This is a compilation of some important judgments taken from 45 VST to 62 VST with a single
judgement from 66 VST. It is hoped that judgements would be useful for all.
Prepared by
The office of OSD (VP)
Department of Sales Tax,
Government of Maharashtra, Mumbai.
Disclaimer:
 This is only a compilation and does not express any views of the author of the document.
 The compilation refers to the gist. Readers may please refer to the original judgement.
 Although due care has been taken in preparing the gist and compiling the same, the compiler shall not be responsible to any
person for any action taken or not taken on the basis of this publication , whether directly or indirectly, on account of any
inadvertent error or omission.
1
Sr.
No.
Citation
Case Name
1
45 VST 111
(All)
2
45 VST 255
(Karn)
Classification
Issue
Decision
Swadeshi Udyog
V. Trade Tax
Officer, Kanpur
and another
Assessing authority has passed original assessment
order for 1996-97. On the ground that in the
assessment year 1997-98 it was found that certain
purchases were not verifiable and, therefore, inference
has been drawn that the purchases of mustard oil for
the year under consideration were also not verifiable
and accordingly the notice for reassessment was issued.
On writ petition,
The Court allowed the petition. Each
year is an independent year for the
purpose of assessment. Only because
purchases in some other year were
not verifiable, it cannot be used as a
basis for initiating proceedings in
another year.
Assessment
Dishnet Wireless
Limited V. Asstt.
Commr.
Of
Commercial
Taxes, Bangalore
and others
The petitioner, an internet service operator, extends
services of broadband, web hosting, etc, and in order to
access the services, a CD-ROM is provided to its
customers from whom service charges are recovered.
The assessment order was passed. On remand
reassessment order was passed. The assessing
authority rejected the contention of the petitioner that
the internet services did not involve sale of CD-ROM
and services were subjected to service tax and passed
the orders of assessments. On writ petitions,
The Court allowed the petition. The
Court observed that the orders
impugned are not speaking orders.
The Court observed that an
examination of orders showed
animate non-application of mind, as
the
assessing
officer
without
adverting
to
the
contentions
advanced by the petitioner in the
objections and recording findings
over the same, held the objections
untenable by placing reliance upon
the reported opinion of this court in
Bharti Airtel Limited v. State of
Karnataka [2009] 22 VST 465, which
had been set aside by Hon. Supreme
Court.
Assessment
.
2
3
45 VST 361
(Guj)
Larsen
And
Toubro Ltd. And
Another V. Union
of
India
and
Others.
The petitioner had manufacturing unit at Hazira in
Gujarat. He entered into four contracts with ONGC for
indivisible turnkey projects consisting both of supply of
goods and rendition of service including labour. To
execute such turnkey contracts, the petitioners had
arranged for supply of certain goods from its Hazira
plant at Surat to ONGC at Bombay High, which is
situated around 180 kms off the baseline of coast of
India and forms part of "exclusive economic zone". It
was thus the case of ONGC that title of goods supplied
by the petitioner to ONGC, during the course of and in
furtherance of execution of the turnkey project, passed
at Bombay High and not at Hazira. The assessing
authority held the opinion that such sales would be
covered under the CST Act as interstate sale.
Held, allowing the petition, when the
sale of goods took place at Bombay
High, for which the goods moved from
Hazira to Bombay High, such
movement does not get covered
within the expression "movement of
goods from one State to another"
contained in clause (a) of section 3 of
the CST Act. It is clear that the goods
had not been moved from one State to
another since Bombay High does not
form part of any State of Union of
India.
High seas sales
4
45 VST 407
(Bom)
Vithal
Sugar
Manufacturing
Ltd. V. State of
Maharashtra and
Others.
The petitioner submitted an application on 29.7.2010
for exemption from the payment of purchase tax under
section 12B of the Maharashtra Purchase Tax on
Sugarcane Act, 1962. It was rejected. The petitioner
called into question an order passed by the State
Government in the Finance Department, rejecting the
application made by the petitioner for exemption under
section 12B of the Maharashtra Purchase Tax on
Sugarcane Act, 1962.
Section 12B is an enabling power. The
State Government is empowered to
remit the whole or any part of the tax
payable under the Act. The State
Government is empowered to do so in
order to encourage the establishment
of new factories or units or for the
purpose
of
overcoming
any
difficulties in respect of any factories
or units in the initial period of
manufacture or production of sugar.
While remitting the tax, the State
Government may do so for such
period or periods and subject to such
conditions as may be specified. The
levy of tax is a sovereign function. The
power to remit the payment of tax is
Remission
3
5
45 VST 544
(Ker)
Bharat Petroleum
Corporation Ltd.
V. State of Kerala.
The assessing authority found that the C form filed by
petitioner to be defective and unacceptable and
disallowed the claim of concessional rate of tax. The
first appeal authority confirmed the disallowance. The
Tribunal confirmed the order. The grievance of the
petitioner is that the erasures, substitutions are not
sufficient to invalidate the form. He had filed
confirmation letters from the buyers showing sale
which he felt was sufficient.
an incidence of the sovereign power
of the State. No assessee has a vested
right to claim a remission from the
payment of tax. An assessee may in a
given situation, be aggrieved if a
remission has been granted to one
but not to any other assessee
similarly situated. However, in this
case a challenge on the ground of
discrimination has not been set up
with any particularity. In the
application for remission that was
submitted by the petitioner on July
28, 2010, it was only stated that the
unit is a new unit and facing financial
difficulties. No details whatsoever
were furnished to the State
Government. The State Government
was in those circumstances justified
in rejecting the request for remission.
The exercise of the power by State
Government cannot hence be faulted.
The Court dismissed the petition. It
observed that checking of few C forms
showed that advance blank C form is
issued by the buyer which is filled up
by the seller which is a procedure
impermissible under the provisions of
the CST Act because buyer should
certify correctness of the entries in
the C form. Supplementing and
substituting entries in C forms
produced by the dealer by producing
Declarations
4
confirmation letters from the buyers
were not permissible and therefore
authorities including the Tribunal
rightly rejected the petitioner' claim.
6
46 VST 1
(Bom)
Addl. CST, VAT III,
Mumbai. V. Ankit
International.
The respondent filed an audit report under section 61
in the prescribed form 704 beyond the period
prescribed. DC levied the penalty. The Tribunal in
second appeal reduced the penalty by holding that the
delay on the part of the respondent was not deliberate.
On a appeal contending that the under section 61(2)
the Commissioner has a discretion whether or not to
impose a penalty in the first place but once he comes to
conclusion that a penalty is liable to be imposed, he has
no further discretion in regard to the extent of the
penalty.
Held, discretion to impose penalty
extends also to quantum of penalty to
be imposed.
Penalty
7
46 VST 35
(Karn)
Sky
Gourmet
Catering Pvt. Ltd.
V. Asstt. Commr.
Of
Commercial
Taxes, Bangalore
and Others.
The applicant was engaged in the business of catering
services which included preparation of food. The
assesse entered into agreement with airlines for
preparation of food and supply of meals. Under the
agreement the - assessee agreed to render supply
services, like loading and unloading services,
transportation services, high lifting services and allied
services under separate heads. The consideration paid
for towards cost of the food and other services like
handling, loading, etc., are separately charged and the
bills are also raised separately as agreed to between the
parties. The assessee is paying service tax on the gross
amounts received by it towards handling charges,
transportation, lifting, loading and unloading, etc. The
assessment order levied VAT on turnover including all
the above charges, The appellant contended the above.
Held, allowing the appeals, (i) that a
contract for outdoor catering is a
contract for service. By virtue of sub
clause (f) of clause (29A) of article
366 it is to be treated as a composite
contract and the State Legislature is
competent to levy sales tax on the
sale aspect.
But that does not
empower them to levy tax on the
entire amount mentioned in the bill.
Sale price
5
8
46 VST 79
(MP)
Cadila
Health
Care
Ltd.
V.
Additional
Commr.
of
Commercial
Taxes and Others.
Whether GRD powder and GRD bix would fall within the
expression "non-alcoholic drink and beverage"
1)In Lazarus Alosius v. State of Kerala
[2006] 144 STC 210 (Ker), the Full
Bench of the Kerala High Court held
that in a generic sense any potable
liquid except water is a "beverage".
From perusal of the language
employed by the Legislature in entry
20(ii) of Part IV of the 1994 Act, the
intention of the Legislature is clear
that an item in order to fall under the
aforesaid entry has to be in the liquid
form which is manifest from the
words "beverages including syrups,
cordials, distilled juice, ark and
essences when sold in sealed or
capsuled or cork bottles or jars".2)
the expression "beverage" as is
commonly understood means any
liquid other than water, which may be
consumed neat or after dilution. Thus,
the products in question, namely,
GRD powder and GRD bix which are
admittedly not in liquid form cannot
be said to fall within the relevant
entries, namely, entry 20(ii) of Part IV
of Schedule II of the 1994 Act and
entry 14 of Schedule II of the Entry
Tax Act.
Schedule entry
6
9
46 VST 179
(AP)
Bharat
Electronics
Limited. V. Dy.
Commr. (CT), no.
II Div, Vijaywada
and Another
The petitioner, has several units spread all over the
country. He manufactures night vision devices at
Machilipatnam. The goods manufactured are
transferred to the other units of the petitioner outside
the State. It is the contention of the petitioner that these
are not sold by Machilipatnam unit but are to be
incorporated in the equipment manufactured at the
other units, and are eventually sold there from to the
end customers; The Dy. Commr. rejected stock transfer
claim and levied tax as interstate sales.
10
46 VST 289
Desai
Brothers
Ltd. V. Additional
The assessee is a dealer in garlic and ginger paste and
paying tax at four per cent under entry dealing with
It is only if the goods, which move
from one State to another, are sold as
they are and are not incorporated in,
or do not form part of, other goods
would the question of such transfer of
goods attracting levy of tax under the
CST Act, as an inter-State sale, arise. It
is not in dispute that the goods
supplied by the Machilipatnam unit,
to other units of BEL located outside
the State, are merely components of,
and are incorporated in, the goods
manufactured by other units of the
petitioner - company locate outside
the State of A.P., and the goods
transferred by the Machilipatnam
unit are not sold to the Armed Forces
as they are. The transfer of goods by
the Machilipatnam unit, to other units
of the petitioner - company located
outside the State, fall within the ambit
of section 6A(1) of the CST Act, and
are not inter-State sales exigible to
tax under section 6 of the Act. The
order of the first respondent, holding
that the transfer of such components
by the Machilipatnam unit to other
units of the petitioner company
situated outside the State constitutes
inter-State sales under the CST Act,
must therefore be quashed.
The Court allowed the petition.1) The
paste that is referred to in this entry
Branch transfer
allowed
Schedule entry
7
(Karn)
Commr.
of
Commercial
Taxes Zone I,
Bangalore.
"fruits and vegetables". Assessing authority passed
orders levying the tax at 12.5 per cent on the ground
that garlic paste and ginger paste are masala.
is to be read in conjunction with the
other items including pickles, even
though, the said entry does not deal
with ginger or garlic paste, etc. Item
No. 27 of the First Schedule deals with
ginger and garlic. However, the paste
is not included. The honourable
Supreme Court in the case of State of
West Bengal v. Washi Ahmed
reported in [1977] 39 STC 378 (SC)
has held that ginger is to be construed
as a vegetable. Further the
honourable Supreme Court affirmed
the finding of the Division Bench of
the High Court which held that green
ginger would fall within the meaning
of the words "sabji, tarkari or sak".
Accordingly they held that green
ginger is a vegetable. Ginger or garlic
paste in view of its non-mentioning in
any of the schedules, would have to
be construed into one of the closest
proximate entry No. 3 of the Third
Schedule which includes the words
fruits and vegetables,
2)
The
reasoning of the revisional authority
that since garlic paste and ginger
paste is close to masala paste and
therefore the same should be read as
masala product and consequently the
tax at 12.5 per cent is applicable,
cannot be accepted. The closest
reference cannot be made with
8
reference to masala paste but with
the reference to vegetable.
11
46 VST 359
(Mad)
Silver
Spring
Spinner (India) V.
State of Tamil
Nadu
and
Another.
For the year 99-2000 dealer was assessed on 12.11.04.
On 22.4.2005 he was sent notice for reassessment. The
contention of the petitioner is that the reassessment
notice therefore, was barred by limitation, having been
issued on April 22, 2005, whereas the period of five
years for assessment year 1999-2000 expired on March
31, 2005. The section was amended wef 1.7.2002
providing limitation for assessment of five years from
date of assessment as against five years from end of
year to which assessment related, which is not
retrospective.
Held, amendment made before end of
the expiry of unamended provision
applies.
Limitation
12
46 VST 453
(Mad)
Venkateswara
Industries.
V.
State of Tamil
Nadu.
The petitioner is engaged in the manufacture of spares
and accessories and tools for tractors, in particular as
per the specifications given by the major tractor
manufacturers namely TAFE. Of the various spares and
tools supplied by the petitioner, "Grease gun" is one
such item was specifically designed by M/s. TAFE
(customer) and which as per petitioner is an important
accessory., He contended that the "grease gun"
manufactured and supplied to M/s. TAFE, cannot be
used by any other manufacturer of tractors. The
petitioner claimed that the sale of "grease gun" to M/s.
TAFE, would attract the levy of four per cent tax as the
said item falls under tools/accessories. According to the
assessing officer, “grease gun" were not exclusive spare
parts for tractors and can be used for other tractors
also, it will fall under the residuary clause.
The Court allowed the petition. By
virtue of the nature of its usage
"grease gun" can be used as a device
for application of grease into the
bearings and other parts of the
vehicle,
namely,
the
tractor
manufactured by M/s. TAFE. The
further fact that the manufacture of
such "grease gun" by the petitioner is
according to the specifications of M/s.
TAFE, and that it cannot be freely
used by the other brand of tractors is
one other relevant factor to support
the stand of the petitioner that it is a
part of an implement of the tractor
manufactured by M/s. TAFE.
Schedule entry
13
46
State of Tamil
Nadu V. Garware
Whether custom duty drawback on export of goods
1) Where the receipt is from any
third party who has nothing to do
Sale price
VST
9
470(Mad)
Wall Ropes
form part of sale price.
with the sale and the payment has no
relevance or reference to the sale, the
same could not form part of the sale
transaction; hence, there is no
question of including the same under
the head of "turnover".
2) When the duty drawback was as
per the scheme given under the
Excise and Customs Rules and that
there was no agreement between the
purchaser and the seller on the aspect
of duty drawback and it never
received any consideration and
rightly so in the sale effected, the
question of roping in those receipts
from the Government of India long
after the sale does not arise, to be
included in the turnover for the
purpose of assessment.
14
46 VST 512
(Mad)
Tools Machinery
And Products V.
State of Tamil
Nadu.
The petitioner is a dealer in motor bus accessories. He
purchased the motor bus accessories such as glass and
resold the goods inside the State at eight per cent under
entry for auto parts and accessories. The assessing
officer has levied tax at 12 per cent as glassware.
