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M/s Hira Lal Shubh Karan Versus State of U.P. And Others

Dated: 14/05/2015

Writ Tax No. - 286 of 2012

Denial of refund claim - Refund claim adjusted towards penalty imposed - Penalty for charging tax at higher rate - Held that:- On an order being made by the First Appellate Authority on 04.10.1988 that a decision was taken by the Assessing Authority on 16.05.1989 to the effect that the money cannot be returned in view of Section 29 (3) of the Sales Tax Act. The issue of refusal to refund the money due under Section 29(3), in our opinion, would only arise when something becomes payable to the assessee under orders of the competent authority which in the facts of the case would be the order of the First Appellate Authority dated 04.10.1988. - under Section 29(1) proviso of the Sales Tax Act, a power has been conferred upon the taxing authority to adjust any amount which is refundable against any other outstanding of the assessee. It is with reference to this power that the amount of excess tax which was paid by the assessee had been adjusted by the department against the amount of penalty which was levied under Section 15-A(1)(QQ). It is also relevant to note that Explanation II to Section 29 provides that the refund would include any adjustment under sub-section 1 of Section 29 of the Act.

In the facts of case, the order for refund of the money adjusted against penalty was directed to be returned to the assessee under the order dated 04.10.1988 which order stands affirmed up to the High Court. Therefore, the liability to make payment of interest under sub Section 29(2) would accrue from the date the order of the First Appellate Authority was received by the department. - it is a fit case to issue a writ of mandamus directing the Assessing Authority to re-calculate and pay the interest for the period commencing from the date the Assessing Authority had received the order of the First Appellate Authority dated 04.10.1988 till 27.12.2002 at the rates as were applicable from time to time to the assessee. - Decided in favour of assessee.


M/s Perfect Mechanical Industries Versus State of Haryana & Others

Dated: 12/05/2015

CWP No. 24906 of 2014 (O&M)

Stay application - Penalty imposed under Section 9(2) of the Central Sales Tax Act, 1956 - Held that:- A perusal of the recovery notice under the Land Recovery Act dated 24.11.2014 would go on to show that recovery was only made regarding the bank guarantee which has already been done. In such circumstances, once the petitioner himself has given his consent for the recovery of the tax amount along with interest, in view of being unsuccessful in appeal, we are of the opinion that subsequently, the petitioner had a change of heart and has approached this Court on the ground that since he had filed the appeal thereafter, the amount should be refunded to him and it was wrongly encashed, without giving him prior notice. - petitioner has submitted that the petitioner shall furnish adequate security, to the satisfaction of the Assessing Authority, in the manner prescribed under Section 33(5) of the VAT Act. - petitioner is granted the benefit of protection of recovery of the amount in dispute, during the pendency of the appeal, subject to the Assessing Authority being satisfied regarding the furnishing of adequate security, as prescribed under Section 33(5) of the VAT Act, within a period of 4 weeks - Conditional stay granted.


M/s Radiant Satellite Private Ltd. Versus The Commercial Taxes Officer

Dated: 08/05/2015

S.B. Sales Tax (VAT) Revision Petition No.96 to 107/2012, S.B. Sales Tax (VAT) Revision Petition No.7 to 28/2011, S.B. Sales Tax (VAT) Revision Petition No.140 to 151 /2012

Levy of entertainment tax - Subscriber - Section 4AA of the Rajasthan Entertainment and Advertisement Act, 1957 - Applicability of the case of Purvi Communication [2005 (3) TMI 438 - SUPREME COURT OF INDIA] - Held that:- M/s Bhaskar Multinet (Private) Ltd. is also an MSO as its claim before the AO, DC(A) and so also the Tax Board has been that it is an MSO. The DC(A) so also the Tax Board in para 7 & 8 of the impugned order has reproduced the contention of M/s Bhaskar Multinet (Private) Ltd. where it has been categorically admitted that it is MSO - Therefore, once it is an admitted fact, then in the case of M/s Bhaskar Multinet (Private) Ltd. as well, the aforesaid judgments hold good. - Judgment of the Hon'ble Apex Cort in the case of Purvi Communication P. Ltd. (supra) has rightly been applied by the Tax Board in the case of M/s. Radiant Satellite Private Ltd. and by this Court in the case of M/s Sky Media (P) Ltd. (2015 (4) TMI 424 - RAJASTHAN HIGH COURT) and thus the judgment in the case of Purvi Communication P. Ltd. (supra), holds the field and I do not find any distinguishing features in between the facts in the instant cases viz-a-viz the facts in the case of Purvi Communication P. Ltd. (supra) - Decided in favour of Revenue.

