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2003 (8) TMI 492
Issues:
Challenge to orders passed by respondent for assessment years 1996-97 to 2000-01.
Analysis:
The petitioner challenged the orders passed by the respondent for assessment years 1996-97 to 2000-01. The petitioner, covered by the Karnataka Sales Tax Act, had their business premises inspected, documents seized, and notices issued under section 28(6) of the Act for provisional orders of assessment. The petitioner contended that the assessment orders were provisional and that regular assessment proceedings had already been completed, complying with demand notices. The High Court Government Advocate argued that certain transactions necessitated additional tax, and the orders were passed after hearing the petitioner.
The High Court, after hearing both parties, examined the provisions of section 28 of the Karnataka Sales Tax Act, 1957. Section 28(6) allows for provisional assessment regardless of regular assessment proceedings. However, the third proviso to section 28(6) states that no provisional assessment shall be made if assessment or reassessment for that year cannot be done under the Act. The court noted that reassessment could be done even after regular assessment proceedings, making the provisional assessment order in question not in line with the law.
Referring to a previous judgment, the court emphasized that the regular assessing authority must frame assessment/reassessment proceedings once the assessment year concludes. Therefore, the court directed the respondent to send the records of provisional assessment orders and demands to the assessing officer for a decision on assessment/reassessment within two months, with proceedings to be completed within six months, providing an opportunity to the petitioner as per the law. The High Court Government Advocate assured that demands would not be enforced until a final decision was made by the regular assessing authority.
In conclusion, the court disposed of the petitions without costs, directing the assessing officer to make a decision on assessment/reassessment within the specified timeframe, ensuring fairness to both parties and compliance with legal procedures.
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2003 (8) TMI 491
The Karnataka High Court ruled on the validity of a provisional assessment notice. The regular assessing authority must now frame the assessment/reassessment, and the petitioner can raise objections to the proposed notice. Petitions have been disposed of accordingly.
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2003 (8) TMI 490
Manufacture and sale of handloom cloths - Imposition of penalty u/s 10(b) - false representation regarding purchases of cotton waste, polythene, sutli, and tat covered by form C - HELD THAT:- As soon as penalty notice dated October 15, 1985 was issued to the dealer it applied for amendment of certificate of registration for inclusion of "cotton waste" in the certificate. The department granted the said amendment on October 15, 1985 and the dealer-applicant became entitled to purchase "cotton waste" against form C. The case of the dealer in reply to the show cause notice was that it bona fidely believed that "cotton waste" is also covered in "cotton". As soon as the mistake was realised necessary application for amendment was filed. This action of the dealer itself shows its bona fide. The representation in order to attract section 10(b) should be false representation to the knowledge of the assessee. If the assessee bona fidely believes that the goods are covered by certificate of registration, but it ultimately turned out to be incorrect, it will not attract the provisions of section 10(b) of the Act. The use of the word "falsely" implies that the persons making representation knew that certificate of registration does not cover the item, but knowingly fully well that it does not, represents that issuing form "C" covers it.
It is also submitted that mens rea is necessary ingredients for imposition of penalty under the aforesaid section. However, this plea has been repelled by this Court in case of Commissioner of Sales Tax v. Rama and Sons. I am bound by the aforesaid judgment.
When tax laws are so complex the administration should proceed specially in the penalty matter from the view of ordinary citizen who is always willing to comply with the conditions of law.
The assessee as soon as it came to know about its fault filed application for amendment of registration certificate. Some fault was on the part of the department also for maintaining silence over the period of about eight years.
The upshot of the above discussion is that in the facts of the present case the finding of the Tribunal that it was a case of false representation cannot be sustained. The Tribunal while recording the said finding has failed to consider relevant facts which were available on record, and as such, this finding is vitiated.
All the revisions are allowed. The penalty orders are hereby set aside so far as it relates to "cotton waste". In respect of other items the penalty order having not been challenged is maintained.
Petitions allowed.
