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1. Penalty u/s 10(d)
The respondent was an
authorized dealer for M Ltd. and carried on the business of sale and purchase
of vehicles. It purchased spare parts against Form C for sale but some parts
were used for honouring warranty claim – free of cost replacement during the
warranty period of the cars sold. Cost of the parts was recovered from M Ltd.
The Assessing Officer levied penalty u/s 10A for violation of Sec. 10(d) of
the CST Act on the ground that the parts were not resold but used under
warranty free of cost. The HC held that such supply of parts under warranty
claim amounts to sale following Mohd. Ekram Khan & Sons vs. CTT (2004) 136 STC
515 (S.C.)
CTT vs. Kanpur Tractors P.
Ltd. (2009) 20 VST 493 (All)
2. Form C purchases
The dealer was engaged in the
manufacture of Khandsari, gur, etc. and applied for registration of HSD for
making purchases of High Speed diesel (HSD) at concessional rate of tax. The
HSD purchased was to be used for running Generator and generating power. The
HC ruled that HSD was eligible to be purchased at concessional rate of tax
against Form C as the benefit was available to goods used in “generation or
distribution of electricity or in any other form of power” which words were
not qualified by the words “for sale”.
CTT vs. Shubham Cane Crusher
– (2009) 20 VST 104 (All)
3. Circular for summary
denial of Set off
The Commissioner issued a
general Circular that no set off should be allowed to any claimant dealers if
they claimed to have effected purchases from 3 dealers who had not shown sales
in their returns. Further, even if their claim had been accepted in appeal,
revision, appropriate action was to be taken for withdrawal of set off.
Accordingly, set off was denied in assessment. The dealer filed an appeal and
also filed a writ petition for quashing of the said Circular. On a perusal of
the powers conferred under Rule 3(5) of the M.P. Commercial Tax Rules 1995 and
ancillary clauses, the Circular did contravene the provisions of the Act as it
encroached upon the quasi – judicial powers and was not for the purpose of
giving effect to the purpose of the Act. Hence, the Circular was struck down.
However, the HC clarified that it had not gone into the merits of the case.
MKS Engineering Co. P. Ltd.
vs. AC (2009) 20 VST 485 (M.P.)
4. Sales by Central
Government Department to State Government
The petitioner was a unit
under the Ministry of Health & Family Welfare of the Government of India. It
transferred medicines and equipments received as aid or imported from various
international agencies like UNICEF, WHO, etc. to other Departments of
Government of India, State Governments, Union Territories and other Central
Government organizations. The petitioner was held to be a “dealer”. To the
extent that the goods were distributed free of cost, no sales took place
within the meaning of Sale of Goods Act, 1930. In instances where the goods
were transferred to other Departments of the Central Government, no sales
could be deemed to take place since one could not sell to oneself. However,
supplies to other State Governments and / or statutory organizations,
hospitals or Health Centres under other State Governments or statutory
organizations would be sale as property in goods was being transferred from
Central Government to other persons not forming part of the Central
Government. Art. 285 of the Constitution did not grant immunity against levy
of Sales tax as sale tax was not a levy on property belonging to the Union of
India but on sales of goods effected by the Union of India.
Government Medical Stores
Depot, Government of India vs. State of West Bengal & Ors. (2009) 20 VST 341 (WBTT)
5. Sale Price – Rural
Development fee
Rural development fee under
the Rural Development Fund Act does not form part of “Sale price” as the said
fee was realized from the purchaser and paid on behalf of the buyer by the
seller – it was the duty of the buyer to pay the same although the seller
could realize it from the buyer.
Tilak Raj Madan Mohan vs.
State of Punjab (2009) 20 VST 351 (P & H)
6. Service of Notice by
affixation
Where a Notice of date of
hearing was served by affixation without recording any finding/reasons that
service could not be made personally or by registered post and the Notice
Server’s Report did not indicate the place where the Notice was affixed or the
name of the person who identified the place of affixation, the Notice was held
to be not properly served under U.P. Trade Tax Rules, 1948.
Gurprasad Ramprasad Agencies
vs. CTT (2009) 20 VST 368 (All.)
7. Entry – Thermoseal and
Rathermoseal toothpastes
The T.N. Taxation Special
Tribunal had ruled that Thermoseal and Rathermoseal, medicated toothpastes
were liable to fall under Entry 7 of Part E and not under Entry 20A Part C
relating to Drugs and medicines on the ground that the products stood excluded
from Entry 20A in the light of the intention of the Legislature. The HC set
aside the Tribunal’s order and allowed the petitioner to place all material
evidence before the Assessing authority who would have to decide on the merits
of the case in the light of guidelines laid down in V.C. Ramalingam & Sons vs.