2015 (5) TMI 883 - SUPREME COURT

Excise And Taxation Commissioner Chandigarh And Another Versus M/s. Bharat Construction Corporation

Dated: 16/04/2015

Civil Appeal No. 4016 of 2007

Validity of High Court's order - Order of refund when order already attained finality - Held that:- High Court should not have passed the order of refund as the assessment order passed by the assessing authority for the assessment year 1995-96 has attained finality. It is only when a rectification of application is considered and decided by the assessing authority then only the respondent would be entitled for refund of the tax paid. - Decided in favour of Revenue.

2015 (5) TMI 882 - BOMBAY HIGH COURT

Confederation of Real Estates Developers' Association of India – Maharashtra, Builders Association of India Rep By Its Trustee, Mr. D.L. Desai, M/s Prime Property Development Corporation Ltd., Shree Shridharkrupa Builders And Realtors Pvt Ltd Versus The State of Maharashtra Through Ministry of Finance, Commissioner of Sales Tax

Dated: 30/04/2015

Writ Petition No.4520 of 2014, Writ Petition No. 2557 of 2014, Writ Petition (Lodg) No.1148 of 2014, Writ Petition No.1258 of 2014

Valuation under VAT - deduction of consideration / profit of sale of land - works contracts inter alia of the nature of construction and buildings - Constitutional validity and propriety of notification dated January 29, 2014 - challenge to Rule 58, 58 (1A) and 58 (1B) and the trade circulars 7 T of 2014 and 12 T of 2014 Held that:- The first essential characteristic of MVAT is it is a tax on transfer of property in goods, secondly, uniformity of incidence is also a characteristic of the tax and thirdly the collection of tax. MVAT can be imposed on assessable value determined with reference to transfer of goods at the stage as referred to in the table. It is legislature's power to legislate in respect of the basis for determining the measure of tax. The computation being made strictly in accordance with the express provisions under the rules, there is no warrant for confining the value as sought to be submitted by the assessee. It is open for the legislature to adopt any basis for determining the value of a taxable article. The measure for assessing the levy need not correspond completely to the nature of levy, and no fault can be found with the measure so long as it bears nexus with the charge.

While MVAT is a levy on transfer of goods in a works contracts inter alia of the nature of construction and buildings, the stage of collection need not, in point of time coincide with transfer of goods. The MVAT is chargeable with reference to the value of goods being transferred in a works contract and the value is to be determined in express terms of the provisions. The Courts have always regarded and recognized that measure employed for assessing tax must not be confused with the nature of tax. There is clear distinction between subject matter of tax and the standard by which amount of tax is measured. The two elements are described as subject of tax and measure of tax. The levy of tax is defined by its nature and the measure of tax may be assessed by its own standard. A standard may be adopted as the measure of levy and may indicate nature of the tax but would not necessarily determine it.

Whether prescription under the provisions according to the contention is inadequate and may be falling short but its incorporation would not be bad or illegal or ultra vires the constitution. In the process, in some cases, if there is any over payment of tax, the provision makes allowance for its refund and would not tantamount to tax on land. Legislature does not intend to levy tax on matters other than as are intended under the enactment. Even in case of undervaluation, after determination, till such time overpayment would be towards the tax on goods so long as land value is not revalued and it would continue to tax on goods up to this time, its nature being MVAT over and in excess on taxable value. Only on redetermination, in a particular case if amount is to be refunded, it cannot be said to be bad for being tax on land.

