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Dealer – Bank
The Supreme Court, while
interpreting the provisions of section 2(viii)(g) and section 5 of the Kerala
General Sales Tax Act, found that the definition of the term ‘sale’ in local law
was different from the definition of the said term under Sale of Goods Act. The
Apex Court, therefore, held that when a bank sell the pledged ornaments, their
action was under section 176 of the Contract Act as of right of a lender. The
sale of the pledged ornaments was not as an agent of the borrower, but in
exercise of the statutory power under the 1949 Act. Since the sale of pledged
assets took place in the course of banking business, the Supreme Court held that
such transactions were taxable under the Kerala General Sales Tax Act, 1963.
M/s Badagara Co-op. Rural Bank
Ltd vs. State of Kerala & Others. 2007 NTN (7 DPH) – 360.
Declared goods
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Resale
Following the ratio of
Supreme Court judgment in the case of M/s K. A. K Anwar & Co (108 STC 258),
the West Bengal Taxation Tribunal held that the rough cast iron casting made
out of pig iron and iron scrap resulted in a new commercial commodity and
therefore, the claim of resale or IInd Sale on such transaction was not
allowable. Considering the scheme of the Act, especially Section 22(2) of the
1994 West Bengal Act, the assessee was eligible to set-off of the tax paid
while purchasing pig iron and iron scrap.
M/s Urvashi Steel Industries
Pvt. Ltd & Another vs. C.T.O., Bally Charge & Others. (2007) 49 S. T. A. –
189.
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Stainless steel pipe
The West Bengal Commercial
Tax Appellate & Revisional Board held that Stainless Steel Pipe was nothing
but steel tube and therefore, the said item was held to be declared goods
liable to be taxed @ 4% only. For that purpose, the board relied on the
Supreme Court decision in the case of M/s Gujarat Steel Tubes Ltd vs. State of
Kerala & Others (74 STC 176).
M/s Advance Trading Co. (CAL)
vs. D.C.C.T., Chowringhee Circle. (2007) 49 S.T.A. – 71.
Effect of circular on
liability
The Supreme Court, while
considering the provisions of U. P. Trade Tax Act, 1948, held that the
Circular issued by the Commissioner cannot create a liability by drawing in
inference in regard to the transactions with farmers.
M/s Jhunjhunwala & Others vs. State of U. P. & Others. (2007) 49 S.T.A. – 217.
Entries in Schedule
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Radio terminals
While considering the
provisions of Custom Act and the notifications thereunder, the Supreme Court
held that the Radio Terminals which converted digital speech from BTS
equipment to the Base Station Control through the outdoor units and antennas
were ancillary equipments of BTS. According to the Hon’ble Court, radio
terminals were not independent equipment having its own independent function.
The equipment only supported the Mobile Communication Network under a
particular GSM. In other words, the Court held the radio terminals as a radio
wave transmitter between BTS & MSC or Base Station Control.
Commissioner of Customs,
Bangalore vs. M/s Spice Telecom, Bangalore. (2007) 49 S.T.A. – 223.
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Fridge stand
The Kerala High Court, after
considering the meaning of the terms ‘accessory’, ‘component’ and ‘spare
parts’, held that the Fridge stand was neither a spare part nor component of
the machine in question. It may be noted that Entry 6 of Fifth Schedule under
the Kerala Sales Tax law referred to components and spare parts of
Refrigerator, Water Coolers etc, but did not cover the accessory. In that
connection, the Court also observed that the accessory cannot be considered to
be a component or a spare part. In view of that position, the Hon’ble High
Court held that the item in question was not covered by the said Entry, but
the same was taxable under residuary entry.
M/s Golden Traders vs.
Commissioner of Commercial Taxes. (2007) 15 KTR 238 (Ker).
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Video Conferencing Products
While disposing of an appeal
against the order of classification under section 94 of the Kerala VAT Act,
the Hon’ble Kerala High Court held that the Video Conferencing Products (VCP)
were not covered by HSN
Code 8517.50, but were
electronically related digital online system, allowing two or more locations
to interact between them simultaneously. In view of that position, the Court
confirmed the order of the Commissioner holding the same to be liable to tax @
12.5% under section 6(1)(d) of the said Act.
M/s Godrej & Boyce Mdg. Co.