The Court allowed the petition. The
schedule entry for glassware covered
glass products other than those
specified elsewhere, So it is clear that
when goods are specified elsewhere
the same would not fall under entry
for glass. The dealer purchased glass
and sold only to bus operators.
Therefore the goods would be
covered by entry for motor parts.
Schedule entry
15
46 VST 549
State of Punjab
V.
Anapurna
For the assessment year 2003-04 the assessment in
respect of the assessee was passed on 15.4.2008.
Held, dismissing the appeal, the
power of Commissioner to extend
Limitation
10
16
(P&H)
Impex Pvt. Ltd.
Though extension of time for framing the assessment
was granted by the Commr in exercise of power u/s
11(10) of the Act,, it was after the expiry of the
statutory period prescribed u/s 11, i.e. three years from
the last date for filing the return. On appeal the Tribunal
set aside the assessment as time-barred. On appeal :
time for completing assessment to be
exercised before assessment becomes
time barred. The high Court followed
the previous High Court judgment in
Shreyans Industries Limited (18 VST
493). It was held that, deferment of
assessment has the effect of enlarging
the period of limitation which did not
expire by the time the deferment
order is contemplated to be passed.
When once the period of limitation
expires, the immunity against being
subject to assessment sets in and the
right to make assessment gets
extinguished. There is no question of
deferring assessment which had
already
become
time-barred.
Therefore the order extending time
for completing the assessment for the
year 2000-01. passed on 17.8.2007,
i.e. beyond three years from the last
date prescribed for furnishing the last
return in respect of that period as
prescribed under section 11(3) of the
Act was liable to be set aside.
47 VST 1
(CSTAA)
Hindustan Zinc
Limited V. State
of
Andhra
Pradesh
and
Others.
In the concerned assessment year 1985-86, the
appellant had not disclosed the nature of the
transactions now involved. The transactions involved
are the supply of zinc to M/s. Indian Iron & Steel
Company Limited (IISCO) and to M/s. Tata Iron and
Steel Company Limited (TISCO). The supplies to these
companies were made by the Calcutta stock point. The
The Court dismissed the petition. it is
indicated that the circumstances have
to be appreciated and that to become
an inter-State sale, it was not even
necessary that the goods be
ascertainable before dispatch. In the
case on hand, it is seen that specific
Branch
Transfer
allowed
not
11
modus operandi adopted was for IISCO and TISCO to
respond to offers made by the Calcutta office of the
appellant and offering to purchase the quantities
required by them at the prevailing rates and placing
orders for purchase of their monthly requirements, on
accepting the conditions imposed by the appellant. On
information gathered in respect of these transactions
from IISCO and TISCO, the assessing officer issued a
notice to the appellant to show cause why the two
transactions involved here, could not be assessed to tax
under the Act. The show-cause notice indicated that it
was found that it was pursuant to orders placed on the
branch office of the appellant that the goods were sent
to the respective buyers for supply through its branch
office and thus the movement of goods was occasioned
by the orders for purchase placed by IISCO and TISCO
on the branch. The appellant pleaded branch transfer.
offers were made by the branch office
of the appellant to IISCO and TISCO
for sale of their products on the
conditions mentioned therein. The
conditions were accepted by IISCO
and TISCO and they placed orders on
the appellant for supply of specified
quantities of zinc of specified purity
in specified monthly quantities. The
authorities below and the Tribunal
cannot be faulted for coming to the
conclusion that in the circumstances
the orders placed by IISCO and TISCO
were firm orders for specific
quantities of the products. The
attempt of the appellant to distance
itself from the offers and acceptance
secured by the branch office at
Kolkata, can only be considered as a
desperate attempt to get over the
effect of that part of the transaction in
assessing the nature of the sale
involved herein. On an appreciation of
the facts indicated by the orders
under appeal, It is true that even
though the orders placed by IISCO
and TISCO indicated the specified
quantities to be supplied every month
and the supplies did not always
conform to it, may not tilt the scale in
favour of the appellant. Similarly, the
fact that in some months, more
quantities were delivered to the
12
companies or that the goods sent
from Visakhapatnam were not
earmarked, may not also tilt the scale.
17
47 VST 66
(All)
Indian
Oil
Corporation Ltd.
V.
CCT,
U.P.,
Lucknow.
The petitioner had its refinery unit at Mathura wherein
it manufactures petroleum products. The assessing
authority added the amount of excise duty paid by the
purchaser outside the State of UP in the turnover. He
found that the applicant had not included the excise
duty in the sale price of the petroleum products which
have been transferred from its bonded warehouse to
other marketing companies outside UP.
Held, no goods shall be removed from
any warehouse except as on payment
of duty or, where so permitted by the
Central Government by notification in
this behalf for removal to another
warehouse or for export. The
aforesaid
provision
clearly
contemplates that the excise duty is
the leviable on the manufactured
product and the duty is payable at the
point of removal. No goods can be
removed from the factory or the
warehouse without the payment of
duty. Therefore, the initial liability to
pay the Central excise duty was on
the applicant while removing the
goods from its factory or its
warehouse. However, in case if the
permission has been granted to
remove the goods from the factory or
warehouse to the warehouse licensed
under section 140 belonging to some
other person, without payment of
duty, the duty is payable on the
clearance of goods from such
warehouse. In such circumstances the
payment of excise duty has only been
deferred or extended from the stage
of removal of goods from the factory
Sale
pricedeferred excise
duty also a part
of it.
13
or the warehouse of the applicant to
the warehouse of the purchaser, but
the liability to pay the excise duty,
which is chargeable and payable
under the Act, by the manufacturer
does not cease. The incidence of
excise duty is directly relatable to
manufacture but its collection can be
deferred to later stage as a measure of
convenience or expediency.
18
47 VST 207
(Karn)
O.P. Developers.
V.
State
of
Karnataka
and
Others.
The assessee is engaged in the execution of civil works
contract and also undertakes construction of
apartments. The authority has passed ex parte
assessment orders for both the years resorting to best
judgment assessment, as the assessee failed to produce
books of account before them. Aggrieved by these ex
parte orders and penalty order, the assessee preferred
two appeals before the Joint Commissioner of
Commercial Taxes (Appeals).
During the pendency of the said appeal, the Additional
Commissioner of Commercial Taxes I, Bangalore in
exercise of his revisional power under section 22A(1) of
the Act reviewed that portion of the order of the
appellate authority which had granted the benefit to the
assessee. It is that order which is challenged by the
assessee in this appeal.
19
47 VST 343
(Delhi)
Giesccke
&
Debrient I.P. Ltd.
V. Commissioner
of
Sales
Tax
The appellant imported bank note processing system
BPS. under bill of entry which described it as an
importer and M/s. Zion Express Cargo Private Ltd., as
the cargo agent. On the basis that this import was back
to back import in view of the order placed by Canara
The Court dismissed the petition; No
revisional jurisdiction is to be
exercised in respect of the matter
which is the subject-matter of appeal.
However, there is no prohibition in
law for the revisional authority to
exercise the revisional jurisdiction in
respect of the matter which is not the
subject-matter of appeal. Merely
because appeal is pending his power
is not denuded.
Revision- scope
The Court dismissed the appeal, The
appellant was the importer. The
appellant no doubt had entered into
an earlier contract with Canara Bank,
Bangalore, but for the purpose of the
Sale
in
the
course
of
import
disallowed
14
20
47 VST 358
(Mad)
(Delhi).
Bank, that after this order was placed on the dealer, it
placed the order on German company, the dealer
claimed that the import and transfer is covered by
section 5(2) of the CST Act". The Tribunal decided the
question against the dealer. On appeal :
said contract the appellant was not
the agent of the supplier in Germany.
The contract between the Canara
Bank, Bangalore, was on principal to
principal basis. The obligation to
comply with the purchase order was
that of the appellant alone. Similarly,
when the appellant entered into
contract with the German company it
was a contract on principal to
principal
basis.
Canara
Bank,
Bangalore, did not have privity of
contract whatsoever with the German
company. Any default of the contract
in the first contract with Canara Bank,
Bangalore, would be liability and
obligation of the appellant and not
that of the German company. Thus,
they
were
two
independent
transactions. The imported goods
could have been diverted to another
third
person,
without
violation/default of the contract
between the appellant and the Canara
Bank, Bangalore.
Kongoor Textile
Process. V. Jt.
Commissioner
(CT),
Chepauk,
Chennai
and
Another.
The petitioner is a dyeing contractor who had effected
The Court dismissed the petition.
When once the revised return or
original return is filed, admitting the
liability, the payment is treated as to a
liability date backs to the date when
the payment of tax ought to have been
made. When once there is default in
inter-State purchases of dyes and chemicals. Originally
the assessee was under the impression that chemicals
purchased and used in the execution of the dyeing
contract were exempted from tax. It was pointed out to
assessee that in the case of dyes, there was 50 per cent
of transfer of property and in the case of chemicals,
Interest
15
there was no transfer of property at all. Based on the
resolution, the assessee paid the taxes on 50 per cent of
the dyes used in the dying contract. Having regard to
the admission, the assessee paid the tax thereon under
the revised return. However, penalty was levied by
assessing authority.
the payment of tax in accordance with
the provisions of the Act, the assessee
becomes defaulter, thus attracting
penal consequences. Wherever the
assessee defaults in meeting the
admitted tax liability within the
statutory period, interest is leviable
and is an automatic one. Consistently,
the view as regards levy of interest is
that it is an automatic levy and there
is no question of discretion reserved
in the matter of levy of penalty.
21
47 VST 363
(Ker)
Jainulavudheen.
V. State of Kerala.
In the course of business the petitioner purchased old
vehicles from various persons, dismantled the same and
sold the items as scrap by weight taxable at four per
cent. During the inspection the intelligence officer
noticed that scrap portion of the dismantled vehicle is
sold in the breaking yard itself and usable automobile
spare parts are recovered by the petitioner from the
dismantled vehicles and the same are brought to shop
and sold as automobile spares. The intelligence officer
found on inspection that the items sold are spare parts
of automobiles usable as such and so much so tax
payable is at the rate shown under the specific entry in
the Act and the petitioner's effort by showing sale as by
weight is only to avoid payment of actual rate of tax.
The Court dismissed the petition. It is
common knowledge that the spares
and components recovered on
dismantling an old automobile would
not have suffered uniform erosion.
Scrap is purchased only for melting
and for re-rolling the primary metal.
However, when old spare parts are
sold as such, those are for use as
spare parts in automobiles and so
much so tax is leviable at the rate
applicable for the commodity. The
findings of the intelligence officer that
the rate of tax applicable for sale of
old automobile spare parts is the rate
applicable to automobile spare parts
is perfectly correct.
Schedule entry
– scrap or not?
22
47 VST 487
(Ker)
Supreme
Industries.
The petitioner engaged in manufacture and sale of ice
cream made bulk purchases of deep freezers and
delivered the same to distributors against security
Held, the transaction is a pure sale
but on credit basis payable in four
instalments. The lower authorities
Sale price
Food
V.
16
State of Kerala.
deposits almost equal to the value of deep freezers, it
was also provided that deposit to be adjusted in 4 equal
instalments for wear and tear. He claimed that supply of
deep freezers against collection of security from them
does not amount to sale. He made an alternate claim for
input tax credit, which is the tax paid on the purchase
thereof. The Tribunal rejected both the claims supply of
deep freezers is sale of capital goods.
including the Tribunal rightly found
that the agreement does not reflect
the nature of transaction which is
nothing
but
outright
sale
camouflaging the consideration as
deposit, which will be adjusted in four
equal instalments in the course of
four years.
23
48 VST 231
(AP)
Ramky
Infrastructure
Ltd. V. State of
Andhra Pradesh.
The petitioner is an incorporated entity engaged in
execution of the works contract. a dealer, who obtains
certificate in form L1 exercising option for composition
of tax payable under sec Act cannot withdraw the
option during the currency of L1 certificate. A showcause notice was issued and the petitioner filed
objections.
The Court dismissed the petition.
Option once exercised and permission
granted for entire year, dealer not
entitled to resile and seek assessment
under
regular
provision.
Composition
24
48 VST 443
(SC)
Hotel
Ashoka
(Indian Tour. Dev.
Cor. Ltd.). V. Asst.
Commissioner of
Commercial
Taxes
and
Another.
The appellant having its duty free shops at all major
International Airports in India. At the said duty free
shops, the appellant sells several articles including
liquor to foreigners and also to Indians, who are going
abroad or coming to India by air. The appellant claimed
sale in the course of import. The AC rejected the
contention of the dealer that the sale made by it in the
duty-free shops was a sale in the course of import u/s
5(2) of the CST Act. # as the goods were sold directly to
the passengers and even the delivery of goods at the
duty free shops was made before importing the goods
or before the goods had crossed the customs frontiers
of India. levied the tax on the goods sold by the dealer in
the
duty-free
shop.
The Supreme Court allowed the
petition and held that sale of goods at
duty-free shop in airport is sale in the
course of import. After purchase of
the goods at the duty free shops,
passengers enter the country by
crossing the customs frontiers. The
goods were actually delivered to the
customers and sales were not effected
by transfer of documents of title to
the goods and, therefore, it cannot be
said that no tax could have been
levied on the sales effected at the duty
free shops. According to the AC,
crossing of customs frontiers had no
significance because once the goods
are brought into our country and
Sale
in
course
import
the
of
17
especially in the State of Karnataka,
all sales effected in the State of
Karnataka would be subject to tax as
per the provisions of the Act. The duty
free shops situated at Bengaluru
International Airport are situated in
the State of Karnataka and, therefore,
sales effected at the said shops would
be taxable under the provisions of the
Act.
25
48 VST 496
(Bom)
Whirlpool
of
India Ltd. V. State
of Maharashtra
and Others.
The petitioner was entitled to the benefits of packages
scheme of incentives 1993 whereunder he was entitled
to claim refund tax paid on purchases. He submitted
bank guarantee for facilitating grant of refund. The
Dept. contended that the Commissioner was duty bound
to verify as to whether and to what extent a refund was
due.
The Court allowed the petition. The
Commissioner is not precluded from
carrying out a due verification.
Refunds relate to the public revenues.
The Commissioner as the custodian of
the public revenue is duty bound to
ensure that the provisions of Section
51 are not being misused and that a
refund is due. Such an exercise is not
prohibited by the statute. However,
refund applications cannot be kept
pending indefinitely. The basic
purpose of Section 51 is to streamline
the grant of refunds to registered
dealers and particularly in the case of
those falling in the special category
carved out in sub-section (3). Having
regard to these provisions, the court
observed that there would be no
justification for the sales tax
Refund
18
department to keep the application of
the Petitioner pending for the grant of
a refund inordinately without
explanation.
26
48 VST 550
(MP)
Paras
Pharmaceuticals
Ltd. V. State of
Madhya Pradesh
and Others.
