The Supreme Court held that while disposing of the appeal, the authority concerned must give reasons for its findings and failure to give reasons was denial of justice. When the first Appellate Authority was found to have disposed of the appeal in a casual manner without due application of mind, the Assessee can challenge the same before higher forum.

M/s. Steel Authority of India Ltd., vs Sales Tax Officer (2010) 18 KTR 143 (SC).

The Kerala High Court held that the concessional rate of taxes was referable to Industrial raw materials or component parts, required to be used in the manufacture of finished products. In the instant case, the Assessee was a Works Contractor engaged in powder coating the metal furnitures belonging to customers. The Assessee claimed concessional rate of taxes on the footing that powder used in coating of goods can be said to be used in the manufacture. The Kerala High Court rejected that submissions, holding that mere production of the prescribed declaration issued by the customers cannot be decisive for eligibility of the concessional rate.

M/s. Ramanand Electro Coats vs. The State of Kerala & Ors. (2010) 18 KTR (KER)

(1) Milk powder and butter mixture

The Allahabad High Court held that mixture of cream milk powder and butter in milk did not change the characteristic of the milk and therefore the item in question was exempt from taxes.

The Commissioner Trade Tax, U.P. vs. S/S Allahabad Sahakari Milk Board Ltd. 2010 NTN (Vo.42)-201

(2) Declared goods

The Bombay High Court held that the expression "tool" appearing in sec. 14 (iv) (ix) of the CST Act, 1956 have to be read independently without considering the impact of later words ‘alloys and special steel’ separately because after the word tool, there was a comma.

The High Court following that principle held that Engineering files made of iron and steel were declared goods.

Commissioner of Sales Tax, M.S. Mumbai vs M/s. Raymond Limited 2010 NTN (Vol. 42) -197

The Punjab & Haryana High Court held that the newly inserted 11CC of 2005 ordinance had no application to the assessment u/s 11. In other words when section 11 provided for 3 years’ period for completing the assessment, the revenue cannot reopen the time barred assessment on the basis of later amendments extending time for assessment.

Bharat Petroleum Corporation Ltd. Patiala vs State of Punjab & Anr (2010) 36 PHT 547 (P&H)

The Supreme Court applied the ratio of its judgement in the case of Shree Krishna Electricals (23 VST 249); while clarifying its earlier judgment in the case of Dharmendra Textile Processors. Supreme Court after considering language of penalty u/s 271(1) C of the Income Tax Act held that where the details supplied by the assessee in its returns were correct and not erroneous or false, the question of imposing a penalty did not arise. Mere making a claim which was not sustainable in law by itself did not amount to furnishing inaccurate particulars. The Supreme Court also held that even where certain items were not included in the turnover but were duly recorded in the Assessee’s books of accounts the addition thereof did not call for any imposition of penalty. In other words the penalty provision had to be strictly construed.

(2010) 35 PHT 575 (SC) Commissioner of Income Tax, Ahmedabad vs Reliance Petroproducts P.Ltd.

Following Judgment of the Supreme Court in the case of second Ashok Leyland (134 STC 473), the Allahabad High Court held that once the requisite

Form ‘F’ covering the transaction of branch transfer was scrutinized, verified and accepted by the assessing authority u/s 6A of the CST Act, no further clarification was required. It had the effect of taking that transaction out of purview of the CST Act.

Master Ram vs The Commissioner of Commercial Taxes, U.P., Lucknow. (2010) NTN (Vol. 42) – 191

Sale – The Rajasthan High Court distinguished the judgment of the Supreme Court in the case of Mohammed Ekram Khan & Sons (AIR2004 SC 3965) and held that replacement of new parts during the warranty period by a distributor of the vehicles in place of defective parts without charging any consideration to the customer and receiving the credit note from the manufacturer for discharging the warranty obligation, was not a transaction of sale and therefore cannot be taxed in the hands of the distributor for its replacement of new parts without consideration.

CTO (AE), Jodhpur vs M/s. Marudhara Motors Jodhpur 2010 NTN (Vol.42) – 205.

The Punjab and Haryana High Court held that TDS was not warranted in the case of works contract that did not involve any transfer of property in goods. The Court therefore directed the Respondent Corporation not to deduct any amount merely because the agreement inter se provided for deduction of tax leviable.

Freedom Info Systems vs Bharat Sanchar Nigam Ltd. & Ors. (2010) 35 PHT 559 (P&H)

Whether Manufacture ?

Before the Bombay High Court, the Assessee was converting aluminium ingots into aluminium alloys by using silicon and copper in small quantity. That activity was statutorily held to be that of a works contract and accordingly the Assessee was paying taxes under the separate Enactment that prevailed during the material time. In the assessment under the local law the purchases that were utilised in the works contract were also charged Purchase tax on the footing that the same were used in the manufacture of finished goods in the form of aluminium alloys.

After considering the relevant provisions under the Bombay Sales Tax Act as well as the Works Contract Act, the Hon’ble High Court held that the State Government cannot impose Purchase Tax under the Sales Tax Act on the material used in carrying out the works contract. While holding so the High Court observed that the scope or meaning of words cannot be so enlarged as to traverse the sense generally carried by the terms, that may adversely effect a citizen vis a vis a Government. The High Court also held that the provisions under the Bombay Sales Tax Act and Works Contract Act did not overlap each other. As such, they cannot be made to overlap through the process of judicial interpretation. The Court therefore answered the reference in favour of the assessee holding that no purchase tax was leviable.

Commissioner of Sales Tax, Maharashtra State vs. Moonlight Metal Industries Pvt. Ltd. Sales Tax Reference 6 of 2001 decided on 30-4-2010