Ltd. vs. State of Kerala. (2007) 15 KTR 235 (Ker).
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Ganga Jal
While disposing of an
application under section 84 of the Delhi VAT Act, the Commissioner held that
Gangajal sold in packed or sealed containers were not covered by Entry 36 of
Schedule 1 of Delhi VAT Act and therefore the same was not tax free, but
taxable @ 12.5%.
Application No. 156/CDVAT/131
decided on 4th January 2007 in the case of Amit Gupta vs. Archana Arora,
Commissioner, T&T, Delhi.
Source : Sales Tax Matters,
1-6-2007, Vol. 10, Part 6, Page 711.
High seas sale – Power of
Checking officer
The VAT Tribunal, Punjab,
held that the provisions of Section 14B(7) of the Punjab VAT Act grants a
limited power to a Checking officer. Therefore, the validity or legality of
the High seas sale cannot be gone into by the Checking officer under the Sales
Tax law, but the same was under the domain of the Custom department under the
provisions of the Custom Act.
M/s Nokia India Pvt. Ltd.,
Mohali vs. State of Punjab. (2007) 29 PHT 672 (PVT)
Interest on refund
Consequent to the decision of
the Supreme Court in the case of M/s India Carbon Ltd., the Commissioner of
Sales Tax, Maharashtra, had issued a Circular on 9th January 2004 that
interest under section 43A (of the B.S.T. Act, 1959) on the refundable amount
under C.S.T Act, Works Contract Act and Lease Act, cannot be granted in
absence of substantive provision in the Works Contract Act in that behalf. The
matter of such interest came up recently before the Tribunal. After
considering the language of section 9(1) of the Works Contract Act which is
similar to section 9(1) of the C.S.T Act, the Tribunal disapproved the version
circulated by the Commissioner and held that recovery of tax and refund
provisions were part of procedural law built-in substantive provisions. The
Tribunal also disapproved the withdrawal of grant of interest by the circular
as unjustified. The Tribunal, while deciding the matter, referred to the
legislative history in regard to section 9 of the CST Act and its adoption in
Works Contract Act. While analysing the distinction between charging provision
and machinery provision, the Tribunal held that even in a procedural law,
there can be substantive provisions. The Tribunal concluded that the
substantive provisions of section 43A of the BST Act was a part of procedural
law and therefore, all the provisions of local law relating to refund
including the provision for grant of interest mentioned in the later part of
section 9(1) were applicable for the purpose of assessment/ reassessment etc.
as if the tax was payable under the local Act.
M/s Arvind G. Daftary vs. The
State of Maharashtra & Others.
Source : Sales Tax Review,
June 2007, Page I-111.
Inter-State Works Contract
Before the Allahabad High
Court, the agreement of the Works Contract provided for procurement of
materials required to be used in the contract from the specified
manufacturers. Those goods were to be inspected by the contractee at the site
of the manufacturer for which specific codes were to be assigned as per its
drawing on individual goods. The manufactured goods out of such approved
material were to be despatched to the site along with the inspection
certificate. Thus it was shown that the goods were ordered, imported,
manufactured and used as per terms in the contract. The Court held that when
the movement of the goods took place, the contractee had lien over the goods
and therefore, the transactions were squarely covered by the provisions of
section 3 of the CST Act. The Court, therefore, held the transaction to be a
clear example of an inter-State Works Contract.
Commissioner, Trade Tax, U.
P., Lucknow vs. Indian Railway Construction Co. Ltd.
Source : Sales Tax Matters,
1-06-2007, Vol. 10, Part 6, Page 696.
Liability of introducer
The Allahabad High Court,
after considering the true and correct meaning of the expression ‘Association
of Persons’, held that a person who permitted a dealer to use his telephone
number by giving consent letter for the purpose of registration, cannot be
held to be a member joining the Association with a common object. The recovery
measures initiated against such introducer was quashed with costs.
Commissioner of Trade Tax, U.
P., vs. M/s Laxmi Vanaspati & Oil Co., Varanasi & Another. 2007 NTN (Vol. 34)
– 128.