Valuation of goods under Rule 58 of the MVAT Rules would let the proper authority to probe into transactions of land dealings by the developers, depending upon facts and circumstances of and evidence in particular case, as it would be open for the competent authority to make proper inquiry and seek details of the transactions and the price at which the property had been purchased. Investigation and inquiries incidental to valuation assessment and the recovery of tax are not precluded or prohibited under the scheme of the rules and there need not be any specific provision for the same, however, with a rider that said investigation or inquiry would not be necessary on vague and general grievances. - Decided against assessee.

2015 (5) TMI 839 - DELHI HIGH COURT


Dated: 15/05/2015

ST.APPL. 33/2009

Validity of Tribunal's order - Allowing of objection after lapse of 8 months - Where on the expiry of time specified in section 74(7) of the Delhi Value Added Tax Act, 2004 the Commissioner has not exercised either of the options set out in section 74(7)(a) or 74(7)(b), whether the objection pending before the Commissioner shall be deemed to be allowed - Held that:- Since the decision in M/s Behl Constructions (2009 (1) TMI 787 - DELHI HIGH COURT) has ultimately settled the law i.e. the objections cannot automatically deemed to have been allowed if they are not decided within 8 months, the matter is remitted to the first appellate authority/objection hearing authority who shall hear and decide the contentions of the parties after issuing due notice to the parties and granting due liberty in that regard - Decided in favour of Revenue.

2015 (5) TMI 838 - DELHI HIGH COURT


Dated: 14/05/2015

WP(C) No. 5231/2014 & CM 10405/2014

Validity of assessment notice issued - Bar of limitation - Section 34 - Held that:- Preconditions for invoking the extended period are that the Commissioner should record reasons to believe that the tax has not been paid and that the reason for non payment of tax should be concealment, omission or failure to disclose full material particulars on the part of the assessee. In the present case no such ‘reason to believe’ has been recorded - it would be a virtually impossible task for the appellate authority to first find and decipher the unknown and unrecorded ‘reasons to believe’ and thereupon decide whether the requisite conditions for invoking the proviso under section 34(1) of the said Act were actually satisfied or not. The issue or question raised would be answered on guess work or mere probabilities as to what the ‘reason to believe’ was. It is for these reasons that the Division Bench held that the “reasons to believe” must be disclosed clearly in the record prior to the issuance of the default assessment notice/order or in the said notice/order itself. - reasons for extending the time for completing the re-assessment proceedings were not the reasons indicated in the proviso to section 34(1) but other purported reasons of pendency of cases, election duty etc. etc. Those purported reasons did not permit the respondent to invoke the extended period of limitation given in the proviso to section 34(1) of the said Act. - Default assessment notice dated 09.07.2014 is time barred and is quashed. - Decided in favour of assessee.


M/s. K.G.F. Cottons (P) Ltd. Versus The Assistant Commissioner (CT) LTU, O/o The Dy. Commissioner (CT) ,

Dated: 04/03/2015

Writ Petition Nos.17972 of 2014 & Writ Petition Nos.17972, 22902, 22907, 28240 of 2008; 6503,6519, 7877, 7898, 7907, 18756, 18791 of 2009; 10710, 11596 of 2010; 17136, 17151, 21980, 22013, 22035, 22123 of 2012;

Levy of purchase tax u/s 4 - agriculture product processors i.e. (1) rice millers, or (2) dhal millers, or (3) soyabean oil millers, or (4) cotton millers - whether in the nature of levy on farmers - Held that:- Notwithstanding the goods being "taxable goods", there may be circumstances by reason of which the particular sale transaction does not attract tax under the Act. Section 4(4) provides for such a situation and makes the purchase of such goods taxable in the hands of the purchasing VAT dealer, on his purchase turnover, in any of the circumstances referred to clauses (i) to (iii). For instance, branch transfer or stock transfer of goods by a VAT dealer to his consignee/agent is not taxable under the Act. Such transactions attract the ingredients of clause (ii) of Section 4(4). Therefore the input of such goods are subjected to tax under Section 4(4) of the Act.