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2003 (8) TMI 489
Issues Involved:
1. Classification of yeast for taxation purposes under the Kerala General Sales Tax Act, 1963.
2. Whether yeast is a chemical or a living organism.
3. Applicability of the common parlance theory and functional test.
4. Relevance of the decision in State of Gujarat v. Bhagwati General Agency (Import) [1991] 83 STC 347 (Guj).
Detailed Analysis:
Issue 1: Classification of yeast for taxation purposes under the Kerala General Sales Tax Act, 1963.
The primary dispute is whether yeast should be classified as a chemical or an unclassified item for taxation under the Kerala General Sales Tax Act, 1963. The State, as the revision petitioner, contends that yeast should be classified as a chemical, while the respondents argue that it is a living organism and thus an unclassified item.
Issue 2: Whether yeast is a chemical or a living organism.
The court examined various definitions and descriptions of yeast from scientific literature, dictionaries, and encyclopedias. It was established that yeast is described as a "microscopic single-celled fungus" and a "unicellular fungus that reproduces vegetatively by budding or fission." The court noted that yeast is a living organism, a fungus, and not a lifeless substance. The court emphasized that merely because yeast is used in a chemical process (fermentation) does not make it a chemical substance. The Central Food Technological Research Institute, Mysore, also confirmed that yeast is a living organism and not a chemical.
Issue 3: Applicability of the common parlance theory and functional test.
The court addressed the State's argument that yeast should be classified as a chemical by applying the common parlance theory and functional test. The court held that such an approach is warranted only if there is ambiguity in an entry. Since entry 29 is meant for chemicals and yeast is a living organism, no further explanation is required. The court referred to the Supreme Court's decision in Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh [1981] 47 STC 359, which emphasized that terms in a taxing statute should be understood in their common parlance or commercial sense.
Issue 4: Relevance of the decision in State of Gujarat v. Bhagwati General Agency (Import) [1991] 83 STC 347 (Guj).
The court distinguished the decision in State of Gujarat v. Bhagwati General Agency (Import), where the Gujarat High Court held that yeast powder manufactured by a chemical process involving molasses and ammonia is a chemical. The court noted that the decision did not address whether yeast is a living organism. The Kerala High Court emphasized that yeast is not chemically manufactured but is a living organism that multiplies by budding or fission. Therefore, the decision in the Gujarat case does not apply to the present case.
Conclusion:
The court concluded that yeast cannot be classified as a chemical under entry 29 (previously entry 42) of the Kerala General Sales Tax Act, 1963. It also cannot be classified under entry 56, which pertains to food items. The court held that yeast is a living organism and not a chemical, and thus should be treated as an unclassified item for taxation purposes. The tax revision cases were dismissed, and all questions were answered in favor of the assessee.
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2003 (8) TMI 488
Issues Involved:
1. Constitutional validity of sub-section (4) of section 39 of the West Bengal Sales Tax Act, 1994.
2. Application of the doctrine of promissory estoppel.
3. Balance of convenience in granting interim relief.
4. Impact of the amendment on vested rights and the prospective or retrospective application of the law.
Detailed Analysis:
1. Constitutional Validity of Sub-section (4) of Section 39 of the West Bengal Sales Tax Act, 1994:
The petitioners challenged the constitutional validity of sub-section (4) of section 39 of the West Bengal Sales Tax Act, 1994, arguing that it is ultra vires and violative of articles 14, 19, and 301 of the Constitution of India. They contended that the amended provision curtails the benefits of tax exemption previously enjoyed by dealers, which had become a vested right. The court noted that the disputes raised regarding the constitutional validity of the provision must be decided on merits after a full hearing.
2. Application of the Doctrine of Promissory Estoppel:
The petitioners argued that the Government of West Bengal had promised various incentives to dealers to encourage the establishment of small-scale industries, and the subsequent notification curtailing these benefits was against the doctrine of promissory estoppel. The State's counsel countered that the legislature is competent to withdraw fiscal benefits and that public interest should prevail over vested rights. The court acknowledged the argument but emphasized that the principle of promissory estoppel cannot be pressed against statutory provisions, especially when public interest is involved.
