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2009 (11) TMI 874
Whether the activity of works contract up to March 31, 2006 is exigible to the KVAT Act, 2003?
Held that:- Once the work is assigned by the contractor to its subcontractor, the contractor ceases to execute the work because the property passes by accretion and there is no property in goods left with the contractor which is capable of retransfer either as goods or in any other form. Thus, the transfer of property is from sub-contractor to the contracting party that is contractee, namely, the recipient. Hence the work executed by the subcontractor results in single transaction and not as multiple transaction.
Hence, it would be erroneous to hold that the payments made by the contractor to the sub-contractor would require to be brought within the total turnover of the appellant or contractor and if such an interpretation is to be given it would lead to double taxation and hence the consideration for execution of works contract executed refers to consideration received by the principal contractor and does not include the consideration received and paid to sub-contractor.
Under section 15 of the KVAT Act, 2003 for the period up to March 1, 2006 the principal contractor is entitled for deduction of payment made by subcontractors only if they are registered dealers and the said sub-contractor has accounted for it and paid tax thereon. In favour of the assessee
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2009 (11) TMI 873
Disallowance of the exemption from tax on the turnover and levying tax at the rate of 10 per cent as outright inter-State sales in the absence of C form, by an order dated May 7, 1980
Held that:- The comparison of the orders placed by Rallis India Limited, Bombay, to the Cochin Branch or to the appellant's factory at Ooty does not make any link between the despatches regularly carried out by the appellant's factory. For example in the month of August 13 despatches were effected, in September 22 despatches were made, in October 5 despatches were made, in November 14 despatches were made, in December 4 despatches were made, in January 11 despatches were made, in February 5 despatches were made and in March 5 despatches were made. Thus there is no consistency or link between the export made by Rallis India Limited and the despatches of goods carried out by the appellant's company. The set of facts held for the 'year', from the foregoing analysis is the similar one as decided by the High Court of Madras in the case of Rallis India Limited v. State of Tamil Nadu [1990 (9) TMI 336 - MADRAS HIGH COURT]. the Department has not made out any case to interfere with the well-considered order of the Tribunal. Appeal dismissed.
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2009 (11) TMI 872
Incentives and concessions announced by the State of Himachal Pradesh as per the Industrial Policy Scheme of 1999 and the notification dated July 23, 1999 issued for grant of incentives and concessions under the Himachal Pradesh General Sales Tax Act, 1968 questioned
Held that:- If the argument made on behalf of the State is accepted then the result would be that the unit would have to pay sales tax on the entire sales of ₹ 61 lacs at the full prescribed rate whereas on sales up to ₹ 60 lacs it will not have collected any sales tax from the customers. It will make the units totally uneconomic and unviable. How can an assessee who has not collected sales tax be directed to deposit the sales tax?
The only logical interpretation which can be given to sales tax notification to make it workable in accordance with the incentive policy is that the eligible units will be entitled to the exemption/concession up to the prescribed limit of ₹ 60 lacs and ₹ 45 lacs and if the turnover exceeds the aforesaid prescribed limits then it will have to pay full sales tax on the sales exceeding the prescribed limit. This will lead to certainty in the mind of the entrepreneur. He knows that up to ₹ 45 lacs or ₹ 60 lacs, he is entitled to either a concessional rate of sales tax or full exemption. Thereafter, he has to pay full sales tax on the sales exceeding over and above the prescribed limit.
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2009 (11) TMI 871
Issues: Interpretation of Government notification on tax levy for fried gram and Bengal gram under Karnataka Sales Tax Act, 1957.
Analysis: The judgment revolves around the classification of fried gram and Bengal gram for tax purposes under the Karnataka Sales Tax Act, 1957. The Supreme Court in Gopuram Gram Mill Co. v. State of Andhra Pradesh clarified that fried gram is distinct from Bengal gram. However, the Government notification from March 31, 1984, continued to classify both as the same for tax purposes. Despite the Supreme Court's ruling in 1994, the notification remained unchanged.
The case involves an assessment order for the year 1996-97, where tax was levied at 1.25% based on the Supreme Court judgment. Subsequently, a rectification application led to a reduction in the tax rate to 1%. However, the Joint Commissioner of Commercial Taxes reviewed the rectification order and reinstated the original tax rate. The assessee appealed to the Karnataka Appellate Tribunal, which ruled in favor of the assessee on July 18, 2006.
