The VAT Tribunal, Punjab, held that an appeal can be filed before the Tribunal against the First Appeal order, even when the reference was pending before the High Court. The Tribunal in that connection held that the reference was on a point of law and not on merit of the case.

State of Punjab & Others vs. M/s K. Ajesh & Co., Mumbai & Others (2007) 30 PHT 59 (PVT).

Discount

The Allahabad High Court, while construing the definition of the term ‘sale price’ in section 2(h) of the Central Sales Tax Act, held that cash discount allowed in each individual bill was correctly deducted while arriving at the sale price.
Commissioner of Trade Tax, U. P., Lucknow vs. M/s Ganga Saran & Sons, Aligarh. 2007 NTN (Vol. 34) – 252.

Entries in Schedule

1. Crushed bones
   
   The Supreme Court held that the crushed bones will not include crushed horn and hoof, as both of them did not form part of animal horn in common parlance. The Apex Court also disapproved the decision of the Tribunal that in absence of any expert opinion, crushed horn and hoof were used only as manure.M/s Noorie Manure Mill, Sambhal vs. Commissioner, Trade Tax, U. P. (2007) 29 PHT 689 (SC).
    

2. Narrow woven fabrics
   
   The Allahabad High Court held that narrow woven fabrics and braded cord were covered by the entry relating to textiles under the category of “Tape, niwars and laces.”Commissioner of Trade Tax, U. P., Lucknow vs. M/s Moti Lal Dali Chand Pvt. Ltd., Kanpur 2007 NTN (Vol. 33) – 195.
    

3. Burden
   
   The Haryana Tax Tribunal reiterated the settled law that where the authorities were not satisfied with the interpretation of the assessee in regard to the proper classification, the burden lay on them to prove that the goods in question were covered by a particular entry or outside the one determined by the assessee.M/s Prash Trading Pvt. Ltd., Gurgaon vs. State of Haryana (2007) 30 PHT 31 (HTT).
    

4. Tarbooz seeds & coconut powder
   
   The Allahabad High Court held tarbooz seeds were covered by Notification No. 7038 and therefore was exempt thereunder, while coconut powder was taxable as oil seeds, even though the same was sold to sweetmeat maker, who in his turn had used it as a dry fruit. The Court in that connection also observed that coconut and coconut powder were similar commodity.The Commissioner, Trade Tax, U. P., Lucknow vs. S/s Mohan & Co., Varanasi 2007 NTN (Vol. 34) – 271.
    

5. Projector
   
   The Joint Commissioner of Commercial Taxes (Legal), Gujarat State, held under section 80 of the Gujarat VAT Act that the projector used only after attaching with computer containing electronic circuits, PCB etc. was covered by Entry 45 of Schedule 2 as IT products and therefore liable to be taxed only at 4%.Source: Sales Tax Journal, Vol. 46, Part 4, July 2007, Page 418(In the case of M/s HCL Infinet Ltd., Ahmedabad – Order dated 30th June 2007).
    

6. Demineralizer & photometer — Electronic goods
   
   The Trade Tax Tribunal held that Demineralizer and Photometer used in pathology and other scientific laboratories, were controlled by microprocessor and therefore were electronic goods. The Tribunal further reiterated the well laid down principle for interpretation of entries that in case there were doubts, the interpretation that favours the assessee should be adopted. M/s Laboratory Store, Sadar Bhatti Road, Agra vs. Commissioner of Trade Tax, U. P. 2007 NTN (Vol. 34) Tribunal – 23.
    

7. Mosquito repellent
   
   The Andhra Pradesh High Court distinguished the case of M/s Sonic Electrochem [(111 STC 181 (SC)] and held that in absence of a separate entry for mosquito repellent in the Andhra Pradesh General Sales Tax Act, the item in question should be treated as insecticides.M/s Godrej Hicare Ltd (Now Known as Godrej Sara Lee Ltd) vs. Joint Commissioner of Commercial Taxes (Legal), Hyderabad. (Writ Petition Nos. 7750, 7775, 7783 of 2002 & 1707 of 2005 decided on 8th December 2005).Source: Sales Tax Matters, 1st July 2007, Vol. 10, Part 7, Page 778.
    

