1. Appeal against time-barred assessment order

The J & K State Sales Tax (Appellate) Tribunal, Srinagar under the J.K. GST Act, 1962, u/s 11 was required to consider whether appeal against the time barred assessment order lies or not ? The facts were, appeal against the Order of the AO u/s. 7(11) reassessing the return of the assessee accepted by Dy. CCT directing the AO to pass fresh Order after giving opportunity of hearing to the assessee on the ground that statutory notice prescribed for initiating reassessment proceedings against the assessee had not been served on him. But by that time the period prescribed for finalising the assessment had passed out. But what could not be done by the AO, could not be permitted to be done in appeal by the DCCT and the Tribunal. An assessment which had become time-barred by the efflux of time could not be given a fresh lease of life through a remand order by the appellate or revisional authority or the Tribunal. As the time passed against the impugned order by the Appellate Authority, the reassessment proceedings had already been barred by the period of limitation, the Appellate Authority giving direction for
de novo assessment was not warranted by law. Hence, appeal accepted by the Tribunal the Order of the Appellate Authority to the extent of de novo assessment was set-aside and the order of the AO for reassessment was quashed.

Valley Motor Corporation, Srinagar v. AACT, Srinagar & Ors. (2015) 51 PHT 417 (J&K-STAT)

2. Attempt to evade tax

Section 51(12) of the PVAT Act, 2005 pertained to attempt to evade tax by producing ingenuine documents attracting penalty provisions. Appellant-company dispatched 3 consignments of biscuits from their office at Zirakpur to M/s Sidhu Gas Services, Jagraon, Sumitra Enterprises, Khanna & Shivalik Gas Company, Barewal, containing 31,176 packets of biscuits without any invoice or delivery challan or any credit or debit note but only with a certificate that – “we are sending 7992 packets of Treat-O biscuits for sampling purposes. They do not have any commercial value” TIN No. of the consignees was also not mentioned over the documents i.e. GRs’ of the Bharti Road Carrier, Zirakpur. The representative of the appellant stated that they were sent not for sale but have been sent free of cost and there was no copy of any agreement or other documents entered with the consignment companies. Hence, penalty was levied. Tribunal, keeping in view the ill intention of the company to evade tax upheld the penalty order and dismissed the appeal.

Britannia Industries Ltd., Dist. Mohali v. State of Punjab (2015) 51 PHT 381 (PVT)

3. Defective and non-speaking order in spite of remand

Attempt to evade tax and penalty. Defective and non-speaking order in spite of remand involving penalty amount of Rs. 10,95,435 whereas penalty order was served to the appellant for Rs. 8,97,372 which showed non-application of mind of a lady officer. Although she tried to cover up the mistake by passing the rectified order which itself was not a self-speaking order and she had rectified only one mistake whereas there were so many mistake in her previous order, so she should have passed the self speaking order. Tribunal held, all this shows that the Officer was very casual in her approach while passing and signing the order. This much could not be expected from a quasi-judicial authority. The copy of the judgment be sent to the ET Commissioner, Punjab for a probe and to proceed accordingly.

Rezondi Retail (India), Ludhiana v. State of Punjab (2015) 51 PHT 378 (PVT)

4. Deferred amount of tax – Recovery thereof

Under Haryana GST Rules, 1975, Rule 28-C pertained to recovery of deferred amount of tax. Appellant was allowed deferment of tax with a cap of Rs. 3,103.65 lakhs w.e.f. 7-5-1993 to 6-5-2002 u/r. 28-A HGST Rules, 1975. Appellant availed this benefit upto 29-9-2000 which was determined at Rs. 2,072.62 lakhs. Out of this deferred tax, an amount of Rs. 1,868.12 lacs was transferred as interest free loan by the Industries Dept. and the balance amount of Rs. 204.5 lakhs remained recoverable. Thereafter, the appellant switched over to tax concessions u/r 28-C for the remaining period. The appellant was assessed to tax for the A.Ys. 1999-2000 and 2000-2001 under the HGST Act and CST Act. No appeals were filed against the assessment orders. Appellant served with a notice initiating recovery proceedings, as the appellant had availed deferment of tax collected by him and that had become recoverable after the prescribed period. Plea of the assessee that nothing was due against the appellant was without any basis, because for deferment units demand is not treated like tax arrears as in the case of normal dealers, because in such cases tax recovery is deferred for a particular period. Recovery proceedings are taken up only after the lapse of the prescribed period for which the dues are deferred. Hence, the argument carries no weight and was rejected. Therefore, appeal against a communication from ETO was not maintainable.

