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Recovery

36

49 VST 256 (Karn)

Habib Agro Industries. V. Commissioner of commercial Taxes, Bangalore.

The assessee has a manufacturing unit in Mandya District, and a branch office at Coimbatore. He claimed an exemption in respect of stock transfer of de-oiled rice bran to its branch in Coimbatore. They were duly 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 CSTand penalty u/s 9(2).

The real transaction noted in the freight letter is a sale. This is not disclosed. The entire stock transfer claimed is similar inter-State sales disguised as stock transfer. The assessee has disguised inter-State sales as stock transferred, though the goods have moved as a result of sale directly to the ultimate purchaser. 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.

Branch transfer

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49 VST 339 (Bom)

Taurus Auto Dealers Pvt. Ltd. V. D.P. Amberao and Another.

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

Held, dismissing the petition, that sub section (4) of section 30 iof the Act did not provide for charging of interest keeping in view the delay in paying the taxes. The interest is being charged at flat rate of 25 per cent of the additional tax payable as per revised return. In the circumstances no interest was being charged for the period prior to 1st July 2009. All the acts leading to the demand for interest such as audit, intimation letter u/s 63(7) of the Act, filing of revised returns and payment of differential tax took place after 1st July 2009. Merely because a part of the requisites for an action was drawn form a time prior to its passing the action would not become retrospective. Therefore, section 30(4) of the Act was not applied retrospectively. There was non payment of additional taxes on 1st July 2009 when section 30(4) was introduced. Thus it could not be said that the orders were wrong.

Interest

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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,

Held, dismissing the petition, the petitioner has apart from making arguments, has 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 disclosed the entire amount of freight in his turnover and had thereafter claimed exemption. He 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. At the appellate stage also only some photocopies were produced to demonstrate that the freight has been charged separately. The appellate authority was thus in doubt about the manner and method in which freight was charged and had remanded the matter. The Tribunal adopted a casual approach and 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 Tribunal also observed that before the first appellate authority the State Representative had examined the material produced by the petitioner and stated that the freight has been separately charged in the bills. These observations, are not only casual but are also against the record. 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 freight was charged separately. The Additional Commissioner did not commit any error on fact or in law in recording the turnover on account of freight has escaped from assessment.



Sale price

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49 VST 418 (Gauhati)

State of Arunachal Pradesh and Others. V. Buishi YadaMotors.

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.

Held, allowing the petition, 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

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50 VST 103 (Uttra)

B.T.C. Industries. V.Commissioner, Trade Tax/Commercial Tax, Dehradun.

When Trucks loaded with coal were intercepted, it was held out that it was meant for petitioner but there was no document suggesting that it was tax paid. The penalty proceeding were initiated. The petitioner filed revised petition that intercepted coal was being supplied under F-C issued by it to the supplier.

Held-dismissing petition, the petitioner issued blank Form C to the supplier at the time when the same was handed over to the supplier. The petitioner did not indicate the particulars of the order placed upon its supplier, which is a requirement, 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. An industrialist would expose itself with a financial obligation without any reciprocal advantage is not acceptable. The fact remains that no tax was paid thereon. 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.

Declarations

41

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

42

50 VST 147 (Mad)

Sundaram Industries Ltd. V. State of Tamil Nadu.

The dealer engaged in retreading of tyres on a works contract basis, quoted consolidated amount in respect of works undertaken, which it claimed to be inclusive of tax. Since the dealer had not separately maintained accounts as regards the amount referable towards transfer of property in goods, labour charges, the dealer appropriated 70 percent of the amount as per statue, as taxable turnover. 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, treated the entire turnover taxable.

Held, dismissing petition, the dealer had charged 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 is clear that irrespective of how they make up the bill or the accounts, the entire consideration will be the turnover.

Sale price (works contract)

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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,

Held, dismissing petition, dealer not utilising opportunity to put forth its cases in appeal cannot complain of violation of natural justice.

Appeal

44

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.

Held, dismissing petition, trade practice of sales through slip once established by dept. Burden on assessee to prove such sales entered in regular books.

Investigation

45

51 VST 168

Maharashtra Chamber of Housing Industry and Others. V. State of Maharashtra and Others.

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 of immovable property which is not a works contract.

Held:- Inclusion within works contract of agreement for building construction etc. in respect of works contract valid.

Builders

46

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

47

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

48

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 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.

Held, allowed the appeal, the dealer had not shown the discount in the tax invoices. 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 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.

Sale price (discount)

49

52 VST 49 ( Delhi)

Ricoh India Ltd. V. Commissioner. (Delhi)

Whether multi-functional printers/machines and their spare and consumable, during the period 1.4.2005 to 31.3.2007 are 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. If the principal and predominant purpose was to act as a computer printer or scanner or as an input or output devise of the computer, the multi functional machine would qualify and fall under entry 41A clause XXIII. However, if the machine was designed and manufactured for some other primary purpose, then it would not be covered by Entry 41A clause XXIII. Mere description or the nomenclature given by the manufacturer or trader is not relevant and the assessee should justify and establish their claim. Therefore for the period prior to30.11.2005 the relevant determining factor would be the dominant or main purpose. For the period after 30.11.2005 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 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

Schedule entry

50

52 VST 120 (Chhat)

Kamesh Traders. V. State of Chhattisgarh and Another.

W.P. involve 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.

Serving tray, flask, stainless steel tiffin with plastic body, water jug and hotpot (casserole) fall within the meaning of "all utensils". No distinction on the basis of materials used for making utensils.

Schedule entry

51

52 VST 129 (Karn)

ACC Lt. 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.

Held, dismissing petition, pumping charges collected from customers being part of pre sale expenses includible in turnover.

Sale price

52

52 VST 221 (Mad)

State of Tamil Nadu. V.Kawarlal and Co.

The assessee herein is a dealer in pharmaceuticals and chemicals. 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.

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