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1989 (11) TMI 310
Issues Involved:
1. Jurisdiction to Levy Octroi Tax
2. Declaration Requirement under Rule 9
3. Current Account Facilities under Section 133 and Rule 13
4. Refund of Octroi Duty
Summary:
1. Jurisdiction to Levy Octroi Tax:
The primary issue was whether the Municipal Council had jurisdiction to levy octroi tax on goods brought within the municipal limits but not sold, consumed, or used therein and subsequently exported outside the said limits. The respondent No. 2 (Indian Oil Corporation) argued that the diesel brought within the Jodhpur Municipality was ultimately exported and sold to respondent No. 1 at Dangiawas for use, consumption, or sale outside the municipal limits. The High Court, referring to Section 104 of the Rajasthan Municipalities Act, 1959, held that octroi duty is chargeable only on goods brought within the municipality for consumption, use, or sale therein. The Court relied on the decisions in Burmah Shell Oil Storage & Distributing Co. India Ltd. v. The Belgaum Borough Municipality and Hiralal Thakorlal Dalal v. Broach Municipality & Ors., concluding that octroi cannot be levied on goods meant for use or consumption outside the municipal limits.
2. Declaration Requirement under Rule 9:
The appellant argued that no declaration as required by Rule 9 of the Rajasthan Municipal Octroi Rules, 1962 was made by the respondent No. 2, and hence, the goods should be treated as brought within the municipal limits for consumption, use, or sale therein. However, the High Court found that Rule 13, which provides for current account facilities, overrides the requirements of Rule 9. The Court held that Rule 13 is a special provision applicable to persons with current account facilities under Section 133 of the Act, and thus, the declaration under Rule 9 was not necessary.
3. Current Account Facilities under Section 133 and Rule 13:
The respondent No. 2 was provided current account facilities under Section 133 of the Act and Rule 13 of the Rules. The High Court held that under Rule 13, the octroi duty is calculated based on the total amount of goods brought in minus the goods transported outside the municipal limits. The Court found that the Indian Oil Corporation had been granted current account facilities, and therefore, the octroi duty should be charged accordingly. The High Court concluded that the Municipal Council had no jurisdiction to levy octroi on goods re-exported by the Indian Oil Corporation to retail outlets for use and consumption outside the municipal limits.
4. Refund of Octroi Duty:
The respondent No. 1 sought a refund of the octroi duty paid on the diesel exported to Dangiawas. The High Court held that there was no privity of obligation between respondent No. 1 and the Municipal Council, as the octroi was charged from respondent No. 2. However, the High Court noted an undertaking given by the appellant to refund the octroi charged on goods re-exported outside the municipal limits if the writ petitions were allowed. The Court directed that the Municipal Council refund the amount of octroi duty paid on petroleum products re-exported by the Indian Oil Corporation to Dangiawas outlet for supply to respondent No. 1, who could recover the same from the Indian Oil Corporation.
Conclusion:
The Supreme Court upheld the High Court's judgment, affirming that the Municipal Council had no jurisdiction to levy octroi on goods meant for use or consumption outside the municipal limits and that the current account facilities under Section 133 and Rule 13 exempted the need for declarations under Rule 9. The Court also upheld the direction for the refund of octroi duty. The appeals were dismissed with no orders as to costs.
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1989 (11) TMI 309
Issues Involved:
1. Liability to pay minimum guaranteed charges despite disconnection.
2. Validity and reasonableness of the agreement stipulating minimum guaranteed charges.
3. Power of the Board to enter into the agreement and enforce minimum guaranteed charges.
Summary:
1. Liability to Pay Minimum Guaranteed Charges Despite Disconnection:
The primary issue was whether the firm was liable to pay minimum guaranteed charges even after the electricity supply was disconnected on September 28, 1981. The High Court quashed the bills and certificate proceedings, holding that the Board could not claim charges post-disconnection. However, the Supreme Court found that under clause 9(b) of the agreement, the disconnection did not terminate the agreement immediately. The agreement was deemed to have continued until May 1, 1983, and thus, the firm was liable to pay the minimum guaranteed charges until that date.
2. Validity and Reasonableness of the Agreement Stipulating Minimum Guaranteed Charges:
The agreement included a clause requiring the consumer to pay minimum guaranteed charges irrespective of actual energy consumption. The Supreme Court upheld this clause, referencing historical and legal precedents that supported the reasonableness of such stipulations. The Court noted that these charges were intended to cover the Board's overhead installation expenses, which do not vary with the quantity of electricity consumed. The Court concluded that the stipulation was not "nudum pactum" and was reasonable and valid.
3. Power of the Board to Enter into the Agreement and Enforce Minimum Guaranteed Charges:
The Supreme Court examined the statutory framework, including the Indian Electricity Act, 1910, and the Electricity (Supply) Act, 1948. It found that the Board had the authority to enter into agreements for the supply of electricity and to stipulate terms, including minimum guaranteed charges. The Court held that such agreements were envisaged by the relevant provisions of law and were binding on both parties.