The Revenue challenged the Tribunal's decision, arguing that the Tribunal erred by not following the Supreme Court's judgment, which treated fried gram and Bengal gram as different commodities for tax purposes. The Revenue contended that despite the lack of a fresh notification, tax should be levied based on the Supreme Court's decision.
Conversely, the assessee's counsel maintained that as the Government notification remained unchanged, the parties should be governed by the existing notification rather than the Supreme Court's ruling. The counsel argued that the assessing officer cannot demand a higher tax rate based on the Supreme Court's decision when the Government notification was not updated.
Ultimately, the High Court found no substantial question of law in the case. The Court highlighted that the Government notification classifying fried gram and Bengal gram as the same was in effect until 1997, despite the Supreme Court's contrary ruling. Therefore, the Court dismissed the Revenue's petition, emphasizing that the assessing officer cannot demand higher tax rates based on a judicial decision when the Government notification remained unaltered.
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2009 (11) TMI 870
Whether the Commissioner is justified in invoking section 22A(2) of the Act, when such a revisional power is also vested with the Joint Commissioner?
Whether the Commissioner was justified in holding that the black pepper purchased by the appellant from the unregistered dealer from outside the State of Karnataka and purchases made within the State of Karnataka?
Held that:- As per section 21 as well as 22A of the Act, revisional powers can be exercised by both the authorities within a period of four years. When limitation is stipulated as four years, it is not for the Commissioner to direct the Joint Commissioner how he has to exercise his revisional power, when such power is vested in him under section 22A of the Act. In the circumstances, we are of the opinion that point No. 1 has to be answered against the assessee by holding that both the Joint Commissioner as well as the Commissioner of Commercial Taxes can exercise their powers under different provisions of law.
So far as purchase of black pepper is concerned, the order of the Commissioner is mainly based on the note sheet maintained by the assessing officer while passing the order of assessment. Based on such note, the revisional authorities are not expected to reverse the findings of the assessing officer. It is for the assessing officer as well as the revisional authorities to find out whether the black pepper purchased by the assessee from the unregistered dealers from local or inter-State based on the accounts maintained and other documents. Appeal is allowed in part by answering the question of law and remanding the matter to the assessing officer to give his finding in regard to purchase of black pepper worth ₹ 77,35,310 is either from the local unregistered dealer or from the unregistered dealer outside the Karnataka State.
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2009 (11) TMI 869
Arrears of tax and interest due for the assessment years 1994-95 to 2000-01 - Held that:- We are of the view that the provisions of the Contract Act have no application so far as the Sales Tax Act is concerned because it is a selfcontained code providing for levy and collection of sales tax by the Government from dealers.Therefore, the learned single judge rightly rejected the appellant's claim based on sections 59 and 60 of the Indian Contract Act.
What is conveyed by sub-section (2) of section 55C is that the applicability of sub-section (1) of section 55C is not with reference to the period for which arrears are paid, but reference to the date of payment made in discharge of arrears of tax and interest by the dealer. In other words, all payments made after January 1, 2000 towards the discharge of arrears of tax will be subjected to adjustment under section 55C(1) irrespective of the year to which the arrears of tax and interest relate. We, therefore, uphold the order of the learned single judge and dismiss the writ appeal
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2009 (11) TMI 868
Whether, in the facts and circumstances of the case, the Tribunal is justified in allowing the deduction on the amount of tax collected as per rule 6(4)(h) of the Karnataka Sales Tax Rules, 1957?
Held that:- In view of the above, we find that the question of law formulated by the Revenue does not call for answering particularly in view of the judgment of the honourable Supreme Court in C. Venkatagiriah's case [1994 (3) TMI 377 - SUPREME COURT] and the "Rule of proof cannot be static and it varies from case to case". Hence, we refrain from answering the substantial question of law.
Accordingly, we hold that the assessing officer should re-examine the claim of the assessee with regard to deduction of tax from the total taxable turnover and pass orders on merits after giving opportunity to the respondent-assessee and in accordance with law. We allow this revision petition in part and remit the matter to the assessing officer for fresh consideration.
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2009 (11) TMI 867
Issues Involved: 1. Entitlement to refund of excess tax paid. 2. Effect of setting aside the assessment order on the ground of limitation. 3. Legal impact of failure to pass an assessment order within the prescribed period. 4. Applicability of the doctrine of unjust enrichment.
