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2009 (5) TMI 887
Issues:
Challenge to order of assessment under Orissa Value Added Tax Act, 2004 based on jurisdiction of assessing authority.
Analysis:
The petitioner, a registered dealer under the Orissa Value Added Tax Act, 2004, contested the assessment order dated April 21, 2007, issued by the Sales Tax Officer, Bhanjanagar Circle, Bhanjanagar. The challenge was primarily on the grounds that the assessment should have been conducted by the assessing authority of the range as per rule 34(12)(b) of the OVAT Rules, not by the Sales Tax Officer. The petitioner argued that the Sales Tax Officer did not have the jurisdiction to conduct the assessment, as per the relevant provisions of the Act and Rules.
The key contention revolved around the interpretation of rule 34(12)(b) of the Orissa Value Added Tax Rules, 2005. The rule stipulates that dealers granted registration under the OVAT Act/Rules and assigned with TIN numbers must be assessed by the "assessing authority of the range." The High Court analyzed the impugned assessment order, which was issued by the Sales Tax Officer, and concluded that it did not comply with the requirement of being conducted by the assessing authority of the range, as mandated by rule 34(12)(b). Therefore, the Court held that the assessment order lacked jurisdiction and could not withstand judicial scrutiny.
In the judgment, the High Court directed the petitioner to appear before the Assistant Commissioner of Sales Tax, Cuttack II Range, for further proceedings in accordance with the law. Additionally, the Sales Tax Officer, Bhanjanagar Circle, was instructed to transfer the records of the assessee to the designated assessing authority of the range. Consequently, the Court disposed of the writ petition, setting aside the assessment order issued by the Sales Tax Officer due to lack of jurisdiction and non-conformity with the relevant rule.
Overall, the judgment emphasized the importance of adherence to statutory provisions regarding the jurisdiction of assessing authorities under the Orissa Value Added Tax Act, 2004, and highlighted the significance of ensuring assessments are conducted by the appropriate authority as prescribed by law.
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2009 (5) TMI 886
Issues: Taxation under the West Bengal Sales Tax Act, 1994 vs. West Bengal Value Added Tax Act, 2003; Rejection of applications before the West Bengal Value Added Tax Settlement Commission; Interpretation of section 8B of the VAT Act; Applicability of different tax rates on PVC pipe fittings; Legislative competence in amending tax rates.
Analysis:
1. Taxation Transition from 1994 Act to 2003 VAT Act:
The case involved a transition from the West Bengal Sales Tax Act, 1994 to the West Bengal Value Added Tax Act, 2003, impacting the taxation of PVC pipes and fittings. The petitioners were paying tax at four per cent under the 1994 Act, but a change in the VAT Act resulted in a higher tax rate of 12.5 per cent for fittings of PVC pipes for a specific period. Assessments were conducted for the year 2005-06, reflecting the correct tax rates applicable during the transition period.
2. Rejection of Settlement Commission Applications:
The petitioners sought settlement before the West Bengal Value Added Tax Settlement Commission due to the tax rate discrepancy between the two Acts. However, the Settlement Commission rejected their applications under section 8B(2) of the VAT Act, which allows settlement for cases of inconsistency in assessments due to different tax rates on goods. The rejection was based on the interpretation of the qualifying clause in Explanation (b) of section 8B(2).
3. Interpretation of Section 8B of the VAT Act:
The Tribunal analyzed the provisions of section 8B, emphasizing that the inconsistency for settlement must arise from the same or similar provisions in the Schedule of the Act. The qualifying clause in Explanation (b) clarifies that inconsistencies due to lawful changes in tax rates are not eligible for settlement. The Tribunal rejected the argument that the qualifying clause only applies to non-admissibility of claims, affirming that it covers all types of inconsistencies specified in Explanation (b).
4. Applicability of Different Tax Rates on PVC Pipe Fittings:
The Tribunal highlighted that the assessing authorities must apply the prevailing law during assessments, including changes in tax rates. Inconsistencies for settlement are limited to differing interpretations of the same entry by authorities. The Tribunal clarified that lawful application of different tax rates under distinct provisions does not constitute an inconsistency eligible for Settlement Commission intervention.
