tax world

Sales Tax

P.C. Joshi,
Advocate

1. PACKING MATERIALS

Before the West Bengal Taxation Tribunal the article ‘Pet Preform’ an Article in a definite shape used by expansion through blowing of hot air so as to bring it to the desired shape. Basically the article was used for packing of plastic. The Tribunal therefore held it to be a packing material.

Epitome Petrochemical Pvt. Ltd. & Anr. vs. Comm. of Sales Tax & Ors. (2011) 58 S.T.A. P. 95.

2. PENALTY

The Supreme Court held that the imposition of penalty was not justified where the issue under dispute in relation to the liability of tax was of interpretational nature.

Uniflex Cables Ltd. vs. Commissioner, Central Excise (2011) 40 PHT 28 (SC).

3. PREPAYMENT IN APPEAL

a) The Madras High Court held that under section 51(1), read with the second proviso, no appeal can be entertained without the satisfactory proof of the payment of admitted tax and 25% of the disputed tax. The Hon’ble Court relied on the judgment of the Supreme Court in the case of Lakshmi Ratan Engineering Works (1968) 21 STC 154 SC and observed that the word "entertained" meant taking up the appeal for consideration and not mere filing of the appeal therefore the proof of payment as provided in section 51 was required to be produced at the time of hearing and it need not accompany the memo of appeal on submission before the appropriate authority.

Ranjit Impex vs. Appellate Dy. Commissioner 2011-12 (17) TNCTJ P. 99.

b) The Andhra Pradesh High Court held that the Act did not permit the payment of prescribed % of disputed tax to be paid beyond the period of 60 days and therefore such a payment has to be effected before filing of the appeal. The defect of non payment cannot be cured. In other words such payment was condition precedent for admitting the appeal.

Ankamma Trading Company & Ors. vs. The Appellate Dy. Commissioner (CT) & Ors. (2011) 53 APSTJ P. 1.

4. RECOVERY

The Allahabad High Court held that under the provisions of U.P. Trade Tax Act, 1948, did not provide for the recovery of outstanding trade tax payable by a company; from the assets of the directors of the said company. In the case before the court, the company was before the B.I.F.R. and therefore the court gave liberty to the trade tax department to file their claim before BIFR.

Arun Kumar Sawhney & Anr. vs. State of U.P. & Ors. 2011 NTN (Vol. 46) 275.

5. REFUND – ITC

1. The Madras High Court held that the assessee was entitled to get the refund of input tax credit when the tax was paid on the purchases of goods which were exported.

Sara Leathers vs. Commercial Tax Officer (2011) 19 KTR 423 (Mad.).

2. Claim by exporter

The assessee before the Supreme Court had purchased the goods from a local seller on payment of tax and the same goods were exported by him. The tax so collected was also deposited by the seller in the Government treasury. The assessee – exporter claimed refund u/s. 44 of the Kerala General Sales Tax Act, 1963, however the same was rejected by all the authorities. The matter reached the Supreme Court by way of SLP. The Supreme Court granted the leave and proceeded to consider the merit of the case.

After considering the language of section 44 of KGST Act, it was held that the dealer on whom the assessment was passed, can be the only person entitled to refund and the assessee-exporter cannot claim the refund of tax collected and paid by the seller.

On the facts of the case the Apex Court also observed that the principles laid down in the case of Mafatlal Industries will not be applicable and therefore the State cannot retain the tax overpaid by the seller to whom the refund was payable.

Saraf Trading Corporation vs. State of Kerala (2011) 58 S.T.A. P. 72.

6. SALE – COMMISSION AGENT

The Delhi High Court held that a transaction of sale u/s. 2(zc) of the Delhi VAT Act required the transfer of property in goods and not mere transfer of goods. The transaction in question was the transfer by the principal to its agent, on consignment basis who sold the goods on behalf of the principal. The title or ownership of goods continued to be that of principal even when the goods were in the possession of the consignment agent. In absence of any transfer of property in goods, the transaction was held to be not that of sale even where the definition of the term ‘dealer’ the commission agent may have been covered.

Havell’s India Ltd vs. Commissioner of Value Added Tax (2011) 19 KTR 444 (Del.)

7. SALE PRICE

In the case before the Kerala High Court the assessee charged VAT on the price after deducting discount but including freight. The assessee did not claim any deduction of freight from the taxable turnover. The Kerala High Court held that the commercial tax department had no authority to question the incentives given by the assessee to its customers therefore further addition for freight was held to be improper.

Madras Cement Ltd vs. State of Kerala (2011) 19 KTR 465 (Kerala).

8. SIM CARD – SALE OR SERVICE

The Supreme Court held that the activation charges received by the cellular company from its customers included the value of SIM Card and therefore formed part of the services provided by it. Considering the dominate object of the customer to be that of availing the services there was no element of sale of SIM Card separately for a specific consideration. The Supreme Court therefore held that no tax was payable under the provisions of Kerala General Sales Tax Act, 1963 but the service tax was payable on the entire value of the activation charges.

Idea Mobile Communication Ltd. vs. C.C.E. & C. (2011) 40 PHT 18 (SC).

9. TRANSFER OF RIGHT TO USE

The Madras High Court held that there was no transfer of exclusive possession of any goods when the hoardings as part of immovable property, were leased out.

The State of Tamil Nadu vs. Tvl. Jayalakshmi Enterprises 2011-12 (17) TNCT-J P. 92.

10. REFERENCE – REVISION

The Supreme Court while considering the provision of section 11 of the U.P. Trade Tax Act, 1948 held that the High Court should not interfere with the concurrent finding of fact unless the same were perverse or based on an apparently erroneous principles which were contrary to law or the finding was arrived at by flagrant abuse of the judicial process or brought about a gross failure of justice.

Agarwal Oil Refinery Corporation vs. Commissioner of Trade Tax (2011) NTN (Vol. 46) – 269

11. WORKS CONTRACT

Purchase on ‘C form’

The Rajasthan High Court held that the contractor can effect purchases of diesel, LDO, Furnace Oil required for undertaking the construction of national highway (Road) by furnishing the declaration in Form C as prescribed under the Central Sales Tax (R & T) Rules.

Commercial Tax Officer vs. Agarwal J. V. (2011) 19 STJ P 243.

12. NEWS FROM UTTARAKHAND

The State Government issued a notification u/s. 8(5) of the Central Sales Tax Act on 18th July, 2011 granting full exemption u/s. 8 (1) to the manufacturers of the State for the interstate sale of Information Technology Goods as specified in the annexure to the said notification subject to production of declaration in Form C. Such a exemption would be valid up to 31st March, 2013 or the date of implementation of GST, whichever was earlier.

National Tax News & Views, Vol. 46, Part 8, August, 2011. P.70 (Circular & Notification)