1. Input Tax Credit – To Unit / Dealer whose sale is exempt – But goods are taxable – Not exempted goods

The Input tax credit is available to Unit / Dealer whose sale is exempt but goods are taxable. There is a distinction between exempted goods which means complete exemption for the specified goods, and when the goods are taxable goods, but a transaction or a person is granted exemption. When the goods are exempt there would not be a taxable transaction or exemption to taxable person. In other case, goods might be taxable, but exemption could be given to a taxable event. Exemption with reference to taxable events or taxable persons would not be exempt goods as such, for a subsequent transaction or when the goods are sold or purchased by a non-specified person the subsequent transaction or the taxable person would be liable to pay tax.

(Commercial Tax Officer v. M/s. A Infrastructure Ltd. (2016) 53 PHT 1 (SC)

2. Input Tax Credit – Disallowance for deficiency in tax invoice – Not justified

Disallowance of input tax credit merely on the ground that tax invoices did not contain name of the buyer and also its TIN number is not justified.

(M/s. Sanjeev Stone Crushing Company v. State of Haryana and Others (2016) 53 PHT 36(P&H)).

3. Sodexo meal vouchers (pre printed meal vouchers – Are not goods

Sodexo Meal Vouchers are not goods within the meaning of term goods contained in section 2(25) of the MVAT Act, 2002. The High Court had mistakenly held that these vouchers after being printed are sold by the appellant whereas its only a service charge of a small amount taken from its customers in proportion to the face value of the vouchers. The goods are provided by the affiliates whereas the appellant is only a facilitator between customers and affiliates. The intrinsic character of the entire transaction is to provide service by appellant through these vouchers.

(M/s. Sodexo SVC India Private Limited v. State of Maharashtra (2016) 53 PHT 45 (SC))

4. Turnover Tax on Textile Articles – Valid

The Constitutional validity of levy of turnover tax u/s. 6A of the Kerala VAT Act as it stood till the date of its omission from the KVAT Act was upheld subject to the restrictions imposed by Article 286 of the Constitution of India read with sections 3, 5 and 15 of the CST Act, 1956. The levy of turnover tax was contemplated only in respect of textiles articles specified in Entries 17A, 46A and 51 of The 1st Schedule to the KVAT Act. The tax, if any, collected on other articles during the period from 1-4-2014 to 23-7-2014 cannot be held to be legal and State was directed to refund it.

(Abdul Jabbar P. M. v. State of Kerala, 53 (2016) 24 KTR (Kar.)).

5. Sale price – Freight up to the delivery point – Forms part of sale price – Liable for Vat

Under the terms of the contract, seller was to deliver goods at a particular destination and was responsible and liable for any shortage, damages or deterioration to the consignment in transit and it was the duty of the seller to deliver goods to the destination point. Freight charges recovered shall from part of sale price liable to tax.

(M/s. Indian Oil Corporation v. Asst. Commissioner Commercial Taxes, Rajasthan, (2016) 24 KTR 109 (Raj.))

6. Purchase of goods under e-auction in Kerala – by SEZ unit, in Chennai – Not exempt – Liable to purchase tax under the Kerala VAT Act

Purchase of sandalwood by SEZ unit, Chennai, from Forest Department, Kerala by participating in e-auction and thereafter exporting to various countries, Chennai is not an export covered by section 5(1) of the CST Act, 1956. No exemption is provided from levy of VAT under SEZ Act. It is left at discretion of State Legislatures. In absence of any exemption, sale effected from DTA to a unit in the SEZ would not qualify to be export sales for the purpose of section 5(1) of the CST Act read with Article 286 of the Constitution of India and therefore, the levy of purchase tax under the Kerala VAT Act was upheld. However, the Court kept issue open to be decided in appropriate proceedings about exemption from payment of tax under section 5(3) of the CST Act, 1956.

(Lalitha Muralidharan v. Commr. of Comml. Taxes & Ors., (2016) 24 KTR 124 (Ker.)).

7. Entry Tax – Barely Matt – Not agri-culture produce – Liable to entry tax

Malted barley / Barley Malt, Hops, Pellets, and Maize flakes are not agricultural / horticultural produce falling under Entry – 2 of Schedule II of the Act and they are not exempt from levy of Entry Tax.

(State of Karnataka v. United Breweries Ltd. & Anr., 2015-2016 (20) KCTS 225 (Karn.)).

8. Higher rate of Entry tax on lime stone used for manufacture of clinker – Which is stock transferred outside the State – Not valid

Section 4A of The Entry Tax Act provides for higher rate of Entry Tax on certain goods consumed or used in manufacture of other goods. On a plain reading of it a higher rate of tax could be imposed based on the nature of the product manufactured from the goods entering the local areas. Once the nature of product manufactured is made the basis of tax it has to be applied uniformly and there can be no further imposition based on the nature of the end user of the goods so manufactured by notification. The sub-classification sought to be done based on the end users outside the local area by notification therefore clearly unsustainable in the law as having no nexus with the object to be achieved by levy of higher rate of entry tax.

(M/s. Ultra Tech Cement v. State of C. G. (2016) 28 STJ 169 (CG)).

9. Levy of Tax on MRP – Not valid

Levy of tax on sale of petrol and diesel by Oil Companies to the retail outlets at the price on which the retail outlets will sell these goods to consumers cannot be sustained in law as it is not on the actual price of the completed sale but on the price of a sale which is yet to take place from the retail outlet to the ultimate consumers.

(M/s. Veer Services v. Govt. of NCT of Delhi (2016) 28 (STJ) 176 (Del.))

10. Classification of Goods – Markers and Highlighters pens, carbon paper, stamp pad, ink of stamp pad and eraser are stationery.

Markers as well highlighters are defined in various dictionaries will literally fall in the category of “all Types of Pens” and accordingly will be covered by it. In common parlance (i) Carbon Paper, (ii) Stamp Pad & Ink of Stamp Pad and (iii) covert (eraser) can certainly be called to be the items of stationery and cannot be taxed under residual entry.

(Assistant Commissioner v. Camlin, (2016) 28 STJ 187 (Raj.)).

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