3. Balance of Convenience in Granting Interim Relief:
The court examined whether any inconvenience or injury would be caused to the petitioner if the interim order was refused and considered the inconvenience to the revenue if an interim order was granted. The court concluded that granting an interim order would not cause loss to the state since dues could be realized with interest or penalty if the provision was ultimately upheld. Conversely, if the provision was found to be ultra vires, complications regarding the refund of taxes would arise. The court thus granted an interim order restraining the respondents from giving effect to the provision of sub-section (4) of section 39 until the disposal of the application.
4. Impact of the Amendment on Vested Rights and Prospective or Retrospective Application of the Law:
The State's counsel argued that the amendment applies prospectively and does not impair any rights accrued before its enforcement. The court examined the amendment and found that it applies prospectively, stating that no vested rights were taken away. The court also considered various judgments supporting the view that the government can withdraw exemptions before the period mentioned in the original legislation if public interest demands it. The court held that the Tribunal did not properly exercise its discretion in granting a stay of the impugned amendment and set aside the Tribunal's order of stay.
Conclusion:
The court allowed the writ application, set aside the Tribunal's order of stay, and directed the Tribunal to hear the main matter on the scheduled date. The court emphasized that the Tribunal should examine the legality of the questions involved without being influenced by the observations made in this order. The writ application was allowed without any order as to costs.
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2003 (8) TMI 487
Issues involved:
1. Legality of the department's action in declining the appellant's request for exemption from payment of tax.
2. Conformity of the impugned order with the statutory Notification dated November 4, 1993.
3. Validity of the rejection of the claim based on the order dated November 26, 1993, as clarified by the letter dated July 5, 2000.
Issue-wise detailed analysis:
1. Legality of the department's action in declining the appellant's request for exemption from payment of tax:
The appellant was registered as a medium-scale unit and initiated steps for setting up the unit for the manufacture of iron rods and bars. The unit started production on March 31, 1995, and the sale of iron rods and bars was exigible to the levy of tax under the Kerala General Sales Tax Act, 1963. The appellant was granted exemption for a total amount of Rs. 2,65,70,965, which could be availed during the period from March 31, 1995, to March 30, 2002. However, the appellant's request for enhancement of the limit of exemption based on additional investment was rejected by the General Manager, District Industries Centre, Kozhikode, on the ground that the power requirements had exceeded 2,500 KVA, placing the unit under the negative list. This rejection was challenged and quashed by the court, but the claim was again rejected based on a clarification issued by the Government on July 5, 2000.
2. Conformity of the impugned order with the statutory Notification dated November 4, 1993:
The Notification dated November 4, 1993, issued under section 10 of the Kerala General Sales Tax Act, 1963, provided exemption from payment of tax to new industrial units for seven years from the date of commencement of commercial production. The exemption was also available for diversification, expansion, or modernization. The appellant's unit, having started commercial production on March 31, 1995, was entitled to the exemption based on its capital investment. However, the impugned order rejected the claim based on a clarification issued on July 5, 2000, which was not in conformity with the statutory notification.
3. Validity of the rejection of the claim based on the order dated November 26, 1993, as clarified by the letter dated July 5, 2000:
The notification dated November 27, 1993, issued by the Department of Industries, did not refer to the statutory notification regarding the reduction in the rate of tax to industrial units. It was primarily concerned with the grant of State investment subsidy and did not have the authority to amend the statutory notification issued under the Kerala General Sales Tax Act. The appellant's claim was rejected based on a clarification that units with power requirements exceeding 2,500 KVA were included in the negative list, even if the cost of power was less than 25% of the cost of production. This clarification was not a decision of the Government and could not modify the statutory notification.
Conclusion:
The impugned order dated October 21, 2000, did not conform to the statutory notification dated November 4, 1993, and was based on an invalid clarification. The appellant's case did not fall within the mischief of clause 7 of the notification dated November 27, 1993, as the expense on electricity did not exceed 25% of the total cost of production. The appeals were allowed, and the respondent-authority was directed to consider the appellant's claim for exemption in accordance with the statutory notification within three months. The parties were left to bear their own costs.