The tax levied under Section 4(4) is not on the sale of goods by a farmer/agriculturist, but on the VAT dealer who purchases goods (agricultural produce) from the farmer. The contention that a farmer or an agriculturist is being subjected to tax is not tenable, as tax is levied not on him but on the VAT dealer who purchases goods from him. It is not every purchase of taxable goods from an agriculturist/farmer, but only such goods which fall within the ambit of clauses (i) to (iii) of Section 4(4), and its proviso, which attracts levy of tax at the stage of its purchase. The contention that a farmer/agriculturist is indirectly being subjected to tax does not, therefore, merit acceptance.

When taxable goods are sold by a person, who is not a dealer under the Act, then VAT is not payable on the sale of such goods. Where a farmer grows raw cotton, paddy, raw dhal and soyabean seed in his land, and sells these agricultural produce to others, he is not liable to pay tax, on the sale of such goods, as he is not a dealer under Section 2(10) of the Act. Purchase of such agricultural produce by a VAT dealer is in circumstances in which no tax is payable by the seller. In such circumstances tax, at 4%/5% of the purchase price of such goods, is liable to be paid by the VAT dealer who purchases the aforesaid goods i.e., agricultural produce. This liability of a VAT dealer to pay purchase tax would, however, arise only if any one of the conditions, mentioned in clauses (i) to (iii) of Section 4(4), are satisfied.

If the allegations in the show-cause notice, accepted as true, show that the dealer had committed wilful evasion of tax, and the findings recorded in the assessment order establish that the assessee had wilfully evaded tax, it would suffice to extend the period of limitation in terms of Section 21(5) of the Act notwithstanding that the show-cause notice does not explicitly refer to Section 21(5) and does not specifically use the words wilful evasion of tax.

Purchase tax is levied on goods which are used as inputs for other goods which are exempt from tax, or for goods which have been transferred on consignment or to branches of the VAT dealer outside the State otherwise than by way of sale. While the provisions of the Act must, in view of Article 286(3) of the Constitution of India, be complaint with Sections 14 and 15 of the CST Act, it is not clear as to how denial of input-tax credit, or computation of input-tax credit in accordance with Rule 20 of the Rules, in the present cases is contrary to the mandate of Sections 14 and 15 of the CST Act. - In any event the question, whether computation of input-tax credit in terms of Rule 20 is in violation of Sections 14 and 15 of the CST Act, must be answered on the facts and circumstances of each case. It is for the assessee to satisfy the assessing authority that computation of the eligible input-tax credit, in terms of Rule 20, is in violation of Sections 14 and 15 of the CST Act. - Matter remanded back - Decided in favour of assessee.

2015 (5) TMI 632 - MADRAS HIGH COURT

M/s. Mehta Cad Cam Systems Pvt. Ltd. Versus The Deputy Commercial Tax Officer

Dated: 09/10/2014

W. P. No. 6495 of 2013

Detention of goods - first respondent erroneously treated the transfer as inter state sale without even conducting any enquiry or appreciating the contents of the documents produced to substantiate their claim - Levy of compounding fees - Held that:- Court is of the view that the petitioner cannot be left without any remedy, as the petitioner states that the goods are not liable for detention or for levy of any compounding fee. The petitioner would state that there are sufficient documents to show that the transaction is not in violation of the provisions of the TNVAT Act, more particularly, when the consignor and the consignee have furnished the TIN numbers and the goods were also accompanied by proper records. - Court is of the view that the petitioner should be granted an opportunity to contest the matter on merits. However, in order to safeguard the interest of the Revenue, the petitioner should be directed to remit the tax demanded. - writ petition is disposed of by directing the petitioner to pay the tax of ₹ 75,222/- within a period of three weeks from the date of receipt of a copy of this order and on such payment, the respondents are directed to release the goods. Insofar as levy of compounding fee is concerned, it is open to the petitioner to file revision under Section 54 of the Act within a period of three weeks after the goods are released - Decided conditionally in favour of assessee.

