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1.
Entries in Schedule
1. Thermoline
The full Bench of the Gujarat
VAT Tribunal held that APCOMARK Retro-reflective thermoplastic road marking
material conforming to the specifications laid down in the ‘Specification for
Road & Bridge Works’ was held to be covered by entry 18(A) of Schedule II of
the Gujarat VAT Act.
The Tribunal in that
connection followed the decision of the Supreme Court in the case of M/s Mauri
Yeast India Pvt. Ltd (14 VST 259).
M/s Asian Paints Ltd vs. The
State of Gujarat.
Source : Sales Tax Journal,
June 2009, Page 223.
2. Paper coated abrasives
The West Bengal Taxation
Tribunal held that Silicon Carbide paper and Emery paper were nothing but
tools for carpentry and therefore covered by Item No. 83(f) of Part I of
Schedule C appended to the West Bengal VAT Act, 2003.
M/s Madhabi Rakhit & Others
vs. C.C.T., Beliaghat & Others (2009) 53 S. T. A. – 327.
3. Gypsum Board
The Bombay High Court, while
deciding a Sales Tax Appeal under Maharashtra VAT Act, held that Gypsum board
was covered by entry C-41 appended to the Maharashtra VAT Act. The entry in
question read as “Gypsum of all forms and description”. For the aforesaid
purpose, the High Court not only referred to the dictionary meaning, but also
referred to the Supreme Court judgments in regard to the proper meaning of
“forms”, “in all forms” and “all forms and description”.
Commissioner of Sales Tax vs.
M/s India Gypsum Ltd. (Sales Tax Application No. 4 of 2008 decided on 17th
April, 2009).
4. Inverted sugar
The Allahabad High Court
confirmed the order of the Tribunal and held that inverted sugar was liable to
be taxed as ‘sugar product’.
Commissioner of Trade Tax, U.
P., vs. M/s Dhampur Invertose & Others 2009 NTN (Vol. 40) – 237.
5. Acrylic yarn
The Allahabad High Court held
that Acrylic Yarn used for weaving sarees was covered by entry relating to
yarn of all kinds.
M/s Haq Textile vs.
Commissioner of Trade Tax, U. P. 2009 NTN (Vol. 40) – 242.
6. Garlic balls & paste
Before the Joint Commissioner
(Legal), Gujarat, the assessee after purchasing garlic, used to crush the same
with the help of a machine and prepare small balls of garlic as well as paste
after adding preservatives like acetic acid and salt. The Joint Commissioner
rejected the submission of the assessee that the garlic continued to be fresh
vegetable under entry 28 of the First Schedule appended to the Gujarat VAT
Act, but after considering the process and other entries mentioned in the
Second Schedule, held that the paste or the balls of garlic were covered by
entry 48 of the said Second Schedule under the description “processed food,
processed vegetables including fruit jams, juice etc”.
M/s Sambodhi Fruits &
Dehydration (Order under section 80 dated 10-6-2009). [Source : Sales Tax
Journal, Vol. 48, Part : 4, July 2009, Page 313.
7. Water Purifying Machine
The Gujarat VAT Tribunal,
while deciding an appeal against the determination order under section 80 of
the Gujarat VAT Act, held that water purifying machine with reverse osmosis
system was a machinery covered by entry 58A of Second Schedule under the
description “Plant & Machinery.”
M/s Aquacare Technology vs.
The State of Gujarat (Appeal No. 27 of 2008 decided on 22-4-2009). [Source :
Sales Tax Journal, Vol. 48, Part : 4, July 2009, Page 333.]
2. Effect of Circular
The Supreme Court, while
considering an appeal against the order passed by Custom, Excise & Service Tax
Tribunal, held that the beneficial circular has to be applied retrospectively
in favour of the assessee, while an oppressive circular against the assessee
has to be applied prospectively. For the aforesaid purpose, the Supreme Court
followed its earlier decision in the case of Commissioner of Central Excise
vs. M/s Mysore Electricals Industries Ltd. (204 ELT 517).
M/s Suchitra Components Ltd
vs. Commissioner of Central Excise (2009) 34 PHT 83 (SC).
3. Inter-State Works
Contract & Lease transaction
The Allahabad High Court held
that the goods brought from outside the State for being used in the execution
of works contract within the State were covered by section 3 of the Central
Sales Tax Act, 1956 and therefore cannot be subjected to tax even where the
items in question were used in the execution of a works contract in the State
itself.