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2003 (8) TMI 486
The petitioner filed a stay petition after an adverse assessment order in 2000-2001. The Joint Commissioner ordered a deposit of 50% disputed tax and security, challenged by the petitioner. The High Court found the order lacking proper consideration and set it aside. An interim order was granted, requiring the petitioner to pay one crore rupees within four weeks. Proceedings were to be completed within three months by the Joint Commissioner.
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2003 (8) TMI 485
The Delhi High Court set aside an order by the Appellate Tribunal Sales Tax directing a petitioner to deposit Rs. 1 lakh under the Central Sales Tax Act, as the Tribunal did not have jurisdiction to pass such an order when no appeal was pending under the Central Act. The writ petition was allowed, and the impugned order was set aside.
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2003 (8) TMI 484
Issues:
1. Adjustment of security deposit against sales tax liability under the Assam General Sales Tax Act, 1993.
2. Validity of the assessment order raising further demand and levying penal interest.
3. Revisional authority's decision regarding the adjustment of security deposit by the assessee.
Issue 1: Adjustment of security deposit against sales tax liability under the Assam General Sales Tax Act, 1993.
The petitioner, a dealer in crockery, submitted a return under the Assam General Sales Tax Act, 1993, and had deposited security money under the Assam Finance (Sales Tax) Act, 1956. The petitioner sought adjustment of the security amount against dues under the Assam General Sales Tax Act. The assessing authority had raised a demand and penal interest, which the petitioner challenged through a revision petition. The petitioner claimed that the security deposit made was adjustable and should be allowed to offset the sales tax liability. The court noted that the petitioner had deposited adjustable security under the relevant Acts and was entitled to adjust the amount against the sales tax paid, thereby setting aside the interest levied by the assessing authority.
Issue 2: Validity of the assessment order raising further demand and levying penal interest.
The assessing authority had raised a demand and levied penal interest on the petitioner, which led to the revision petition. The court observed that the notices demanding security did not disclose any grounds or reasons, as required by law. The court also noted that there was no written document confirming the agreement for adjustable security. The petitioner had deposited the security amount, which was accepted by the authority. The revisional authority had dismissed the revision, stating that the security furnished by an assessee could not be adjusted against tax liability. However, the court held that the security deposit made by the petitioner was adjustable and should be allowed to offset the tax liability, thereby setting aside the interest and revision order.
Issue 3: Revisional authority's decision regarding the adjustment of security deposit by the assessee.
The revisional authority had dismissed the revision petition, stating that the security deposit could not be adjusted by the assessee against tax liability. The petitioner had not sought to adjust the security deposit made under the Assam Finance (Sales Tax) Act after the Assam General Sales Tax Act came into force. The court found that the petitioner was entitled to adjust the security amount against the sales tax liability, as the amount was already deposited with the department. The court allowed the adjustment of the security deposit and directed the assessing authority to reframe the assessment order accordingly, relieving the petitioner from paying interest.
In conclusion, the High Court allowed the writ petition, setting aside the interest levied and the revision order, and directed the assessing authority to allow the adjustment of the security deposit against the sales tax liability.
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2003 (8) TMI 483
The application challenges recovery proceedings for demand from 1992. The Tribunal directs the Board to reconsider the case without limitation hindrance. The case is remitted to the Board for early hearing within three months. The certificate case is stayed until the Board's decision. No costs are ordered.
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2003 (8) TMI 482
Issues:
1. Interpretation of section 8-A(5) of the U.P. Trade Tax Act, 1948 regarding the seizure of goods for non-production of form No. 49.
2. Determination of whether stainless steel sheets fall under the category of iron and steel for the purpose of form No. 49 requirement.
3. Validity of the Tribunal's decision that the seizure order was invalid and the applicability of section 13-A(4) of the Act for breach of section 8-A(5).