Detailed Analysis:
1. Entitlement to refund of excess tax paid: The petitioner, a proprietor, submitted returns for the year 2001-02 and paid the due tax of Rs. 1,533.45. Additionally, Rs. 20,822 was deducted at source (T.D.S.) by contractors and deposited. An assessment order dated June 29, 2004, determined tax dues at Rs. 2,16,762 and interest at Rs. 63,631. The petitioner paid Rs. 25,000 on September 27, 2004, under alleged coercion to obtain C forms. The demand notice was received on November 1, 2005, leading to an appeal that set aside the assessment order on other grounds and remanded the case for fresh hearing. The Tribunal later set aside the assessment order as it was not passed within the prescribed period. The petitioner sought a refund of the excess T.D.S. and the Rs. 25,000 paid. The honourable Judicial Member supported the refund claim, while the honourable Technical Member opposed it, leading to the Full Bench's involvement.
2. Effect of setting aside the assessment order on the ground of limitation: The assessment order was set aside on the ground of limitation, meaning it lost its legal effect. The honourable Judicial Member argued that the assessment order's setting aside did not render it non-existent but only nullified its legal effects. Therefore, the payment made under the assessment order should be considered for refund. However, the honourable Technical Member argued that without an assessment order, the petitioner was not entitled to a refund.
3. Legal impact of failure to pass an assessment order within the prescribed period: The Tribunal emphasized that tax legislation must clearly define the method and manner of tax collection. Under the West Bengal Sales Tax Act, 1994, and Rules, 1995, the tax payable is based on self-assessment in returns unless the Commissioner finds reasons for verification. Section 60 mandates the refund of any excess tax paid. The Tribunal held that failure to pass an assessment order within the prescribed period implies acceptance of the returns as correct, making the tax payable the amount shown in the returns. This view was supported by the Tribunal's decision in Flury's Swiss Confectionery (Pvt.) Ltd. v. State of West Bengal.
4. Applicability of the doctrine of unjust enrichment: The Tribunal clarified that excess tax paid voluntarily, even without an assessment order, should be refunded if claimed in the return, provided there is no unjust enrichment. The Tribunal noted that the petitioner claimed to have paid Rs. 25,000 under coercion, which was not permissible for the State to retain. The Tribunal directed the petitioner to appear before the appropriate authority to demonstrate the absence of unjust enrichment. If satisfied, the authority was to refund the amount.
Conclusion: The Tribunal concluded that the petitioner was entitled to a refund of the excess T.D.S. and the Rs. 25,000 paid, provided there was no unjust enrichment. The concerned authorities were instructed to refund the T.D.S. by February 15, 2010, and the Rs. 25,000 by March 31, 2010, subject to verification of unjust enrichment by January 31, 2010. The application was disposed of with no order as to costs.
Judgment Agreement: R.K. DUTTA CHAUDHURI (Judicial Member) and DIPAK CHAKRABORTI (Technical Member) agreed with the judgment.
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2009 (11) TMI 866
Best judgment assessment - Non production of relevant documents - Held that:- In the present case, only on the ground that the relevant documents were not produced, the respondent-Department proceeded to finalise the assessment on the basis of the best judgment method. The failure to grant sufficient time and opportunity to produce records is a clear violation of principles of natural justice and the assessment orders passed without considering the relevant statutory records and documents will amount to denial of sufficient opportunity and will amount to violation of principles of natural justice. The assessment order has been passed, without considering the relevant factors and therefore, the orders suffer from vice of non-application of mind to relevant factors and therefore, deserve to be set aside.
In the result, the orders of assessment in both the cases, which are challenged, are set aside on the ground of violation of principles of natural justice and since no opportunity was given to produce records, the matters are remitted back to the Commercial Tax Officer/respondent for reconsideration on the merits. The petitioner will be entitled to produce all records and materials that may be available for the purpose of effectively concluding the assessment proceeding.
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2009 (11) TMI 865
Whether there is no separate notice issued for cancellation of the registration certificates under section 7 of the CST Act and there is no personal hearing granted to the petitioner?
Held that:- There are no reasons stated in the affidavit for the belated writ petition nor any reason disclosed for not challenging the order passed on the notice. It must be noticed that the petitioner filed an application on October 12, 2004 for fresh registration. If really the petitioner had any grievance on cancellation, nothing prevented the petitioner from seeking remedy before the revisional authority. Hence, on the ground of laches alone, the writ petition is liable to be dismissed.