State of T.N. (2002) 127 STC 382 (Mad.) and Puma Ayurvedic Herbal P. Ltd. vs.
CCE (2006) 145 STC 200 and State of Goa vs. Leukoplast (India) Ltd. 105 STC
318 (S.C.) – whether the products had medicinal contents, had curative
function, whether they were used to cure, alleviate or prevent disease or
merely to restore or preserve health.
Jain Distributors vs.
Registrar, T.N. Taxation Special Tribunal (2009) 20 VST 375 (Mad.)
8. Recovery from Directors
The petitioner was an
erstwhile Director of some companies against whom dues had been determined.
The Director was proceeded against for recovery of dues payable by the
companies. Writ petitions against the Recovery Notices were filed and the
entity by itself and it could sue or be sued. The High Court held that any
dues from the company could be recovered only from the company and not from
its Directors.
Ravindra Maheswari vs. CTO
(2009) 20 VST 422 (Mad.)
9. Reassessment –
Exaggerated turnover shown to banks
The dealer had shown an
exaggerated turnover to the bank with a view to procure Home Loan and Cash
credit facilities. The Assessing authorities and the Tribunal had justified
the reassessment on the basis of the exaggerated turnover disclosed to the
bank. The HC accepted the dealer’s plea that reassessment was not justified
solely on the basis of the exaggerated turnover without there being any
incriminating evidence to support the view that there was suppression of
turnover. On the contrary, there was a finding by the Assessing authority that
the turnover was exaggerated for the purposes of the bank and telephone and
electricity bills reflected were never raised by the Telephone and Electricity
Department.
Asha Industries vs. CTT
(2009) 20 VST 465 (All)
10. Reassessment
In original assessment after
adjudication in detail, it had been held that freight directly paid by the
purchasers to the Railways while taking delivery of goods would not form part
of turnover. Hence, reassessment u/s 21 of the U.P. Act solely on account of
change of opinion was set aside.
CTT vs. Arihant Trading Co.
(2009) 20 VST 483 (All.)
11. Sales Tax Declaration
Forms
While deciding on the
issuance of declaration forms IIIB and IIIC/1, the Authorities are required
only to see whether demand was genuine and reasonable and refusal on the
ground that the dealer had not paid certain dues was not justified or in
accordance with Rule 12B and Rule 25B of U.P. Trade Tax Rules, 1948.
Darshan Agroils Ltd. vs.
State of U.P (2009) 20 VST 619 (All.)
12. Sales Turnover
Compensation for non-lifting
goods as per Agreement would not form part of sales turnover since it was
neither sales consideration nor falling within the purview of Explanation to
Sec. 2(i) which defined “Turnover”.
CTT vs. Manava Gramodyog
Mandal (2009) 20 VST 711 (All.)
13. Circular – Time of
applicability
The SC has held that a
beneficial Circular has to be applied retrospectively while an oppressive
Circular has to be applied prospectively.
Suchitra Components Ltd. vs.
CCE (2009) 20 VST 726 (S.C.)
14. Second Inter State sales
The HC held that for second
or subsequent inter State sales in transit u/s 6(2) of the CST Act, it was
necessary that the goods purchased were tax-paid under the CST Act and the
mere fact that the purchase was made from registered dealers was not
sufficient for a successful claim u/s 6(2) of the CST Act.
CTT vs. Azad Scrap Traders
(2009) 20 VST 768 (All.)
15. Stay against recovery
In appeal proceedings against
demand that had arisen due to disallowance of claim of branch transfer on the
ground that goods were manufactured to specification and sent in furtherance
of prior purchase order, the Joint Commissioner declined to grant stay against
recovery of dues. In writ petition challenging the dismissal of the stay
application, the HC held that powers conferred on the Joint Commissioner to
grant stay were discretionary and unless it was shown that the exercise of the
power was vitiated by an error apparent, the Court could not interfere. There
were several vital considerations like existence of prima facie case balance
of convenience, public interest, possibility of irreparable injury. Further,
Courts should grant stay under Art. 226 of the Constitution in very
exceptional cases and not as a matter of rule.
Thejo Engineering Services P.
Ltd. vs. CTO (2009) 20 VST 737 (A.P)
16. Entry – Exerciser
Fitness equipments like
Exerciser would not be covered by entry “Goods for indoor or outdoor games or
sports” but be covered by residuary entry. The Exerciser was merely a device
for physical exercise for sake of health, training or practice to develop
skill, aptitude but did neither did it involve any contest or competition as
in a game nor involved a concept of recreation, fun or enjoyment as in sports.
Hero Cycles Ltd. v. CTT
(2009) 20 VST 819 (All)
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