Analysis:
1. The revision before the Allahabad High Court involved the interpretation of section 8-A(5) of the U.P. Trade Tax Act, 1948, specifically regarding the seizure of goods for non-production of form No. 49. The Tribunal had held that there was no requirement of form No. 49 and deemed the seizure order invalid. The Commissioner of Trade Tax argued that the failure to produce form No. 49 would presume that the goods were not accounted for, leading to tax evasion. However, the Senior Counsel contended that the department had limited the applicability of section 8-A(5) to specific items only, excluding stainless steel sheets.
2. The key issue was whether stainless steel sheets should be considered under the category of iron and steel for the purpose of form No. 49 requirement. The Tribunal, based on previous assessment orders, concluded that the department treated stainless steel sheets differently than iron and steel. The circulars issued by the department also clarified that form No. 49 was necessary only for specific items falling under the definition of iron and steel as per the Central Sales Tax Act. The Court agreed with this interpretation, emphasizing that stainless steel sheets did not fall under the definition of iron and steel under the Act.
3. The Tribunal's decision on the validity of the seizure order and the applicability of section 13-A(4) for breach of section 8-A(5) was also challenged. The Tribunal had held that the department could not invoke section 13-A(4) for a violation of section 8-A(5). However, the Court disagreed, stating that in cases where section 8-A(5) applied, the authorized officer had the power to seize goods under section 13-A(1)(ii). The Tribunal's lack of reasoning in this regard led to the setting aside of their observation.
In conclusion, the High Court dismissed the revision, upholding the Tribunal's decision that there was no requirement of form No. 49 for stainless steel sheets and affirming the power of the authorized officer to seize goods for non-compliance with section 8-A(5). The Court also directed the department to pay costs to the dealer and release the seized goods promptly.
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2003 (8) TMI 481
Issues:
1. Condonation of delay in filing the appeal under article 226 of the Constitution of India.
2. Consideration of factors leading to the delay in filing the appeal.
3. Application of the principle of 'sufficient cause' in condoning delay.
4. Remittal of the case for determination on merits by the concerned authority.
5. Directions for expeditious disposal of the appeal.
Condonation of Delay in Filing the Appeal:
The petitioner, a Government of India enterprise, filed a petition under article 226 challenging the dismissal of their appeal due to being time-barred. The delay of two months and seven days in filing the appeal was attributed to the absence of key personnel involved in the case due to accidents and health reasons. Despite unrebutted facts, the delay was not condoned based on the organization's size. The Court, after considering the circumstances, held that the delay should have been condoned, citing the need for a pragmatic approach in justice-oriented processes. Referring to previous judgments, the Court emphasized that delay should be condoned unless there is an intention to delay the matter.
Consideration of Factors Leading to Delay:
The delay in filing the appeal was sought to be condoned due to the absence of crucial staff members, including an assistant who met with an accident and a manager who was on leave due to illness. The petitioner organization faced challenges with new officers handling the case and a shortage of staff. Despite these reasons, the delay was not initially condoned, highlighting the need for a pragmatic approach in such situations.
Application of the Principle of 'Sufficient Cause' in Condoning Delay:
The Court, in its analysis, referred to the principle of 'sufficient cause' and emphasized the need for a pragmatic and justice-oriented approach in considering delays. Quoting previous Supreme Court judgments, the Court stressed that factors peculiar to governmental conditions should be taken into account, and delays should be condoned unless there is an intention to delay the proceedings.
Remittal of the Case for Determination on Merits:
Based on the analysis of the circumstances, the Court set aside the impugned orders and remitted the case to the Joint Excise and Taxation Commissioner (Appeals) for determination on merits. The parties were directed to appear before the Commissioner on a specified date for further proceedings.
Directions for Expeditious Disposal of the Appeal:
To ensure timely resolution, the Court directed the concerned authority to deal with the appeal and dispose of it in accordance with the law as expeditiously as possible, preferably within two months from the date the parties appear before him. The petition was disposed of accordingly, providing clear instructions for the future handling of the case.