Haryana Telecom Ltd., Rohtak v. State of Haryana (2015) 51 PHT 384 (HTT)

5. Duplicate issue of ‘C’ forms

Turnover, assessment, invoices etc. and not the factor of delay in applying for a ‘C’ form, was the requirement of law as need for ‘C’ form arises mostly at the time of assessment and in appeal. As the appeal has been finalised during 2014 for the A.Y. 2006-07, the delay for producing ‘C’ form was allowed.

Amba Shakti Ispat Ltd. v. E.T. Commissioner, Himachal Pradesh (2015) 51 PHT 408 (HPTT)

6. Rebate / Refund – Sale price – lpg cylinders

In this case, the Rajasthan HC following the SC judgment in the case of MRF Ltd. v. Collector of Central Excise, Madras (1997) 5 SCC 104 held – On conjoint reading of the definition of the ‘Sale Price’ and ‘Turnover’, both paid and payable and amount received or receivable had been used under the Act – payable and receivable would mean that the assessee was entitled to receive the amount of Rs. 682 per cylinder initially and did receive but on account of rate revised by the oil companies on the basis of some expert report therefor it cannot be said that payable or receivable would mean final amount determined @ Rs. 645 per cylinder. (Para No. 15) – the view expressed by the Tax Board appears to be well justified, it needs no interference and is to be sustained – the question of law is answered against the assessee and in favour of the revenue. Accordingly, revision dismissed.

M/s Universal Cylinders Ltd. v. CTO, Alwar 2015 NTN (Vol. 58)-251 (Raj)

7. Recovery – Arrears of Sales Tax

Immovable property of an industry was taken over by Tamil Nadu Industrial Investment Corporation Ltd. for default of payment of loan invoking section 29 of S.F.C. Act, 1951. The property in question was purchased by the petitioner in public auction conducted by the said Corporation. However, Sub-Registrar refused to register the document in favour of the petitioner, as the property was already attached by the Commercial Tax Dept. The HC held that the refusal of the Sub-Registrar was not justified when a secured creditor took possession of the property invoking section 29 of the S.F.C. Act, the principle of “First Charge” of the State over the property not applicable. Accordingly, the Sub-Registrar was directed to consider the document of the petitioner on merit as per law.

Manikandan T. v. CTO And Ors. (2015) 23 KTR 293 (Mad.)

8. Schedule Entries

A. Flavoured Milk – Rate of tax – Clarification

“Flavoured Milk” held – was not covered by any of the entries in the Schedules appended to the Haryana VAT Act, 2003, and, therefore was liable to be taxed as unclassified goods @12.5%. Moreover, these are packed in a manner that their shelf life is increased. In this way, a new commodity emerges. Also, the same view was taken by the Haryana Tax Tribunal in the case of
Punjab State Co-op. Milk Producers Federation Ltd. v. State of Haryana (2010) 37 PHT 250 (HTT).

Pindori Copy House, Faridabad v. Addl. Chief Secretary to Govt. of Haryana (2015) 51 PHT 329 (Hr.-CC)

B. Gujarat Sales Tax Act, 1969 – Section 55 r/w Schedule-Ii-A – Works Contract

Appellant M/s Voltas Ltd. was engaged, amongst others, in the business of exhibition of jobs design, supply and installation of Air Conditioning Plants. M/s Aupam Colours and Chemical Industries, Mumbai, placed an Order with it for water chilling plant at its factory at Vapi. The basic design parameters were – (i) Tonnage of Refrigeration – 11 Tr., (ii) Final Temperature or chilled water – 5-6ºC; (iii) Quantity of chilled water – 12,000 litres. The assessee-appellant was to provide to the customer with the layout drawings and necessary information required for the construction of the plant. Sales Tax authority charged sales tax (composite) @15% as per Entry No. 2, whereas, assessee insisted for charging at 5% as per Entry 5 of Schedule. Assessee-appellant since did not succeed up to HC level, they filed the appeal before the SC.