2015 (5) TMI 596 - KERALA HIGH COURT


Dated: 10/10/2014

WP(C).No. 25406 of 2014 (A)

Waiver of pre deposit - According to the petitioner, in respect of assessment years 2006-07, 2007-08 and 2008-09 petitioner's appeals are still pending wherein they have already remitted 30% of the demand to obtain stay of further proceedings - Held that:- some leniency can be shown to the petitioner, especially since the petitioner's security is already available with the department in regard to the conditional orders passed in the previous years appeals. Hence Ext.P10 shall stand modified, directing the petitioner to pay ₹ 4,00,000/- and to furnish security for the balance amount within a period of three weeks from the date of receipt of a copy of this judgment. - Decided partially in favour of assessee.


State of Karnataka Versus M/s. Toshiba Embedded Software (India) Pvt. Ltd. (Successor of M/s. Socrates Software India Pvt Ltd)

Dated: 09/10/2014

STRP No. 295/2013

Denial of exemption claim - contravention or non-observance or non-compliance to the notifications - Held that:- The assessee purchased furniture from the seller who is a dealer in furniture. The exemption notification relied upon is in respect of sale of raw materials, component parts and packing materials by the registered dealer to 100% Export Oriented Units. It has no application to the sale or purchase of furniture. The seller acting on the said notification which has no application, had granted exemption of tax to the assessee. He is at fault and primary liability to pay tax is on the seller only. If the case falls under Section 8-A(5)(a) of the Act, the liability could be foisted on the purchaser-assessee. In the instant case, as the notification on which, reliance was placed is not applicable to the furniture, the assessee has not contravened any restrictions or conditions stipulated in the said notification. Because the said notification is not applicable at all. Therefore, the Tribunal was justified in holding that the tax is to be collected by the seller but action to be taken against the assessee for producing the certificate and a notification which has no application insofar as furniture is concerned. Since Section 8-A(5)(a) of the Act is not attracted to the facts of the present case, no liability could be foisted on the assessee. - Decided against Revenue.

2015 (5) TMI 563 - DELHI HIGH COURT

M/s. Shubham Marketing, Bharat Ram Raj Kumar & Co. Versus Commissioner Value Added Tax

Dated: 14/10/2014

W.P.(C) 2214/2013 & CM Nos. 4220/2013, 5669/2013, W.P.(C) 2919/2013 & CM No.5497/2013

Penalty in form DVAT-24A issued under Section 33 of the Delhi Value Added Tax Act, 2004 - non-filing of stock statement online in form Stock-I - whether the respondent-commissioner has the power or jurisdiction to impose fine as a punishment under the provisions of Section 70(5) of the said Act through his delegate or such power to impose fine vests with the courts of criminal jurisdiction - Held that:- A bare reading of Section 3(38) of the General Clauses Act,1897, reveals that the expression “punishable with fine” stated under section 70(5) of the said Act indicates that section 70(5) of the said Act deals with “offence” as defined under the General Clauses Act, 1897.

It is clear that the fine imposed under section 70(5) of the said act is for an “offence” as defined under Section 3(38) of the General Clauses Act, 1897 which shall be tried by the court of criminal jurisdiction in accordance with section 26(b) of the Code of Criminal Procedure, 1973. The commissioner or its delegates do not have power or jurisdiction to impose such fine. Thus, the impugned notices are liable to be quashed on the ground of jurisdiction alone. - Decided in favour of assessee.