8. Handkerchief
   
   The Karnataka High Court held that under Central Excise Tariff act, handkerchiefs were not considered as cotton fabrics and handkerchiefs were expressly included in Chapter 62 which relate to articles of apparel and clothing accessories. However, the State legislature of Karnataka had amended Entry 8A of the Fifth Schedule by insertion of the expression “as described from time to time in Column (2) of the First Schedule to the Additional Duties of Excise Act, 1957.” Since the handkerchief in question was covered by Chapter 62 of the Act, the said item cannot be treated as an exempted item.M/s Ramdev Agencies vs. Additional Assistant Commissioner of Commercial Taxes, IX Circle, Bangalore. (Writ Petition Nos. 2606 to 2611 of 1999 decided on 25th October 2005).Source: Sales Tax Matters, 1st July 2007, Vol. 10, Part 7, Page 779.

Exemption — Manufacturing outside

The Allahabad High Court held that the assessee holding Eligibility Certificate cannot get his material manufactured outside the Unit on job work basis. However, if the minor part of the activity was so done with the help of outside agency, the manufacturing can be considered to be that of the Unit.M/s Mars Auto Pvt. Ltd vs. The Commissioner of Trade Tax, U. P., Lucknow 2007 NTN (Vol. 34) – 326.

Goods return

1. The assessee sold one machine to a party outside the State and despatched the same through carrier. Due to non-payment of sales tax, the machine was brought back. The assessee claimed that the machine in question was never delivered to the buyer, but was lying with the local agent who kept it at his place for exhibition and thereafter returned back. In absence of any evidence for non-delivery of the goods, the High Court held that the sale was complete and therefore the period of goods return described under section 8A(b) of the CST Act was applicable, with the result the claim of goods return was held to be not allowable.M/s Parishudh Machines (P) Ltd., Ghaziabad vs. Commissioner of Trade Tax, U. P., Lucknow 2007 NTN (Vol. 34) – 276.
    

2. The Punjab VAT Tribunal at Chandigarh held that in absence of any cogent evidence, it cannot be presumed that the transaction of goods return were that of inter-State sale.M/s V. K. Steels, Ludhiana vs. State of Punjab. (Appeal No. 328 of 2007-07 decided on 26th April 2007).
   
   Source: Sales Tax Matters, 1st July 2007, Vol. 10, Part 7, Page No. 764.

Interest

The Haryana Tax Tribunal held that though the amendment to the CST Act providing for levy of interest was of 12th May 2000, the same was retrospective and the interest was always payable under the provisions of the local Act. The Tribunal for that purpose, followed the decision of the Supreme Court in the case of M/s Calcutta Jute Mfg. Co (106 STC 433).M/s Purolator of India Ltd., Gurgaon vs. State of Haryana (2007) 30 PHT 49 (HTT).

Jurisdiction

The Himachal Pradesh High Court, after considering the provisions of sections 8 & 9 of the Himachal Pradesh Tax on Luxuries Act, 1979, held that an agreement inter se between the parties cannot confer a jurisdiction if an authority in law did not have it. The Court, therefore, held that no officer can assume jurisdiction not conferred on him by the express words of the Act. The Court recalled the settled principle of law that in case of an inherent lack of jurisdiction, an order passed was a nullity and the proceedings that followed were void ab initio. The Court, however, cautioned that if the power can be traced to a source under the Act and where the power was exercised under a different provision, the proceedings will not be illegal.M/s Manali Resorts vs. State of Himachal Pradesh & Others (2007) 30 PHT 106 (HP).

Manufacture

1. The Allahabad High Court held that mounting of body of three wheelers on the chassis amounted to manufacture. In that connection, the Court observed that simply because the word ‘body’ and ‘chassis’ were mentioned under the same entry, it did not consider to be one commodity. M/s Verma Tractors vs. State of U. P. and Others 2007 NTN (Vol. 34) – 201
    

2. The Allahabad High Court held that simply because the manufacturing activity was not undertaken by the assessee himself at his Unit, but the job was done through an outside agency, it does not lead to the conclusion that the assessee was not the manufacturer.The Commissioner of Trade Tax, U. P., Lucknow vs. S/s Yash Udyog, Agra 2007 NTN (Vol. 34) – 237.
    

