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1. Assessment
The Allahabad High Court held
that no assessment can be made in the trade name, where the business carried
on was that of a Proprietor. However, the defect in the assessment order in
the name of the Firm, instead of the Proprietor, was curable defect.
The Commissioner, Trade Tax vs. M/s Kuberji Traders, Jalaun 2009 NTN (Vol. 39)
– 1
2. Appellate Authority –
Power
The Allahabad High Court held
that an Appellate Authority exercised his power which was wider than the power
of the Assessing Authority. The court also held that the power of enhancement
cannot be exercised by travelling beyond the subject matter of the appeal.
The Commissioner of Trade
Tax, U. P., vs. S/s Krishna Flour Mill, Chandausi 2009 NTN (Vol. 39) – 79.
3. Double Taxation
The Allahabad High Court held
that the provisions of the Special Act will prevail over the General Act. In
the case before the court, the State was collecting ‘administrative charges’
which was nothing but charges on molasses through sugar factories under the
special enactment, while it was also collecting trade tax under the U. P.
Trade Tax Act. The court, finding that the same purchase of molasses having
been taxed twice under two different enactments, accepted the suggestions of
the assessee and held that the trade tax being under the general enactment,
tax thereunder cannot be legally sustained. The Hon’ble Court, for that
conclusion, referred to several case laws including those from the Apex Court.
M/s. SAF Yeast Co. Pvt. Ltd
vs. State of U. P. & Anr. 2008 NTN (Vol. 38) – 296.
4. Entries in Schedule
1. Sports Wears
The Allahabad High Court,
while interpreting notification under the U. P. Trade Tax Act, 1948, held
that the goods of indoor or outdoor games cannot cover sports wears. The
entry in question covered only sports items specified therein and the term
‘readymade garments’ covered by another notification was broad enough to
cover sports wears.
M/s A. H. Wheeler & Co.
Pvt. Ltd. vs. The Commissioner of Trade Tax, U. P., Lucknow. 2009 NTN (Vol.
39) – 11.
2. Renewable energy
devices
The Gujarat VAT Tribunal
held that the battery operated vehicle was covered by entry 61 of Schedule
II of the Gujarat VAT Act, 2003. That entry related to ‘renewable energy
devices and components and parts thereof’. The rate of tax was held to be 4%
under that entry.
M/s Ashapura Trade &
Transport Pvt. Ltd. vs. The State of Gujarat.
Source: Sales Tax Journal,
Vol. 47, Part 10, January 2009, Page – 904.
3. Ayurvedic medicine
The Supreme Court, while
disposing of the civil appeals under the Central Excise Act, held that
Bio-aloe vera, Bio-bhringraj, Bio-cucumber, Bio-coconut, Bio-milk,
Bio-walnut etc were Ayurvedic medicines under Chapter 30 and not under
Chapter 33 as cosmetics. The Supreme Court, in the course of its decision,
referred to the relevant case law in detail.
Commissioner of Central
Excise vs. M/s Ishaan Research Lab. P. Ltd & Others (2009) 53 S.T.A – 7.
4. Tyres & Tubes
The West Bengal Taxation
Tribunal held that tyres and tubes of tractors were parts of the tractor and
therefore covered by Sr. No. 84 of Part I of Schedule C of the West Bengal
VAT Act liable to 4% VAT.
M/s Goodyear India Ltd vs.
C. C. T., Beliaghata & Others (2009) 53 S.T.A - 39.
5. Mirror Glass
The Allahabad High Court held
that looking glass (mirror glass) was taxable as toilet requisite and not
under the entry relating to the glass ware.
The Commissioner of Trade
Tax, U. P. vs. M/s Kohinoor Glass House 2009 NTN (Vol. 39) – 75.
5. Exemption – Impact of CST
amendment
Before the Allahabad High
Court, the assessee was entitled to exemption for a specified period by virtue
of the notification issued earlier under sub-section (5) of Section 8 of the
Central Sales Tax Act for its inter-State sales without furnishing any Form.
The said notification continued without any change even after the amendment to
CST Act by Finance Act, 2002. The assessee therefore claimed exemption for the
post-amendment period on the basis of the said notification. The Court held
that with the amendment in CST Act restricting the exemption only to the sales
to registered dealers supported by ‘C’ form, the State Government had no power
to exempt such sales.
[Editor’s Note:– With due
respect to the Hon’ble Single Judge of the Allahabad High Court, the impact of
the provisions of General Clauses Act and not amending the earlier
notification even after the amendment in 2002 seems to have not been brought
to the notice of the court. The amendment to the enabling power under section
8(5) of the CST Act made effective from 11th May 2002 do not ipso facto vary,
rescind, alter or amend the notifications issued earlier. Such a power have to
be exercised by the same authority and in the same manner in which the power
was earlier exercised as per the provisions of General Clauses Act. The
judgment therefore requires reconsideration, especially because the amendment
was not a retrospective one. The entire judgment proceeded on the principles
of promissory estoppel].
M/s Swastik Components Pvt.