2015 (5) TMI 562 - MADRAS HIGH COURT

M/s. Anthony Garments Private Ltd. Versus The Commercial Tax Officer

Dated: 13/10/2014

W. P. No. 27115 of 2014

Denial of refund claim - Input tax - Held that:- Additional Government Pleader has fairly submitted that the respondent may be directed to dispose of the representation dated 08.09.2014, submitted by the petitioner, by granting reasonable time limit - petitioner has come out with the limited prayer of mandamus to the respondent, without adverting into the merits of the case, the respondent herein is directed to consider the representation of the petitioner dated 08.09.2014 and dispose of the same on merits and in accordance with law within a period of three weeks from the date of receipt of a copy of this order - Petition disposed of.

2015 (5) TMI 532 - KERALA HIGH COURT

Rajasekhara Kurup S/o. Ramakrishna Kurup, Sivasailam Versus The Commissioner of Commercial Taxes

Dated: 14/10/2014

WP (C). No. 21990 of 2014 (W)

Extension of interim stay - Finalization of proceedings - Held that:- petitioner submits that the condition imposed as per Ext.P17 was not satisfied , earnestly under the belief that the proceedings will be finalised without any delay and that the petitioner was expecting favourable orders from the revisional authority/third respondent. It is also pointed out that the petitioner is ready and willing to satisfy the said condition, for which short time is sought for. - Government Pleader points out that if the petitioner proves his bonafides by effecting deposit within 'ten days', the matter can be considered and disposed of accordingly - it is fit and proper to grant one more chance to the petitioner to satisfy the condition imposed vide Ext.P17. The petitioner shall continue to enjoy the benefit of interim stay, if the petitioner complies with the condition, within 'ten' days - Decided conditionally in favour of assessee.

2015 (5) TMI 531 - MADRAS HIGH COURT

M/s. Sunder Electronics Versus The Commercial Tax Officer

Dated: 14/10/2014

W. P. No. 19616 of 2011

Rejection of the petitioner's return filed as being incorrect and incomplete - Held that:- It is seen that the writ petition was entertained by this Court, since the challenge to the validity of Section 19(2) of the Act was pending at the relevant point of time. It is not disputed by the petitioner that the validity of the said enactment was upheld by the Hon'ble Division Bench of this Court by order dated 17.07.2013. Therefore, the petitioner cannot maintain this writ petition against the impugned proceedings, which is only a show cause notice, since the statutory provision has been upheld to be a valid piece of legislation. Therefore, only remedy left to the petitioner is to submit its reply to the impugned proceedings. - Decided against assessee.

2015 (5) TMI 530 - MADRAS HIGH COURT

M/s. Pankaj Impex (India) Versus The Commercial Tax Officer

Dated: 14/10/2014

W. P. Nos. 22001 to 22004 of 2011

Stock transfer to Calcutta - Levy of tax on DEPB licences in Calcutta - Held that:- On perusal of the impugned order, it is seen that the Assessing Officer is solely guided by the proposal given by the Enforcement Wing Officers and there is no independent application of mind by the Assessing Officer, while assessing the petitioner's returns. Hence, the impugned proceedings are held to be bad in law. Furthermore, the contention that no penalty is leviable, was specifically raised by the petitioner, since the assessments were completed by taking materials from the books of account produced by the petitioner. In such circumstances, the question of levy of penalty does not arise and the fundamental aspect has also been ignored by the Assessing Officer. Therefore, the petitioner is entitled to succeed. - Decided in favour of assessee.

2015 (5) TMI 497 - KERALA HIGH COURT

Power India Electricals Versus Commercial Tax Officer (Works Contracts) , Cochin

Dated: 15/10/2014

W.P. (C) NO. 26838 OF 2014 (D)

Waiver of pre deposit - Held that:- petitioner was served with proper notice and objection submitted by him was duly considered and it was thereafter, that the proceedings were finalized by the assessing authority vide Ext.P4. In spite of giving an opportunity to produce the relevant records, the petitioner/assessee did not file any profit and loss and the Balance Sheet involving the correct turnover for the year 2009-2010. It was accordingly, that 50% addition was made to the reported turnover and the proceedings were finalized. The proceedings filed before the appellate authority were considered by the said authority. The objection raised from the part of the petitioner was also discussed and it was thereafter that, Ext.P7 order was passed also referring to the merits of the case as given in the concluding paragraph, just above the order portion. - Court does not find any reason to call for interference as the appellate authority has exercised the discretion in a proper manner. Interference is declined and the writ petition is dismissed. Since the time limit fixed is already over, the petitioner is granted a further time of 'three weeks' to comply with the condition imposed so as to avail the benefit of interim stay. - Petition disposed of.