Conclusion:
The Supreme Court set aside the High Court's judgment, holding that the agreement was reasonable and valid, and the firm was liable to pay the minimum guaranteed charges until the agreement was deemed terminated on May 1, 1983. The appeal was allowed with no order as to costs.
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1989 (11) TMI 308
Issues Involved:
1. Jurisdiction of Civil Court vs. Controller under the Haryana Urban (Control of Rent & Eviction) Act.
2. Nullity of the Decree.
3. Applicability of Res Judicata.
4. Delay in Filing Leave Application.
Issue 1: Jurisdiction of Civil Court vs. Controller under the Haryana Urban (Control of Rent & Eviction) Act
The main contention was whether the Civil Court had inherent jurisdiction to entertain the suit for ejectment of the appellant-tenant, or if the decree was a nullity due to the exclusive jurisdiction of the Controller under the Haryana Urban (Control of Rent & Eviction) Act. The Supreme Court held that the Act provides exclusive jurisdiction to the Controller for eviction matters, and by necessary implication, the jurisdiction of the Civil Court is excluded. The Court stated, "By necessary implication the jurisdiction of the Civil Court under Section 9 of C.P.C. is excluded."
Issue 2: Nullity of the Decree
The appellant argued that the decree passed by the Civil Court was a nullity and could be challenged at any stage, including execution. The Supreme Court agreed, citing precedents such as Kiran Singh & Ors. v. Chaman Paswan & Ors., which held that "a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings."
Issue 3: Applicability of Res Judicata
The respondent contended that the decree had become final and operated as res judicata. However, the Supreme Court clarified that a decree passed without jurisdiction does not operate as res judicata. The Court explained, "A question relating to the jurisdiction of a Court cannot be deemed to have been finally determined by an erroneous decision of the Court... the doctrine of res judicata does not apply to a case of decree of nullity."
Issue 4: Delay in Filing Leave Application
The respondent argued that the leave application was barred by limitation. The Supreme Court found no delay in filing the leave application, noting, "The leave application was filed within the limitation from the date of original order of dismissal of the revision or on a later date dismissing the review application."
Conclusion
The Supreme Court concluded that the Civil Court lacked inherent jurisdiction to pass the decree of ejectment, rendering the decree a nullity. The decree did not operate as res judicata, and the appellant could challenge it at the execution stage. The appeal was allowed, and the parties were directed to bear their own costs. The Court stated, "The appeal is accordingly allowed. But in the circumstances parties are directed to bear their own costs."
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1989 (11) TMI 307
Issues Involved:
1. Applicability of Section 23(2) of the Land Acquisition Act, 1984 for higher solatium.
2. Applicability of Section 23(1A) for additional compensation.
Summary:
Issue 1: Applicability of Section 23(2) for Higher Solatium
The primary question was whether Section 23(2) of the Land Acquisition Act, 1984, providing for higher solatium, applies to awards made after 24 September 1984, even if the acquisition proceedings commenced before that date. The Court noted that Section 23(2) has limited retrospectivity through transitional provisions u/s 30(2). The Court referenced previous judgments, including Kamalajammaniavaru v. Special Land Acquisition Officer and Union of India v. Raghubir Singh, which clarified that higher solatium applies only to awards made between 30 April 1982 and 24 September 1984. However, the Court found that excluding cases like the present one from the benefit of higher solatium would lead to anomalies and potential constitutional issues under Article 14. Therefore, the Court held that the benefit of higher solatium should also be available to the present case, affirming the High Court's decision to grant 30% solatium.
Issue 2: Applicability of Section 23(1A) for Additional Compensation
The second issue was whether the claimant is entitled to additional compensation u/s 23(1A). Section 23(1A) mandates an additional amount at 12% per annum on the market value of the land from the date of notification u/s 4(1) to the date of the award or possession. The Court examined the transitional provisions u/s 30(1)(a) and (b), which apply Section 23(1A) to acquisition proceedings pending as of 30 April 1982 or commenced after that date. Since the acquisition in this case commenced on 26 October 1967 and the award was made on 5 March 1969, the proceedings were not pending before the Collector as of 30 April 1982. Therefore, Section 30(1)(a) and (b) did not apply, and the claimant was not entitled to additional compensation u/s 23(1A).
Conclusion:
The appeal was allowed in part. The judgment of the High Court was modified to delete the compensation awarded u/s 23(1A), while the rest of the judgment and decree were kept undisturbed. No order as to costs was made.
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1989 (11) TMI 306
whether the Bank was negligent in opening the account in the name of Sethurarman, as proprietor, Industrial Chain Concern?