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2009 (11) TMI 864
Whether in spite of the statutory provisions under the KST Act and Rules, 1957 and judicial pronouncements that there is only one ‘sale’ and ‘turnover’ involved in the works contract executed by a subcontractor directly to the employer/contractee, the Karnataka Appellate Tribunal was right in having held that in respect of the payments made by the petitioner to the sub-contractors, besides the sub-contractors, the petitioner is also liable to pay turnover tax at three per cent prescribed under section 6B of the Karnataka Sales Tax Act, 1957?
Whether the Karnataka Appellate Tribunal was right in having held that the petitioner is not eligible for deduction under rule 6(4)(n)(iii) of the KST Rules, 1957 on the payments made to sub-contractors merely because the petitioner could not produce proof that the sub-contractors had declared the turnovers corre sponding to such payments in the monthly statements/annual returns filed by them, when the petitioner had furnished proof that the subcontractors were dealers registered under the KST Act, 1957 which was substantial compliance with the rule to entitle to the petitioner to the deduction claimed?
Whether the Karnataka Appellate Tribunal was right in having held that the petitioner was liable to pay purchase tax under section 6 of the KST Act, 1957 on the purchases of sand and jelly in spite of the fact that the dealers who sold the sand and jelly to the petitioner had attained total turnovers exceeding ₹ 2,00,000 in the year and therefore were liable to registration and payment of tax?
Held that:- The Tribunal was in error in holding that the payments made by the petitioner to the sub-contractors would come within the purview of turnover and liable to pay turnover tax of three per cent under section 6B of the Act. Accordingly, we answer the question of law framed hereinabove one and two in favour of the revision petitioner and against the Revenue on the facts of this case only.
Insofar as question No. 3 which is formulated hereinabove, the authorities have considered the submissions and also the material placed by the revision petitioner and have come to a conclusion that the petitioner is liable to pay purchase tax and we do not see any grounds to deviate from the said view taken by the authorities. Accordingly, we confirm the said view and answer question No. 3 in favour of the Revenue and against the assessee. Appeal allowed in part.
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2009 (11) TMI 863
Recovery proceedings against the personal assets of the petitioners - whether the tax dues from the corporate body can be recovered from the assets of the directors of corporate body?
Held that:- The facts and circumstances of the case that the arrears of tax dues against the company cannot be recovered from the personal assets of the petitioners who were the directors of the company. Hence, the recovery notice against the petitioner (annexure 1 to the petition) is not sustainable in law and is liable to be quashed.
The writ petition, therefore, succeeds and is allowed. The recovery notice issued against the petitioner (annexure 1 to the petition) is quashed.
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2009 (11) TMI 862
Bogus transactions - Held that:- In the instant cases, the custom authorities at Bhairwan (Nepal) has informed the Department that they never issued such certificates. In spite of several opportunities, the assessee has not brought any certificate issued by the Indian Custom Office at Bhairwan. However, the assessee has claimed that custom fee was paid by the dealer who has received the goods in Nepal. The payment was received from Nepal by way of pay order.Hence, the transaction pertaining to export becomes doubtful.
In the instant cases, if the export to Nepal will be found bogus then it will have to be added as a sale in the State. So, D.C. (Executive) has rightly restored the cases pertaining to the State Sales Tax Act as well as Central Sales Tax Act for both the assessment years under consideration. Thus the assessing officer will decide the issue de novo by considering the entire evidence and by providing the reasonable opportunity of being heard to the assessee
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2009 (11) TMI 861
Benefit of section 4BB of the Act - Held that:- The benefit of Sec 4BB is the statutory benefit and the assessees are entitled for the said benefit. To this effect, the Commissioner has already issued a circular No. 554 dated July 22, 2004. See Diksha Suri v. ITAT [1997 (5) TMI 20 - DELHI High Court], Union of India v. Paras Laminates Pvt. Ltd. [1990 (8) TMI 140 - SUPREME COURT OF INDIA] and Commissioner of Income-tax v. Ramamurthi [1976 (10) TMI 18 - MADRAS High Court] wherein the said benifit already allowed.
