1. Damaged rice was “cattle feed”

The petitioner had purchased damaged rice from the respondent which was declared unfit for human consumption. The tender floated provided that the goods purchased would be used for cattle feed only and an Undertaking to that effect was obtained from the petitioner. Thus, the intention of the parties was to treat the impugned item as cattle feed. Accordingly, no tax was chargeable as cattle fodder was exempted under Schedule A – 4 read with Section 16 of the Punjab VAT Act.

Garg Cattle Feed Industries vs. Food Corporation of India (2009) 23 VST 94 (P & H)

2. DG set and diesel – Inclusion in CST certificate

The respondent was in the business of manufacture and sale of brass artware and its application for insertion of generator and diesel in its certificate of registration for the purpose of concessional rate of tax was held as justified.

Commissioner, Trade Tax, UP vs. Goel India (All) (2009) 23 VST 138 (All.)

3. Entry – Artificial silk yarn

The relevant Notification covered “Pure silk, silk fabric, silk mixed cloth and silk yarn” (emphasis supplied). In this context, it was held that the word “pure” only qualified pure silk and not silk yarn. It is a settled principle that the natural meaning of the word should be given if there was no ambiguity. Even on an application of the common parlance test or how the goods were known in the industry, the expression “silk yarn” would include within itself, both pure silk yarn as well as artificial silk yarn.

Commissioner, Trade Tax, UP vs. Baton Store Gali Arya (2009) 23 VST 52 (All)

4. Glove for workmen – Use in manufacture

Gloves for workmen can be said to be “used in manufacture” and the concessional rate of tax could not be denied on the ground that the goods were not consumed in the manufacturing process. In a sensitive industry like a Refinery, the use of industrial gloves was absolutely essential to protect the workmen from the dangers of electric shock, heat, etc. The Notification should be assigned a meaning that would make it meaningful and would supplement the statute rather than restricting its application to benefits already available under the statute which would make the Notification redundant.

P. Narendra Menon vs. State of Kerala (2009) 23 VST 66 (Ker)

5. Inter-State sale

Newsprint was sold by the seller in Tamil Nadu to a buyer in Kerala. Instead of dispatching the newsprint directly to Kerala, the buyer instructed the seller to dispatch newsprint to a printing press for conversion into a news magazine and thereafter sending the same to Kerala. It was held that inter- State movement of goods was contemplated under the contract and notwithstanding the aforesaid conversion, the sale was held to be an inter-State sale.

State of Tamil Nadu vs. Sun Paper Mills (2009) 23 VST 191 (Mad.)

6. Inter-State works contracts

Hot mixed bitumen prepared in Haryana and brought to site in Delhi was required to be consumed on the same day as bitumen could not be stored for long. Under such circumstances, inference that the works contract was to this extent of inter-State nature could be justifiably drawn and there was no need for an express covenant or stipulation regarding inter- State movement of goods. The Court also proceeded to rule that in the absence of Rule for determination of sale price under the CST Act/Rules, the provisions of the local Sales Tax / VAT could be applied. Accordingly, deduction towards labour charges, etc. was granted for the period prior to the amendment of the definition of “Sale price” under the CST Act with effect from 13-5-2005.

Commissioner of VAT vs. State of Haryana (2009) 23 VST 10 (CSTAA)

7. Kattimoru (Thick butter-milk) and Sambharam (Diluted butter-milk)

Both the items were held as covered under butter milk, both being basically similar products and the only difference being in the quantum of water content therein. It was further held that addition of ginger, chillies and curry leaves was only to give flavour to the product but “Sambharam” continued to remain as such even with the addition of these flavouring ingredients.

R.F. Enterprises vs. State of Kerala (2009) 23 VST 148 (Ker)

8. Kerosene used as fuel not “raw material”

Section 5(3) of the Kerala GST Act provided for a concessional rate of tax for industrial raw materials, components, parts, containers and packing materials. The expression, “raw materials” means something from which another new / distinct commodity could be produced and include materials which physically enter into the composition of the finished product. However, in the present case, kerosene was used as fuel in the calciners for assisting the manufacturing process did not physically enter into the composition of the finished product, Titanium dioxide. Hence, concessional rate of tax for purchase of kerosene was not justified.

Travancore Titanium Products Ltd. vs. Commissioner (2009) 23 VST 70 (Ker)

9. Penalty for concealment

The SC held that when sales turnover was recorded in books but exemption was found to be wrongly claimed, no penalty could be imposed merely on the basis that exemption claimed was being disallowed. In the present case, the appellant had wrongly claimed that it was selling parts of Wet grinders whereas in fact it was selling complete Wet grinders.

Shree Krishna Electricals vs. State of Tamil Nadu & Anr. (2009) 23 VST 249 (S.C.)

10. Preparation / supply of photo identity cards – No sale involved

The assessee had undertaken a contract for preparation and supply of photo identity cards to the Chief Electoral Officer. The job entailed highly skilled labour like entering data from electoral rolls into computers, storing the same on magnetic media for future use, taking video photographs of each voter at the respective poll booth and preparing identity cards using data stored on the magnetic media. It was held that photo identity cards were not commercial commodities and had no utility to any person other than the Electoral Officer who paid for the service rendered by the petitioner. The material purchased and utilized in the preparation of the card was negligible and incidental and there was no element of sale or transfer of property in the goods involved and hence the contract was one for labour and service not exigible to sales tax.

Orissa Small Industrial Corpn. Ltd. vs. State of Orissa (2009) 23 VST 55 (Orissa)

11. Promissory Estoppel

With the introduction of VAT, Notification granting sale tax exemption to village industries before expiry of period therefore stood withdrawn. No justification for withdrawal was given except that newly constituted VAT Act had been brought into force. Applying the principle of “Promissory Estoppel”, the Notification withdrawing the exemption benefits was struck down although merely equity and not a right had been created in favour of the petitioners. Once a Notification has been issued in favour of party in exercise of powers under a statute, an equity was created and thereafter it was no longer a legislative function but an executive function or it could be a delegated legislation. Even assuming that it was a legislative function by delegated legislation, it had to be tested on the touchstone of Article 14 which has reference to fairness, equity and justice. Since the VAT Act had similar powers for granting exemption and there was entry referring to similar products for which exemption ought to be granted but was not granted, the doctrine of legitimate expectation would come into play and denial of exemption to Khadi & Village Industries, in the face of such benefits granted to other industries set up by industrial groups or companies was held to be unjustified, untenable.

Kishorkumar Prabhudas Tanna vs. State of Gujarat (2009) 23 VST 298 (Guj.)

12. Toner & Developer not parts of Photocopier machine

Toner & developer sold along with the Photocopier machine by the dealer who was engaged in the manufacture and sale of Photocopier machines, were not parts of the said machine and hence were not eligible for exemption.

Commissioner, Trade Tax, UP vs. HCL Ltd. (2009) 23 VST 204 (All.)

13. Wood sold for use as fuel not “Timber”

The assessee had sold wood for the purpose of using it as a fuel and the facts clearly demonstrated that the commodity purchased and sold was only “firewood”. Accordingly, it was held that the wood was classifiable as “Firewood” and not “Timber” The Court observed that all wood was not timber nor all wood was firewood. Though both firewood and timber were in their generic sense “wood”, if “wood” was not firewood, it need not necessarily be “timber”.

State of Kerala vs. K.K. Ibrahimkutty (2009) 23 VST 205 (Ker.)