5. Legislative Competence in Amending Tax Rates:
The Tribunal acknowledged the legislative authority to set and revise tax rates, emphasizing that the freedom of the legislature in tax rate amendments is subject to constitutional provisions. The Tribunal upheld the legislative decision not to amend the tax rate entry for a specific period, suggesting that aggrieved parties may seek redress through the appropriate legislative channels for rate amendments.
In conclusion, the Tribunal found no error in the Settlement Commission's rejection of the petitioners' applications, highlighting the legislative competence in tax rate amendments and encouraging joint representations to the State Government for necessary changes. The applications were disposed of without costs, with the technical member concurring with the decision.
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2009 (5) TMI 885
Whether, the Commercial Tax Tribunal has erred in law in dismissing the second appeal, filed under section 10 of the U.P. Trade Tax Act, 1948, on the ground that the Joint Commissioner, Commercial Tax, has no authority to sign the memorandum of appeal on behalf of Commissioner, Commercial Tax?, and whether an appeal filed only by the "State" is maintainable on behalf of Revenue, against order of the Joint Commissioner (Appeals)?
Whether, the Commercial Tax Tribunal and the Joint Commissioner (Appeals), Commercial Tax, have erred in law in holding that the assessee, a works contractor, is not liable to pay the tax in respect of amount mentioned in the certificate of tax deduction at source, which was not verified nor the deducted amount paid in the account of the State Government?
Held that:- The Tribunal has committed grave error of law in rejecting the memorandum of appeals filed before it by the Commissioner of Commercial Tax on the ground that neither Commissioner could maintain appeal in respect of order passed by Joint Commissioner, Commercial Tax, nor the memorandum was signed by the authorised person. The finding and order recorded by the Commercial Tax Tribunal, Dehradun, in this regard is liable to be set aside. We hold that the three second appeals filed by the Commissioner, Commercial Tax, before the Tribunal were maintainable against order of the Joint Commissioner, and were duly signed by the person authorized. Question of law No. 1 stands answered in favour of the Revenue/appellant.
Where under a statute contractee has been made an agency to collect the tax in the form of deductions in the payment, if the amount of tax is deducted by such agency, the assessee (dealer) cannot be made liable to pay the same tax again. But if such deduction is found false or the T.D.S. certificate is found not genuine, it cannot be said that the dealer (assessee) is not liable to pay the tax demanded by the A.O. Accordingly, question of law No. 2 stands also answered in favour of the Revenue/appellant.
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2009 (5) TMI 884
Whether, on the facts and in the circumstances of the case, the Trade Tax Tribunal was justified in not accepting the report of the Valuer which clearly indicates that the investment in the applicant unit was less than ₹ 3,00,000?
Whether, on the perusal of the registration certificate issued under the U.P. and Central Sales Tax Act, 1956 the inference drawn by the Tribunal that the applicant has used the challan of some other firm appears to be incorrect?
Whether, on the facts and circumstances of the case, the Trade Tax Tribunal was justified in holding that the applicant-firm is closed for more than six months at a stretch on the ground that the applicant has filed no returns under misconception of law?
Whether, in any view of the matter the order passed by the Trade Tax Tribunal is illegal and is liable to be set aside?
Held that:- The contentions of the learned counsel for the assessee that the order of the Tribunal has been passed by ignoring material evidence have substance. The contentions as raised by the learned counsel for the assessee are, therefore, accepted by this court. The matter is remanded to the Tribunal for a fresh consideration. The consideration will be made by the Tribunal on the basis of material, which is already there on record before the Tribunal as well as the entire record, which has been placed before this court. The assessee will be given an opportunity once again to establish his case on the basis of the material, which has been produced in this revision also.
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2009 (5) TMI 883
Delay in filing the claim for input tax credit - whether should have been condoned as per the provisions of section 14 of the VAT Act and rule 25(1)(b) of the Punjab Value Added Tax Rules, 2005?
Held that:- The issue involved in these appeals is no longer res integra. Similar controversy was brought before us by the Revenue in City Petro [2009 (1) TMI 789 - PUNJAB AND HARYANA HIGH COURT], therefore, following the same reasoning, the appeals filed by the Revenue are dismissed.
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2009 (5) TMI 882
Whether sales to registered dealers are includable in notional tax liability of a "unit" as defined in rule 28A(2)(n) of the Haryana General Sales Tax Rules, 1975?