Reassessment
The Supreme Court held that
an order of assessment passed on the basis of the earlier circular, cannot be
reopened on the basis of a later circular issued by the Commissioner upon
review of the earlier circular. In fact, in such a matter, there was no
provision permitting the review by the Commissioner. The Supreme Court,
therefore, set aside the Karnataka High Court judgment, holding the later
circular to be valid and consequently the reassessment that followed was also
quashed.
M/s Binani Industries Ltd.,
Kerala vs. Asst. Commissioner of Commercial Taxes, VI Circle, Bangalore.
Source : Sales Tax Matters,
1-6-2007, Vol. 10, Part 6, Page 659.
Recovery – A high handed action
The Punjab & Haryana High
Court awarded the cost of Rs. 10,000/- recoverable from the officer who kept
the bus in his custody for more than a month for recovering a small amount of
Rs. 2,770/-, though the owner of the bus had offered to pay the amount in full
for release of the bus. The officer was also directed to be charge sheeted, so
that such high handedness should not recur in future.
M/s Chaudhary Bus Service,
Rewari vs. State of Haryana.
Source : Sales Tax Matters,
1-6-2007, Vol. 10, Part 6, Page 679.
Sale
The Allahabad High Court,
relying on the provisions of section 2(h) of the U. P. Trade Tax Act, 1948 and
the provisions of section 4 & 5 of the Sale of Goods Act, held that the sale
and the agreement to sell were different. Where the Sale Memo was issued
without any pre-condition, it can well be assumed to be a transaction of
complete sale. For that purpose, according to the High Court, delivery of
goods at a later date or deferment of payment had no bearing.
M/s Paramount Pesticides Pvt.
Ltd., Meerut vs. The Commissioner of Trade Tax, U. P., Lucknow. 2007 NTN (Vol.
34) – 175.
Taxation Tribunal jurisdiction
The West Bengal Taxation
Tribunal held that an application under section 8 of the West Bengal Taxation
Tribunal Act by the President of the Association against the opinion of the
Public Relations Officer was maintainable. For that purpose, the Tribunal
applied the provisions of CPC section 2(2), Order 1, Rule 8(1)(a).
M/s Calcutta Computer
Stationery Printers Association & Another vs. C.C.T., West Bengal & Others.
(2007) 49 S.T.A. – 244.
Tax & Fee
The Supreme Court,
distinguishing its earlier judgment in the case of M/s Jindal Stainless Ltd.
(145 STC 544), held that the principles of distinguishing of fees with the tax
had undergone a sea change. In that regard, the Hon’ble Court held that for a
valid levy of fee, it was no longer necessary that some specific service must
be rendered to the individuals from whom the fees were being realised, if
there were a broad and general correlation in totality. In other words, it was
not necessary to have mathematical correlation between amount realised as the
fees and the value of services rendered to the fees payer. The Supreme Court,
on the above basis, held that the cess levied under the provisions of Andhra
Pradesh Rural Development Act, in addition to purchase tax and sales tax,
cannot be struck down to be invalid, as in substance the cess was fees for
rendering to the rural public the service of rural development. Even if no
specific service was rendered to a particular individual from whom the fees
were collected, the cess was a valid piece of legislation. The Supreme Court
also observed that where there was no broad correlation between the total
amount of cess realised every year and the total value of services rendered
every year, the position would be otherwise.
M/s Vijayalashmi Rice Mill &
Others vs. Commercial Tax Officer & Others. (2007) 15 KTR 205 (SC).
Works Contract
While considering the
provisions under the Bihar Finance Act 1981, in regard to levy of tax on Works
Contract, the Supreme Court held that the value of the goods involved in the
Works Contract was to be determined after deducting charges towards labour and
services from the entire Works Contract value. If an item was not covered by
List II or III of the Seventh Schedule of the Constitution, then only the
Parliament can provide for levying tax either under List I or under its
residual power.
State of Jharkhand & Others
vs. M/s Voltas Ltd., East Singhbhum (2007) 29 PHT 655 (SC)
Withholding of refund
The Punjab & Haryana High
Court held that the refund due to an assessee cannot be withheld simply
because the revenue involved in the case was substantial or an appeal was
pending in the Supreme Court on the same point.
M/s Shiwalya Spinning &
Weaving Mills (P) Ltd., Ludhiana vs. State of Punjab.
Source : Sales Tax Matters,
1-6-2007, Vol. 10, Part 6, Page 682.
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