bengal Commercial Tax Appellate & Revisional Board held that the painting and display charges did not involve any transfer of right to use any goods nor was there any conditional transfer of right to use goods and therefore the assessee was not liable to pay any tax under section 2(g)(ii) of the Bengal Finance (Sales Tax) Act, 1941.

M/s Display Pvt. Ltd. vs. A. C.C.T. Chowringhee Circle (2008) S.T.A. – 81.

17. Limitation

1. Date of Order

The Supreme Court, while considering the provisions of limitation for assessment under section 29(8)(b) of the Rajasthan Sales Tax Act, 1994, held that the time limit for passing the consequential order to the order passed by the Appellate Authority would be two years from the date of communication of the order in appeal to the assessing authority and not from the date of the order in appeal.

M/s Deepak Agro Foods vs. State of Rajasthan & Ors. VSTI 2008 B-369.

2. Notice for assessment

The VAT Tribunal, Punjab, held that if the notice for amendment was issued within the limitation period of five years from the last date of filing the return for the period under assessment, the same can be completed any time thereafter, since the Act did not provide for any limitation for completing the assessment proceeding.

M/s Mollins of India Engg. Ltd, Mohali vs. State of Punjab (2008) 32 PHT 113 (PVT)

18. Maintainability of Appeal

The Madras High Court held that the original order of assessment, if not challenged in appeal, cannot be agitated in an appeal against a later rectification order.

M/s Sunmangala Steels Ltd vs. The Chairman, Tamil Nadu Sales Tax Appellate Tribunal, Chennai & Others 2008-09 (14) TNCTJ – 132.

19. Manufacture

The Customs, Excise & Service Tax Appellate Tribunal, Bangalore, while considering the liability of service tax, held that the assessee engaged in the activity of powder coating of furniture did not undertake an activity of manufacture. Therefore the assessee was liable to pay service tax on such activity.

M/s A. G. Shibu & Another vs. Commissioner of Customs, Excise & Service Tax, Kochi. 2008 NTN (Vol. 37) – 161.

20. Multifunctional Digital copier machine

It may act as a combination of some or all of the following devices – (a) Printer (b) Scanner (c ) Photocopier (d) Fax (e) Email. Except the photocopier, others are connected to the CPU of the computer. If the principal purpose of any particular model is printing and the value of the printing components is more than the value of other components put together, it would be a computer peripheral falling within HSN code 8471 appearing in C-3 Part II of WBVAT Act, 2003.

Ricoh India Ltd. v. ACST (2008) 14 VST 491 (WBTT)

21. Order in appeal – Reasons must

The Supreme Court disapproved the manner of disposing the appeal in a casual manner without due application of mind. It also observed that reasons for arriving at a conclusion was the heart-beat of the judicial process leading to clarity in the order when challenged before the higher authority.

M/s Steel Authority of India Ltd vs. Sales Tax Officer, Rourkela - I Circle & Others. VSTI 2008 B-374.

22. Packing material

The Allahabad High Court, after considering the provisions of the U. P. Trade Tax Act, 1948, held that the sale of edible oil, in tin containers purchased from local market by the manufacturer of edible oil was not liable to tax for the value of the tin container shown separately in the bill.

M/s Prag Ice Oil Mills vs. Commissioner, Trade Tax, U. P., Lucknow 2008 NTN (Vol. 37) – 158.

23. Petroleum jelly – Drug

The S.C. has, on an application of the principle of stare decisis has held that petroleum jelly was a drug and not a cosmetic. The product was considered as a drug consistently in the past by the Sales Tax authorities and the burden of proving that the goods fell under a different entry “cosmetic” was on the Department. If an entry was interpreted consistently in a particular manner for several assessment years, ordinarily it would not be permissible for the Revenue to depart therefrom unless there was a material change. The S.C. held that drugs would include medicines for prevention of disease or disorder. The product found mention in Indian Pharmacopoeia and also did not contain any perfume whereas a cosmetic would ordinarily contain some perfume.

Ponds India Ltd. v. Commissioner of Trade Tax, Lucknow (2008) 15 VST 256 (S.C.)

24. Rate of tax

Electronic Push button Telephones which are electronically programmed to store messages, numbers, etc are a class by themselves and are different from ordinary telephones which are listed in Sound transmitting equipments.

K.M. Mohammed Habeebulla v. State of Kerala (2008) 14 VST 150 (Ker.)

25. Revision

The Madras High Court held that once the payment at the compounded rate was made by the assessee under section 7-C of the Tamil Nadu Act, it was not open to revise the same on the pretext that the transaction was not that of works contract, but a pure and simple sale, on the basis of the judgment of the Supreme Court in the case of M/s Kone Elevators (140 STC 22).

Sinetch vs. The Commercial Tax Officer, Chennai. 2008-09 (14) TNCTJ-122

26. Sale price

The Allahabad High Court held that the duty of paying export pass fee was that of the buyer / purchaser and therefore even if the export duty was deposited by the seller, it cannot form part of the sale consideration as defined in section 2(g) of the Central Sales Tax Act, 1956.

M/s Sir Sadi Lal Enterprises Ltd, Muzaffarnagar vs. Commissioner of Sales Tax, U. P., Lucknow VSTI 2008 .. B-367.

27. Unserviceable Plant & machinery taxable as scrap

Unserviceable plant & machinery of a company that was closed (Factory licence had been surrendered) was sold in auction on “As is where is” basis and “No complaint” basis. The seller and buyer had intended to dismantle the machinery and the buyer, a scrap dealer, was to sell the resultant scrap. The machinery was described in the gate pass as scrap although it was not broken up or dismantled at the point of sale and was described as Machinery in the invoice. On these facts, it was held that the unserviceable plant and machinery was intended to be sold as steel scrap and was taxable at 4%.

Chitrahar Traders & Anr v. Commissioner of Commercial Taxes (2008) 14 VST 439(Mad)