According to the assesse Borosoft Natural and Borosoft
Cream are items which can be used to treat specific
medical conditions and can also be used otherwise by
persons who are not suffering from any such medical
problems, for enhancement of beauty, and therefore
these items would be taxable under entry 41 of Part III
of Schedule II. Dermicool powder which is described as
a prickly heat powder is a medicine.
The assessee accepted that Borosoft
Natural and Borosoft Cream are not
medicines. Prickly heat powder is
normally used for relieving prickly
heat problem. Dermicool powder
which is described as a prickly heat
powder is also commonly understood
to be of use in treating prickly
problem and not as an ordinary
talcum powder. Therefore item
Dermicool powder must be held to be
a medicine.
Schedule entry
27
49 VST 1
(SC)
IFB
Industries
Ltd. V. State of
Kerala.
It has a scheme of trade discount for its dealers under
which the dealer, on achieving a pre-set sale target gets
certain discount on the price for which it purchased the
articles from the manufacturer.
Hon. Supreme court overruled the
high court judgment, and allowed the
appeal. It held that the assessing
authority shall not reject the claim for
deduction of the amounts of trade
discount solely on the grounds that
discount amounts were not shown in
the sale invoices.
Sale
price
(discounts)
28
49 VST14
(Bom)
Commissioner of
Sales
Tax,
Maharashtra
State. V.
Pure
Helium
(India)
Ltd.
The assessee had effected sales of Helium gas to ONGC
which is situated about 150 km from the coast line of
Maharashtra. The area falls within the exclusive
economic zone on the continental shelf. The assessee
claimed that the sales which were effected were sales in
the course of export under Sec 5(1) of the CST Act for
the reason that Mumbai High falls beyond the territorial
The court held that both before and
after 15.1.1987, the sale which was
occasioned by the movement of the
goods from the State of Maharashtra
to Mumbai High was not sale in the
course
of
export.
The court also held that the State has
Sale to Bombay
High
19
29
49 VST 98
(AP)
State of Andhra
Pradesh.
V.
Bharat Sanchar
Nigam Limited.
waters of India.
not sought to levy sales tax in the on
the basis that there was a local sale.
The assessment sought to be effected
on the basis that there was a sale in
the course of interstate trade and
commerce. Having held that the state
was not justified in brining the sale to
tax as a sale in the course of interstate trade and commerce, the court
cannot be called upon to decide any
other hypothetical issue.
It is contended on behalf of the petitioners - service
providers that the use/utility of the SIM card remains
the same in both prepaid and postpaid connections; in
the case of a pre-paid SIM card, service charge is
collected mainly for activating the connection; service
tax is paid on this consideration as "telecommunication
service"; a SIM card is incidental to the rendering of
telecommunication service; SIM cards are not sold by
the service provider to the subscribers, and are not
chargeable to tax under the Act; even if it is held that
SIM cards are "goods" and it is sold, the price charged
for the starter kit does not constitute the sale
consideration; sales tax is sought to be imposed even on
the activation charges component of the value of a
starter kit though it does not amount to "sale"; Postpaid SIM card charges, which represent the call charges
collected by the petitioners from their subscribers,
cannot be subjected to tax as there is no sale/deemed
sale of goods; and, in any event, the purchase price of
the SIM card in the hands of the petitioner, and a
reasonable profit thereon, can alone be brought to tax
Held: 1. SIM cards, recharge coupon
vouchers, mobile telephone rentals on
post-paid connections, value added
services such as ring tones, music
down loads, wall papers, etc., and
proceeds received on sharing of
infrastructure cannot be subjected to
tax.
2. Telephone instruments, mobile
handsets, modems and Caller ID
instruments
are
"goods"
3. In case these goods are sold or
supplied to the subscribers by the
service providers such "sale" or the
"transfer of the right to use these
goods" would be liable to tax.
4. However, if, these goods are
procured by the subscribers from
suppliers, the monthly charges, paid
to service provider, would fall within
"telecommunication service" and
Schedule entry
20
30
49 VST 134
(Ker)
Cadbury
India
Limited. V. State
under the Act.
Revenue contended that, while the
SIM card enables access to the cellular network, it can
also store data of phone calls, contact numbers, games,
music, etc.; it is capable of being bought and sold; it has
utility; it is capable of being transferred, delivered and
stored; SIM cards have all the attributes of "goods", and
can be subjected to "sale"; pre-paid SIM cards are sold
to customers, through distributors, for a price; the
charges collected from the subscriber are for the SIM
card; they are not collected for the service of activating
the SIM card; SIM cards are not activated at the time of
their sale to the distributors; and the amounts collected
for issue of prepaid SIM cards, and rentals for
postpaidSIM cards, represent the consideration for
"sale" and "deemed sale", respectively.
cannot be made liable to tax under
the
Act.
5. If non-refundable deposits are
collected, by the service providers
from their distributors, for supply of
SIM cards, recharge voucher coupons
and the like, cannot be brought to tax
under the provisions of the Act.
6. If the non-refundable deposit is
received against supply of telephone
instruments, batteries, accumulators,
etc., these deposits would form part of
the
sale
consideration
7. Likewise, if refundable deposits are
collected from post-paid subscribers
as security for payment of dues
towards STD or ISD facilities provided
by the service provider, then such
deposits, not being "goods", cannot be
brought to tax under the Act.
8. If, however, the refundable deposits
are for supply of telephone
instrument, handset, etc., which are
"goods” these refundable deposits
may also form part of the sale
consideration under section 2(29)(b)
of the Act, and would be chargeable to
tax under section 4 thereof.
The petitioner purchased raw cocoa beans through
agents who purchased from farmers as well as from
small traders and delivered them at the godowns of the
Held, dismissing the petition, the
agency arrangement appears to be
only a scheme for splitting up of price
Agency
21
31
49 VST 200
(Mad)
of Kerala.
company. There is written agreement between the
company and the agents providing for reimbursement
of price paid to farmers/dealers, all the cost incurred by
the agents and also commission payable to them at the
agreed rate. The assessing officer after examining the
terms of the agreement and the accounts came to the
conclusion that the agency agreement is only a device to
avoid payment of tax on the taxable turnover which is
the cost incurred by the company until goods reach
their stockyard where delivery is given by the agents.
The assessing officer added 15 per cent of other
reimbursements to purchase price reimbursed by the
petitioners to the agent for the payment to farmers and
dealers and passed assessment orders.
between purchase cost, transport
cost, commission, etc., to avoid tax on
part of the turnover.
State of Tamil
Nadu .
V.
Mahaveer
Chemicals
Industries
The assessee herein is a dealer in chemicals, acids and
solvents. The investigation wing inspected the premises
of the assessee. The assessee claimed interstate sale
after taking constructive delivery of the goods The
assessee contended that after the purchase, even before
taking delivery, they effected further inter-State sales to
their end-users within and outside the State of Tamil
Nadu. Thus, by filing EI and EII and form C declaration,
the assessee made claim under section 6(2) of the
Central Sales Tax Act, 1956. The said claim was rejected
by the assessing authority by taking a view that the
assessee had effected sale after arrival of the goods at
Coimbatore after taking the constructive delivery of
goods at Coimbatore. Thus, the assessing authority
viewed that the assessee was not entitled to exemption
under section 6(2) of the Central Sales Tax Act. The
assessing officer pointed out that verification of the
records showed that M/s. Mahaveer Chemicals were
Held, allowing the petition, the
documents
accompanying
the
movement of the goods show that the
journey started from Cochin to
Coimbatore. The Appellate Assistant
Commissioner rightly pointed out
that there was no obligation on the
part of the carrier to transport the
goods further to any place beyond
Coimbatore. Thus the subsequent
arrangement that the assessee had
with the same transporter to carry
the goods to another place for a
different person however did not
make the movement a continuation of
the original inter-State sale. Further
movement done as per the fresh
invoices prepared and trip sheets and
Sale
under
section 6(2) of
the CST Act
disallowed
22
appointed as registered dealers to deal with the
chemicals, viz., liquid/gaseous chemicals manufactured
by M/s. Cochin Refineries Limited, Ernakulam, Kerala.
Admittedly the said Mahaveer Chemicals and the
assessee, viz. Mahaveer Chemicals Industries are
located in the same premises, at No. 16/56, Mill Road,
Coimbatore. On the purchase effected by M/s. Mahaveer
Chemicals from M/s. Cochin Refineries Limited, the
liquid/gaseous chemicals were transported in tanker
lorries. The transport, delivery and use of such
chemicals were covered by Central excise provisions. As
per this, there was no necessity to maintain a godown
for storing before distributing to the ultimate buyers.
The Revenue pointed out that verification of the
purchase invoices, transport documents and other
statements, revealed that after purchase, M/s.
Mahaveer Chemicals transported them to Coimbatore.
The transport documents revealed that the movement
of goods started from Cochin in tanker lorries to
Coimbatore and had the end destination at Coimbatore,
it being the delivery place. After the receipt of the goods
in Coimbatore, Mahaveer Chemicals effected EI sale to
the assessee herein which was situated in the same
premises. Since the sale was effected by transfer of
documents of title to goods, while in transit, the sale
was treated as one falling under section 3(b) of the
Central Sales Tax Act. However, as regards EII sales,
said to have been effected by the respondent/assessee,
it was pointed out that the inspection of the business
premises of the assessee on September 9, 1995
revealed that after taking delivery, the assessee had
used form XX delivery notes to transport chemicals in
tankers to the end-users within and outside the State of
way-bill clearly pointed out to fresh
movement from Coimbatore to other
State and to the local purchaser from
the assessee.
23
Tamil Nadu. Thus, the authorities came to the
conclusion that on the basis of the available materials,
after the endorsement in favour of the assessee herein,
the movement of the goods had terminated at
Coimbatore itself. There afterwards, on the assessee
had taken constructive delivery at Coimbatore itself, the
assessee effected fresh sale. The authorities held that
the claim of the assessee for second inter-State sales
could not be sustained.
32
33
49 VST 252
(All)
49 VST 256
(Karn)
Raj Kumar Gaba.
V. State of U.P.
and Others.
Habib
Industries.
Agro
V.
The sales tax dues of the assessment year 2002-03
(State) vide assessment order dated March 18, 2006,
are sought to be recovered from the petitioner, the
Chairman of the society in the relevant period,
registered under the Societies Registration Act as "Maa
Vaishno Gramodyog Sansthan". Learned counsel for the
petitioner states that the petitioner had resigned in the
year 2004, after which a new committee of
management was elected. Shri. Madan Lal Arora,
respondent No. 5, was elected as the Manager of the
society. He had stopped the business of the society and
sold away its entire assets in 2006.
The petitioner submits that earlier the recovery was
withdrawn on the ground that the petitioner had
resigned from the society in the year 2004.
Subsequently Trade Tax Department in pursuance to
the provisions of section 8(3) of the U.P. Trade Tax Act,
1948 has initiated recovery against the petitioner, as
the Chairman of the society in the relevant assessment
year, giving rise to this writ petition.
The assessee has a manufacturing unit in Mandya
District, and a branch office at Coimbatore. He claimed
The Court dismissed the petition.
That the dues relate to the
assessment year 2003-04 when the
petitioner was the President of the
society and is still a member of the
society and dues could be recovered
from him under the bye laws from the
petitioner. Under the bye laws it is
provided that in case of debt all
members of the society will be
equally responsible.
Recovery
The real transaction noted in the
freight letter is a sale. This is not
Branch transfer
not allowed
24
34
49 VST 339
(Bom)
Commissioner of an exemption in respect of stock transfer of de-oiled
rice bran to its branch in Coimbatore. They were duly
commercial
Taxes, Bangalore. supported by form F issued by the said branch office. At
an inspection of the business premises eight freight
letter pads maintained by the assessee for despatch of
de-oiled rice bran directly to the outside consignees
were seized containing name and address of the
purchaser, quantity sent, vehicle number in which
goods were moved from Boothana Hosur. The assessing
authority on the ground that the F forms disclosed that
bills were raised in favour of dealers in Tamil Nadu and
the goods were dispatched from Mandya directly to
them, levied CST and penalty u/s 9(2).
disclosed. The entire stock transfer
claimed is similar inter-State sales
disguised as stock transfer. The
assessee has disguised inter-State
sales as stock transfer, though the
goods have moved as a result of sale
directly to the ultimate purchaser.
The evidence gathered showed that
the good were directly sold to the
ultimate purchaser with documents
of the sale bill raised at the factory in
the name of the branch. The material
and particularly, the documents laid
on clearly shows the intention on the
part of the assessee to avoid the
payment of Central sales tax and
misleading the authorities. The
contents of form F are also not true. It
also discloses the guilty mind. Under
these circumstances, the authorities
were justified in disallowing the
exemption and were justified in
imposing penalty.
Taurus
Auto
Dealers Pvt. Ltd.
V.
D.P.
Amberaoand
Another.
The court dismissed the petition, The
only issue for consideration before
this
court
is
whether
imposing/charging of interest under
Section 30(4) of the Act in respect of
the late payment of tax for the years
2005-06, 2006-07 and 2007-08 is
valid in law. It is an undisputed
position that sub-section (4) of
Whether imposing or charging of interest at flat rate
25% u/s 30(4) of MVAT Act retrospectively, which
came into force wef 1.4.2009 in respect of late payment
of tax for the years 2005-06, 2006-07 and 2007-08 is
valid in law
Interest
25
Section 30 of the Act came into force
with effect from 1 July 2009 providing
for imposition of interest at a flat rate
at 25 per cent of the additional tax
payable as per the revised returns. In
the present case, the audit of the
petitioner's accounts under the Act
for the years 2005-06, 2006-07 and
2007-08 took place on 8 July 2009.
Intimation of short payment of tax
under Section 63(7) of the Act was
made on 16 July 2009 by the
Respondents. Consequent to the
above Intimation, on 20 August 2009
the Petitioner filed revised returns for
the years 2005-06, 2006-07 and
2007-08 and also paid the differential
tax demanded consequent to the
audit, aggregating to Rs. 41,38,416/along with interest thereon under
Section 30(3) of the Act. Sub-section
(4) of Section 30 of the Act provides
for interest at a flat rate of a sum
equal to 25 per cent of the additional
tax payable as per the revised returns.
It does not provide for charging of
interest keeping in view the delay in
paying the taxes but provides for a
flat rate depending upon the quantum
of additional tax payable consequent
to filing of the revised return. The
demand for interest is not for the
period prior to 1 July 2009 as the
26
interest is being charged not with
regard to a delay (period/time wise)
in making the payment of tax to the
State but is charged at a flat rate of 25
per cent of the additional tax payable
as per the revised returns. In the
circumstances, in the present case, no
interest is being charged for the
period prior to 1 July 2009.
Consequently, Section 30(4) of the
Act
is
not
being
applied
retrospectively. This is particularly so
as all the acts leading to the demand
of interest such as the audit,
intimation letter under Section 63(7)
of the Act, filing of revised returns
and the payment of differential tax all
took place after 1 July 2009. Merely
because a part of the requisites for an
action is drawn from a time prior to
its passing, that would not make the
action retrospective.