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2003 (8) TMI 480
Issues:
1. Adjustment of excess tax paid towards penalty under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002.
2. Interpretation of the provisions of section 6(1) and the first proviso to section 6(1) of the Act.
3. Validity of rejecting the application for settlement of disputes based on excess tax payment.
Issue 1: The petitioner sought to quash a notice rejecting the application for settlement of disputes due to the adjustment of excess tax paid towards penalty. The respondent contended that there is no provision in the Act for such adjustment, and the demand for penalty is justified.
Issue 2: The Tribunal analyzed section 6(1) and the first proviso, emphasizing that the designated authority must adjust any amount paid towards tax, penalty, or interest before the application. Referring to a previous judgment, the Tribunal highlighted that excess payments entitle the applicant to a refund, and any excess can be adjusted towards any shortfall in tax, penalty, or interest.
Issue 3: The Tribunal set aside the notice rejecting the application, directing the respondent to adjust the excess amount paid towards the penalty shortfall and proceed with the settlement process. The decision was based on the interpretation of the Act's provisions and the entitlement of the applicant to refunds for excess payments.
The Tribunal's decision clarifies the mandatory adjustment of prepayments under the Act, emphasizing the entitlement of the applicant to refunds for excess payments. It highlights the need for the designated authority to adhere to the provisions for determining amounts payable and adjusting excess payments towards any shortfalls. The judgment ensures fairness and adherence to legal provisions in the settlement of tax disputes under the Tamil Nadu Sales Tax Act.
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2003 (8) TMI 479
Issues:
Issuance of a writ of certiorarified mandamus to quash the proceedings of the respondent dated August 16, 2003 and release detained vehicles.
Analysis:
The petitioner filed writ petitions seeking to quash the respondent's proceedings and release vehicles detained for alleged non-payment of entry tax. The petitioner, a granite quarry owner, purchased excavators and transported them to Madurai. The check-post officer detained the vehicles citing non-billing with TNGST and CST registration numbers and entry tax liability. The petitioner's representations for release were denied, leading to the present petitions.
The statutory provision under Section 42 of the TNGST Act empowers check-post officers to inspect goods in transit for tax compliance. The provision mandates release of goods if tax is paid or accounted for properly. However, in this case, the respondent detained the goods based on reasons not supported by the law. The impugned detention orders cited lack of registration numbers and entry tax liability as grounds, which were found legally unsustainable.
The court found that the petitioner was a registered dealer under TNGST and CST, making the first ground for detention invalid. Regarding the second ground, the court held that the Entry Tax Act, 1990 is distinct from the TNGST Act, and detention under the former requires specific compliance procedures not met in this case. The petitioner argued that the excavators were not liable for entry tax as they were not motor vehicles under the Act, supported by authorities under the Motor Vehicles Act.
The court emphasized that the dispute was not about the applicability of the Entry Tax Act but the legality of the detention orders. The respondent's failure to adhere to Section 42 of the TNGST Act rendered the detention orders illegal. Consequently, the court quashed the orders and directed the immediate release of the detained goods, cautioning authorities to act lawfully to avoid unwarranted harassment of the public.
In conclusion, the writ petitions were allowed, with no order as to costs, and the connected W.P.M.Ps were closed. The judgment highlighted the importance of lawful actions by authorities and the need for adherence to statutory provisions to prevent illegal actions and unwarranted harassment.
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2003 (8) TMI 478
Business of dyeing and printing is deal within the meaning of section 2(1)(d) of the Works Contracts Act? - Liable to pay tax - Maharashtra Sales Tax - Scope and ambit of the powers of the States to levy tax on transactions - Whether the processes of dyeing and printing of cloth fall within the ambit of the Maharashtra Sales Tax on the Transfer of Property in Goods involved in the Execution of Works Contracts (Re-enacted) Act, 1989 - HELD THAT:- In the present case, the coloured shade is passed to the fabrics due to the chemical reaction of the materials used in the process of dyeing. Coloured shade may be due to the chemical reaction of one or more materials. The coloured shade represents the inherent chemical property of the materials used. Once there is passing of the chemical property of the materials used in the execution of works contract, then under the Works Contracts Act, there is a deemed sale of the materials used in the execution of the works contract. Accordingly we hold that in the process of dyeing, the coloured shade passed on to the fabrics constitutes sale of the materials used in dyeing, under the Works Contracts Act.