Held that:- In the instant case there was no question of a reference inasmuch as the Manager himself knew Sethuraman and gave the introduction. The account was not opened by depositing any cheque but by depositing case of ₹ 100. The first cheque was paid into the account later and there is nothing to show that it formed part of the same transaction. No particulars have been proved as to the tenor of that cheque. The Manager made several inquiries which in the facts and circumstances of the case, in our view, were sufficient, for it is an accepted rule that the banker may refrain from "making inquiries which it is improbable will lead to detection of the potential customer's purpose if he is dishonest and which are calculated to offend him and may drive away his customer if he is honest.
Sethuraman was believed when he said that he was the proprietor of Industrial Chain Concern which he recently started. He showed some orders and references in proof of his business. The banker believed in existence of his business but did not meticulously examine the addresses. Sethuraman was asked as to why he wanted to come to that branch and his reply was that he expected there to have overdraft facility and when that was refused he expressed that after his business improved he would expect to be granted overdraft facilities after one year. There is no doubt that Sethuraman was a rogue, but he prepared the plan intelligently and the banker in good faith believed in his statements. We, therefore, find it difficult to hold that the Bank was negligent in opening the account accepting the deposit of cash by a person known to the Manager of the Bank under the above circumstances. Appeal allowed.
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1989 (11) TMI 305
Issues: Assessment under Kerala General Sales Tax Act, 1963 for the years 1981-82 and 1982-83, non-liability for tax under section 5A, opportunity to produce purchase bills, rejection of claim for non-liability, rectification of assessment orders under section 43, maintainability of appeals against modified orders of assessment, compliance with appellate orders, jurisdiction of appellate authority, challenge to revised assessment orders, quashing of assessment orders, opportunity for reassessment.
Analysis:
The judgment concerns assessment under the Kerala General Sales Tax Act, 1963 for the years 1981-82 and 1982-83. The petitioner had filed appeals against the original assessment, seeking non-liability for tax under section 5A for certain purchases. The Appellate Assistant Commissioner allowed the appeals in part and directed the assessing authority to amend the assessment based on the observations in the appellate order, specifically paragraph 12 of exhibit PI. The Appellate Assistant Commissioner noted that exemption for single point goods purchased with bills would be allowed if proved. However, the assessing authority amended the orders without giving the petitioner an opportunity to produce evidence to support the claim for non-liability, resulting in the rejection of the claim.
The petitioner sought rectification of the assessment orders under section 43 of the Act, believing that the orders were passed mistakenly without notice or opportunity to produce evidence. The petition for rectification was rejected, and subsequent appeals against the revised assessment orders were also dismissed by the Appellate Assistant Commissioner on the grounds of maintainability. The petitioner challenged the revised assessment orders and the dismissal of the appeals.
The High Court analyzed the provisions of the Act regarding appeals against assessment orders. Section 34 allows for an appeal against any order of assessment, without limitation on challenging revised or modified orders. The appellate authority can examine compliance with earlier orders and directions in the revised assessment. Failure to afford opportunities as directed in the appellate order can vitiate the revised assessment, allowing the assessee to challenge it in appeal.
In this case, the petitioner challenged the revised assessment orders for non-compliance with the directions and benefits conferred by the appellate order, exhibit PI. The High Court held that the failure to provide the opportunity to prove the claim for exemption as directed in paragraph 12 of exhibit PI was sufficient to challenge the revised assessment orders in appeal. The Appellate Assistant Commissioner's rejection of the appeals as not maintainable was deemed contrary to the provisions of the Act and an abdication of jurisdiction.
Consequently, the High Court quashed the revised assessment orders for the years 1981-82 and 1982-83, as well as the order dismissing the appeals. The assessing authority was directed to provide the petitioner with an opportunity to prove the claim for non-liability of single point goods as directed in exhibit PI and complete the reassessment within three months from the date of the judgment.
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1989 (11) TMI 304
Issues:
Validity of composition order and refund of amount collected.
Analysis:
The petitioner, a dealer, issued a cash bill and way-bill for 50 drums of ground-nut oil to be transported to a buyer. However, upon inspection, it was found that the lorry contained 40 empty drums, leading to the imposition of tax by the Check-post Officer. Subsequently, a composition order was passed based on the dealer's admission of irregularities in issuing spurious sale bills. In the assessment proceedings, the disputed turnover was initially included but later deleted after appeal. The petitioner challenged the composition order, arguing that since no tax was leviable, no penalty or composition should have been imposed. The court noted that the composition amount was collected due to the issuance of spurious bills, not for tax evasion, and upheld the composition order despite the subsequent assessment deleting the turnover.
In a separate argument, the petitioner contended that the composition should fall under clause (b) of section 32, limiting the composition amount to Rs. 1,000. The court agreed that the offense of issuing spurious bills did not involve tax evasion, placing it under clause (b) rather than clause (a) which pertains to tax-related offenses. Therefore, the composition amount should not exceed Rs. 1,000 as per the relevant provision. Consequently, the court allowed the writ petition in part, directing the state to refund the excess amount collected as composition, retaining only Rs. 1,000. No costs were awarded in the matter.
