2. Hospital
   
   The Maharashtra Sales Tax Tribunal, after considering the provisions under the Bombay Public Trust Act, Indian Income-tax Act & the Bombay Sales Tax Act, 1959, have held that a Public Charitable Trust running a hospital was not a dealer qua its activities of supplying medicines, injections and other materials in the course of treatment of in-patients through a pharmacy as well as supplies of medicines to out-patients or post-operative patients. For all such activities, the Tribunal held the hospital to be not a dealer.

Entry tax

Following the Supreme Court judgment in the case of M/s Jindal Stainless Ltd., the Punjab & Haryana High Court held that the nature of the levy of entry tax was not compensatory in character and adversely affect free flow of trade and commerce. The provisions, therefore, were declared to be ultra vires Article 301 of the Constitution.

M/s Jindal Strips Ltd & Another vs. State of Haryana & Others. (2007) 29 PHT 385 (P&H).

1. Boro soft cream
   
   The Allahabad High Court, rejecting the submissions of the assessee, held that in absence of some material on record to show that the item in question was Ayurvedic Medicine, the proper classification had to be decided by keeping in mind the distinction between Ayurvedic Medicine and cosmetics.

2. Crushed bones
   
   The Supreme Court, while setting aside the order of the High Court as well as that of the Assessing Authorities, held that the crushed bones whether can be differentiated with the Bone meal or not, must be considered along with the expert opinion on the point. For that purpose, the Apex Court applied the common parlance test.

Liability to tax

The Gujarat High Court confirmed the judgment of the Gujarat Sales Tax Tribunal and held that a dealer cannot be made liable for the disposal of closing stock and other assets after the closure of business. Such transactions were held to be not in the course of business and therefore not liable.

Newspaper — Not goods — Penalty

The Kerala High Court, while confirming the imposition of penalty under section 45A of the Kerala General Sales Tax Act 1963, held that publishers of newspapers were not entitled to purchase printing ink at the concessional rate of tax under Section 5(3) of the Kerala Act which in its turn, was used for publication of newspaper. The court held such purchases as unauthorised, with the result the publisher was held to be liable to penalty.

Penalty — Mens rea

The full Bench of the Madras High Court, while considering the phrase "falsely represents" appearing in Section 10A, held that mens rea was essential for imposition of penalty under section 10(b) of the Central Sales Tax Act read with section 10-A thereof.

Refund

1. Considering the provisions of U. P. Trade Tax Act 1948, the Allahabad High Court held that the authorities are duty bound, both under the law or on equity, to refund the excess amount of tax realised, even if there was no specific direction in that regard by the higher appellate authority.

M/s Reva Enviro Systems (P) Ltd vs. State of U. P. (2007) 29 PHT 340 (All).

2. The Allahabad High Court held that in absence of the tax collected from the customers in the bills, simply mentioning of the amount in Form 82 as tax realised, did not lead to a finding that the quantum of actual tax was collected, though in fact no tax was realised from the customers as per the bills. The High Court, therefore, directed the lower authority to verify all the bills and other records before coming to a proper decision.

Retrospective cancellation of registration certificate

The Maharashtra Sales Tax Tribunal, following the ratio of the Supreme Court decision in the case of M/s Suresh Trading Company, held that the purchases from dealers whose registration certificates were in force on the date of transaction but were cancelled later on with retrospective effect, cannot be adversely affected by such a cancellation. The Tribunal, therefore, held that such purchases will have to be treated as from registered dealers and no purchase tax was leviable on such transactions by treating them as unregistered dealers.

M/s J. D. Orgochem Ltd vs. The State of Maharashtra [Second Appeal No. 77 of 2004 decided on 23rd March 2007].

Refusal of declarations

The Delhi High Court, rejecting the petition of the assessee, held that the department was justified in not supplying the declarations in Form ‘C’, where the applicant was defaulter in making the payment of tax collected by them. The High Court also held that Article 19(1)(g) cannot be taken help of for compelling the department to issue the declaration in the above circumstances.

1. The Allahabad High Court held that the recovery of trade tax due from a Limited Company was not permissible to be made from the personal assets of the Directors, especially when the Petitioner before the Court was no more a director during the material period.

2. In an important judgment pronounced by the Karnataka High Court, though under Income Tax provisions, it has been held that the tax deducted at source by the payer cannot be recovered from the payee upon the deductor failing to make the payment of tax so deducted.

The above principle could also be applied to the similar provisions under the VAT Act in regard to payments to Works Contractors etc.

(Smt. Ansuya Alwa vs. Deputy Commissioner of Income Tax – 147 Taxman, Page 152 (Karnataka).

Sale

The Allahabad High Court held that the parts of automobiles used during warranty period without consideration, would also be transactions of sale.

Commissioner, Trade Tax, U. P. vs. S/s Auto Wheel Ltd., Bareilly. 2007 NTN (Vol. 33) – 298.

While considering the provisions of Central Excise Act, 1941, the Supreme Court held that the assessee was entitled to get the reduction of trade discount (commission) which was paid in terms of the agreement entered into between the parties.

Unreasonable imposition of penalty

The Supreme Court, while disapproving the personal cost awarded by the High Court, held that the action of the officer concerned in overlooking the documents produced by the assessee and coming to the conclusion that the case was that of manipulation, was totally uncalled for and unreasonable. The Apex Court opined that the officer ought to have been more careful. The Apex Court also made it clear that if in future any such arbitrary action was noticed by the Court, appropriate action against the officer concerned in accordance with law would be justified.