Ltd. vs. Commissioner, Commercial Tax, U. P., Lucknow. 2009 NTN (Vol. 39) –
48.
6. Entry Tax – Natural
justice
The Maharashtra Sales Tax
Tribunal quashed the order levying entry tax on the local buyer on the basis
of the submission of return and payment of entry tax by the vendor from other
State, holding that the local buyer was never made a party to any proceeding
nor any hearing given. The order in question was held to be complete violation
of principles of natural justice.
M/s B. E. S & T. Undertaking
vs. State of Maharashtra (Second Appeal Nos. 1045 & 1046 of 2007 decided on
30th January, 2009).
7. Expectation – Quasi-judicial authority
The Gujarat VAT Tribunal,
while directing the Commercial Tax Officer to issue permission for lump sum
tax in lieu of tax on sales as provided in Section 14 of the Gujarat VAT Act,
observed that a quasi judicial authority was expected to apply his mind and
thereafter pass a reasoned and speaking order and not follow blindly the
instructions of the superiors.
M/s Shah Navinchandra
Mulchand, Mandvi vs. The State of Gujarat.
Source: Sales Tax Journal,
Vol. 47, Part 10, January 2009, Page – 909.
8. Inter-State Works
Contract
1. Before the Allahabad High
Court, some of the machinery to be erected in the State of U. P., moved from
other States after due inspection by the representative of the buyer. The High
Court held that the goods upon inspection at the very place from where it
originated, were appropriated to works contract and thereafter moved therefrom
in pursuance to the works contract. It was covered by Section 3(a) of the CST
Act.
The court also held that the
nature of the transaction cannot change simply because the value of the
machinery and the erection charges were bifurcated. In regard to the purchase
within the State of U. P., and thereafter use in the works contract, the court
held that no tax can be levied because of the single point first stage
taxation scheme adopted under the U. P. Trade Tax Act.
Commissioner, Trade Tax, U.
P., Lucknow vs. M/s Indian Sugar & General Corporation Sakauli Tanda, Meerut.
2009 NTN (Vol. 39) – 20.
2. Before the Allahabad High
Court, the assessee had undertaken to Manufacture, supply, install and erect
the Sprinkler Irrigation System at the site in the State of Uttar Pradesh. The
consideration agreed upon by the parties was one consolidated one for the
execution of the works contract. The authorities, however, held that there
were two contracts, one for supply of goods and the other for installation,
erection etc. The authorities levied tax on the value of the material used in
the execution of works contract. Following the ratio of the judgment of the
Constitution Bench in the case of M/s Gannon Dunkerley & Co. Ltd (88 STC 204),
the High Court held that the material required to be used, moved from the
State of Uttar Pradesh to the site outside the State which inter alia included
the parts and accessories of sprinkler irrigation system and therefore the
nature of contract was held to be an indivisible inter-State works contract
which could not have been taxed under the provisions of U. P. Trade Tax Act
during the period prior to 13th May 2002, when the Central Sales Tax Act was
amended.
M/s Jindal Irrigation Limited
vs. Commissioner of Trade Tax, U. P., Lucknow 2009 NTN (Vol. 39) – 105.
9. Goods – Customised & non-customised
software – Issue of ‘C’ form
The Madras High Court held
that the software, unbranded or customised, developed by the assessee and sold
to the customers for upgrading their system or for the purpose of repairing
and maintaining it, were goods under Article 366(12) of the Constitution read
with section 2(d) of the Central Sales Tax Act, 1956 and 2(j) of the Tamil
Nadu General Sales Tax Act, 1959.
In view of the above
position, consequent to the judgment of the Supreme Court in the case of M/s
Tata Consultancy Services (137 STC 620) as well as M/s BSNL (145 STC 91), the
court also held that the assessee can effect the purchases by issuing
declaration in Form ‘C’ under the Central Sales Tax Act and Form XVII under
the Tamil Nadu Act. The Court therefore held that the department was not
justified in rejecting the said declaration issued by the assessee.
M/s Infosys Technologies Ltd,
Chennai vs. The Special Commissioner & Commissioner of Commercial Taxes,
Chennai & Others 2008-09 (14) TNCTJ-313.
10. Inter-State purchase
The Allahabad High Court
upheld the claim of the purchasing commission agent that the purchases made by
them were effected on behalf of the principals from other States. The
submission of the Revenue in regard to the absence of record of orders from
principal was negatived, holding that the orders from the principals may be
oral orders on telephone which did not call for maintenance of any record.
M/s Jai Shree Trading Company
vs. Commissioner of Trade Tax, U. P., Lucknow. 2008 NTN (Vol. 38) – 318.
