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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.



Sr.Noo

Citation

Case Name

Issue

Decision

Classification

1

45 VST 111 (All)

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,

Held, allowing the petition, each year is an independent year for the purpose of assessment. Initiation of assessment proceeding on the basis of material for another year improper.

Assessment

2

45 VST 255 (Karn)

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 CD-ROM and services were subjected to service tax and passed the orders of assessments. On writ petitions,

Held, allowing the petitions, the orders impugned are not speaking orders. They showed 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

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". Thus 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. The assessing authority of the State of Gujarat opined that there was no export of goods as claimed by petitioner company and that such sale 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 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.


Remission

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 disallowed the claim of concessional rate of tax. The first appeal authority confirmed the disallowance. The Tribunal confirmed the order. The main grievance of the petitioner is that all the mistakes and corrections pointed out by the officer that was confirmed in two level appeals have been rectified through confirmation letters issued by the purchasers.

Held, dismissing the petition, 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 confirmation letters from the buyers were not permissible and therefore authorities including the Tribunal rightly rejected the petitioner' claim.

Declarations

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. Under the agreement entered with airline the assessee has 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. A notice was issued on the grounds that the assessee has not included the amounts received towards handling charges, transportation, etc., in the returns filed by the assessee. Overruling all the objections, the authorities have passed a consolidated order.

Held, allowing the appeals, (i) that a contract for outdoor catering is a composite contract which fell under sub clause (f) of clause (29A) of article 366 of the Constitution and service tax was payable on service aspect and sales tax was payable on deemed sale aspect. It is not an indivisible contract. Therefore the order of reassessment passed by the assessing authority was set aside.

Sale price

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"

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". The expression "beverage" as is commonly understood means any liquid other than water, which may be consumed neat or after dilution. Therefore drugs and medicines and food supplements carrying brand names 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 for the period from 1.4.1997 to 31.3.1998.

Schedule entry

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 which are transferred to the other units of the petitioner outside the State to be incorporated in the equipment manufactured at the other units, and are eventually sold therefrom to the end customers; The Dy. Commr. rejected stock transferred claim.

Held, 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,

Branch transfer

10

46 VST 289 (Karn)

Desai Brothers Ltd. V. Additional Commr. of Commercial Taxes Zone I, Bangalore.

The assessee is a dealer in garlic and ginger paste and paying tax at four per cent under entry dealing with "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.

Held, allowing the petition that the paste that is referred to in entry Sch-III-3 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 Sch-I-27 deals with ginger and garlic. However, the paste is not included. Ginger and garlic paste come within the definition of "vegetables". 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, etc. They are not to be read as masala product and taxed at 12.5%.

Schedule entry

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 417 (HP)

VRV Foods Limited. V. State of H.P. and Others.

The petitioner engaged in the manufacture of liquor, was registered under the benefit of deferment of tax Scheme. As per this scheme, eligible industrial units other than those specified in the negative list were entitled to the benefit of deferment of payment of the tax. However in 2009, benefit of such Scheme was withdrawn. The petitioner filed a writ petition and contended that once company was given benefit of deferment scheme, the State was estopped from withdrawing this benefit from the petitioner. On the other hand the State submitted that liquor was left out of the original negative list by inadvertence and that it was subsequently introduced therein specifically providing that the amendment would be retrospective in in operation.

Held, dismissing petition that doctrine of promissory estoppel does not mean that the State cannot correct legitimate mistakes or even withdraw a promise which is against the established public policy.

Promissory estoppel

13

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 of the various spares and tools supplied by the petitioner. "Grease gun" is one such item was specifically designed by M/s. TAFE (customer), The "grease gun" manufactured and supplied by the petitioner 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.

Held, allowing 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

14

46 VST 470(Mad)

State of Tamil Nadu V. Garware Wall Ropes

Whether custom duty drawback on export of goods form part of sale price.

Held, on revision petition, when the receipt of duty drawback has nothing to do with the sale between the parties and has no relevance to the sale transaction at the time of or before the delivery of the goods, the duty drawback can not be treated as forming part of turnover.

Sale price

15

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

Held, allowing the appeal, in this case, the dealer purchased automobile glass and the same was sold to only motor buses operator. Therefore, the automobile glasses shall be subjected to tax only at eight per cent under entry 43 of Part D of the First Schedule.

Schedule entry

16

46 VST 549 (P&H)

State of Punjab V. Anapurna Impex Pvt. Ltd.

For the assessment year 2003-04 the assessment in respect of the assessee was framed on 15.4.2008. 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 thelast date for filing the return. On appeal the Tribunal set aside the assessment as time-barred. On appeal :

Held, dismissing the appeal, the power of Commissioner to extend 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. Resort to deferment provisions does not retrieve the situation. 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.

Limitation

17

47 VST 1 (CSTAA)

Hindustan Zinc Limited V. State of Andhra Pradesh and Others.

The appellant is having stock points at Jamshedpur and Kolkota. IISCO and TISCO placed purchased orders on appellant for monthly requirements. The appellant supplied zinc to these companies from its Kolkota stock point. The assessing officer found that the sales involved were sales in the course of inter-State trade and assessed the appellant's t/o u/s 3 and 6 of CST Act, rejecting the contention that it was not aware of the orders of purchased secured by branch office at Kolkota and the movement of the goods was not occasioned by the orders of the purchase on branch by IISCO and TISCO, but that the goods were transferred to the branch at Calcutta by way of stock transfer and that the sales were effected in West Bengal from Calcutta.

Held, transaction on facts held inter-state sale and not stock transfer as orders were placed by IISCO and TISCO of specific quantity of zinc of specified purity in specified monthly quantity. Although the order placed and the supplies did not match it would not favour the case of appellant. Similarly the fact that in some month more quantities were delivered would not change the case.

Branch Transfer

18

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 found that the dealer had not included the amount of the excise duty in the sales price of the petroleum products which had been paid by purchaser. The assessing authority has rejected the books of account and the enhanced turnover adding excise duty paid by the purchaser outside the UP.

Held, that 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 another licensed warehouse 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 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. The position is not different when under a prior agreement, the legal liability of the manufacturer-dealer for payment of excise duty is satisfied by the purchaser by direct payment to the excise authorities or to the State exchequer. The Central excise duty paid by the purchaser was liable to be included in the sale price for the purpose of levy of tax.

Sale price

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