Overall, the judgment clarified the distinction between tax-related offenses and other offenses under the Andhra Pradesh General Sales Tax Act, determining the appropriate composition amount based on the nature of the offense committed by the dealer.
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1989 (11) TMI 303
Issues:
Whether the sale price of returned goods can be included in the taxable turnover of a dealer under the Central Sales Tax Act.
Analysis:
The case involved a dealer, M/s. Parmali Wallace Ltd., dealing in the manufacture of wooden parts of electrical machines. The dealer had a provision where goods not conforming to purchaser specifications could be returned. The dispute arose when the dealer claimed that the value of returned goods, amounting to Rs. 21,699, should not be included in its turnover. The assessing authority, first appellate court, and second appellate court rejected the dealer's contention, stating that the sales were deemed complete as the goods were not returned within the stipulated period. The dealer argued that the goods were returned after a year without prior intimation, and thus, it should not be liable for the turnover inclusion.
The definition of "sale" under section 2(g) of the Central Sales Tax Act was considered, which includes any transfer of property in goods for valuable consideration. The court noted that the agreement for return of goods if not conforming to specifications did not exclude the transactions from the ambit of a sale. However, the crucial issue was whether the dealer could deduct the value of returned goods from the turnover. Section 8A of the Act allows deductions for goods returned within specified periods, which was not the case here. As the goods were returned after a year and without proper intimation, the court held that the dealer was not entitled to deduct Rs. 21,699 from its taxable turnover.
In conclusion, the court ruled in favor of the Revenue, stating that the sale price of returned goods could be included in the dealer's taxable turnover. The reference was answered in the affirmative, against the applicant-dealer. No costs were awarded in the judgment.
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1989 (11) TMI 302
Issues involved: Interpretation of section 8(3)(b) of the Central Sales Tax Act, 1956 regarding the supply of "C" forms to a registered dealer engaged in executing works contracts using materials purchased from out-State registered dealers.
Summary:
The petitioner, a registered dealer in Andhra Pradesh involved in works contracts, faced refusal of "C" forms by authorities citing the non-amendment of section 8(3)(b) of the Central Sales Tax Act, 1956. The petitioner contended that as per the certificate of registration, the goods purchased were intended for resale, making him eligible for "C" forms. The Court noted that post the Forty-sixth Amendment to the Constitution, goods used in works contracts are deemed to be sold. The Court emphasized that the correctness of "C" forms usage is not relevant at the supply stage, focusing solely on the issuance to the petitioner by tax authorities.
The Court, in its judgment, allowed the writ petition, directing the authorities to provide the necessary "C" forms to the petitioner in accordance with the Rules upon application. No costs were awarded, and an advocate's fee of Rs. 150 was specified.
Separate Judgment:
None.
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1989 (11) TMI 301
Issues Involved
1. Levy of purchase tax on dry fish under Section 6 of the Karnataka Sales Tax Act.
2. Clarification and circulars issued by the Commissioner of Commercial Taxes.
3. Interpretation of entry 6-A of the Fifth Schedule under Section 8 of the Act.
4. Validity of the proposition notice issued under Section 12-A of the Act.
Detailed Analysis
1. Levy of Purchase Tax on Dry Fish under Section 6 of the Karnataka Sales Tax Act
The petitioners, engaged in the manufacture and sale of poultry feed, purchased dry fish from both registered and unregistered dealers. The assessing authority initially exempted the purchase turnover of dry fish from purchase tax under Section 6, citing that fish is exempt under Section 8 of the Act. However, a subsequent notice issued by the Assistant Commissioner of Commercial Taxes proposed to levy purchase tax on the dry fish turnover, based on the Commissioner's clarification that dry fish used in poultry feed is taxable. The court held that the purchase tax under Section 6 is applicable only to taxable goods, and since fish is exempt under Section 8, the proposal to levy purchase tax on dry fish was deemed illegal and without authority of law.
2. Clarification and Circulars Issued by the Commissioner of Commercial Taxes
The Commissioner issued two circulars stating that only edible fish is exempt from tax, and non-edible dry fish used in poultry feed is taxable under Section 5(1). The court examined whether these clarifications were consistent with the legislative intent of exempting "fish" from tax under the Act. It was determined that the Commissioner's circulars, which attempted to classify fish into edible and non-edible for tax purposes, were beyond his authority. The power to exempt goods from tax lies solely with the legislature, and the Commissioner cannot alter the statutory meaning of "fish" as provided in the Fifth Schedule.
3. Interpretation of Entry 6-A of the Fifth Schedule under Section 8 of the Act
Entry 6-A of the Fifth Schedule exempts "fish (excluding shrimps, prawns, and lobsters) except when sold in sealed containers" from tax. The court emphasized that the term "fish" should be interpreted in its plain and general sense, inclusive of all types of fish, whether fresh or dry, edible or non-edible. The legislature did not intend to make distinctions within the category of fish for tax purposes. Therefore, any attempt to classify fish based on its use or edibility for tax purposes would amount to unauthorized legislation, which is the exclusive domain of the legislature.