Set aside all the impugned orders passed by the Tribunal and restored the matter back to the Tribunal to decide the issue de novo
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2009 (11) TMI 860
Whether the petitioner herein has to pay the turnover tax on the ale of packing material based on the notification dated March 30, 1994 at the reduced rate of tax of second sale at one per cent. instead of 2.5 per cent?
Held that:- If the package material used by the assessee for selling its product, i.e., cement has suffered tax earlier. The same has to be considered as second sale or subsequent sale or whether the package material has suffered tax earlier or not, it can be answered by the assessing officer. In the circumstances, answering the questions of law in favour of the assessee holding that if the package material has suffered tax earlier and it is used for selling its product, in the light of the notification dated March 30, 1994 the turnover tax attracts only one per cent. of the tax considering it as second sale or subsequent sale. In order to ascertain the actual facts in the case, we have set aside the order of the assessing officer and remitted the matter for fresh consideration in accordance with law. Accordingly, this appeal is allowed and matter is remanded to the assessing officer who shall consider the matter afresh and pass an appropriate order within an outer-limit of six months from the date of receipt of the copy of this order.
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2009 (11) TMI 859
Whether the Corporation cannot be treated as manufacturer?
Held that:- The present case is referred to the committee to be constituted as directed by the apex court, if not already functional and the said committee will look into the matter and redress the dispute raised in the present petition. It is further directed that until the decision by the aforesaid committee, recovery proceeding shall be kept in abeyance and the same shall be subject to the order that may be passed by the said committee.
In view of the observation made above, the present revision is disposed of.
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2009 (11) TMI 858
Revision of assessment - Form F accepted - CST Act - TNGST Act - Held that:- It is now settled that once form F has been accepted and an assessment has been made on the basis of form F declaration filed by the assessee, revision of assessment cannot be made unless or otherwise the assessing authority has recorded a finding that assessment has been completed by fraud, misrepresentation or collusion - the writ petitions are dismissed.
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2009 (11) TMI 857
Whether exhibit P9 assessment is unsustainable in view of the fact that it is issued totally in violation of the provisions contained in section 17D?
Held that:- In view of the directions contained in the judgment of the Division Bench, Hindustan Petroleum Corporation Limited v. Assistant Commissioner [2009 (10) TMI 876 - KERALA HIGH COURT] exhibit P9 is not sustainable. Therefore exhibit P9 is hereby quashed and the second respondent is directed to issue fresh orders.
Since the application for benefit under the Amnesty Scheme was submitted by the petitioner at a time when exhibit P9 revised order of assessment was not issued, the orders permitting payment under the Amnesty Scheme issued as evidenced by exhibit P10 is liable to be quashed.
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2009 (11) TMI 856
Disallowance of turnover in a sum of ₹ 3,57,41,932.63 as the consignment sale which claim was rejected by the assessing officer and whether treating the transaction as inter-State sale falling under section 3(a) of the Central Sales Tax Act, 1956 is correct or not?
Held that:- The issues raised by the Revenue in the present writ petition being questions of fact which were thoroughly considered by the lower authorities they do not warrant any interference. W.P. dismissed.
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2009 (11) TMI 855
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the erection of body on the chassis would amount to sale, contrary to the judgment of the honourable Supreme Court in State of Gujarat (Commissioner of Sales Tax, Ahmedabad) v. Variety Body Builders [1976 (4) TMI 190 - SUPREME COURT OF INDIA]?
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that there would be no effect with regard to tax liability of the dealer even if the transaction is held to be inter-State sale?
Held that:- The first question of law does not survive as it has already been answered against the dealer-appellant by the honourable Supreme Court in the case of Commissioner of Commercial Taxes, Mysore v. M.G. Brothers [1974 (10) TMI 81 - SUPREME COURT OF INDIA]
On the issue of inter-State sale, the Tribunal has opined that even if the contention raised by the dealer-appellant is accepted and it was treated as an inter-State sale on account of movement of goods from Punjab to Haryana, still the fact remains that the tax was assessable at four per cent, which has been charged by the respondent-State. Accordingly, the Tribunal has concluded that no useful purpose would be served by remanding the matter for fresh assessment, especially when the dealer-appellant did not show the transaction to be inter-State sale. Therefore, we are of the view that there would be no tax effect on the dealer-appellant in the facts and circumstances of the present case. Accordingly, while leaving the question of law open, we dismiss the appeal.
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