Held that:- Sales made to registered dealers were not includible in the matter of calculation of "notional tax liability" during the period in question.
Petition succeeds. The order dated December 19, 2001 (P9) and order dated May 26, 2005 (P11) passed by the Tribunal are set aside and direction is issued to the respondents to deduct the sales made to the registered dealers while working out taxable turnover. Accordingly the same would also not be included in "notional tax liability
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2009 (5) TMI 881
Claim for sales tax exemption with respect to the "building" rejected - though the exemption sought for with regard to the "plant and machinery" stands accepted
Held that:- To have absolute right, it is very much necessary that the petitioner ought to have obtained requisite release deeds to be executed by other co-owners as well and it should have been produced before the authority for substantiating the claim for exemption; placing reliance on the dictum in exhibit P5 judgment. Accordingly, the matter is disposed of, directing the petitioner to produce proof as to his absolute right over the property by procuring necessary release deeds to be executed by other co-owners or otherwise and produce the same before the first respondent/State Level Committee for considering the claim for exemption within two months. On producing the same, the first respondent shall reconsider .
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2009 (5) TMI 880
Whether the belated order issued by the assessing officer on October 15, 2007 produced as annexure A is beyond his jurisdiction and against the scheme of compounding provided under section 7 of the Act?
Held that:- Since the application for compounding was admittedly filed by the assessee on due date in this case and the officer has not attributed anything on the assessee for the delay in passing orders thereon and since there is a bona fide dispute about the validity of the proceedings issued and since tax returns also were filed by the assessee, we direct the officer to recall penalty orders provided the assessee clears all the arrears of tax under the compounding scheme with interest in accordance with the judgment, within three months from now. Since counsel for the petitioner submitted that there is error in the calculation of tax, we direct the officer to modify the demand, if there is any mistake based on application for rectification to be filed by the petitioner under section 43 ignoring the time-limit, if application is filed within a month from the date of receipt of a copy of this judgment.
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2009 (5) TMI 879
Issues:
1. Interpretation of notification regarding tax rate on oxygen and industrial gases.
2. Classification of medicated oxygen as medicine for tax purposes.
3. Application of tax rates based on usage and purpose of the product.
Interpretation of Notification Regarding Tax Rate on Oxygen and Industrial Gases:
The Assistant Commissioner filed a sales tax revision petition against the judgment by the Tax Board, Ajmer, affirming the decision of the Deputy Commissioner (Appeals) regarding the tax rate on oxygen and industrial gases. The dispute arose when a demand was created for a difference amount of four per cent tax and surcharge on medicated oxygen produced by the respondent-dealer. The petitioner argued for a 12 per cent tax rate based on a specific entry in the notification dated March 22, 2002. However, the Tax Board, following a judgment of the Allahabad High Court, concluded that medicated oxygen, used only for human patients in hospitals, should be taxed at eight per cent as it is considered medicine and not an industrial gas.
Classification of Medicated Oxygen as Medicine for Tax Purposes:
The respondent-dealer produced medicated oxygen gas under a license issued as per the Medicated Oxygen and Drugs Rules, 1945, solely for human patients with no commercial use. The petitioner challenged the additional tax demand, which was set aside by the Deputy Commissioner (Appeals) and upheld by the Tax Board. The court agreed that medicated oxygen, used to save the lives of seriously ill patients, falls under the category of medicine. The judgment emphasized the duty of the welfare state to either exempt such critical medical supplies from tax or impose a negligible tax due to their life-saving nature.
Application of Tax Rates Based on Usage and Purpose of the Product:
The court analyzed the purpose and usage of medicated oxygen, highlighting its critical role in saving human lives in hospitals. It differentiated between industrial use of oxygen gas, subject to a 12 per cent tax rate, and medicated oxygen used solely for medical treatment, taxed at eight per cent. The judgment stressed that when a commodity is intended for saving human lives without any industrial or commercial purpose, a lower tax rate or exemption should be considered. The court dismissed the revision petition, stating that no question of law was involved, and upheld the decision to tax medicated oxygen at eight per cent due to its essential role in healthcare and life-saving nature.