As rightly contended by the counsel for the Revenue, under the Works Contract Act, what is relevant is the passing of property in goods used in the execution of the works contract and not the quantity of the material that passes. It is not the case of the respondents that the chemical solution used for dyeing retains its property even after dyeing. In fact, it is the specific case of the respondents that the solution prepared for dyeing the grey fabrics of one customer, cannot be used for dyeing the grey fabrics of another customer. It is the case of the respondents that on completion of dyeing, of a particular fabric, the chemical solution becomes worthless and is thrown as a waste.
Therefore, it is clear that on completion of dyeing, the entire property of the materials used in dyeing are passed on and what remains as solution is nothing but the residue or the waste. In other words, the coloured shade on the fabrics represents the entire property of the materials used in dyeing. Therefore, it was not open to the Tribunal to hold that the coloured shade represents only very small quantity of the materials used for dyeing and, therefore, the Act is not applicable. In this reference, we are not concerned with the issue relating to the computation of tax on transfer of property in goods used in the execution of a works contract. We are only concerned with the applicability of the Works Contracts Act to the materials used in the execution of a works contract.
Accordingly, we are of the opinion that the Tribunal was not justified in holding that the Works Contracts Act is not applicable in the present case, because the coloured shade passed on to the consumer represents only a small quantity of the materials used in the process of dyeing.
Thus, we hold that the property of the materials such as chemicals, colours and dyes used in the process of dyeing and printing are passed on to the fabrics of the customer and, such passing of property of the materials is a deemed sale and tax is leviable on such materials under the Works Contracts Act.
Accordingly, we answer both the questions referred to us in the negative, i.e., in favour of the Revenue and against the respondents.
The reference is disposed of in the above terms, with no order as to costs.
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2003 (8) TMI 477
Whether 38 persons were rightly included in the electoral rolls?
Held that:- As the basic issue revolves around as noted supra on the question of the legality of their membership and the eligibility of 38 persons to participate in the election held in the year 1996, let the election be held for the Committee under the directions and supervision of the Appellate Authority provided under the Endowments Act. Before issuing directions for holding election, the said authority shall decide about the eligibility of the 38 persons by deciding whether the names of the concerned 38 persons were rightly included in the electoral rolls prepared by the respondents 1 to 12 for election of members to the Committee which was held on 6.10.1996. Parties shall be permitted to place all such materials on which they place reliance to justify their respective claims and stands. We make it clear we have not expressed any opinion on the said questions. The appeals are disposed of accordingly leaving the parties to bear their respective costs.
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2003 (8) TMI 476
Validity and proper interpretation of impugned provisions of Calcutta Municipal Corporation Act 1980 which are contained in Part IV Chapter XII under the Heading "Power of Taxation and Fixation of Consolidated Rates - Held that:- Appeal dismissed. No vice in any of the provisions of the Act.
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2003 (8) TMI 475
Issues Involved:
1. Whether the assessee was entitled to depreciation on air-pollution equipment purchased and leased back to RSEB.
2. Whether the transaction was a genuine sale and lease-back arrangement or a mere finance transaction.
3. Applicability of the rule laid down in McDowell's case.
4. Whether the assessee had ownership rights over the equipment.
5. Validity of the valuation report of the equipment.
6. Impact of the notifications issued by the State Government.
7. Consistency in the stand of the Income-tax Department.
8. Applicability of Explanation 4A to section 43(1).
9. Relevance of the Central Board of Direct Taxes (CBDT) circulars.
10. Whether the assets were movable or immovable property.
11. Economic or commercial value of the transaction.
Summary:
1. Entitlement to Depreciation:
The assessee claimed depreciation on air-pollution equipment purchased from RSEB and leased back. The Assessing Officer disallowed the claim, considering the transaction as a mere finance transaction rather than a genuine sale and lease-back arrangement.