Commissioner, Trade Tax Vs
M/s Indus Food Products & Equipments Ltd. (2009) 34 PHT 25 (All).
4. Items for ‘C’ Form
The Allahabad High Court,
upholding the order of the Tribunal, held that the high speed diesel oil
required for the operation of generator for the generation of electricity was
eligible to be purchased at concessional rate under Section 8(3)(b) of the
Central Sales Tax Act.
Commissioner, Trade Tax, U.
P., Lucknow vs. M/s Shubham Cane Crusher & Others (2009) 34 PHT 28 (All).
5. Intangible goods
The VAT Tribunal, Punjab,
held that Duty Free Import Authorisation was intangible goods. Entry 65 of
Schedule A enumerating tax free goods, did not expressly cover the said
intangible goods. The Tribunal, therefore, held that the said item was covered
by entry 59 of Schedule B under description “intangible goods of all kinds.”
M/s Raghu Export (India) Pvt.
Ltd., Jalandhar vs. State of Punjab (2009) 34 PHT 115 (PVT).
6. Interest
The Madurai Bench of Madras
High Court held that though the provisions in regard to levy of interest did
not provide for issue of a notice before quantifying the interest, such an
action was violative of the principles of natural justice. In other words, the
authority must consider the objections raised by the assessee before passing
the order of levying interest.
Tvl. Sornammal & Company vs.
The Assistant Commissioner (CT), Viruthunagar & Others 2009-10 (15) TNCTJ –
117.
7. Lease tax
Before the Allahabad High
Court, the assessee had entered into a lease agreement at Madras for giving on
lease certain systems and machineries which were also inspected by the lessee
at Madras itself. Since the agreement was executed at Madras for the
machineries etc. in existence, the Hon’ble Court held that the State of U. P.
had no jurisdiction to levy tax under the U. P. Trade Tax Act.
M/s S & S Power Switchgear
Ltd. vs. The Commissioner of Trade Tax, U. P., Lucknow. 2009 NTN (Vol. 40) –
243.
8. Limitation – Reference
The Haryana Tax Tribunal,
Chandigarh, rejected the Reference Application submitted by the State
Government late by 249 days. The cause for such a delay was sought to be
explained in a vague manner as delay at various levels and summoning of
relevant records by respective authorities. The Tribunal found that there was
no genuine or serious effort made by any officer to explain such a heavy
delay.
State of Haryana vs. M/s Ram
Partap Bansal & Co., Fatehabad (2009) 34 PHT 88 (HTT).
9. Lease of bus
The assessee, before the
Allahabad High Court, had entered into a contract with various companies for
providing buses owned by him for transportation of the employees from their
place of residence to and fro factory. The assessee received hire charges
periodically. The Allahabad High Court, setting aside the order of the
Tribunal, held that the assessee continued the effective control of the buses
ever during the period when the employees were being transported and since the
companies – transferee – did not get any legal right to use the vehicle in any
manner it likes, there was no transfer of right to use goods.
Mr Mohd. Wasim Khan vs.
Commissioner of Trade Tax (2009) 34 PHT 132 (All).
10. Manufacture
1. Jumbo roll to small
flats
The Supreme Court held that
conversion of Jumbo rolls of photographic films into small flats and rolls of
different sizes amounted to an activity of manufacture and therefore the
assessee was entitled to get the benefits of section 32AB, 80HH & section 80.1
under the Income-tax Act, 1961.
M/s India Cine Agencies vs.
Commissioner of Income Tax, Madras (2009) 53 S. T. A. – 311.
2. Mixing of colour
strainer and paint
The Allahabad High Court held
that mixing a colour strainer to the white paint did not amount to
manufacture, since the activity did not result in a new commercial commodity.
M/s Kumar Paints & Mill
Stores, Meerut vs. Commissioner of Trade Tax, U. P., Lucknow & Others 2009 NTN
(Vol. 40) – 228.
3. Assembling of wet
grinder
The Supreme Court held that
when the assessee purchased spare parts individually and assembled the same as
a complete Wet Grinder unit that was sold as such, there was an activity of
manufacturing Wet grinders. The Apex Court rejected the contention of the
assessee that he had sold spare parts.
M/s Sree Krishna Electricals
vs. State of Tamil Nadu & Another. (2009) 34 PHT 1 (SC).