4. Validity of the Proposition Notice Issued under Section 12-A of the Act
The proposition notice issued under Section 12-A was based on the Commissioner's circulars, which were found to be without competence. The court held that the assessing authority's initial decision to exempt the purchase turnover of dry fish was correct, as it aligned with Section 8 of the Act. The reasons given in the proposition notice for levying purchase tax were invalid, and the notice was quashed. The court reiterated that the exemption under Section 8 should be applied as stated, without additional classifications or interpretations by the Commissioner.
Conclusion
The court allowed the writ petitions, quashing the proposition notices issued under Section 12-A and declaring the Commissioner's circulars void. The initial exemption of dry fish from purchase tax by the assessing authority was upheld, affirming that the legislative intent was to exempt all types of fish from tax under Section 8 of the Karnataka Sales Tax Act.
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1989 (11) TMI 300
Issues:
1. Interpretation of Section 5 of the A.P. Entertainments Tax Act regarding the timing of opting for the alternate mode of tax collection.
2. Validity of demanding differential tax amount based on seating capacity reduction.
Detailed Analysis:
1. Interpretation of Section 5:
The case involved a dispute regarding the timing of opting for Section 5 of the A.P. Entertainments Tax Act, which provides an alternate mode of tax collection. The petitioner, a theatre, had initially paid tax under Section 4 but later opted for Section 5 from June 16, 1984. The authorities reopened the assessment, demanding a differential tax amount of Rs. 40,880 for the period June 16, 1984, to March 31, 1985, arguing that the seating capacity reduction should not be considered. The High Court held that the Act allows exhibitors to opt for Section 5 at any time during the financial year, rejecting the authorities' contention that the option must be exercised at the beginning of the financial year. The Court emphasized that once the option is exercised, it remains in force till the end of the financial year, as clarified in a previous Bench decision.
2. Validity of Demanding Differential Tax:
Regarding the demand of Rs. 36,018 for the period January 1, 1984, to March 22, 1984, the Court found that the petitioner was liable to pay tax under the amended Section 4 from January 1, 1984. The authorities claimed that the petitioner continued to pay tax under Section 4-C even after January 1, 1984, leading to the demand for the differential tax amount. Since both the original and appellate authorities affirmed this position, the Court upheld the demand for the differential tax for this period. Consequently, the Court allowed the revision in part, quashing the demand of Rs. 40,880 while upholding the demand for the remaining amount of Rs. 36,018. No costs were awarded, and the advocate's fee was set at Rs. 200.
In conclusion, the judgment clarified the timing flexibility for opting for Section 5 of the Act during a financial year and upheld the differential tax demand for the period January 1, 1984, to March 22, 1984, under the amended Section 4.
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1989 (11) TMI 299
Issues Involved:
1. Whether the purchases of tea by the applicant-companies from wholesalers/tea brokers for ultimate export to Iran were the last sales or purchases preceding the sale or purchase occasioning export of those goods.
2. Whether these purchases are deemed to be in the course of export within the meaning of sub-section (3) of section 5 of the Central Sales Tax Act, 1956.
3. Whether the sales of tea to the foreign buyer are exempted under sub-clause (b) of clause (1) of article 286 of the Constitution of India and sub-section (1) of section 5 of the CST Act.
4. Whether the department's move to realize sales tax on the purchases from tea brokers is unwarranted and illegal.
Issue-wise Detailed Analysis:
1. Whether the purchases of tea by the applicant-companies from wholesalers/tea brokers for ultimate export to Iran were the last sales or purchases preceding the sale or purchase occasioning export of those goods:
The applicant-companies argued that the exports were directly made by themselves, and thus the sales of tea were made by them to the foreign buyer, with the STC acting merely as their agent. Consequently, no sale of goods between them and STC was involved in the process. The Revenue, however, contended that the export sales were actually made by the STC, with the applicants selling the teas to the STC and shipping the same as its agent. The Tribunal concluded that the agreements between the STC and the applicants were contracts for the sale of tea by the applicants to the STC, with the applicants shipping the goods on behalf of the STC as its agent for that limited purpose. Thus, the purchases from tea brokers at auctions were not the last sales preceding the export sales.
2. Whether these purchases are deemed to be in the course of export within the meaning of sub-section (3) of section 5 of the Central Sales Tax Act, 1956:
The Tribunal held that the agreements between the STC and the applicants indicated two contracts: one for the sale of goods to the STC and the other for the shipment of goods to the foreign buyer. The Tribunal noted that the mere fact that the goods were shipped using the export licenses/permits of the applicants did not make it a direct export by them to the foreign buyer. Therefore, the purchases from tea brokers at auctions were not deemed to be in the course of export under section 5(3) of the CST Act.