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2009 (5) TMI 878
Whether on a true and correct interpretation of entry No. 14 of Schedule B appended to the State Act, could it be held that 'labels' are textiles and covered under the said entry?
Held that:- Left with no doubt that "labels" have to be regarded as textiles. It has remained undisputed on the facts that the names of the companies for which the labels are prepared are woven, which is the process used for weaving any other textile. It does not involve any printing by any external aid. Therefore, in the facts and circumstances of the case "labels" have to be regarded as textile and covered by entry 14 of Schedule B to the Act. The question posed hereinabove is decided in favour of the assessee and against the Revenue.
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2009 (5) TMI 877
Whether, on the facts and circumstances of the case, the Tribunal is correct in law in holding that assessment framed falls under section 11(3) of the Act and not under section 11(4) or 11(5) so as to attract bar of limitation?
Is Tribunal correct in law in upholding assessment for the financial year when the unit of assessment is a return period and a quarter in the case in question?
Held that:- Assessment has been framed by accepting returns filed on record. Even otherwise there is no addition on guess-work or estimate. . .". The Division Bench judgment of this court in the case of Avtar Singh Ranjit Singh v. State of Punjab [1982 (4) TMI 269 - PUNJAB AND HARYANA HIGH COURT], has no application to the facts of the instant case because in that case there were categorical findings by the Financial Commissioner showing that terms of show-cause notice were partly complied with. Therefore, the argument that the assessment should be considered to have been framed on the basis of best judgment assessment of the Assessing Authority within the meaning of section 11(4), is wholly unsustainable and is liable to be rejected. Accordingly, the first question is liable to be answered against the dealer-petitioner and in favour of the Revenue.
The scheme of the Act as well as that of the Rules would show that the power vests in the Assessing Authority in specific cases to fix a different return period. In that regard reference may be made to rules 20, 22 and 23 of the Rules. Therefore, it cannot be concluded that unit of assessment is only one quarter and not the year. The question, thus, deserves to be answered against the dealer-petitioner and in favour of the Revenue.
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2009 (5) TMI 876
Issues involved: Determination of whether sales of cotton yarn by the respondent are local sales or inter-State sales for the years 1998-99 and 1999-2000.
Summary:
The High Court of Kerala considered the question raised in tax revision cases filed by the Revenue regarding the nature of sales made by the respondent. The respondent had been enjoying sales tax exemption on local sales but not on inter-State sales. Despite attempts to obtain exemption for inter-State sales, the respondent continued filing returns without tax payment. The assessing officer initially rejected the claim of the sales being local, but it was allowed in the first appeal and confirmed by the Tribunal. The Court noted that the respondent's efforts to convert inter-State sales to local sales seemed aimed at avoiding liability under the CST Act. The respondent failed to provide evidence of the agency transaction or how goods were transported out of Kerala. It was established that goods were transported using delivery notes issued by the respondent, and the introduction of an agent appeared to be a tactic to avoid paying CST. The Court emphasized that even if goods were lifted by an agent, the sales would still be considered inter-State as the goods moved out of the State as per the contract. The orders of the Tribunal and the first appellate authority were deemed factually and legally unsustainable, leading to the reversal of those orders and restoration of the assessment order.
The revision cases were allowed accordingly.
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2009 (5) TMI 875
Reassessment proceedings challenged - Held that:- As find from the record that to the show-cause notice dated March 27, 2004 the petitioner had filed a detailed objections/reply on March 29, 2004 but the Additional Commissioner had not given any reasons, whatsoever, nor has dealt with any of the objections raised by the petitioner in its reply. In view of the law laid down by this court in the case of S.K. Traders [2007 (7) TMI 573 - ALLAHABAD HIGH COURT] the said order passed by the Additional Commissioner cannot be sustained and is, therefore, liable to be set aside.
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2009 (5) TMI 874
Whether, in the facts and circumstances of the case, interest under section 59 of the Haryana General Sales Tax Act, 1973, is chargeable even on the demands which are quashed in appeal?
Whether, in the facts and circumstances of the case, the interest under section 59 chargeable even without service of demand notice?
Held that:- It is necessary to point out that question No. 1 is based on the fact that some demand of tax has been quashed and interest has been claimed on that demand of tax. Merely because at one forum demand was quashed, that would not absolve the assessee-petitioner from payment of tax if finally it has been found due. If tax is payable then interest would also be payable as per statutory provision.