35
49 VST 371
(All)
Diamond Cement.
V. State of U.P.
and Others.
The petitioner separately charged freight and claimed
exemption on it. The assessing authority rejected the
claim on the ground that petitioner had not disclosed
the challan/delivery challan. However Tribunal held
that no tax could be imposed on freight. Addl CST
granted the permission for reassessment on the ground
that charging of freight separately was not verified., On
writ,
The petition was dismissed. The
petitioner has apart from making
arguments, had not relied on any such
material to show that the petitioner
had disclosed the manner and method
of charging freight, before any of the
authorities from the stage of
assessment to the order authorising
reassessment. The petitioner had not
disclosed
the
challan/delivery
Sale price
27
challan/invoices. The petitioner did
not produce the details as to how the
goods were transported and the
freight was charged. The proof of
charging freight separately was not
produced nor could be verified from
the audit report, profit and loss
account, balance sheet or trial
balance. The Tribunal erred in
observing that the assessing authority
had accepted the declared turnover,
and the account books, and that the
account books and bill books
produced before the assessing
authority shows that the freight was
charged separately. The assessing
authority had clearly observed and
recorded finding that the petitioner
did not produce the material relating
to freight and did not produce, in
spite of demand, the challan, delivery
challan, invoices and thus rejected the
plea of exemption. The material
discovered by the Department from
the returns filed by the petitioner in
Central Excise Department for levy of
service tax, the railway receipts, and
the non-production of the document,
bill books and challans, before the
assessing
authority,
clearly
establishes that the petitioner
company did not produce the relevant
material to claim that the entire
28
freight was charged separately.
36
49 VST 418
(Gauhati)
State
of
Arunachal
Pradesh
and
Others.
V.
BuishiYadaMotor
s.
The dealer is an authorised dealer of Maruti Udyog
Limited , in Arunachal Pradesh. The tax on local sales of
motor vehicles is 12%. The State Government, reduced
the tax rate to 2% on inter-state sale by issuing
notification dt. 2.5.2001 u/s 8(5) of CST Act. However it
was noticed that, in order to avoid payment of local tax,
sold motor vehicles by showing addresses of persons,
who claimed to be the resident of State of Assam. But
after the sale of the vehicle, the same vehicle was
brought back and registered in Arunachal Pradesh. This
gave enough indication that the respondent was
evading payment of sales tax in terms of intra-State
sales tax leviable. Subsequently, in pursuance of letter
issued by Commr, Addl DC directed vide letter dated
February 7, 2002 , to stop selling motor vehicles to the
customers outside the State of Arunachal Pradesh with
immediate effect. The dealer challenged the legality of
the letter dt 7.2.2002, notice dt 27.5.2002. A single
judge allowed the writ and the State filed an appeal.
The Court dismissed the petition of
the State. It observed that the mere
fact that the vehicles have been
subsequently registered in the State
of Arunachal Pradesh will not make
the first sale intra-State sale in the
absence of any material to show that
notwithstanding the terms of the
contract of sale between the
petitioner and the buyers thereof,
vehicles, in question, had not moved
at all out of the State of Arunachal
Pradesh. It was held that the
movements of the vehicles to other
States was necessitated by the
contracts
themselves and the
movements of the vehicles were
inextricably interlinked with the sale
and therefore the sale is an inter-state
sale.
Inter-State Sale
37
50 VST 103
(Uttra)
B.T.C. Industries.
V.Commissioner,
Trade
Tax/Commercial
Tax, Dehradun.
Trucks loaded with coal were intercepted. At the time
when such interception took place, though it was held
out that the intercepted coals are meant for petitioner,
there was no document suggesting that those were taxpaid. As a result, after obtaining security, the goods
were permitted to be released. Subsequently, on notice
to the petitioner , penalty proceedings were initiated.
The petitioner contended that coal is used as fuel in its
industry and, accordingly, it has tax exemption. The
The Court dismissed the petition.
Fact remains that in the C form, that
was issued by the petitioner in favour
of its supplier, was all blank at the
time when the same was handed over
to the supplier of the petitioner. The
petitioner did not indicate the
particulars of the order placed upon
its supplier, which is a requirement,
Declarations
29
petitioner disclosed that it has issued C form to its
supplier and the intercepted coal was being supplied
under the said C form. It was contended that since the
coal was being imported through a route, which is not
normally adopted, it cannot be held that there was any
clandestine intention in using the said route, inasmuch
as tax on coal for the petitioner is exempted.
as would be evident from the form C.
Form C was purported to be utilized
by showing that the intercepted coals
were being supplied to the petitioner.
This form C was not with the goods
intercepted. This part of the form C
was inserted therefore subsequent to
interception of the goods in question.
By not filling up the form C in the
manner the same was required to be
filled up, i.e., by not mentioning the
order number in the form C,
petitioner gave a blank cheque to its
supplier, on the basis whereof the
supplier could supply coal to the
petitioner and in addition to such
coal, if it wanted to, could deal with
coal otherwise in the State of
Uttarakhand. What was the real
intention in relation to the
intercepted coal is anybody's guess,
since one truck, it is not disputed, did
not carry any paper. That being the
situation, by reason of failure on the
part of the petitioner in protecting
itself while issuing the form C, it failed
to ensure that the goods to be
supplied thereunder would only be
supplied to the petitioner for being
used as fuel, for which there is a tax
exemption.
30
38
50 VST 122
(Mad)
State of Tamil
Nadu V. Jayesh
Brothers.
"Whether, the Tribunal is right in holding the masala
powder is not food items taxable under entry 63, Part D
of the First Schedule when there is a specific entry in
item 1(ix) of Part E of the First Schedule ?"
Held-Masala powder not by itself food
item and will not be covered by the
entry for food.
Schedule entry
39
50 VST 147
(Mad)
Sundaram
Industries Ltd. V.
State of Tamil
Nadu.
The assessee a company engaged in retreading of tyres
on a works contract basis. In respect of the works
undertaken, the assessee quoted a consolidated
amount, which they claimed as inclusive of tax. In the
return made, since the assessee had not separately
maintained accounts as regards the amount referable
towards transfer of property in goods and labour
charges, the assessee apportioned 70 per cent of the
amount as per the statute, as taxable turnover. The
officer viewed that since the assessee had charged a
lump sum amount and no separate amount was noted
in the bills towards collection of sales tax and that the
tax was only notionally stated so in the accounts, the
entire turnover at 70 per cent was to be assessed to tax.
The assessing officer rejected the contention of the
assessee that there was a clear mention in the invoice to
the effect that the sale price is inclusive of sales tax. The
assessing officer, however, pointed out that since the
transactions involved in the execution of the works
contract are deemed sales, provisions relating to sales
are equally applicable to deemed sales and when the tax
on the sales are not separately shown as not included in
the sale price, the petitioners were liable to pay tax. As
per Explanation (1A) to section 2(r) of the Tamil Nadu
General Sales Tax Act, 1959, any amount charged by a
The Court dismissed the petition. In
the instant case, the dealer had
charged a consolidated amount for
the execution of the works contract.
The indivisible contract showed no
bifurcation as regards labour and
materials. Even in the accounts, the
assessee did not have the details on
the cost of the materials used to have
a deduction of the labour charges
from the consolidated price charged.
The consolidated amount charged is
stated to include the tax element.
Even for claiming deduction on the
labour charges, the assessee adopted
the statutory percentage only. In the
above
circumstances,
on
a
consolidated sum thus charged, the
claim of the assessee that the
adjustment entries given in the
accounts have to be taken as tax
charged
separately
was
not
acceptable. When the parties to the
contract
have
agreed
on
a
consolidated price inclusive of tax, it
Sale
price
(works
contract)
31
dealer by way of tax separately without including the
same in the price of goods bought or sold shall be
excluded from the turnover. Since the assessee had not
collected the tax separately from the purchasers, the
mere fact that they had been shown separately in the
accounts could not be a justifiable ground for granting
exclusion.
is clear that irrespective of how they
make up the bill or the accounts, the
entire consideration will be the
turnover.
40
50 VST 302
(Mad)
Mangai Agencies.
V. Appellate Dy.
Commissioner
(CT),
Virudhunagar
and Another.
The appellant filed appeal against assessment order,
however he failed to appear on near 38 occasions. Then
appellate authority dismissed appeal. On writ filed after
delay more than one year and four months, contending
that there had been a violation of principle of natural
justice and order without jurisdiction,
The Court dismissed the petition. The
dealer not utilising opportunity to put
forth its cases in appeal cannot
complain of violation of natural
justice.
Appeal
41
50 VST 527
(Ker)
Maggy Sunny. V.
State of Kerala.
One of the departmental officers pretending to be a
consumer made a sample purchase of a gold ornament
from the petitioner's shop for which payment was also
made by the officer based on slip prepared and issued
by the petitioner without raising any invoice and
accounting transaction. A search was conducted which
departmental authorities recovered slip covering
suppressed sales, based on which tax evasion was
determined and penalty was levied.
The Court dismissed the petition.
Trade practice of sales through slip
once established by dept. Burden on
assessee to prove such sales entered
in regular books.
Investigation
42
51 VST 168
Maharashtra
Chamber
of
Housing Industry
and Others. V.
State
of
The challenge of the petitioners is that by amending the
provisions of Section 2(24) the State Legislature has
brought within the ambit and purview of the expression
"sale", an agreement for the building and construction
Held:- Inclusion within works
contract of agreement for building
construction etc. in respect of works
contract valid.
Builders
32
Maharashtra and
Others.
of immovable property which is not a works contract.
43
51 VST 382
(Bom)
Premium Paper
and Board Ind.
Ltd.
V.
Jt. Commissioner
of Sales Tax,
(INV-A)
and
Others
The petitioner who claimed Set off on purchases
claimed to have been effected from certain vendors
against the tax liability on sales. On the ground that an
investigation revealed that the records of the certain
vendors were found to be engaged in the activity of only
issuing tax invoices without actual delivery of goods
and passing on tax credit without paying it in the
Government Treasury , that there was a mismatch in
the ITC claimed by the dealer and the tax deposited into
the Treasury by the bogus vendors in respect of
purchases claimed to have been made by the dealer
from them, that no one was claiming responsibility for
the companies from whom the dealers claimed to have
purchased the goods, that in the very first year of
business the turnover of three dealers high, action of
provisional attachment was made. On a writ,
Held, dismissing petition, writ
petition challenging vires of provision
cannot be entertained where entire
claim is based of set-off found upon
assessment to be bogus.
Input tax credit
44
51 VST 413
(Uttra)
Shriya
Enterprises.
V.
Commissioner of
Commercial
Taxes,
Uttrakhand
The question, which has to be decided in the present
revision is, whether potato chips is a processed
vegetable or not, and consequently liable to be taxed at
four per cent or at 12.5%.
Potato chips taxable as processed
vegetable.
Schedule entry
45
51 VST 439
(Karn)
State
of
Karnataka.
V.
Kitchen
Appliances India
Ltd.
Subsequent to issue of tax invoice the dealer had issued
credit notes to the customers on monthly sales
performance basis incentives, in which dealer had
deducted output tax relating to discount and remitted
the balance tax to the Dept. On the ground that rule
3(2)(c) of the Karnataka VAT makes it mandatory on
the dealer to claim the discount separately on the tax
The court upheld the appeal of the
State. It observed that the dealer had
not shown the discount in the tax
invoices but that the discount offered
is subsequent to the raising of the tax
invoice. Even though the dealers may
have a right to revise the sale price of
Sale
price
(discount)
33
46
52 VST 49 (
Delhi)
Ricoh India Ltd.
V. Commissioner.
(Delhi)
invoice and the tax collected should be on the sale price
less discount and there is no provisions to claim the
discounts, which are allowed in future dates as per the
trade practices followed, the assessing authority levied
tax on the sum representing discount. The JC (Appeal)
dismissed the appeal, however Tribunal directed
deletion of tax demanded alongwith the interest. The
State filed an appeal.
their goods in accordance with
contract or otherwise, in terms of the
proviso to rule 3(2)(c), the same
would have to be shown at the time of
raising the tax invoice. Discount on a
product cannot be offered after a sale
has taken place. A discount is offered
at the time of sale. Once a sale takes
place, the question of offering a
discount thereafter does not arise for
consideration. In view of the admitted
fact that the tax invoice did not
contain the discount, subsequent
credit notes could not be treated as
discount to claim relief.
Whether multi-functional printers/machines and their
spare and consumable, during the period 1.4.2005 to
31.3.2007 are computer peripherals taxable under
entry Sch-III-41 @4% of the Act or taxable under
residual entry at 12.5%?
The multi function machines may or
may not be computer peripheral,
depending upon the main purpose or
function which the machine was
designed and manufactured to
perform. The doctrine of dominant
purpose of the multi functional
machine will determine whether it is
an input or output unit of automatic
data processing machine. In case
multi functional machine is a
duplicator
or
a
photocopying
machine, which incidentally can be
used as a printer or a scanner etc., the
said machine would not qualify and
cannot be treated and regarded as
input or output unit of automatic data
Schedule entry
34
processing machine. Said machines
would not qualify under Entry 41A
and will be covered by the residuary
tax rate. In the case the principal or
dominant purpose is to act as input or
output unit, then it would be covered
by entry 41A.
47
52 VST 120
(Chhat)
Kamesh Traders.
V.
State
of
Chhattisgarh and
Another.
The writ petition involves the question of law as to
whether or not the products of cello company, i.e.,
serving tray, flask, stainless steel tiffin with plastic
body, water jug and hotpot (casserole) would fall within
the meaning of "utensils" under entry No. 13 of Part II
of Schedule II of the Act. The assesse filed the petition.
The Court allowed the petition. The
question for consideration before this
court is that whether the abovestated articles, i.e., serving tray, flask,
stainless steel tiffin with plastic body,
water jug and hotpot (casserole)
come within the definition of
"utensils" and fall within entry 13 of
Part II of the Second Schedule of the
Act, 2005. Entry 13 starts with the
word "all utensils". Utensils have a
very wide connotation. It further
states that all the utensils except
utensils made of precious metals.
There is no dispute that the abovestated articles are not made of
precious metals and there is no
distinction whether it is made of
stainless steel, plastic or any other
metal and as such all utensils come
within entry 13 of Second Schedule
wherein VAT payable at the rate of
four per cent.
Schedule entry
On reading of the definitions given by
35
the various dictionaries, it is clear
that all the articles which are useful
for kitchen and domestic purposes,
come within the definition of
"utensils".
It is trite law that in case of
imposition of taxes, the word should
be construed in the same way in
which it is understood in ordinary
parlance in the area in which the law
is in force.
48
52 VST 129
(Karn)
ACC Ltd. V. State
of Karnataka.
The assessee is engaged in the manufacture and sale of
cement including ready mix concrete. The assessee had
effected sale of ready mix concrete (RMC) to its
customers and claimed exemption on the charges
collected by it for pumping ready mix concrete at the
customers' site.