3. Whether the sales of tea to the foreign buyer are exempted under sub-clause (b) of clause (1) of article 286 of the Constitution of India and sub-section (1) of section 5 of the CST Act:
The Tribunal found that the STC entered into the export contracts independently and there was no privity of contract between the applicants and the foreign buyer. The Tribunal concluded that the sale from the applicants to the STC and the subsequent sale from the STC to the foreign buyer were distinct transactions. Consequently, the sales of tea to the foreign buyer were not exempt under article 286(1)(b) of the Constitution of India and section 5(1) of the CST Act.
4. Whether the department's move to realize sales tax on the purchases from tea brokers is unwarranted and illegal:
The Tribunal determined that the purchases from tea brokers at auctions were exigible to sales tax under the BFST Act, as no exemption under section 5 of the CST Act was available to these purchases/sales. The Tribunal dismissed the writ petitions, thereby upholding the department's move to realize sales tax on the purchases from tea brokers.
Conclusion:
The Tribunal dismissed the two writ petitions, concluding that the purchases of tea by the applicant-companies from wholesalers/tea brokers were not the last sales preceding the export sales and were not deemed to be in the course of export. The sales of tea to the foreign buyer were not exempt under article 286(1)(b) of the Constitution of India and section 5(1) of the CST Act. The department's move to realize sales tax on the purchases from tea brokers was found to be warranted and legal. The interim orders were vacated.
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1989 (11) TMI 298
Issues:
Violation of Article 304(a) of the Constitution by the notification reducing sales tax rate on locally manufactured goods supplied to specified undertakings.
Analysis:
The petitioners, a manufacturing company, challenged a notification issued by the Andhra Pradesh Government that reduced the sales tax rate on goods manufactured locally and supplied to specified undertakings. The petitioners argued that this notification violated Article 304(a) of the Constitution. They relied on various Supreme Court decisions, including Indian Cement Ltd. v. State of A.P., Weston Electroniks v. State of Gujarat, and Hi-Beam Electronics Pvt. Ltd. v. State of A.P., to support their claim.
In the Indian Cement Ltd. case, the Supreme Court observed that differential treatment favoring local manufacturers was not justified and violated Article 304(a) of the Constitution. The Court emphasized that any preference given to locally produced goods over imported goods is prohibited under Article 304(a). The Court also referred to the State of Madras v. Nataraja Mudaliar case, where differential rates of tax on locally produced and imported goods were deemed unconstitutional.
The Government Pleader argued that unless the difference in taxation rates affects the movement of goods or free-flow of trade, the notifications should not be invalidated. However, the Court held that Article 304(a) prohibits discriminatory treatment between locally produced and imported goods. The Court cited the Mahindra and Mahindra Limited v. State of Andhra Pradesh case and Anand Commercial Agencies v. Commercial Tax Officer case but ultimately relied on the Indian Cement Ltd. case to quash the impugned notification.
The Court concluded that the notification reducing sales tax on locally manufactured goods supplied to specified undertakings was in violation of Article 304(a) of the Constitution. As a result, the notification was quashed, and all parties were directed to pay tax at a uniform higher rate. Past transactions were not affected by this decision, and the writ petition was disposed of with no costs awarded.
This judgment underscores the importance of ensuring non-discriminatory treatment between goods produced locally and those imported, as mandated by Article 304(a) of the Constitution. The Court's decision provides clarity on the constitutional principles governing taxation and trade practices, emphasizing the need for uniformity and fairness in tax policies affecting intra-state trade.
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1989 (11) TMI 297
Issues Involved:
1. Legality of the orders passed under section 13(4)(a) of the Orissa Sales Tax Act, 1947.
2. Sustainability of penalties imposed under section 13(5) of the Orissa Sales Tax Act, 1947.
3. Jurisdiction of the Commissioner to revise the Additional Commissioner's order.
Issue-Wise Detailed Analysis:
1. Legality of the Orders Passed Under Section 13(4)(a):
The petitioner, a Government of India undertaking, filed returns for January to March 1973, paying tax at 3% instead of the 7% rate, claiming a rebate. The Sales Tax Officer initiated action under section 13(4)(a) of the Orissa Sales Tax Act, 1947, for the reduced tax payment. The petitioner argued that section 13(4)(a) was inapplicable as there was no admitted tax payable or due. The court analyzed sections 11 and 13 of the Act, concluding that section 13(4)(a) applies only when returns are furnished without showing full payment of tax admitted to be due. The court found that the Sales Tax Officer's orders were unauthorized since section 13(4)(a) did not involve any determination of tax payable by an assessee. This view was supported by a previous decision in Mahadev Ram Udmi Ram v. Sales Tax Officer. The court held that the orders purportedly passed under section 13(4)(a) were without jurisdiction.