The provisions governing the payment of interest are entirely different from section 59 of the HGST Act. For example, in none of these cases a provision has been made which may be equivalent to first proviso to section 59 of the HGST Act, which in unmistakable terms provides that recovery of any tax or penalty shall be made with interest even when there is a stay order by the Appellate Authority or by the High Court or by the Supreme Court, provided the amount is ultimately found due. The interest payable on such amount has to be assessed from the date when tax or penalty first becomes due.Therefore, both the questions of law have to be answered against the assessee-petitioner and in favour of the Revenue.
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2009 (5) TMI 873
Furnish form 25 in respect of the transactions covered by the bills produced as exhibits P2 and P3 series, pertaining to the sale of black pepper for the years 1986-87 and 1987-88
Held that:- The stipulations in exhibit P1, particularly under paragraph Nos. 6, 8 and elsewhere as to the conditions incorporated and the liability fixed on the supplier, show that the transactions between the petitioner and the first respondent would never come to an end on effecting the supply. Showing the name of the first respondent as "shipper" in the relevant records and proceedings was only for the purpose of facilitating the transactions in an effective and result-oriented manner, which cannot be reckoned as the basis to arrive at a conclusion to the contrary. Exhibit P1 contract executed between the parties was only for the purpose of facilitating sale on payment of "commission", which could never be regarded as a "sale", so as to shift the liability to the shoulders of the first respondent and to compel them to issue Form 25 declaration, more so, at this belated stage. W.P. dismissed.
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2009 (5) TMI 872
Issues:
Challenge to order disallowing input-tax credit for four quarters ending on March 31, 2006 under the West Bengal Value Added Tax Act, 2003.
Detailed Analysis:
1. Claim of Input-Tax Credit Disallowed:
- The petitioner challenged the order disallowing input-tax credit for four quarters ending on March 31, 2006.
- The Deputy Commissioner rejected the claim based on the petitioner's failure to produce tax invoices and non-compliance with rule 19(8) of the West Bengal VAT Rules, 2005.
2. Legal Provisions:
- Section 22 of the West Bengal VAT Act, 2003 provides for input-tax credit eligibility.
- Rules 19 to 23, 87, and 91(7) of the West Bengal VAT Rules, 2005 are relevant.
- Sub-section (5)(a) of section 22 mandates the requirement of an original tax invoice for claiming input-tax credit.
- Rule 91(7) of the VAT Rules, 2005 specifies the details a tax invoice must contain for validity.
3. Tax Invoice Requirements:
- A tax invoice must include specific details like date of sale, dealer information, goods description, tax amount, among others.
- The purpose of these details is to verify the authenticity of the transaction and ensure proper tax charging.
- Deviation from the prescribed format does not invalidate a tax invoice if essential information is available.
4. Verification of Money Receipts:
- The petitioner provided money receipts issued by the State Government undertaking, which contained most essential information.
- The Deputy Commissioner did not verify these receipts to determine their genuineness, leading to a dispute regarding the input-tax credit claim.
5. Payment Method Dispute:
- Rule 19(8) requires payment by account payee cheque or draft exceeding Rs. 20,000, unless banking facilities are unavailable.
- The petitioner argued that the rule is directory, not mandatory, especially in cases where banking facilities are lacking.
- Cash transactions are permissible in such scenarios to ensure the genuineness of transactions.
6. Decision and Direction:
- The Tribunal held that if transactions are genuine, the petitioner is entitled to input-tax credit, despite non-compliance with payment method rules.
- The appellate order disallowing the claim was set aside with a direction to verify transactions and examine bills issued by the State Government undertaking.
- The verification process and appeal disposal were to be completed by a specified date.
7. Final Decision:
- The petition was allowed without costs, with both members of the Tribunal concurring on the decision.
This detailed analysis highlights the legal intricacies involved in the challenge to the disallowance of input-tax credit under the West Bengal Value Added Tax Act, 2003, emphasizing the importance of compliance with tax invoice requirements and the interpretation of payment method rules in specific circumstances.