The Court dismissed the petition.
Pumping charges collected from
customers being part of pre sale
expenses includible in turnover.
Sale price
49
52 VST 221
(Mad)
State of Tamil
Nadu. V. Kawarlal
and Co.
The assessee herein is a dealer in pharmaceuticals and
chemicals. He claimed exemption on the turnover as
representing high sea sales effected. In support of the
claim, the assessee filed bill of lading and high seas
agreement and pointed out that the goods in question
were cleared by the purchaser by paying customs duty
through clearing and forwarding agent and that the
assessee had nothing to do with the clearance of the
said goods.
The petition was allowed. The Court
held that the bill of entry not a
document of title and admittedly it
carried the name of the ultimate
buyer and that there was no denial of
the fact that the assessee had
transferred the goods before it
crossed the customs station, The only
ground on which the claim was
rejected was the difference in the
name found in the bill of entry
available with the assessee and the
one with the customs authorities.
With the title to the goods thus
High seas sales
36
endorsed even before it crossed the
customs station, the claim of the
assessee could not be denied just
based on the bill of entry which is
admittedly not a document of title.
Under section 46 of the Customs Act Entry of goods on importation - the
importer has to file bill of entry
before the proper officer, which may
be for home consumption or for
warehousing. Only on filing the bill of
entry for home consumption that the
goods are allowed to be cleared after
the payment of required customs
duty. In the absence of any details as
to whether the said entries relate to
the one in the bill of entry for home
consumption or any bill of entry for
warehousing, the dealer's claim could
not be denied.
50
52 VST 306
(Karn)
Essar
Telecom
Infrastructure
(P.) Ltd. V.Union
of
India
and
Others
The petitioner having entered into contract with
various telecom/cellular operators is required to
render service in relation to passive telecom network
including operating and maintenance. The assessing
authority proposed to impose tax on providing of
cellular tower on rent to various service providers
stating that the transaction fell under the definition of
deemed sale.
Providing cellular telephony towers
on rent to various telecom companies
amounts to transfer of right to use.
Transfer
right to use
51
52 VST 330
(Karn)
State
of
Karnataka.
V.
Anantha Refinery
The assessee sold oiled and de-oiled cakes in course of
inter-State trade and produced C forms. By notification
CST was reduced to two per cent on de-oiled cakes. The
Held:- Oil cake and de-oiled cakes are
different commodity : concessional
rate of tax on de-oiled cake cannot be
Schedule entry
37
of
52
52 VST 447
((AP)
Pvt. Ltd.
assesse claimed the benefit for oiled cakes. The benefit
was denied and in the reassessment order, the sales tax
was levied at four per cent.
extended to oil-cake.
Indus Tower Ltd.
V.
Commercial
Tax
Officer,
Begumpet Circle,
Hyderabad and
Others.
The petitioner is in the business of providing telecom
infrastructure support services to several telecom
operators (such as Airtel, Vodafone, Idea, Reliance,
Aircel, BSNL, etc.). The dealer builds, operates and
maintains passive telecom infrastructure, also owned
and controlled by it. He purchased material on form C
intended for use in telecommunication network. But he
was not having license issued by Dept. of
Telecommunication and hence he was not telecom
service provider and CTO levied the penalty as the
dealer has misused the form.
Held, allowing the petition,. The
petitioners/dealers are registered as
infrastructure provider Category 1
(IP-1) by the DOT, Government of
India, a fact not in dispute. That they
are registered under the CST Act; that
the
certificate
of
registration
describes
the
petitioners
as
telecommunication network service
providers; that the goods purchased
by them against issue of C forms
during the course of inter-State
transactions are goods specified for
purchase
for
use
in
telecommunications
network
specified by them in para 16 of form A
application submitted for seeking
registration under the CST Act, are
also facts not in dispute. It is also not
in dispute that the goods in respect of
which the impugned penalty orders
were passed under the provisions of
section 10A of the CST Act were
goods specified in the list of goods
stated by the petitioners while
applying for registration under the
CST Act and enumerated in the
respective certificates of registration,
and were used for the erection and
Declarations
38
maintenance
of
telecommunication
(the cell towers).
the
passive
infrastructure
It was the contention of the Revenue,
that the petitioners are not telecom
service providers but are only
engaged in the construction of towers
equipped with generators and other
equipment that are provided to actual
telecom service providers/operators
and that the petitioners wrongly
represented
themselves
as
telecommunication network service
providers. The Court held the above
contention and assumption by the
Revenue as wholly erroneous. The
certificate of registration describes
the petitioner as engaged in the
business
of
telecommunication
network service provider. The
registration certificate issued by the
DOT, constitutes a federal recognition
that the erection and maintenance of
telecom/cell towers is an activity
falling within the legislative field
enumerated in entry 31 of List I. On
this analyses, the Revenue cannot be
heard to contend that the petitioners
are not comprehended within the
generic area "telecommunications
network",
39
53
52 VST 484
(Karn)
Assistant
Commissioner of
Commercial
Taxes, Bangalore
and Others. V.
Pink City
The dealer has not filed the return within the time
prescribed nor have they paid the tax. Therefore, a
penalty has been imposed under section 72(1) of the
Act. The dealers have preferred writ petitions
challenging the virus of section 72(1) of the Act on the
ground that it is arbitrary.
Power to impose penalty within
competence of State legislature.
Penalty
54
53 VST 226
(Karn)
Ali
Singhania
Bulk Carriers. V.
State
of
Karnataka.
The petitioner own fleet of vehicles and was engaged in
transporting concrete mixture. The agreement was to
provide vehicles for transport the produce of company
from its plant to the various customers in the city. The
adequate number of vehicles is made available 24 hours
on all the seven days of the week. The company also
agreed to reimburse the dealer for diesel and
lubricants. On this ground that the transaction
amounted to transfer of right to use.
The Court dismissed the petition. It
amounts to transfer of right to use
goods as effective control of vehicles
with company.
Transfer
right to use
55
53 VST 271
(Uttara)
Gujarat
Co-op
Milk Marketing
Fed
Ltd.
V.
Commissioner of
Commercial
Taxes,
(Uttarakhand)
The assessing officer held that the product sold by the
petitioner 'Amul Masti spiced Buttermilk" was not one
of the item mentioned in entry Sch-I-25 of the Act
which exempt tax in respect of " fresh milk, pasteurized
milk, buttermilk, separated milk, curd and Lussi".
Accordingly assessing authority levied tax on the dealer.
Held, allowing the petition, 'Amul
Masti spiced Buttermilk" is exempt as
buttermilk.
Schedule entry
56
53 VST 355
(Gauhati)
State of Tripura
and Others.
V.
Joy Kali Radio
Stores.
The petitioner - assessee is a manufacturer of
compressors. During inspection it was found that the
petitioner/assessee had done works contract of
repairing the defective compressor received from their
customers at Chennai, and also the assessee had
received repair charges. The assessing officer treated
the transaction as works contract.
Held, allowing the appeal, declaration
of low profit and high closing stock
warrants rejection of books of
accounts and assessment to the best
of
judgment
in
absence
of
explanation.
Assessment
The petitioner contended that the Tribunal is wrong in
40
of
holding that the transfer of property by way of
replacement of defective parts in the compressors while
undertaking repair works took place within the State of
Tamil Nadu and hence, the transactions are liable to tax.
He further submitted that the authorities have failed to
appreciate the fact that the petitioner/assessee
received defective compressors from their dealers, who
had earlier received the same from their respective
customers to whom the said compressors were sold by
them and later, these defective compressors were
despatched to the factory at Hyderabad for repair and
reconditioning; that the repaired compressors were
taken into the petitioner's/assessee's floating stock in
due course on receipt from Hyderabad. But soon after
the receipt of defective compressors, the reconditioned
compressor was given to the authorised dealer from
their floating stock and flat rate was charged as
repairing charges, therefore, the assessing officer ought
to have appreciated that the transactions partake the
character of an exchange not exigible to tax under the
provisions of the Tamil Nadu General Sales Tax Act.
57
53 VST 382
(Mad)
Sriram
Refrigeration Ind.
Ltd.
V.State of
Tamil Nadu.
The petitioner its factory at Hyderabad and supplied
refrigerators to customers in Tamil Nadu. The defective
compressors were brought to the petitioner for repairs
at Chennai. When the defective compressor is handed
over, the dealer replaced the defective compressor by a
reconditioned compressor of the same model. The
defective compressor received was subsequently
transferred to the factory in Andhra Pradesh for
rectification of the defects. The dealer collected repair
charges for the defective compressors. On finding that
the dealer carried out works contract of repairing the
The Court dismissed the petition. It is
transaction of works contract taxable.
Sale
price
works contract
41
defective compressors received from their customers at
Chennai and received repair charges, the assessing
authority assessed the replacement of defective
compressor as works contract, he gave relief of
deduction at 30 per cent towards labour charges and
levied tax at 70 per cent of the turnover in respect of
the works contract and levied penalty.
58
53 VST 401
(Gauhati)
BrahmputraV ally
Construction and
Suppliers. V. Oil
and Natural Gas
Corpn. Ltd. And
Others.
The assessee owned cranes and in pursuance of notice
inviting tenders issued by the ONGC for hiring cranes,
the assessee had entered into the contract. The cranes
were placed at the disposal of the contractee- ONGC on
day-to-day basis, without transfer of possession and
custody thereof. Operating costs including maintenance,
repair, insurance, salary of employees were to be borne
by the assessee and it is there was no transfer of
ownership of the cranes, nor of the right to use. The
possession and custody of the cranes remained with the
assessee. The assessee contended that there was no
lease. The assessee was paying service tax.
Held, hire of manned crane to ONGC
amounts to transfer of right to use
goods as ONGC alone entitled
exclusive use.
Transfer
right to use
59
54 VST 271
(Bom)
National Organic
Chemical
Industries Ltd. V.
State
of
Maharashtra.
The petitioner entered into a transaction with Assam
Gas for the performance of the work of laying HDPE
pipe for transportation of natural gas. The assessing
officer considered the transaction with Assam Gas as a
divisible transaction which could be divided into two
parts, namely, sale of HDPE pipes and installation of the
same as per the contract with Assam Gas. DC(Appeal) as
well as Tribunal affirmed order.
The petition of the assessee was
allowed. It was held that the
agreement between the applicants
and the Assam Gas was a works
contract and it could not be divided
into two parts, namely, contract to
supply the pipes and a contract to lay
down the pipelines. The use of HDPE
pipes was an integral part of the
performance of the contractual
obligation by the applicants. In order
to comply with the contractual
obligation cast on the applicants, the
Whether
divisible
indivisible
of
or
42
applicants were required to do
various acts set out in clause 3 "scope
of work" ultimately to see that the
HDPE
pipes
are
laid
for
transportation of natural gas. The acts
to be committed by the applicants
could not be divided into two parts,
namely, supply of pipes and laying
down the pipes. The use of this term
contract value clearly indicates that
the consideration payable to the
applicants was to be calculated as a
whole and not in parts. The payment
terms set out in the said agreement
speak in favour of the applicants that
the contract was to be read as an
inter-State indivisible works contract.
Clause 21 specifically mention that
the work was awarded to the
applicants on a turnkey basis. The
invoices raised at the time of taking
out pipes out of the factory premises
by the dealer for the purposes of
compliance of excise duty provisions
specifically mentioned that the
articles were for home consumption
and not to be sold in the market but
to be used in performing contract.
Looking to the terms of the
agreement as a whole, the property in
pipes which were to be used for
creation of a pipeline would pass on
only after the applicants completed
43
acts to be performed by them as per
the terms of the agreement. The
transaction to supply and laying
down the pipe being inseparable, it
would constitute works contract and
to such a works contract, the liability
to pay Central sales tax would arise
only after May 11, 2002 and since the
transaction in the present case
pertains to the period prior to May
11, 2002, the applicant would not be
liable for Central sales tax.(ii) that the
distinction between a divisible
contract and an indivisible contract
came to an end after the 46th
Amendment to the Constitution of
India, however, liability to pay Central
sales tax covered by property in
goods involved in the works contract
could be fastened only after May 11,
2002 when the definition of term
"sale" was amended on account of Act
20 of 2002.
60
54 VST 442
(Ker)
Trivandrum Club.
V.
Sales Tax
Officer (Luxury
Tax) and Another.
Whether luxury tax is payable on Club allowing guest
the to stay in cottages and rooms attached to it on rent
and other charges under the provisions of the Kerala
tax on Luxuries Act. The assessee filed the petition
against levy of tax.
The court dismissed the petition.
Admittedly the tariff charged by the
appellant for the cottages and guest
rooms attached to the club are above
the limit that attracts luxury tax
under the Act, if the collections attract
tax applicable to hotel rooms. The
Court observed that "hotel" as defined
under the Act has a wide meaning
Luxury Act
44
because Explanation covers even
guest house run by the Government
or a company or a corporation. The
appellant's
contention is
that
provision for accommodation in
cottages and rooms provided by the
club is only to the guests of members
or for members of affiliated clubs and,
therefore, the rent collection is not in
the form of business carried on by the
club. The Government Pleader
opposed the contention by stating
that guest houses of Government and
companies which are brought within
the meaning of "hotel" under the
Explanation to the definition clause
are not engaged in business and so
much so, renting out of rooms by the
club need not be as business to attract
liability under the Act. The Court
expressed agreement with the
contention of the learned Government
Pleader because under the charging
section 4(1)(i) luxury tax is leviable
for the rent collected by clubs for
auditorium, kalyanamandapam and
hall attached to clubs. Club as a
person liable to luxury tax is
recognised by the charging sections
and in fact, specific provisions stated
above are there for charging luxury
tax on clubs on membership fee at the
rate of Rs. 100 per member per year,
45
and also on rent collected for
auditorium, kalyanamandapam, etc.,
attached to clubs. The Court observed
there is no necessity for the
Department to prove that the
accommodation provided to guests in
cottages and rooms attached to clubs
for residence is a business activity of
the club to levy luxury tax thereon.
Further, there is some force in the
contention of the Government
Pleader that there is no prohibition
against club making profit by renting
out cottages and rooms to it's
members or to members of affiliated
clubs, and such profit of the club will
ultimately go to the benefit of the
members.
61
55 VST 1
ABB
Ltd.
V.Commissioner,
Delhi Value added
Tax.
The questions of law which arise for consideration in
this case are :"(i) Whether the sale transactions in the
present case were in the course of the inter-State trade,
so as to attract the provisions of CST Act, 1956 ?
(ii) Whether an inter-State trade is deemed to have
been taken place in the course of movement of goods
into
and
inside
the
country?
and
(iii) Whether the sale made to the Delhi Metro Rail
Corporation is in the course of import and consequently
exempt from the Delhi VAT Act, 2, especially section
7(c) of the DVAT Act, read with section 5(2) of the CST
Act.
