O.P. Developers. V. State of Karnataka and Others.
During the pendency of the dealer's before the Tribunal against the order of JC (Appeal) partly allowing the appeals filed by the dealer against best judgment assessment order and levying penalty, the Additional Commissioner in exercise of his revisional power under section 22A(1) of the Act set aside the portion of the appellate authority which had granted the benefit to the dealer directed the assessing authority to re-do the assessment. On appeal :
Held, dismissing 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.
47 VST 343 (Delhi)
Giesccke & Debrient I.P. Ltd. V. Commissioner of Sales Tax (Delhi).
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 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 :
Held, dismissing the, appeal, the dealer has imported machine in its own name. There was no obligation under contract to sell machine only to Canara Bank. Therefore this is not sale in the course of import.
Sale in the course of import
47 VST 358 (Mad)
Kongoor Textile Process. V. Jt. Commissioner (CT), Chepauk, Chennai and Another.
The petitioner is a dyeing contractor who had effected inter-State purchases of dyes and chemicals and that chemicals purchased and used in the execution of the dyeing contract were exempted from tax under TNGST Act, it did not pay tax on the cost of consumables like dyes and chemicals used in execution of dyeing. On remand it was pointed out that in the case of dyes there was 50% transfer of property. Based on this dealer has filed revised return admitting the liability to the extent of 50 per cent on the dyes used and paid the taxes on 50 per cent of the dyes used in the contract. The assessment was finalised on this basis and penalty was levied. On writ
Held, dismissing the petition, that once the revised return or original return is filed, admitting the liability, the payment is treated as made in respect of a liability that dates back to the date when the payment of tax ought to have been made. Whenever the dealer defaults in meeting the admitted tax liability within the statutory period, interest is leviable and is an automatic one.
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.
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.
47 VST 487 (Ker)
Supreme Food Industries. V. State of Kerala.
The petitioner engaged in manufacture and sale of ice cream made bulk purchases of deep freezers and delivered the same to distributors against security 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.
Held, partly allowing (i)the petitions, that the transaction is a pure sale but on credit basis payable in four instalments. (ii) Deep freezers not capital goods in the hands of petitioner, he is entitled for input tax credit.
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 show-cause notice was issued and the petitioner filed objections.
Held, dismissing the petition, option once exercised and permission granted for entire year, dealer not entitled to resile and seek assessment under regular provision.
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 AC rejecting 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. On appeal :
Held, allowing the appeal, sale of goods at duty-free shop in airport is sale in the course of import
Sale in the course of import
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.
Held, allowing the petition, while a general provision has been made in sub-section (2) prescribing the modalities of refund for registered dealers, a special provision has been made in sub-section (3) beginning with a non obstante clause and governing a class of registered dealers who fall within the ambit of that provision. The Petitioner fell undergone of the categories referred to in sub-sec 3 relating to holders of the certificate of entitlement. In such a case, the Commissioner within one month of the receipt of the application may require the dealer to furnish a bank guarantee and call for additional information as he may think necessary. However, under sub-section (5), which operates notwithstanding anything contained in the Section. Under sub-section (5) therefore, the Commissioner is obligated to grant a refund due within one month of the furnishing of the bank guarantee irrespective whether additional information furnished or not. Having regard to these provisions, it would be clear that there would be no justification for the department to keep the application of the petitioner pending inordinately without an explanation. It could not be said that the Commr. was precluded from carrying out a due verification. Therefore a decision must be taken expeditiously to effectuate the purpose and object of the statutory provisions.
48 VST 502 (AP)
Associate Cement Co. V. Commercial Tax Officer, Secunderabad and Another.
The assessing authority passed an order forfeiting certain amount under the Act, towards excess collection of tax by petitioner. However on second appeal Tribunal allowed the appeal and set aside the order of forfeiture both on the ground that it was barred by limitation as prescribed under section 30C, and as no separate order of forfeiture was passed by the assessing authority.
Held, dismissing the petition, that it was not disputed that the tax burden has been passed on by the petitioner to their purchasers. Neither the persons, who paid the tax to the petitioner, come forward seeking refund nor have such purchasers been identified to enable refund of the amount to them. The petitioner is seeking to retain the excess tax collected though they were precluded from collecting such excess tax under section 30B(2) of the Act. Granting the relief sought for by the petitioner would enable them to unjustly enrich themselves at the cost of the State.
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 assesse 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.
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 allowing the appeal, that the claim of for deduction of the amounts of trade discount could not be disallowed solely on the grounds that discount amounts were not shown in the sale invoices.
Sale price (discounts)
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 waters of India.
Held, (i)That the sale of helium gas by the dealer to its vendee in the Mumbai High regime was not sale in the course of export out of India. 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. (iii)The State has not sought to levy sales tax in the on the basis that there was a local sale but on the basis that there was a sale in the course of interstate trade and commerce.
Sale to Bombay High
49 VST 98 (AP)
State of Andhra Pradesh. V. Bharat Sanchar Nigam Limited.
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"; Post-paid 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 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 postpaid SIM cards, represent the consideration for "sale" and "deemed sale", respectively.
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 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.
49 VST 134 (Ker)
Cadbury India Limited. V. State of Kerala.
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 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.
Held, dismissing the petition, the agency arrangement appears to be only a scheme for splitting up of price between purchase cost, transport cost, commission, etc., to avoid tax on part of the turnover.
49 VST 200 (Mad)
State of Tamil Nadu . V. Mahaveer Chemicals Industries
The assessee herein is a dealer in chemicals, and carried on business out of the same premises as Mahaveer Chemicals which had been appointed as distributor for the products manufactured by M/s. Cochin Refineries Limited. At an inspection of the business premises of the dealer that the dealer was effecting in-transit sales after taking constructive or notional delivery of the goods from Kerala. The claim for exemption under section 6(2) of the CST Act was disallowed rejecting the dealers contention 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. The assessing authority in the absence of any material to show that the journey continued without any break, the dealer was not entitled to claim exemption under section 6(2) of the CST Act. The appellate AC affirmed this, but Tribunal held in favour of the dealer. On revision petition by the Dept.
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 way-bill clearly pointed out to fresh movement from Coimbatore to other State and to the local purchaser from the assessee.
Sale under section 6(2) of the CST Act
49 VST 252 (All)
Raj Kumar Gaba. V. State of U.P. and Others.
Where the society has stopped doing business in 2006 and all its properties had been sold and proceeding for recovery of sales tax dues were undertaken against petitioner. On a writ petition,
Held, dismissing 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.