3. The Supreme Court, after considering the definition of the term ‘manufacture’ given in Section 2(n) of the Andhra Pradesh General Sales Tax Act, 1957, held that the masala powder obtained by grinding together all the spices was the result of an activity of manufacturing, since the masala powder and the spices were two different commercial commodities. The Apex Court for that purpose, referred to series of judgments on the point and negatived the contention of the assessee that the spices which had already suffered levy of tax at the first stage, should not be taxed over again when sold after grinding as masala powder.M/s A. P. Products vs. State of Andhra Pradesh JT 2007 (9) SC 58
    

4. The Supreme Court, while considering the provisions of section 35B of the Income-tax Act, 1961 relating to weighted deduction for export markets development allowance, held that the activity of blending different qualities of tea did not constitute manufacture for the purpose of section 35B. Such an activity at best was held to be that of processing not amounting to manufacture. The assessee, therefore, was held to be not entitled to any weighted deduction as claimed.Commissioner of Income Tax, Kerala vs. M/s Tara Agencies. JT 2007 (9) SC 65.

Penalty under section 10A of CST Act

The Allahabad High Court, while deleting the penalty imposed for false representation, held that the broad heads mentioned in the Registration Certificate would cover the technical or specific names under which the goods were purchased.The Commissioner of Trade Tax, U. P. vs. S/s Doors India Pvt. Ltd., Kanpur 2007 NTN (8 DPH) – 86.

Packing material

The Supreme Court held that in absence of a contract, express or implied in regard to the sale of packing materials, tax cannot be levied.M/s Co-operative Company Ltd vs. Commissioner of Trade Tax, U. P. (Civil Appeal No. 2124 of 2007 decided on 24th April, 2007).Source: Sales Tax Matters, 1st July 2007, Vol. 10, Part 7, Page No. 713.

Revision – Limitation

The Allahabad High Court held that the period of limitation, for the purpose of exercising the power of revision, would start from the date of the order sought to be revised.The Court also held that dropping of reassessment proceeding initiated earlier was also an order amenable to revisional jurisdiction.The Commissioner of Trade Tax, U. P., Lucknow vs. S/s Kanpur Edibles (P) Ltd., Kanpur 2007 NTN (Vol. 34) – 214.

Review

The Haryana Tax Tribunal held that the power of review was not equivalent to a rehearing of the matter. If, however, certain statutory provisions which were relevant for the decision were overlooked while arriving at the decision, the matter can be reviewed, otherwise not.M/s Parle Biscuits Ltd., Bahadurgarh vs. State of Haryana (2007) 30 PHT 34 (HTT).

Right to represent

The Madras High Court upheld the objection of the assessee against the authorities who denied the representation through his Attorney. In that connection, the Hon’ble High Court held that section 52 of the TNGST Act was widely worded to include even a relative or an employee / accountant to represent the case. Therefore, it is not correct to infer that a right of representation was limited to an Attorney only. Under the circumstances, the court disapproved the objection by the authorities when the assessee sent the reply through the lawyer.M/s S. S. K. Trading Company vs. Commercial Tax Officer, Perundurai.(Writ Petition Nos. 38854 of 2005 & 41606 of 2005 decided on 26th October 2006). Source: Sale Tax Matters, 1st July 2007, Vol. 10, Part 7, Page 788. Withdrawal of exemption with retrospective effect The Supreme Court considered the relevant provisions under U. P. Trade Tax Act, 1948 for the purpose of considering the above question. In the case before the Apex Court, by Notification dated 2nd November 1994 exemption was granted to all categories of potassium phosphatic fertilizers. Thereafter, by another Notification dated 10th April 1995, one category of the said fertilizer was excluded by withdrawing the exemption. The Supreme Court, after considering the proviso under Section 25, held that the exemption granted earlier cannot be retrospectively withdrawn. Such withdrawal had the effect of creating/increasing the tax liability. Therefore, such a withdrawal by the later notification was held to be illegal.State of U. P. & Others vs. M/s Deepak Fertilizers & Petrochemical Corpn. Limited JT 2007 (7) SC 605.