11. Package Scheme of
Incentive – Circular quashed
The Bombay High Court, while
considering the Package Scheme of Incentive, 1993 by the State of Maharashtra,
held that the Circular issued by the Commissioner of Sales Tax on 17th January
1998, clarifying the pro rata enjoyment of the incentive in case of Units
effecting expansion; being contrary to law laid down by the court in the case
of Commissioner of Sales Tax vs. M/s Pee Vee Textiles Ltd (Sales Tax
Application No. 8 of 2007 decided on 13th August, 2008); amounted to excessive
exercise of jurisdiction and therefore the same was quashed. Consequently, the
additional condition in the Certificate of Entitlement, containing the pro
rata eligibility of incentive, also was quashed.
M/s MIRC Electronic Ltd &
Others vs. State of Maharashtra (Writ Petition No. 818 of 2001 decided on 19th
June, 2009).
12. Promissory estoppel
The Supreme Court held that
where the new industrial unit got written confirmation from the Development
Corporation about the availability of exemption of sales tax for a fixed
period subject to a ceiling of 100% of capital investment, the doctrine of
promissory estoppel was applicable and the authorities under the sales tax law
cannot deny the benefits later on.
M/s Pepsico India Holdings P.
Ltd. vs. State of Kerala & Others 2009 NTN (Vol. 40) – 175.
13. Penalty
The Supreme Court held that
when certain items were duly incorporated in the books of account though not
included in the return furnished or by claiming exemption of such turnover,
there was no case for imposing a penalty.
M/s Sree Krishna Electricals
vs. State of Tamil Nadu & Another (2009) 34 PHT 1 (SC).
14. Revision
Before the Gujarat VAT
Tribunal, the assessee was assessed under the Simple Assessment Scheme,
announced for a limited period by the Gujarat Government, applicable to
pending cases of assessment up to a particular year. As per the scheme, the
Commissioner was empowered to accept or reject the application under the said
scheme and accordingly in the assessee’s case, the assessment was done under
the said scheme. Since the scheme itself was not subject to revision, the
action of the revising authority was set aside.
M/s Laxman Plastics Pvt. Ltd. vs. The State of Gujarat
Source : Sales Tax Journal,
June 2009, Page 234.
15. Refund
The Supreme Court held that
where the assessee had effected the payment of tax at a higher rate as per the
notification then available and where by subsequent notification the rate of
tax was reduced with retrospective effect, the excess payment of tax by the
assessee was refundable. In such a case, according to the Supreme Court, the
doctrine of unjust enrichment would not apply.
Corporation Bank vs.
Saraswati Abharansala & Another (2009) 53 S.T.A. – 318.
16. Rectification of mistake
The Allahabad High Court held
the point of law which was sought to be rectified, being debatable and require
investigation, cannot be considered as a mistake apparent on the face of the
record for the purpose of section 22 of the U. P. Trade Tax Act, 1948.
M/s. Vivek Mentha Udyog,
Rampur vs. The Commissioner of Trade Tax, U. P., Lucknow 2009 NTN (Vol. 40) –
254.
17. Recovery
The Madras High Court, after
considering the relevant judgments of the Supreme Court, held that the auction
notice issued by the Deputy Commercial Tax Officer much after creation of the
lien over the property by bankers for advances paid, cannot be sustained. The
plea of the State that the State tax dues have first charge over the property
of the defaulter with the right to sell the same when required was rejected.
The base and bottom of such a conclusion was the language used in section 24
of the Tamil Nadu General Sales Tax Act, much different than the provisions
under the Bombay Sales Tax Act, Rajasthan Sales Tax Act and Kerala General
Sales Tax Act, where statutorily the first charge was created over the
property of the dealers. Such provision in those enactments specifically used
non obstante clause overriding other provisions as well as contrary provisions
in any law for the time being in force.
Mr M. Nagarajan vs. The
Deputy Commercial Tax Officer & Others 2009-10 (15) TNCTJ – 125.
18. Sale price
1. The Madras High Court,
after considering the judgment of the Apex Court in the case of State of
Orissa vs. M/s Asiatic Gases Ltd (07 VST 531), held that the containers in
which the gases were sold constituted integral parts of the gases and
therefore the delay in return of the cylinders or charges for non-return
thereof for which demurrage charges or cylinder holding charges were
collected, formed part of sale price.
M/s. Asiatic Oxygen Ltd.,
Chennai vs. The State of Tamil Nadu 2009-10 (15) TNCTJ – 83.
2. The West Bengal Taxation
Tribunal, after analysing the terms and conditions of the contract together
with other relevant documents like Invoice, Delivery Challan, Stores Receipt
Vouchers etc, held that the freight and insurance charges reimbursed to the
seller by the buyer were post-sale events and did not form part of sales price
in the hands of the seller. In the instant case, the price quoted was Ex-works
price, while freight and insurance were to be mentioned separately.