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2009 (5) TMI 871
Whether, on the facts and circumstances of the case, the Trade Tax Tribunal after recording a finding in favour of the applicant that the notice by affixation on March 27, 1985 was not legal and valid, was not justified in treating the service of notice on Madan Lal, who was admittedly the brother of the wife of the sole proprietor of the applicant as legal and valid?
Whether, on the facts and circumstances of the case, the Tribunal was not justified in holding that in the absence of the proprietor of the applicant, the service of notice on Madan Lal shall be treated as valid?
Whether the observation of the Tribunal that the conduct of Madan Lal was that of an agent is based on surmises and conjectures since there is no material whatsoever on record to indicate that either Madan Lal was managing the business affairs or acting as an agent?
Held that:- The Tribunal has on its own recorded firstly that the notice sent through process server was not served upon the assessee. Secondly, the mode of notice used by the assessing authority was by pasting on the premises of the assessee. However, the order of the Tribunal does not reflect in any manner that the assessing authority has given any reason for resorting to this mode and, therefore, the Tribunal, on its own, has recorded that the mode of fixation used by the assessing authority was illegal. Thirdly, the notice, which has been held to be valid by registered post by the Tribunal, is also in the teeth of the finding recorded by the Tribunal itself that it has not come on record anywhere that Madan Lal, who was the brother-in-law of the assessee was either the agent or the munim, manager or the person authorized by the assessee in writing to act on his behalf and to accept the notice.
This court comes to the conclusion that the notice issued under section 21 was not properly served on the assessee and, therefore, the proceedings initiated on the basis of such a notice were bad and are liable to be set aside by this court.
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2009 (5) TMI 870
Whether, on the facts and under the circumstances of the case the Karnataka Appellate Tribunal was right in holding that the levy of penalty under section 9(2) of the CST Act read with section 18A of the KST Act made by the assessing authority and confirmed by the first appellate authority is correct?
Held that:- There is failure to record a finding as to whether the incorrectness of the return, as claimed by the petitioner was due to want of care on the part of its employee and that there was no reasonable explanation forthcoming from the assessee for such want of care and therefore, it could be inferred that the returns filed are deliberate false returns. The authorities having failed to apply their mind to the contention, it cannot but be said that the orders of the assessing authority, annexure "A", and the orders impugned of the appellate authorities are unsustainable. In the circumstances, the question of law as raised in the petition is answered accordingly. W.P. allowed.
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2009 (5) TMI 869
Whether the higher authorities in the hierarchy of Sales Tax Department, Haryana in the garb of exercising power of granting sanction under rule 36 of the Haryana General Sales Tax Rules, 1975 to the refund orders passed by the assessing officer, could set aside such order of assessment?
Held that:- The arguments of the learned State counsel that the petitioner should first exhaust the remedy of appeal as per the provisions of section 39 has not impressed us because in cases where question of jurisdiction of concerned authority is involved, writ petitions under article 226 could be filed before the High Courts.
It has been held that in order to avoid filing of alternative remedy of appeal a writ petitioner under article 226 is required to show that there was complete lack of jurisdiction on the part of the officer or authority to pass an order. Similar view has been expressed in another judgment of the Supreme Court rendered in the case of Surya Dev Rai v. Ram Chander Rai [2003 (8) TMI 527 - SUPREME COURT]. Therefore, there is no blanket bar on the power of the High Court to entertain a petition in the face of an order which is totally without jurisdiction. Accordingly the objection raised by the learned State counsel is rejected. Petitions succeed
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2009 (5) TMI 868
Constitutionality of section 44(10) of the Kerala Value Added Tax Act, 2003 challenged - Held that:- It is not open to the petitioners to assail the validity of section 44(10). No compelling reasons have been made out to declare section 44(10) as unconstitutional. It is part of a fiscal statute, an economic measure. Apparently, the Legislature has deemed it fit to deal with a serious problem of rampant tax evasion practised through the medium of undisclosed godowns, thus resulting in better compliance.
It is necessary to observe that it is certainly not the law that in every case where goods are discovered at undisclosed godowns, the penalty is to be mechanically imposed under section 44(8) at the maximum rate. Even when in a case falling under section 44(8), de hors section 44(10) where an inspection unravels the phenomenon of unaccounted goods, it becomes the duty of the officer to examine the issue as to whether penalty is to be imposed and what is the quantum of penalty to be imposed.
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