2. Sustainability of Penalties Imposed Under Section 13(5):
The petitioner contended that it acted in good faith, believing it was entitled to a 4% rebate, paying tax at 3%. The court referred to the Supreme Court's decision in Hindustan Steel Ltd. v. State of Orissa, emphasizing that penalties should not be imposed unless the party acted deliberately in defiance of law or was guilty of contumacious conduct. The Assistant Commissioner had annulled the penalty under section 11(3), accepting the petitioner's contention that there was no default in paying the admitted tax. However, the Additional Commissioner upheld the penalty under section 13(5) without considering the petitioner's bona fides or the cancellation of the penalty under section 11(3). The court found this approach to be lackadaisical and showed non-application of mind, vitiating the order.
3. Jurisdiction of the Commissioner to Revise the Additional Commissioner's Order:
The Commissioner refused to revise the Additional Commissioner's order, citing a decision in Orient Paper Mills v. State of Orissa, which held that the Commissioner had no jurisdiction to revise an order passed by the Additional Commissioner. The court upheld this view, agreeing that the Commissioner was right in refusing to exercise revisional power over the Additional Commissioner's order.
Conclusion:
The court quashed the orders and demand notices as contained in the annexures, allowing the writ applications. It directed the parties to bear their respective costs, concluding that the orders under section 13(4)(a) were without jurisdiction and the penalties under section 13(5) were unsustainable due to the petitioner's bona fide conduct.
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1989 (11) TMI 296
Issues:
Interpretation of the term "business" under the Karnataka Sales Tax Act, 1957 in the context of an insurance company selling salvaged goods.
Detailed Analysis:
Issue 1: Interpretation of the term "business" under the Act
The case involved a dispute regarding whether an insurance company, engaged in selling salvaged goods, should be considered a dealer under the Karnataka Sales Tax Act, 1957. The appellant, an insurance company, contended that its primary business was insurance and not buying and selling goods, thus it should not be liable to register as a dealer under the Act. The learned single Judge held that the sale of salvaged goods was part of the appellant's business, and the activity was considered business for the purposes of the Act. The appellant challenged this decision in the appeal.
Issue 2: Definition of "business" under the Act
The Court referred to the definition of "business" under the Act, which includes any trade, commerce, or manufacture, whether or not done for profit, and any transaction incidental or ancillary to such activities. The Court emphasized that the existence of a profit motive is not relevant to constitute a business under the Act. It was clarified that any transaction incidental or ancillary to the main business also falls under the definition of business for tax purposes.
Issue 3: Comparison with other High Court decisions
The appellant relied on decisions from the Madras and Allahabad High Courts to argue that generally, insurance companies do not engage in buying and selling goods, especially in the course of settling insurance claims. However, the Court disagreed with this argument, citing a Supreme Court decision that held selling unclaimed goods by a carrier as part of its business makes it a dealer. The Court found the decisions of the Madras and Allahabad High Courts not in line with the Supreme Court's view.
Issue 4: Conclusion
The Court rejected the appellant's contentions and affirmed the order of the learned single Judge, stating that the appellant's activity of selling salvaged goods was incidental to its main business of insurance, making it a dealer under the Act. Consequently, the appeal was dismissed, and the appellant was required to register as a dealer under the Karnataka Sales Tax Act, 1957.
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1989 (11) TMI 295
The High Court of Madhya Pradesh answered a reference under the Madhya Pradesh General Sales Tax Act, 1958, stating that the assessee is not liable for sales tax on gunny bags used for selling sugar if they conform to prescribed standards. The decision was based on a previous Division Bench ruling. The reference was answered in favor of the assessee.
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1989 (11) TMI 294
Issues:
1. Admissibility of additional grounds by the Tribunal
2. Entitlement to claim exemption based on previous decisions
3. Impact of the Constitution (Forty-sixth Amendment) Act, 1982 on taxation laws
Admissibility of Additional Grounds:
The judgment dealt with two revisions concerning the assessment years 1974-75 and 1977-78 for two separate businesses. The common issues were the Tribunal's admission of additional grounds disputing turnover and the entitlement to claim exemption. The Court referenced a Full Bench decision stating that the appellate authority has discretion to admit additional grounds, rejecting the rigid view of a previous case. This established that the Tribunal was justified in admitting additional grounds for appeal.
Entitlement to Claim Exemption:
Regarding the second issue, the Tribunal allowed exemption based on a Supreme Court decision. However, a subsequent Supreme Court decision necessitated reconsideration by the assessing authority. The Court highlighted that the Government of Tamil Nadu had not extended the Act to cover the specific sale in question, thus the Revenue could not benefit from the Forty-sixth Amendment to the Constitution. Citing a Division Bench decision, the Court emphasized that the turnover related to food and drinks supplied in hotels and restaurants could not have been taxed under the existing provisions or the Constitution (Forty-sixth Amendment) Act, 1982.