Held, allowing the appeals, express
stipulation of interstate movement of
goods in agreement not necessary to
constitute a sale in course interstate
sale.
Interstate sale
46
62
55 VST 81
(Ker)
MGF Motors Ltd.
V.State of Kerala.
Whether the replacement of parts of automobile during
warranty period without collecting any price for the
same from the vehicle owner amounts to sale that
attracts sales tax.
Held, Free replacement of parts
during warranty period amounts to
sale
Sale
63
55 VST 89
(Karn)
Sasken
Communication
Technologies Ltd.
V.
Jt.
Commissioner of
commercial Taxes
(Appeals)-3,
Bangalore
and
Another.
Whether software development according to
specification of customer sales? The assesse had filed
the appeal stating that software development is a
service and not a sale.
The court allowed the appeal. It was
in the agreement that all patentable
and
unpatentable,
inventions,
discoveries and ideas which are made
or conceived as a direct or indirect
result of the programming or other
services performed under the
agreement shall be considered as
works made for hire and shall remain
exclusive property of the client and
the Assessee shall have no ownership
interest therein. Both, the source code
of developed software and hardware
projects of worldwide Intellectual
Property in and each shall be owned
by the client. Therefore, even before
rendering service, the Assessee has
given up his rights to the software to
be developed by the Assessee.
Whether SaleDevelopment of
Software
The considerations under the
agreement is not for the cost of the
project, the consideration is for the
service rendered, based on time or
man hours. Once the project is
developed, all rights in respect of the
said project including the Intellectual
Property Rights vest with the
47
customer and he is at liberty to deal
with it in any manner he likes.
The Software so developed even
before it is embedded on the material
object or after it is embedded on a
material object exclusively belongs to
the customer. The title to the
project/software to be developed lies
with the customer even before the
Assessee starts rendering service.
In fact, a careful reading of the
agreement shows that, the employees
of the Assessee and the employees of
the customer have to work hand in
hand, consult at every stage, have
interactions and understand the need
and requirement of the customer and
through
their
employees,
the
software is to be developed. The end
product i.e., the ultimate software, is
not necessarily the work of any one
such service provider. It is a collective
effort.
As clear from the terms of the
agreement, on the day they entered
into agreement, there was no
software in existence. In other words,
there was no goods in existence. The
agreement is not for transfer of
software. The agreement is for
48
development of software. Even before
the software comes into existence, the
Assessee has given up all the rights
and claims of the software to be
developed and has expressly agreed
that such a software which may come
into existence in the end of the
contract period is the absolute
property of the customer.
64
55 VST 145
(Uttara)
State
of
Uttrakhand and
Others. V. Nestle
India Ltd.
Whether tomato sauce is a processed vegetable.
Tomato sauce is taxable as a
processed and preserved vegetable.
Schedule entry
65
55 VST 208
(Ker)
Sanjos
Parish
Hospital.
V.
Commercial Tax
Officer, Thrissur
and Others.
In these writ petitions, where hospitals being
established by public ltd co with profit motive.
Therefore, if in hospitals, medicine and other
consumables sold to patient and bills are raised then
such transactions are taxable?
Held:- Hospitals are liable to get
themselves registered and pay tax on
sale of medicine and consumables to
patients.
Sale
medicines
66
55 VST 278
(MP)
P.K. Plastics. V.
Commissioner of
Commercial Tax,
MP and Others.
Petitioner is engaged in the business of purchase and
sale of plastic and steel items. Filed an application for
determining the rate of tax on the items purchased and
sold such as water jug and bottle, lunch box etc. The
Commissioner, held that only the water jug is covered
within the meaning of utensils taxable @ 5% and that
the remaining items are taxable @ 13%.
Held:- Entry "all kinds of utensils and
enamelled utensils" not restricted to
utensils used in kitchen alone but also
extends to items of daily household
use.
Schedule entry
67
55 VST 420
(Bom)
Commissioner of
Sales
Tax,
Maharashtra
State, Mumbai. V.
Whether ink, lacquer and chemicals used in job-work of
plate making with plates supplied by customers are
taxable.
The Court followed its decision in
Matushree textiles. It held that the
lacquer and ink were materials used
in plate making and property in them
passed on in the execution of the
Works Contract
of
49
contract of plate making under the
Act. There was transfer of property in
ink and lacquer.
RamdasSobhraj.
68
56 VST 163
Gauhati
Bhola Ram Kanoo
V. State of Assam
and Others.
Whether, "raabgur" is to be exempted from payment of
tax under the Assam General Sales Tax Act, 1993 by
treating the same as "gur" which is exempted from tax
under entry 17 of Schedule I of the Act or by treating
the same as a "cattle feed" which is also exempted from
tax under entry 50 of the said Schedule.
The Court upheld the contention of
the assessee. It held that though
Rabgur is a form of gur it is a distinct
item and not the same as gur. The
stand of the petitioners that the
rabgur is not fit for human
consumption is not disputed. Though
it may other uses the revenue had
not disputed the stand of the
petitioner that it can also be used as
cattle feed. Held, rabgur exempt as
cattle feed.
Schedule entry
69
56 VST 441
(Mad)
State of Tamil
Nadu
V. Steel
Authority of India
and Another.
The dealer entered into contract with the foreign co for
conversion of S.S. strips in to coin blank. The dealer
thereafter entered into an agreement with the
Government of India for the manufacture and supply of
twenty five and fifty paise stainless steel coin blanks. In
this agreement, the dealer was described as the
supplier whereas the Indian Government mint was
described as the purchaser. The payment to the
supplier for the supply of coin blanks was to be made
through irrevocable letters of credit to be opened by the
purchaser through the SBI in favour of the supplier. The
supplier had to ensure that the coin blanks were
manufactured strictly as per specifications.
The
question as to whether the dealer was eligible for the
claim of exemption u/s 5(2) of CST Act.
Held, that conjunct reading of both
the agreements would make it clear
that these two agreements are
independent to one another and were
in no way connected with one
another. The first agreement was
entered by the dealer as a purchaser
with the foreign company for
conversion of steel strips into coin
blanks and the second agreement was
entered into by it as a supplier with
the Indian Government Mint for
supply of steel strips. In the first
agreement the dealer acted in the
capacity of a supplier for a valid
consideration and in the second
Sale
in
course
import (
allowed)
the
of
not
50
agreement it acted as the purchaser
to the Conversion Agent for a valid
consideration. There was no privity of
contract between the local purchaser,
namely, the Government and the
foreign seller. Under the CST Act tax is
leviable on sale and not because of
the movement of goods. To claim
exemption under Section 5(2) of the
Act, the sale or purchase of goods
should be deemed to take place in the
course of the import of the goods into
the territory of India. The assesse
dealer had not established that there
was any term or condition prohibiting
the diversion of the goods after the
import i.e., the inextricable link
between the transaction of the sale
and the actual import making sale in
the course of import. Moreover, in
order to qualify for the exemption, the
goods must move from the foreign
country to India in pursuance of the
conditions in the contract of sale
between the foreign seller and the
local purchaser, but, in the present
case, the goods were imported from
the foreign country to India in
pursuance of the contract entered
into between the foreign seller and
the dealer, which was not the local
purchaser.
The transaction took
place between the parties had amply
51
made it clear that the sale
contemplated under Section 5(2) had
not taken place and, even assuming
that there was an import of goods
from Italy, such import was not
occasioned as a result of sale by a
dealer in Italy. Therefore, the dealer
was not entitled to the benefit of
section 5(2).
70
56 VST 452
(Gauhati)
Reckitt Benckiser
India Pvt. Ltd. V.
State of Assam
and Others.
Whether the product "Harpic", "Lizol" are pesticides
and "Dettol". falls under the category of drugs and
medicine.
The Court allowed the petition.
"Harpic", "Lizol" are pesticides and
"Dettol" falls under the category of
drugs and medicine and not a toilet
article.
Schedule entry
71
57 VST 55
(AP)
Santhosh
Builders. V. Dy.
Commissioner of
Commercial
Taxes
(CT),
Nellore
and
Others.
The dealer was serviced the order of assessment long
after expiry of prescribed time limit for passing order.
No proper explanation for delay was given. The assesse
file dpetition.
The Court allowed the petition. In
view of the circumstances, it must be
presumed that the order was not
passed on the date it is purported to
have been passed but it was passed
beyond the period of limitation
prescribed. Consequently, the order
cannot be sustained being barred by
limitation and is accordingly quashed.
Assessment
72
57 VST 179
(AP)
Kumar
Metallurgical
Corp Ltd. V. Dy.
Commercial Tax
Officer, Nalgonda
and Another.
The petitioner availed loans from banks hypothecating
movable assets and immovable properties sought a
reference under the SICA to the BIFR in 03-04. The
Asset Reconstruction (ARCIL) obtained security interest
and initiated action under the SARFAESI Act. While the
petitioner was busy agitating against the proceedings
under the SARFAESI Act before the DRT, DRAT and this
The Court dismissed the petition.
Section 16C of the APGST Act has nonobstante clause. It creates first charge
on the property of the dealer in
favour of the Government which can
claim priority in recovery of debts.
Section 38C of the BST Act also
Recovery
52
court, the BIFR passed order on July 22, 2005 to the
effect that the reference pending before them shall
stand abated in terms of the third proviso to section
15(1) of the SICA. A notice of attachment was issued for
non payment of sales tax.
provided first charge in favour of the
Government in the recovery of sales
tax dues. Section 22 of the SICA does
not in any way bar the proceedings
for recovery of sales tax arrears.
Therefore the notice of attachment
issued u/s 27 of the Revenue
Recovery Act could not be faulted.
73
57 VST 275
(AP)
Jitender
Roller
Flour Mills. V.
Assistant
Commissioner
(CT)
LTU,
Charminar Div,
Hyderabad.
The petitioner disclosed export turnover and
consignment sales claimed to be transfers to its
branches and agents in other States and claimed
exemption on the above The assessing authority passed
an order allowing exemption., Subsequently, on the
ground that the F forms submitted by the petitioner
covered consignment sales periods in excess of one
calendar month, contrary to the stipulation of rule
12(5) of the Rules) and passed the order of revision of
the assessment order withdrawing the exemption
allowed on specific turnover. On writ petitions:
The court allowed the petitions. Since
the petitioner had filed the F forms
for periods in excess of one calendar
month and these F forms were before
the assessing authority when he
passed the initial order were
accepted, this cannot be revised as it
is a case of lack of diligence on the
part of the assessing authority, not
liable to be corrected.
F form
74
57 VST 284
(AP)
State of A.P. V.
Hindustan Cables
Ltd.
Whether even in the absence of a provision under the
CST Act for forfeiture of excess tax collected by a
registered dealer, forfeiture could be ordered by
recourse to the provisions under the local Act.
Held- following SC judgement in
Khemka and Co 9 35 STC 571) and
India carbon (106 STC 460) a
provision for forfeiture of tax is a
fortiori a substantive provision and
not a mere procedural prescription.
Since the CST Act contained no
provision authorizing forfeiture of
excess tax collected but not remitted
to the Revenue, no forfeiture could be
ordered on forfeiture provisions in
the local Act,.
Forfeiture
53
75
57 VST 373
(Mad)
West
Coast
Industries
(Exports) Pvt.Ltd.
V. State of Tamil
Nadu.
The assessee engaged in manufacturing and trading of
hosiery goods purchased furnace oil, distribution pipes,
copper
cable,
transformer,
electrical
goods,
demineralising plant, circular trolley and M.S. trolley
and water storage tank by issuing declaration in form C
which were not mentioned in RC. The first appellate
authority levied a minimum penalty in respect of all
above goods except aluminium sheets. Considering the
fact that these items were not entered in the
registration certificate, the issuance of form C was a
violation attracting penal action under section 10A of
the CST Act, levied penalty at 150 per cent on the
differential tax.
The Commissioner had issued
instructions that wherever a dealer
had purchased goods on the basis of C
form without, including them in the
certificate under the CST Act either
inadvertently or out of ignorance, no
penalty need be levied under section
10(b) of the CST Act. Therefore the
first appellate authority confirmed
minimum penalty in respect of goods
like furnace oil, distribution pipes.
Copper cable, transformer and
electrical goods which are directly
used in manufacturing activity of the
assesse and have a bearing on his
business. However, aluminium sheets
do not have a direct bearing. It is not
close to the enumerated items
mentioned in the RC and therefore
the assessee cannot plead ignorance
of law. Therefore levy of penalty on
the purchase of aluminium sheets
which were used for factory roofing
purposes and which could not in any
manner, be brought anywhere near
the enumerated entries confirmed.
Declarations
76
57 VST 415
(Gauhati)
A.R.N.V.
Chemicals
Pvt.
Ltd. V. State of
Assam.
They make bulk purchase of loose detergent powder.
The purchased powder is then packed by the petitioner
in unit containers and is offered for second sale to the
customers. The assesse challenged in a writ petition the
order of the revisional authority holding that packing of
Held, allowing the petition, the
process of packing/re-packing of
detergent powder does not convert
the original product into anything
other than detergent powder.
Manufacture
54
the detergent powder amounts to "manufacture".
77
57 VST 484
(Orissa)
Tata Steel Ltd and
Others. V. State of
Odisha
and
Others.
The questions in writ petitions."(i) Whether the entry
tax can be levied and/or imposed on the value of the
goods imported by the petitioners from outside the
country ? (ii) Whether such entry tax under the
aforesaid Act can be levied and/or imposed on import
of plant and machinery for establishing a plant in the
State of Odisha ? (iii) Whether the entry tax can be
levied on certain raw materials and goods imported
from outside the country and purchased from outside
the State when such materials have not been listed in
the schedule appended to the Orissa Entry Tax Act ?and
(iv) Whether the Orissa Entry Tax Act,, is violative of
entry 83 of List I of the Seventh Schedule and article
246
of
the
Constitution
of
India
?"
i) Restriction under article 286 of the
Constitution could not be applied in
entry 5 of List II of the Seventh
Schedule to the Constitution. Thus the
levy of entry tax on goods imported
from outside the country was not hit
by article 286(1) of the Constitution
(ii) The taxable event under the Entry
Tax Act is entry of specific goods into
a local area. whereas custom duty on
import of goods into territory of
India. When the former is a subjectmatter of legislation by the State, the
latter relates to entry 83 of List I of
the Seventh Schedule. There is no
overlapping in the exercise of
legislative
power.
(iii) The Act is a tax in lieu of octroi
incident of which are similar to that of
entry tax. When the levy of octroi on
imported goods was upheld by
different courts there is no reason
why entry tax on imported goods
cannot be upheld. iv)A plain reading
of the charging section under the
Orissa Entry Tax makes it clear that
the Legislature has no intention that
imported goods are intended to be
left out from the charging section.
"Outside the State" means any place
outside the State and includes all
Entry
steel
tax
55
on
places outside the State as well as
outside
the
country.
(iv) The plant, which is brought in
knock down condition, is a
combination of machinery in a
systematic manner so as to produce
goods and, therefore, it is coming
within the definition of machinery
and, hence, it is liable for entry tax.