Entries in Schedule

Pet foods — Pet foods like dog feed and cat feed cannot be classified as “Animal feed and Feed supplements” on application of the common parlance test. Sree Durga Distributors vs. State of Karnataka (2007) 7 VST 267 (S.C.)

Cooked food — “Fryums” were sought to be classified as “cooked food” under the M.P. Commercial Tax Act, 1994. However, the S.C. has held that only consumables could be classified as “cooked food.” Since “Fryums” were made by the process of frying and thereafter preservatives are added, it could not be said to be “cooked food.” Commissioner of Commercial Tax, Indore vs. T.T.K Health Care Ltd. (2007) 7 VST 1 (S.C.)

Exemption certificate

The Eligibility certificate initially mentioned processing cashewnuts and not processing of cashew kernels but was later amended to include processing of kernels. During assessment exemption was sought to be denied on processing of kernels during the intervening period. The A.P. High Court has held that Eligibility certificate granted by the Industries Department was at best a piece of evidence that the dealer was entitled to exemption but was not the source of exemption. The Eligibility certificate was at best reflective of the understanding of the Officer of the Industries Dept. at the time of issuance of the Eligibility Certificate. Subsequently, the Industries Dept. was of the opinion that both the processes were covered by the G.O. Hence, the exemption could not be denied on the ground the Dept. had initially not understood the exact scope of the G.O. or the correct legal position. Sri Venkateshwara Cashew Manufacturers vs. C.T.O (2007) 8 VST 48 (A.P.)

Software licence

The Commissioner of Sales Tax, Maharashtra has clarified that software licences (Agreements on paper) were sold after sales of software and consideration received therefor was nothing but consideration for sale of software packages. Hence, sales of software licences were covered by Schedule. Entry C-39 (Software Packages) and attract tax rate of 4%. The position would not be different even in respect of sale of software via internet or supply of software by email. Trade Circular 47 T of 2007 dt. 22-6-2007

Levy of interest

Interest on tax can be levied only under a statutory provision or agreement and not on the basis of equity. State of Punjab vs. Atul Fasteners Ltd. (2007) 7 VST 278 (S.C.)

Interest on refund

Interest on refund under allied laws like Works Contract Act has been held as admissible on the lines of section 43A of the Bombay Sales Tax Act, 1959 and could not be denied on the ground that there was no substantive provision for grant of interest in the Works Contract Act. The Tribunal held that the provision for grant of interest on refund under the BST Act was not a substantive provision but in the nature of a concession and hence as the procedural provisions under the BST Act were applicable mutatis mutandis to the allied laws like Works Contract Act, interest was admissible on refund granted under the Works Contract by reference to sec. 43A of the BST Act. Arvind G. Daftary & Ors. – S.A. No. 1817 of 2002 dt. 12-6-2007

Penalty

Order levying penalty on a ground other than that mentioned in the Show Cause Notice was liable to be set aside being in violation of the principles of natural justice as the dealer was not put on notice of the other aspect of the matter. Sumo Foods P. Ltd. vs. C.T.O. (2007) 7 VST 774 (A.P.)

Withdrawal of Notifications retrospectively

Initially, the State Government granted retrospective exemption by Notification to sale of packaged and mineral water on representation by associations of dealers. Thereafter, the said Notification was withdrawn retrospectively. The Kerala High Court held that the retrospective withdrawal was not in public interest and was ultra vires. E.G. Bindu vs. Addl. S.T.O. and Geekay Hygenics P. Ltd. vs. State of Kerala (2007) 7 VST 688 (Ker.)

Sale — Bullion was delivered to exporter-clients by the bank against receipt of substantial amount but invoice was raised after fixing the price in the subsequent year. The Kerala H.C. held that sale was complete at the time when delivery was given although the price was fixed subsequently. Hence, sale was assessable in the year of delivery.State Bank of India vs. State of Kerala (2007) 7 VST 621 (Ker.)