2015 (5) TMI 496 - MADRAS HIGH COURT

M/s. Elgi Equipments Ltd. Versus The Deputy Commissioner (CT)

Dated: 15/10/2014

W.P.Nos.10446 to 10451 of 2014

Denial of concessional rate of tax - Assessing Officer, while granting the concessional rate of tax to Air Compressors being capital goods, denied the same in respect of the sale effected by the petitioner through its distributors - Held that:- just because of having sold by the manufacturers of machinery and its spares, components and accessories to their buyers being the dealers in such lines for further distribution to the industry, would not alter the legal position and subject these goods for levy at the higher rate of 14.5%. In respect of the identical products as manufactured by the petitioner, namely, Industrial Air Compressors, an application was filed by M/s.Schumak Equipments India Pvt. Ltd., who are manufacturers of Industrial Air Compressors and they sought for clarification as regards the rate of tax for industrial air compressors.

Advanced Ruling Authority, by order dated 24.06.2014, clarified that Industrial Air Compressors are liable to tax @ 5% as capital goods within the meaning and scope of Entry 25 of Part-B of First Schedule r/w Section 2(11) of the TNVAT Act, 2006. In the light of the subsequent development, this Court is of the view that the Assessing Officer should take note of the clarification issued by the Advanced Ruling Authority. So far as the rate of tax is concerned, the order of the Advanced Ruling Authority dated 24.06.2014 would be prima facie applicable - Decided in favour of assessee.

2015 (5) TMI 495 - MADRAS HIGH COURT

VTX Industries Limited Versus The Assistant Commissioner (CT)

Dated: 14/10/2014

W. P. Nos. 27221 and 27222 of 2014, M. P. Nos. 1 and 1 of 2014

Validity of assessment order - petitioner's Form-S Certificates were not considered by the authority, prior to passing the final order in respect of both assessment years while issuing notices - Held that:- Admittedly, in the reply given by the petitioner, he has specifically taken a stand that Contractor has paid the tax due on the contract receipts and reported to the Sales Tax Department through the monthly sales tax returns filed at the Trichy Road Circle, Coimbatore and copies of the monthly returns and Tax receipts were enclosed along with the reply on 21.01.2014. Further, it was stated that the balance amount relates to the purchase of materials for the constructions of buildings, the question of deduction of tax at source does not arise. The petitioner produced a copy of the ledger account and purchase bills along with the reply to the show cause notice. If the respondent had afforded an opportunity of personal hearing to the petitioner, this could have been sorted out then and there and it would have complied with principles of natural justice as well the statutory requirement.

In the light of the decision SRC Projects Private Limited vs. Commissioner of Commercial Taxes, Chennai and another, reported in [2008 (9) TMI 914 - MADRAS HIGH COURT], it is necessary for the respondent to afford an opportunity of personal hearing, more particularly, when the petitioner was in possession of Form-S and has specifically stated that the Contractor has paid tax. Further, it is to be noted that the Principal Secretary / Commissioner of Commercial Taxes, Chennai, by circular No.7/2014, dated 03.02.2014, has issued guidelines and circular instructions to be followed while passing orders of assessment or revision of assessment, etc. Clause 3(a)(iii) of the said circular would be relevant for the purpose of this case - impugned proceedings are held to be bad in law - Matter remanded back - Decided in favour of assessee.