Supreme Court observed that the work order of the appellant in clear terms did enjoin that the design parameters pertaining to the tonnage of refrigeration, final temperature of the water to be made available for the process of manufacturing pigments and quality of chilled water essential therefor indispensable and were in addition to other specifications as offered by the appellant. The exercise as a whole as contemplated by the work order thus was neither intended nor can be reduced to mere installation of the finally emerging apparatus. The work order had been apparently tailor-made to the requirements from which no departure was intended. Apex Court thus held that the inescapable conclusion was that the appellant’s works contract for fabrication and installation of water chilling plant at the factory of Anupam Colours & Chemicals at Vapi would fall under Entry–5 of the Schedule to the Notification dated 18-10-1993 issued u/s 55A of the Act and would be taxable @5% as prescribed thereby. In coming to this conclusion, the Apex Court interpreted the provisions of taxing statute, burden of proof regarding rate of tax on whom lies and also interpreted the words “Words and Phrases”. After doing this analysis, the Apex Court held in favour of the appellant-assessee i.e. the rate of tax applicable to the works contract was at 5%.

Voltas Ltd. v. State of Gujarat (2015) 51 PHT (SC) 300 (FB)

C. Liability to tax – Yarn imported from outside India

AO levies tax at 20% on yarn imported from outside and 4% on yarn of other kind. The Allahabad HC applying the golden rule held that the words of the statute must prima facie be given their ordinary meaning. The Court came to the conclusion that the tax was in the nature of entry fees over the foreign items brought in the State of U.P. It has got no relationship with either the sale or purchase or the import or export of goods. Imposition of tax at Entry level where sale or purchase of goods were not involved, did not seem to come within the purview of sub-clause (b) of clause 1 of Article 286. Accordingly, it was held that the writ petitions filed were lacking merit and, hence, they were dismissed accordingly.

Brij Mohan Amit Kumar And Ors. v. State of U.P. And Ors. 2015 NTN (Vol. 58) – 346 (All.)

D. The Karnataka VAT Act, 2003 – Entry 3 of Schedule–III – Whether the commodity namely – Vegit-Aloo hara bara kebab, Vegit-aloo veg cutlet, Vegit-aloo yummy cheese balls, Vegit-majedar bonda and Vegit-aloo jatpat tikki, were covered by Entry 3 of the Third Schedule of the Act attracting levy of tax @ 4% or fell under the Residuary Entry, liable to be taxed at a higher rate?

Earlier, the learned Commr. by Order dated 24-7-2010 clarified that the commodities in question were unscheduled goods liable to tax @12.5% up to 31-3-2010 and @13.5% from 1-4-2010. This clarification of the Commissioner was challenged in Writ Petition. The learned Single Judge of the HC by Order dated 10-2-2011 allowed the W.P. by setting aside the clarification of the Commissioner. Against the said Order, the State appealed to the Division Bench of the HC. Upon hearing the State and the dealer and noticing 8 judgments of the courts, the Division Bench held that the commodities in question fell under the residuary entry and thus taxable at higher rate of tax as may be applicable.

State of Karnataka v. Merino Industries Ltd. 2015-16 (20) KCTJ 35 (Md)

E. Rate of tax on Prepared Rubber Accelerators

Revenue relying on classification of Commissioner on commodity ‘Disposal’, classifying petitioner’s product under Residuary Entry taxable at 12.5%. HC held – not proper. Assessment Order based on Commissioner’s clarification quashed. Assessing Authority was directed by the Court to look into the issue whether the product classified by Commissioner is similar to the commodity in question. Further, principles enunciated in Reckitt Benckiser India Ltd. (2009) 17 KTR 443 along with Explanatory note to H.S.N. and scientific literature on the products to be adhered to.

Joseph Scaria v. CTO & Ors. (2015) 23 KTR 289 (Ker.)

D. H. Joshi

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