2. Genuine Sale and Lease-Back Arrangement:
The Tribunal examined the intention behind the transaction, noting that the documentation and the terms suggested a pre-ordained arrangement. The use of the word "notional" in the agenda note prepared for the board of RSEB indicated that the sale was not intended to be real. The equipment was not identified at the time of the initial negotiations, and the valuation report lacked credibility. The Tribunal concluded that there was no genuine sale by RSEB to the assessee.
3. Applicability of McDowell's Case:
The Tribunal applied the rule laid down in McDowell's case, which emphasizes that colorable devices cannot be part of tax planning. The Tribunal found that the entire transaction was a subterfuge to claim depreciation and was not a genuine sale and lease-back arrangement.
4. Ownership Rights:
The Tribunal held that the assessee did not acquire ownership rights over the equipment. The terms of the lease agreement and the power of attorney executed in favor of RSEB indicated that the property in the equipment did not pass to the assessee.
5. Valuation Report:
The valuation report prepared by M/s. M. Choudhary and Associates was found to be unreliable. The report lacked essential details, and the valuer admitted that the valuation was done based on information provided by RSEB employees without physical verification.
6. Notifications Issued by State Government:
The Tribunal noted that the notifications exempting the sale from sales tax were neutral factors and did not advance the assessee's case. The issue of the notification was seen as a step to facilitate RSEB in raising funds.
7. Consistency in Stand of Income-tax Department:
The Tribunal acknowledged the inconsistency in the stand of the Department, where lease rentals were allowed as a deduction in the assessment of RSEB but depreciation was disallowed in the assessee's case. However, this inconsistency was not considered fatal to the Department's stand.
8. Applicability of Explanation 4A to Section 43(1):
The Tribunal held that Explanation 4A applies only to genuine SLB transactions and not to non-genuine transactions. Since the transaction was found to be non-genuine, the Explanation was not applicable.
9. Relevance of CBDT Circulars:
The Tribunal noted that the CBDT circulars serve as guidelines for investigating SLB transactions. The circular dated February 9, 2001, advises considering the principles laid down in McDowell's case to determine the genuineness of SLB transactions.
10. Movable or Immovable Property:
The Tribunal held that the assets were movable property, as the cases had proceeded on this footing. The argument that the boilers were immovable property was raised for the first time before the Tribunal and was not considered.
11. Economic or Commercial Value:
The Tribunal refrained from entering into the complexities of economic calculations, noting that assessments are made on legal principles rather than arithmetical calculations.
Conclusion:
The Tribunal concluded that the transactions were not genuine SLB arrangements but mere finance transactions. The assessee was not entitled to the depreciation claimed, and the orders of the departmental authorities were confirmed. The records were placed before the Division Bench for disposal of other grounds of appeal.
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2003 (8) TMI 474
Whether there was any non-compliance of Sections 42 and 50 of the Act as pleaded?
Held that:- Appeal dismissed. In the factual scenario of the present case not only possession but conscious possession has been established. It has not been shown by the accused-appellants that the possession was not conscious in the logical background of Sections 35 and 54 of the Act.
In fact the evidence clearly establishes that they knew about transportation of charas, and each had a role in the transportation and possession with conscious knowledge of what they are doing. The accused-appellant Manjit Singh does not stand on a different footing merely because he was a driver of the vehicle. The logic applicable to other accused-appellants also applies to Manjit Singh. he presumption available by application of logic flowing from Sections 35 and 54 of the Act clearly applies to the facts of the present case
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2003 (8) TMI 473
Prohibiting trade in the imported ivory - WHETHER THE IVORY VESTS IN THE GOVERNMENT?
Held that:- Appeal dismissed. The respondents would be entitled to take physical possession of the ivory now in seizure. The question, however, would be as to whether the Central Government should destroy the articles including idols of gods and goddesses and household items like sofa sets depicting cultural and religious heritage.
It is stated that similar articles are being displayed in museums as a part of cultural and religious heritage of India.
In view of our findings aforementioned, the appropriate authority would be entitled to continue to keep in possession the said articles. We, however, direct that the same be kept at appropriate museums or at such suitable places where the statutory authorities feel fit and proper but they should not be destroyed.
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