M/s India Potteries Ltd &
Another vs. A. C. C. T., Taltala Charge & Others (2009) 54 S. T. A. – 52.
9. Second sale
The Madras High Court,
upholding the judgment of the Tribunal, held that the subsequent seller was
under the obligation only to show that there was a first sale prior to his
transaction and it was none of his obligation to show that the first seller
had in fact paid the tax.
The State of Tamil Nadu vs.
Tvl. Sri Alaggar Traders, Coimbatore 2009-10 (15) TNCTJ – 89.
20. Sale – Free gift
The Allahabad High Court held
that distribution of free match boxes to the distributors under the Sale
Promotion Scheme by the manufacturer amounted to gifts to the distributors,
but not a transaction of sale as contemplated under section 2(h) of the U. P.
Trade Tax Act.
M/s Wimco Limited, Bareilly
vs. Commissioner of Trade Tax, U. P., Lucknow 2009 NTN (Vol. 40) – 218.
21. Scope of BIFR Scheme and
its impact
The Bombay High Court, after
considering the impact of section 32 of the SICA Act, held that the sanctioned
Rehabilitation Scheme by BIFR, had overriding effect over all other laws
excepting those mentioned in the said Section.
The Hon’ble High Court also
held that the Maharashtra Sales Tax Tribunal being a quasi-judicial body,
cannot ignore the sanctioned Scheme nor was it open to the authorities under
the Sales Tax law including the quasi-judicial authorities like Tribunal, to
order the payment of interest or penalty, which was contrary to the sanctioned
Scheme. The action of the Maharashtra Sales Tax Tribunal in retaining part of
the interest, that was directed to be fully waived by BIFR was held by the
High Court to be without jurisdiction by refusing to consider the impact of
section 32(1) of the SICA Act.
M/s Vadilal Dairy
International Ltd. vs. State of Maharashtra (Sales Tax Application No. 68 of
2009 decided on 24th July, 2009).
22. Transfer of right to use
computer
The Bombay High Court, while
deciding a Sales Tax Reference arising out of the Lease Act, held that when
the computer owner rendered the service of preparing statements etc. as per
the data given by the customers during fixed allotted time, did not come
within the charging section of transfer of right to use goods and hence there
was no case of deemed sale, especially when no effective control and
possession was transferred to the customer by the computer owner, whose
employees operated the computer feeding data brought by the customers.
Commissioner of Sales Tax,
Maharashtra State vs. M/s Rolta Computer & Industries Pvt. Ltd (Sales Tax
Reference No. 8 of 2000 decided on 19th June 2009).
23. Transfer of right to use
goods – Advertisement hoardings
Before the Andhra Pradesh
High Court, the Municipal Committee had constructed hoardings at various
places, whereupon the boards were fixed by the individuals desiring to have
advertisement of their own product or for conveying a message. In such
transactions, fixed hire charges were charged. The Hon’ble High Court held
that since the advertisement hoardings were embedded to the earth constituting
part of immovable property did not involve any transfer of right to use any
goods. It was a simple case of lease of immovable property for which hire
charges were charged.
State of Andhra Pradesh vs.
M/s Prakash Arts (2009) 34 PHT 34 (AP).
24. Works contract
Before the Commissioner of
Commercial Taxes, Gujarat, the applicant made an application under section 80.
The applicant undertook contract of cleaning services of the pipelines,
valves, drainage system etc. In such job, the applicant used his own material
and chemicals like caustic soda, citric acid, sodium nitrite etc. Since the
material used in the job work got consumed in the process of cleaning, the
nature of the transaction was held to be that of works contract, but the
Commissioner held it to be not amounting to deemed sale, as there was no
transfer of property in goods in the course of executing the cleaning job.
M/s Alen & Co., Gujarat
(Order dated 24th March, 2009)
Source : Sales Tax Journal,
June 2009, Page 200.
25. Writ Jurisdiction –
Scope
The Supreme Court, while
considering the scope of Article 226 vis-à-vis the jurisdiction of the High
Court in entertaining the petition, held that where the impugned order was
challenged to be without jurisdiction, the availability of alternative remedy,
would not be a bar for entertaining the Writ Petition by the assessee.
M/s Godrej Sara Lee Ltd vs.
Asst. Commissioner (AA) & Another 2009 NTN (Vol. 40) – 171.
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