78
58 VST 43
(Ker)
HDFC Bank Ltd. V.
Intelligence
Officer (IB), Dept.
of
Commercial
Tax,
Edapally,
Kochi
and
Another.
The petitioner - banks have conceded turnover on the
sale of gold bars during the relevant period and paid tax
at one per cent, on the premise that the commodity sold
will fall within the relevant entry of gold bullions. But
the returns were rejected and the turnover was
assessed at four per cent treating the commodity as one
falling within entry 4(4) of the Third Schedule to the
KVAT Act. In this regard, the Commissioner of
Commercial Taxes had issued a clarification in exercise
of power vested under section 94 of the KVAT Act . In
the said clarification, issued on September 29, 2008, it is
held that 10 grams of rectangular gold bars, being semimanufactured gold would fall within entry 4(4) of the
Third Schedule with HSN Code 7108.13.00. The
assessing authorities found that the rectangular gold
bars dealt with by the petitioner - banks cannot be
regarded as bullion since they are not raw or
unwrought gold or gold in mass. The assesse filed a
writ.
The court dismissed the petition.
Following the Kerala High Court
judgement in HDFC Bank ( 36 VST
338), the gold bar dealt with by the
petitioner - banks cannot be treated
as gold bullion coming within entry
1(2) of the Second Schedule to the
KVAT Act with HSN Code 7108.12.00.
But it can only be considered as
"semi-manufactured" form of gold
falling within entre 4(4) of the Kerala
Act coming within HSN Code
7108.13.00.(ii)
Schedule entry
79
58 VST 262
(Gauhati)
Data Plus Info
Chanel. V.
V.
State of Assam
The petitioner modernized the industrial unit and
limited its manufacturing activities to production of
computer stationery. For production of computer
The court allowed the writ petition.
The activity of the petitioner,
involving certain processes with the
Schedule entry
56
80
58 VST 290
(Mad)
and Others.
stationery the raw materials used are paper rolls and
carbon rolls.In order to qualify any product as
computer stationery, the said product must be
perforated on both sides/edges of the paper and must
also be foldable. Such perforation must be of certain
specifications so that such paper can be fed into the
computer printers and if it is a continuous paper, such
paper must be horizontally perforated so that the
continuous paper can be folded and torn off. Therefore,
unless such paper is subjected to such perforation with
certain specifications, the same cannot be used as
computer stationery. While ordinary paper may be also
used for computer printing, computer stationery having
distinct characters as stated above is used only for
computer printing. The computer stationery carries a
distinct identity in the common trade parlance.
aid of machines by integrating plain
paper with carbon and which is
perforated
under
certain
specifications, and known in the
common trade parlance as a
computer stationery, would qualify as
a manufacturing process. The process
applied results into transformation of
the two commodities of paper and
carbon used as raw materials to an
integrated and non-separable product
assuming an identity of a different
article or commodity known as
computer stationery in the common
trade parlance.
Ajey& Sons Oils
(Madras) P. Ltd.
V. State of Tamil
Nadu.
The petitioner herein is a dealer in Vanaspathi and
Edible oil. The petitioner had effected sales to Andaman
Customers and had shown the turnover as inter-state
sales and charged at four percent against the C form.
The documents seized at the time of inspection revealed
that the goods were delivered to the agent at Madras.
Assessments were made assessing the turnover under
TNGST Act, rejecting the dealer's contention that the
purchasers at Andaman have no office or a branch place
of business at Madras. Most of their requirements of
grocery, edible oils, vanaspathi are to be ordered at
Madras and moved to Andamans from their nearest
port., viz., Madras harbour. The assesse claimed interstate sales.
The High Court confirmed the
findings of the Tribunal that there
was nothing on the record to show
that the dealer had a contract with
the Andamans dealers and towards
that end, effected sales, resulting in
movement of goods from Chennai to
Andamans. In the absence of any
material the turnover was assessable
under TNGST Act and the sales were
not inter-state sales.
Inter-state sales
57
81
58 VST 341
(Gauhati)
Hindalco
Industries
Ltd.
and Another. V.
State of Assam
and Others.
The petitioner is engaged in the business of
manufacturing and dealing in aluminum and its
products. The petitioners paid tax at the rate of four per
cent on the sale of aluminum rolled products
manufactured by it treating the same to be covered
under entry 26 of the Second Schedule to the Act.The
petitioner filed a petition under section 105 of the Act
before Commissioner, seeking clarification as to why
the aluminum ingots, wire rods and rolled products and
extrusions should not fall within the ambit of entry 26
of the Second Schedule to the Act. The Commr. clarified
that such product would be taxable at 12.5%. The
assesse challenged the petition.
The Court allowed the petition,
observing that giving of reason is an
indispensable sine qua non in quasijudicial adjudications. The order by
Commissioner contains omnibus
observations that in a number of
cases aluminium rolled products had
been held to be different from
aluminium and that it also did not
come under extrusions which is not
proper. The contention of the
petitioners that in the context of
entries in entry 26 of the Second
Schedule, the words "extrusions of
those" would mean secondary
products of aluminium like sheets,
plates, foils, etc. had also not been
gone into. Therefore the order passed
by Commr. was to be quashed.
Assessment
82
59 VST 237
(P&H)
Prem Enterprises.
V. State of Punjab
and Another.
The appellant has contended that POP is exempted from
tax as it is powdered gypsum falling under entry no A16 for fertilisers. The Commissioner rejected the
contention of the appellant that the gypsum has the
same chemistry as that of POP and thus tax-free. It has
many uses such as in plaster, cement, paints and
ornamental stones. The intention of entry A-16 i.e.
gypsum used only in relation to improvement of quality
of soil. POP is not gypsum and not tax-free.
The court dismissed the appeal, The
appellant has brought POP within the
State of Punjab. Though the chemical
properties may be similar, but the fact
remains that the uses of gypsum and
POP are different. Entry 16 of
Schedule A exempts fertilizers from
tax. The definition is inclusive which
includes gypsum as a fertilizer. Entry
16 exempts fertilizer from tax,
whereas POP cannot even remotely
be used as a fertilizer. Therefore, POP
Schedule entry
58
does not fall within entry 16 of
Schedule A. As a matter of fact, the
order dated August 27, 2008 of the
Excise and Taxation Commissioner
holding that POP does not fall within
entry 16 has attained finality.
83
60 VST 163
(Karn)
United Agencies.
V.
Assistant
Commissioner of
Commercial
Taxes, II Circle,
Bangalore
and
Others.
The appellant is a registered dealer of old newspaper
and waste paper. The appellant claimed exemption
from tax liability on the sale of above items as
exempted. But the assessing authority did not grant
exemption and assessed tax on the ground that the
appellant is liable to pay tax treating the sale of old
newspaper as waste paper.
Held, Sale of newspapers for purpose
other than reading news not
exempted.
Schedule entry
84
60VST 241
(P&H)
Daya Ram And
Company. V. State
of Harayana.
Penalty notice served on friend of assessee.
Held, service of penalty notice on
friend of assessee is not valid notice.
Service
Notice
85
60 VST 245
(Mad)
A.V.R. Agencies. V.
Assistant
Commissioner
(CT), Tirupur .
The Asst. Commr. refused to issue forms F and C States,
stating that they could be misused.
The Court allowed the petition. That
the Department has not been in a
position to show that the request of
the petitioner for the issuance of
forms F and C cane be refused for the
reason that such forms could be
misused.
Declarations
86
60 VST 270
(P&H)
Rathi Udyog. Ltd.
V.
State
of
Haryana
and
Others.
Initially, the Assessing Authority finalized the
assessment. Subsequently, a show-cause notice was
served upon the petitioner after it was discovered that
the turnover of the assessee has escaped assessment
during the year in question as the appellant has made
unaccounted sales of iron and steel. In the show-cause
notice, it was stated that the appellant has suppressed
The Court dismissed the appeal of the
assessee. After framing of the
assessment, the information came to
the notice of the Assessing Authority
that the appellant has not reflected
certain sales in the return submitted
by it. The Assessing Authority found
Assessment
of
59
sales. The appellant filed its reply admitting that the
sales worth Rs. 31,41,663 exclusive of tax could not be
reflected in the returns due to bona fide omission of
their clerk.
It was found that assessee - firm has suppressed
considerable turnover during one month only and
deserves to be assessed to tax to the best of the
judgment
The learned counsel for the appellant has vehemently
argued that the best judgment assessment could be
resorted to only after the rejection of books of accounts
that too during the course of assessment proceedings.
The assessing officer while issuing show-cause notice
has quantified the daily turnover for addition to the
gross turnover without returning a finding that account
books produced by the appellant are to be rejected. It is
only after recording a finding and that too after giving
an opportunity of hearing to the appellant, the account
books could be rejected by the Assessing Authority and
could proceed to frame best judgment assessment.
Since no such procedure was adopted, therefore, the
order passed under the Act are not sustainable.
87
60 VST 289
(Mad)
State of Tamil
Nadu. V.
V.S.S.
and Company.
The assessee, manufacture of groundnut oil and oilcake. On finding that there had been incorrect
maintenance of accounts and there has been a shortage
of groundnut kernel, which according to the assessing
officer indicates that the dealer crushed kernel without
recording in the accounts and sold resultant oil and oilcake outside the accounts and therefore, the claim of
exemption made by the assessee on account of
consignment sales, was disallowed. The tax was
that not only the appellant has
purchased iron and steel from
different dealers, which are not
reflected in the accounts, but also the
sales were also not reflected.
Therefore, the Assessing Authority
proceeded to frame the best judgment
assessment. Once the sales are proved
to be outside the said books of
accounts, a fact not disputed by the
appellant, the rejection of the books
of accounts is necessary consequence.
Held, dismissing the petition of the
Revenue, electricity consumption
cannot be sustained for the reason
that the consumption can be supply of
water for agricultural purposes or
any other purposes and hence cannot
be relied.
Assessment
60
assessed based on the estimate purely on the electricity
consumption made by the assesse. He estimated the
turnover on the basis of the electricity consumption
applying statistical data for consumption of electricity
and the conclusion that there has been suppression and
imposed tax and penalty.
88
60 VST 295
(Raj)
Commercial Tax
Officer, Baran V.
Ganesh Lal Goya
& Sons.
The assessing authority imposed tax on the sale of AC
generator sets in residuary entry at 10 per cent. The
Tax Board by has held that AC generator set is taxable
at four per cent entry "all kinds of generating sets" at
four per cent and, therefore,
Held, entry No. 41 "all kinds of
generating sets" is wide enough to
cover the AC generating sets also
during the relevant period.
Schedule entry
89
60 VST 350
(P&H)
Eco
Auto
Components Ltd.
V.
State
of
Haryana
and
Others.
Where the appeal filed by the petitioner challenging
certain orders by the Tribunal was dismissed as
withdrawn, with liberty to the appellant to take
recourse to the legal remedies availing to it in
accordance
with
law.
WP filed seeking quashing of the same orders.
The Court dismissed the petition and
held that the petitioner could not be
permitted to invoke the writ
jurisdiction of this court after the
petitioner has withdrawn the appeal
filed against the orders now
impugned in the writ petition.
Appeal
90
60 VST 491
(Gauhati)
Sunil
Chandra
Dey & Partner. V.
Food Corporation
of
India
and
Others.
The petitioner is carrying out contract for
transportation of food-grains of the (FCI) in terms of the
work order. The FCI made deduction from the bills of
the petitioner at four per cent as per mandate of the
rules in pursuance of the letter of the Principal
Secretary, drawing attention to provisions in Act and
Rule providing for tax deduction at source. The
petitioner moved this writ petition on the ground, that
the provisions for deduction from the bills of the
petitioner, without reference to the tax liability was
beyond the legislative competence of the State. It has
further been submitted that the provision for deduction
of tax at source had to have nexus with the tax due or
Held, allowing petition, the perusal of
rule 7(1) and 7 (2) of the Rules 2005,
would show that the deduction of
four per cent from the bills is
referable to tax liability and not de
hors thereof. Thus, deduction of four
per cent from the bills of the
petitioner
cannot
be
without
considering its tax liability. This being
the settled legal position, the
petitioner may give a declaration as
to it taxable turnover out of the
TDS
61
likely to be due.
payment of the bill.
91
61 VST 5
(Cal)
Crompton
Greaves Ltd. V.
Assistant
Commissioner of
Commercial
Taxes, Corporate
Div and Others.
The petitioner collected sales tax on the basis of invoice
from purchasers of goods and issued credit notes later
on as trade discount and /or incentive giving them
credit of tax charged on such incentives, filed returns on
the basis of actual collection of tax after the tax was
deposited. The Dept rejected the claim of trade discount
on the ground that factually trade discount was not
made known to the purchaser at the time of sale. The
full price has been realised with tax at the time of
issuance of bill.
Held, dismissing the appeal, that the
petitioner herein had realized the full
price with the sales tax and surcharge
without any mention of discount
being allowed in any manner
whatsoever. It was not a discount,
which was known and understood at
the time of removal of the goods.
There was no whisper in the invoices
as to discount being allowed. No
recurring credit scheme was also
introduced to allow the purchasers to
get the discount through the credit
notes. It was not turnover discount
through issuance of credit notes to
encourage
turnover
of
sales.
Sale price
discount
92
61 VST 23
(Bom)
Commissioner of
Sales
Tax,
Maharashtra
State, Mumbai. V.
Kolsite Indistries.
The department referred the following question :
The appeal was dismissed. The Court
observed that
the terms in the
documents like the agreement, the
quotation, marine cover notes,
specimen sale invoice clearly revealed
that the delivery of goods was to be
effected by the assessee is ex-works
and assesse had not taken any risk
upon themselves qua the goods upon
delivery. The respondent, in no
uncertain terms, clarified in the
agreement that unless otherwise
agreed, the quoted price is exclusive
Whether
insurance is a
part of sale
price
1) Whether, insurance charges will not form part of
sale price, as it was borne by the buyer independently
and separately and also the parties did not intend, as
contained in clause (h) of section 2 of the CST Act, 1956,
?
(2)Whether, the Tribunal was entitled to take different
view from its earlier view, pertaining to same issue, in
respect of the different assessment years in view of the
evidence submitted by the respondent before it :
62
-
of the charges payable of packing,
carriage, freight and insurance. There
is no material to show that there was
any agreement to the effect that the
quoted price is inclusive of insurance.
It is also categorically agreed that the
delivery of the equipment/machinery
is to be taken at the works of the
company.