2015 (5) TMI 462 - DELHI HIGH COURT

MRF Limited Versus Commissioner of Trade And Taxes

Dated: 14/05/2015

ST.APPL.1/2015, ST.APPL.2/2015

Valuation - Deduction on account of “turnover discount” - Classification of movement of goods against 'F' from - interstate sale or not - Whether the VAT Tribunal fell into error in holding that the discounts on sales which are subject matter of the present appeals, were not deductible - Whether the VAT Tribunal fell into error in holding that the said sales were not inter-state sales within the meaning of expression under Section 3(a) of the Central Sales Tax Act, 1956 - Held that:- In computing the turnover, the sales price received, or receivable, by the dealer is to be reduced to the extent of the “cash discount” accorded by him to the purchasers under the normal prevailing trade practices. Unlike some other statutes governing the Sales Tax (e.g. Kerala General Sales Tax Act 1963, to which we shall make a reference a little later), Delhi Sales Tax Act does not specifically refer to any discount other than “cash discount”. - Clearly, the approach of the Tribunal in the case at hand has been misdirected. The facts here are dissimilar to those prevailing in Indian Pistons Limited (1973 (7) TMI 95 - MADRAS HIGH COURT). That the provision contained in Section 2(m) of Delhi Sales Tax Act does not conceive of any deduction other than “cash discount” from the sale price on which the turnover is to be computed is of no consequence, inasmuch as, as explained by Supreme Court in Advani Oerlikon (1979 (10) TMI 194 - SUPREME COURT), the effect of turnover discount, which is in the nature of a trade discount in accord with the prevailing practices of the trade, enters the calculation anterior to the computation of the sale price collected or collectible from the purchasers.

Tribunal having failed to comprehend the law laid down in Advani Oerlikon (supra), fell into error, because it proceeded on the wrong premise that the assessee had been in receipt of the sale price equivalent to the catalogue price from which it would subsequently allow reimbursement on the basis of turnover. Since the said assumption is factually incorrect and the turnover discount occurred “apart from and outside” the calculation of the sale price, rather “prior to it”, as in the case of Advani Oerlikon (supra), no question arises for deduction of any trade discount from the sale price. - turnover for the assessment years in question was correctly computed by the appellant herein after deducting the turnover discount granted to its dealers and rightly so declared in the returns. The assessing authorities have unjustly denied the benefit of deduction on such account.

On inter-State sale:- assessee (appellant) herein itself did not treat the transactions in question in its record as inter-State sales. The provision contained in Section 6A(1) of the Central Sales Tax Act, 1956 places the burden of proving a transfer of goods claimed to have been effected “otherwise than by way of sale” upon the dealer. The clause stipulates that if a dealer claims that he is not liable to pay tax in respect of any goods on the ground that the movement thereof “from one State to another” was occasioned by reason of their transfer by him “to any other place of his business or to his agent or principal, as the case may be” not by reason of sale, he is obliged to submit a declaration to such effect in the prescribed format along with evidence, inter alia, of dispatch of such goods. In terms of the provision, a presumption arises that the movement of goods was “as a result of sale” in the event of the failure on the part of the dealer to furnish such declaration. The format for declaration in terms of Section 6A is prescribed by Rule 12(5) of the Central Sales Tax (Registration and Turnover) Rules, 1957 in the shape of “form F”.

Assessee itself treated the movement of goods from Faridabad to Delhi “otherwise than by way of sale” within the meaning of the clause contained in Section 6A of the Central Sales Tax Act and not only reflected it so in its stock registers but also, more importantly, made a formal declaration to such effect by issuing “form F”. No documents showing placement of orders by M/s Tyre Junction, Badarpur, Delhi for purchase of such goods have been shown the light of day and, therefore, there is nothing on which it can be inferred that the movement of goods from Haryana to Delhi had been occasioned by the sale of such goods in favour of M/s Tyre Junction. - The claim of the assessee about the inter-State sale of the goods, thus, remained unfounded and was rightly rejected by the authorities below including the Tribunal. We may add that if a different view has been taken by the assessing authorities in the State of Haryana or if any tax on such account has been collected from the appellant, it is for him to seek appropriate remedies there against such orders. - Decided partly in favour of assessee.

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