11. Intra-State or
Inter-State – Replacements under Warranty
Before the Gujarat VAT
Tribunal, the assessee having dealership of M/s.Tata Motors provided services
to the customers of M/s Tata Motors and wherever required, replaced the
damaged spare parts during warranty period. For such free replacement, the
assessee got reimbursement from the said M/s Tata Motors having their office
in Mumbai. On the above facts, the Assessing Authority treated the transaction
of replacement of spare parts, and the value thereof being reimbursed by M/s
Tata Motors as of inter-State sale. Following ratio of the Supreme Court
judgment in the case of Mohammad Ahmadkhan vs. Commissioner of Trade Tax (136
STC 515), the amount of reimbursement received from Tata Motors were held to
be for a transaction of sale. However, considering the fact that there was no
movement of parts replaced, from one State to another, the nature of
transaction was held to be an intra-State sale and not an inter-State one.
M/s Kenson Motors, Bhuj vs.
The State of Gujarat
Source : Sales Tax Journal,
Vol. 47, Part 10, January 2009, Page – 907.
12. Inter-State sale
The assessee from Pune
entered into a contract with a party in Uttar Pradesh for supply of machinery.
Accordingly, the machinery and its parts moved from Pune to the site of the
buyer, where the same were delivered. Since the title to the goods passed to
the buyer in the State of U. P., the authorities taxed the transaction as a
local transaction liable to be taxed under the provisions of U. P. Trade Tax
Act.
In view of the fact that the
movement of goods commenced from Pune pursuant to the pre-existing contract,
the Allahabad High Court held that the transaction was squarely covered by
Section 3(a) of the Central Sales Tax Act and the place where the title to the
goods passed was of no relevance.
The Commissioner of Trade
Tax, U. P., Lucknow vs. M/s Dharmex Pvt. Ltd., Pune – 2009 NTN (Vol. 39) – 68.
13. Limitation
The Supreme Court, while
deciding an appeal under the Central Excise Act, held that in absence of any
positive material showing suppression, the discretion of extended period of
limitation cannot be invoked. In that connection, the Hon’ble Apex Court also
held that mere non-declaration was not sufficient for invoking the larger
period under Section 11A of the Central Excise Act, 1944.
Commissioner of Central
Excise, Bengaluru vs. M/s Karnataka Agro Chemicals. (2009) 53 S.T.A. – 27 &
28.
14. Lease Tax
1. Plant & Machinery
The Allahabad High Court held
that no tax for the transfer of right to use goods was leviable when the
entire Unit, including the plant and machineries permanently attached to the
earth was leased. Such plant and machineries were not movable property and
were not goods. The court also held that the judgment of the Supreme Court in
the case of M/s Sirpur Paper Mill was on entirely different facts and was
distinguishable.
The Commissioner, Trade Tax,
U. P. vs. S/s Gulshan Sugar & Chemicals Ltd. 2009 NTN (Vol. 39) – 56.
2. Dies & moulds
The Allahabad High Court held
that when the assessee, carrying on the business of manufacture and sale of
motor cars, supplied dies and moulds to outside agencies, for manufacture of
the parts of the car, it did not involve any transfer of right to use the dies
and moulds and the assessee was not liable for such use of dies and moulds by
the manufacturers.
The Commissioner, Trade Tax,
U. P., Lucknow vs. M/s Honda Siel Cars India Ltd., Greater Noida 2008 NTN
(Vol. 38) – 307.
15. Luxury Tax – The
Members’ Club
The Madras High Court, while
allowing the writ petition, explained the term ‘business’ as defined under the
Tamil Nadu Luxuries Tax Act and held that the accommodation provided to the
members, by the Members’ Club, cannot be equated to a lodging house or a hotel
and therefore, no tax under the Luxuries Tax Act can ever be levied. The
action instituted by the department was held to be without jurisdiction and
void ab initio.
M/s Coonoor Club & Others,
Coonoor vs. The Commercial Tax Officer & Others 2008-09 (14) TNCTJ – 287.
16. Rate of tax – Digital
watches
Before the Allahabad High
Court, the assessee had sold digital watches in the course of inter-State
sale. By notification under Section 8(5), electronic goods were granted
partial exemption, by levying only 2% tax on such inter-State sales. The court
held that the digital watches were electronic goods for the purpose of
notification under Section 8(5), though a separate entry under the local
enactment referred to ‘All kinds of watches and clocks’.
The Commissioner, Trade Tax,
U. P., Lucknow vs. M/s Fore Front Electronics Pvt. Ltd., Noida 2008 NTN (Vol.
38) – 315.
17. Rectification
The Allahabad High Court held
that the Tribunal while exercising the powers under Section 22, cannot review
the earlier decision, on the basis of new grounds raised with the
rectification application.
The Commissioner, Trade Tax,
U. P. vs. S/s D.C.M Limited., Meerut 2009 NTN (Vol. 39) – 61.
18. Situs of sale
The Madras High Court, while
allowing the writ petition of the assessee, held that when the seller had
physically delivered the articles, to the purchaser from other State, at his
own place of business in the State of Tamil Nadu, the nature of the
transaction was that of a local sale and not inter-State sale, as held by the
departmental authorities.
M/s Saraswathi Agencies,
Chennai vs. The Sales Tax Appellate Tribunal, Chennai & Others 2008-09 (14)
TNCTJ – 302.
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