However,
if
the
equipment/machinery is desired to
be delivered at a particular site, the
same can be arranged at the
discretion of the respondent at the
buyers cost and risk, irrespective of
which the delivery shall be construed
as complete at the works of the
company. These clauses clearly
establish that the transactions
was/were entered into by and
between the respondent and the
buyers on a clear understanding that
the insurance charges would be
charged separately and therefore it
cannot be construed to be forming
part of the "sale price". Again, the
Marine Cover Note further goes to
show that the declaration for
insurance is to be made immediately
after the dispatch of the goods. Since
the delivery is ex-works and the
amount acknowledged in the Marine
Cover Note is only a deposit, the
Tribunal was correct in reaching a
63
conclusion that the insurance came
into force after the dispatch of the
goods. This finding as well as
explanation of the respondent that
the amount of insurance charges was
paid by the buyer subsequently after
adjusting the amount of deposit
mentioned in the Marine Cover Note
is also supported by the addendum to
the Cover Note, by which addendum
the sum insured was increased by Rs.
10,000 and thereby the insurance
company collected extra sum for the
additional premium. Therefore the
Tribunal was correct in holding that
the insurance charges were not part
of the sales price u/s 2(h) of the CST
Act 1956.
93
61 VST 89
(Cal)
Anatech
Instruments
Pvt.Ltd.
V.
Commercial Tax
Officer, Sealdah
Charge
and
Others.
The assesse challenged the order of the tribunal which
held that the smoke meter and gas analyzer used to
examine whether the engines of the automobiles
conform to the norms of pollution and these
instruments and/or machines are pressed into
operation before the automobiles are put on sale or for
use on road would be machinery as mentioned in item
No. 54B, Schedule C of the VAT Act. The assessee was of
the opinion that it is covered by entry for ‘Tools’.
The Court partly allowed the petition.
It held that these two machines
having
measuring
functionality
cannot be treated as plant and
machinery merely because the
manufacturers used the same. They
are not required for manufacturing
automobile in any sense. The word
"tools" is of wide import, and the
Legislature has made it clear that
measuring
tools
of
various
descriptions that can be operated
manually and power operated or
Schedule entry
64
otherwise are includible there under.
94
61 VST 272
(Ker)
Kochi Refineries
Ltd. V. State of
Kerala.
The assessment involved is CST assessment. On account
of non-production of C forms, its turnover of inter-State
sales to the extent not covered by C forms was assessed
at the higher rate. Since it was unable to get the C forms
and, therefore, assessment at higher rate got confirmed.
However, when the Tribunal heard the appeal the
petitioner could produce C forms for Rs. 2.46 crores.
The Tribunal took a very lenient view and allowed the
petitioner's claim by directing the assessing officer to
grant concessional rate in respect of C forms obtained
later. The assesse filed revision petition seeking more
time to produce the forms.
The petition was dismissed. That the
C forms should have been produced
at the assessment stage itself and
even for accepting belated C forms,
the assessee has to furnish
explanation. Tribunal took a lenient
view in petitioner's case and accepted
all the C forms produced before them.
This in fact amounts to condonation
of delay by the Tribunal in the
production of C forms without which
the same could not have been ordered
to be accepted. In any case the
Tribunal has no powers to grant
further time for the petitioner to try
for C forms for the balance turnover.
So much so, the Tribunal did not
grant time requested for by the
petitioner.
Declarations
95
61 VST 324
(Bom)
Timex Art Décor
Pvt. Ltd. V. State
of Maharashtra
and Others.
The petitioner filed VAT returns for 2008-09 and 200910 and claimed input-tax credit/set-off on the
purchases claimed to have been effected from certain
vendors against its tax liability of sales. Information was
received by the Department from the Economic
Intelligence Unit to the effect that certain
vendors/suppliers of the petitioner were fictitious and
bogus tax invoices had been issued to the petitioner
without the actual delivery of goods and for passing off
tax credit without payment or deposit in the treasury.
The Assistant Commissioner of Sales Tax, Investigation
The Court dismissed the petition. (i)
under Sub-section (1) of Section 73,
the State Government is empowered
to publish or disclose the names of
any dealers or other persons if it is of
the opinion that it is necessary or
expedient in the public interest to do
so. The State is also empowered to
publish any other particulars relating
to any proceedings under the Act in
respect of such dealers and persons.
Input tax credit
65
Branch, conducted a search on the premises of the
dealer. The director was confronted with 13 purchase
invoices in response to which he stated that these bills
were given to him by agents in the market and were
accounted by the petitioner in the purchase register for
the claim of input-tax credit. The director stated that he
did not know the whereabouts of the dealers; that no
supporting documents for the movement of goods were
available with him; that he had no details of the
transporters and was unable to explain the disposal of
the goods purchased from those parties. The statement
of one vendor, K. V. Shah, was also recorded and he
stated that he had never actually sold or purchased any
goods; that he did not possess sale or purchase
registers and that the entire operation was being
supervised by a hawala operator by the name of Pradip
Vyas. The affidavit stated that no sale has been effected
to the petitioner and that in his proprietary business, he
issued bogus tax invoices to different dealers. On the
website of the Sales Tax Department, a list was put up
on July 12, 2012 of beneficiary dealers against whom
police complaints were lodged after April 1, 2011. The
claim of the petitioner appears as a beneficiary in that
list. On writ petition contending that a first information
report was first filed on October 22, 2012. that the
name of the petitioner was uploaded on the website on
July 12, 2012 even prior to the filing of the F. I. R. that
there was no basis to initiate proceedings under section
73 of the Act, by publication on the website, when the
assessment was pending. And that it was the duty of the
Department to pursue the hawala dealers who have
collected tax.
The publication by the State on the
website falls within the enabling
provisions of Section 73(1). (ii) That
whether and what stage the State
should carry out the assessment of
hawala dealers was not a matter for
determination in these proceedings.
The petitioner could not possibly
assert that its assessment in
accordance with law must be
deferred until an assessment is
carried out in the first instance
against
hawala
dealers.
The
Department was justified in taking
necessary steps to complete the
assessment of the petitioner in
accordance with law. A web of
complex transactions has been put
into place to defraud the revenue and
we do not in the course of this
judgment intend to circumscribe in
any manner whatsoever the full range
of powers vested in the State
Government through its Sales Tax
Department for ensuring that due
steps are taken to curb or as the case
may be deal with hawala transactions
which posed a serious threat to the
revenue of the State.
66
96
61 VST 445
(Cal)
Cipla Ltd. V. Dy.
Commissioner,
Commercial Tax,
Corporate
Div.
and Others.
The petition was filed by the assessee challenging the
disallowance of assessee's claim of stock transfer under
section 6A of the Central Sales Tax Act, 1956 against the
F forms covering transaction of stock transfer for more
than one month in violation of rule 12(5) of the Central
Sales Tax (Registration and Turnover) Rules, 1957.
The petition was allowed. The Court
observed that the proviso to rule
12(5) provides that a single
declaration might cover transfer of
goods, by a dealer to any other place
of business, or agent or principal,
effected during a period of one
calendar month. There is nothing in
the rules which can be construed to
vitiate a declaration form only on the
ground that it covers transactions
exceeding a period of over one month.
Declarations
97
61 VST 455
(Bom)
President Trade
and Exim Corp
and Another. V.
State
of
Maharashtra and
Others.
The Tribunal has directed the petitioner to pay an
amount of Rs. 50,000 for the assessment year 2005-06,
Rs. 4 lacs for the assessment year 2006-07 and Rs. 4.50
lacs for the assessment year 2007-08 on a writ,
contending that for the assessment year 2007-08 the
petitioner was entitled to a refund of approximately Rs.
27.74 lakhs and therefore, no order of deposit
warranted :
Petition of the assessee dismissed.
The Tribunal had duly taken the note
of the fact that for the assessment
year 2007+08 there was a refund to
extent of Rs. 27.74 lakhs but having
regard to the total tax liability for the
assessment year 2005-06 , 2006-07
and 2007-08 which was about Rs.1.43
crores, the direction for deposit of an
amount of Rs. 9 lakhs for the
remaining two years could not be
regarded as arbitrary or contrary to
law. The merits of the submission that
the petitioner is entitled to a set-off
and that the provisions contained in
section 48(2) read with section
48(5)of the MVAT Act would not be
attracted could be considered by the
Dy. Commr (Appeals) when the
Input Tax credit
67
appeal was taken up.
98
61 VST 465
(All)
Skyline
Engineering
Contracts (India)
Pvt.
Ltd.
V.
Commissioner,
Commercial Tax,
Lucknow.
The petitioner had been awarded a works contract for
the construction of new lecture hall complex, Samtel
Centre, Boy's hostel. In order to arrive at the value of
the contract, the value of the electrical works have been
separately shown in the contract. However, the case of
the applicant is that the contract was one composite
indivisible contract for the execution of the aforesaid
contract. The applicant applied for compounding under
the compounding scheme. The compounding in respect
of the civil work has been accepted excluding the value
determined for electrical works.
However, the
compounding in respect of the civil work was accepted
excluding the value determined for electrical works.
The assessee filed the petition.
The petition was allowed. A perusal of
the contracts reveals that in each
contract the scope of the work are
mentioned.
A
composite
and
consolidated price of the entire work
is also mentioned. Only for the
purposes of the convenience and for
determination of the value of the
entire contracts, the price of the
electrical work has been separately
shown though the electrical work was
also a part of the main contracts.
Merely because the value of the
electrical
works
was
shown
separately in the contracts. The same
cannot be excluded from the
composite value fixed for the entire
contracts.
The
contracts
are
admittedly civil in nature which also
includes the electrical works.
Works
contracts
99
61 VST 478
(Karn)
State
Karnataka.
Modayil
Properties
Ltd.
The petitions filed by the revenue challenging tribunal
order which set aside the order of the assessing
authority and held that the assessee is not liable to pay
any sales tax on the transportation charges mentioned
in the invoice .
The petition allowed. In the invoice
raised, the assesse has shown the
amount
payable
towards
transportation charges separately and
value of goods is shown separately.
The amount was payable within 60
days from the date of invoice. Apart
from these, no documents were
produced to show at what point the
title passed. Therefore it is clear title
Sale price
of
V.
(P)
68
passed to the consignee at time of
delivery. All amounts received prior
to the delivery constitute the value of
the goods which may include the
transportation charges. There is
nothing in the document to show that
the transportation charges are
directly paid to the transporters.
Moreover, the transportation charges
is fixed to a particular unit. Under
these circumstances, it cannot be said
that the transportation charges
collected form part of the post-sale
expenditure and cannot be included
in the total turnover.
100
62 VST 197
(MP)
AAR KAY Agro
Spring Industries.
V.
State
of
Madhya Pradesh
and Others.
The petitioner had filed C forms, which were found
defective. In the C form, the purchase order was not
mentioned. It is submitted that the petitioner be
permitted to file afresh correct C forms duly issued by
the competent authority. It is submitted that to rectify
the error in C form, the petitioner be allowed an
opportunity to file fresh C form.
The Court followed the judgement of
the supreme Court in Ambuja cement
( 142 STC 1). Under rule 12(7) of the
CST Act, the declaration form could be
filed at a subsequent point of time
and not necessarily along with
returns. That means that the
provisions
requiring
filing
of
declaration forms along with the
return is a directory provision and
not a mandatory provision. The object
of the rule is to ensure that the
assessee is not denied a benefit which
is available to it under law on a
technical plea.
Declarations
69
101
62 VST 216
(Mad)
Aspick
Engineering (P.)
Ltd. V. State of
Tamil Nadu.
The assessee effected sale to M/s. VijayashreeColata
,Warora and claimed the sale as an inter-State sale. The
assessing officer, viewed the sale as a local sale, on the
ground that the purchaser had taken delivery inside the
State. The Appellate authority held that the assessment
was rightly made. Further Tribunal rejected the
assessee's case, on the ground that the price was exgodown; that the purchaser had taken delivery and
moved the goods inter-State at its own cost. Thus, the
sale was only a local sale. The Tribunal further pointed
out that the goods were insured by the buyers
themselves and the sellers were relieved of the liability
after the delivery. On a revision petition,
The petition was allowed. It was not
denied by the assesse that the
transactions were not governed by a
written agreement. The terms of the
agreement between the parties are
evident only by the despatch details,
indicative of the understanding
between the parties. It was clear that
sale and movement were intimately
connected, that the movement of
goods was consequences of sale. The
HC held it as an inter-state sale.
Inter-state sales
102
62 VST 241
(AP)
Mahabaleswarap
pa& Sons. V.
Assistant
Commissioner
(LTU), Anantapur
and Others.
The petitioner is engaged in the business of mining
.Theysupplied iron ore to an exporter and claimed
exemption as "sales for export" u/s 5(3) of the CST Act.
He produced H form, as required under section 5(4) of
the Act for the entire year, was accepted and
assessment was completed granting exemption. The
revisional authority issued notice proposing to
withdraw the exemption under section 5(3), on the
ground that H forms for quarterly periods were not
submitted.
Under -rule 12(10)(a) a dealer is
required to file a declaration signed
by the exporter in form H to the
prescribed authority up to the time of
assessment
by
the
assessing
authority. A plain reading of rule
12(10)(a) does not, in any manner,
support the view that they are
required to be filed for quarterly
periods, and not for entire year. Even
a machinery provision has to be read
in a manner that is workable.
Declarations
103
62 VST 388
(Delhi)
Varun Beverages
Ltd.
V.
Commissioner of
Value Added Tax
(Delhi).
The petition was regarding the classification of ‘Slice’
which was classified by the tribunal as a food article. It
was contended that the content is water-based. The
product "Slice" had a composition of 69.52% water,
1.08 Alfonso Mango, 15.56% Totapuri Mango, 13.05%
Sugar, and .79% preservatives. The question therefore
The predominant contents of the
mango pulp drink, in this case , is
water ( 70%). The mango pulp
content is 17%. The Court observed
that the product does not claim to be
a fruit juice and therefore it cannot be
Schedule entry
70
104
65VST 260
(Mad)
Jayam& Co. V.
Assistant
Commissioner
(CT)
Main
Amindakarai
Assessment
Circle,
Chennai
and Another.
was whether fruit based pulp based drink was
classifiable as "food article".
urged to have minimum modicum of
nutritive properties. If the product
had been milk based it might have
been different. The mango pulp is at
best an energy giver and in all cases a
thirst quencher and cannot be called a
food article.
The section 19(20) of the Tamil Nadu VAT Act was
challenged as arbitrary. The section said that
'notwithstanding anything contained in this section,
where any registered dealer has sold goods at a price
lesser than the price of the goods purchased by him. the
amount of the input tax credit over and above the
output tax of those goods shall be reversed.
The selling dealer gave discount after
issuance of the tax invoice and
charging VAT on the selling price,
extending discount to the petitioner
which were in the form of credit
notes. On receipt of the credit notes
the purchasing dealer calculated the
purchase price taking into account
the discount and fixed the same as the
purchase price. By value addition the
purchasing dealer sold the goods to
the consumer and VAT was calculated
on the sale price fixed by the
purchasing dealer by considering the
discount Thus he took excess tax
credit as the VAT paid by him was less
that the VAT paid by him to the first
selling dealer 9 before discount) .High
Court upheld the validity of the
amendment as the above method
caused a dent in State revenue.
Sale price- ITC
on discount
71
72