Impact of Constitution (Forty-sixth Amendment) Act, 1982:
The judgment also discussed the impact of the Forty-sixth Amendment on taxation laws. It clarified that the amendment did not alter the definition of 'sale' in State legislations but validated certain provisions that lacked legislative competence at the time of enactment. The Court held that the turnover in question could not have been taxed under the existing laws or the Amendment. Additionally, it emphasized that pending proceedings did not render assessments final, especially if the transactions were not taxable. The Court directed the matter to be remitted back to the Appellate Tribunal for reconsideration in light of the relevant Supreme Court decision and the previous decision of the High Court.
In conclusion, the impugned orders were set aside, and both cases were remitted back to the Appellate Tribunal for reevaluation based on the principles outlined in the relevant Supreme Court decision and the previous High Court decision. The Tribunal was instructed to consider the facts of each case and dispose of the matters accordingly, while keeping in view the legal interpretations provided in the judgment.
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1989 (11) TMI 293
Issues:
1. Interpretation of section 39-A of the Madhya Pradesh General Sales Tax Act, 1958 regarding the admissibility of additional evidence at the appellate or revisional level.
2. Consideration of whether a government notification can be treated as additional evidence under section 39-A.
Analysis:
The judgment pertains to a reference under section 44(1) of the Madhya Pradesh General Sales Tax Act, 1958, where the Board of Revenue sought the court's opinion on the admissibility of certain forms appended to a government notification dated March 28, 1969. The primary question was whether the Tribunal was correct in allowing the production of these forms at any time, despite the restrictions under section 39-A of the Act. The case involved an assessee dealing in paints and hardware, subject to a best judgment assessment resulting in a disputed turnover amount. An appeal was made to the Appellate Deputy Commissioner, who rejected the claim for set-off due to missing certificates. Subsequently, a second appeal was filed before the Tribunal, arguing for the production of the forms in question, which was allowed by the Tribunal, leading to a remand to the assessing officer for reconsideration.
The central issue addressed by the court was whether the government notification and its appended forms could be considered as additional evidence under section 39-A. The court emphasized that a statutory instrument like a government notification, which carries the force of law, cannot be equated with factual evidence barred under section 39-A. The notification in question was deemed a legal provision that must be taken into account by all concerned parties within its operational scope. Section 39-A restricts the production of evidence unless certain conditions are met, such as evidence wrongly refused by the assessing authority or not within the dealer's knowledge. Since the notification was a legal mandate requiring public acknowledgment, the court concluded that section 39-A restrictions did not apply to it. Therefore, the Tribunal's decision to consider the notification and its forms was upheld, and the question was answered in favor of the assessee against the Revenue.
In light of the legal position accepted by the Revenue's counsel, the court decided not to award costs in the matter. The reference was answered affirmatively, affirming the Tribunal's decision to allow the production of the forms appended to the government notification, emphasizing the distinction between statutory instruments and additional evidence under section 39-A.
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1989 (11) TMI 292
Issues:
Claim for refund under section 14-A of the Orissa Sales Tax Act, 1947 based on rejected applications. Interpretation of the repealed section 14-A and its applicability post-repeal. Commissioner's refusal to entertain applications for refund due to lack of order for refund in assessment.
Analysis:
The petitioner, a registered dealer under the Orissa Sales Tax Act, 1947, sought a refund of Rs. 23,937.29 paid between December 31, 1975, and December 31, 1988, excluding a specific quarter. The applications for refund were initially rejected citing the ultra vires nature of section 14-A of the Act. Upon approaching the Court, the initial rejection was quashed, and fresh consideration was directed by the Court.
Upon reevaluation, the Commissioner found that the petitioner had made payments to the Food Corporation of India and the Collector, Puri. However, as no order for refund was mentioned in the assessment, the Commissioner refused to entertain the applications for refund. The central issue in the writ application was whether a claim for refund should be based on the assessment order to exercise power under section 14-A of the Act.
Section 14-A, which was repealed by Act No. 23 of 1983, was considered in light of the Orissa General Clauses Act, 1937. The Court highlighted that despite the repeal, rights accrued under the provision could still be exercised as per the General Clauses Act. The provision allowed for a refund of tax in specific cases, not controlled by other provisions of the Act or any other law, except for the limitation period provided in section 14.
The Court emphasized that the Commissioner's rejection of the refund applications was unjustified as it was based on extraneous factors. The order was deemed unsustainable in law and was quashed. The Commissioner was directed to reevaluate the refund claims, ensuring compliance with the period of limitation, verification of payment by the dealer, and confirmation that the amount was not payable under the Act.
The petitioner was instructed to appear before the Commissioner for a fresh hearing, with the Commissioner required to dispose of the matter by a specified date. The writ application was allowed, and a writ in the nature of mandamus was issued to the Commissioner, with no costs imposed. Both judges concurred on the decision, and the writ petition was granted.
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1989 (11) TMI 291
The Sales Tax Tribunal allowed the petitioner's appeal, quashing sales tax and interest charges. The Assessing Authority's refusal to refund the amounts was deemed without jurisdiction. The High Court directed the State Government to refund the amounts illegally charged, with interest, within six weeks. Petition allowed with costs of Rs. 500.
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