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2006 (11) TMI 566
Issues:
1. Liability of a public company under the Assam General Sales Tax Act for the extraction of bamboos under an agreement with the Government of Assam and the Karbi Anglong Autonomous Council.
Analysis:
The judgment revolves around the liability of a public company under the Assam General Sales Tax Act for the extraction of bamboos under an agreement with the Government of Assam and the Karbi Anglong Autonomous Council. The petitioner, a public company engaged in the business of manufacturing, sale, and supply of papers, entered into an agreement for extracting bamboos for raw materials. The agreement specified the quantity of bamboos to be extracted annually and the royalty to be paid for the extraction. The main issue was whether the petitioner was liable to pay tax under the AGST Act for the extraction of bamboos based on the royalty paid. The petitioner challenged the decision of the revisional authority, which held the petitioner liable for tax, through a writ petition.
The petitioner argued that the decision of the revisional authority contradicted principles laid down by the apex court in previous cases, specifically citing the cases of State of Orissa v. Titaghur Paper Mills Co. Ltd. and State of H.P. v. Gujarat Ambuja Cement Ltd. The petitioner also referred to a later decision by the Commissioner of Taxes, which supported the petitioner's position that the transaction involved did not constitute a purchase price, thus not attracting tax liability under the AGST Act. The Standing Counsel for the Finance Department acknowledged the applicability of the principles established in the Titaghur Paper Mills case to the present situation.
The court, relying on the precedent set by the apex court in the Titaghur Paper Mills case, concluded that the royalty paid by the petitioner for the extraction of bamboos could not be considered as a purchase price. Therefore, in cases of inter-State sales by the petitioner, no tax liability should arise under the AGST Act. Consequently, the court allowed the writ petition, setting aside the impugned order and the consequential assessment order passed by the Superintendent of Taxes. The judgment favored the petitioner, ruling in their favor and absolving them of tax liability under the AGST Act.
In conclusion, the judgment clarifies the tax liability of the petitioner, a public company, for the extraction of bamboos under a specific agreement. By applying established legal principles and precedents, the court determined that the royalty paid for extraction did not constitute a purchase price, thereby exempting the petitioner from tax liability under the AGST Act.
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2006 (11) TMI 565
Issues involved:
The issues involved in this case are:
1. Justification of penalty amount by the Appellate Tribunal without evidence of false declaration.
2. Appellate Tribunal's disturbance of the first appellate authority's finding on penalty without new circumstances.
3. Imposition of penalty by the Appellate Tribunal in absence of relevant evidence.
4. Tribunal's decision on not setting aside the penalty due to failure in proving knowingly false declaration.
5. Tribunal's justification for not fully deleting the penalty.
Details of the Judgment:
Issue 1:
The Appellate Tribunal justified the penalty at one time the tax payable without evidence of a false declaration. The petitioner, a dealer in iron, steel, and cement, was assessed for the year 2001-02, with a turnover treated as a second sale. The assessing officer proposed reassessment and penalty under section 6A(3) of the Act for a bogus declaration. The Tribunal reduced the penalty from Rs. 18,76,689 to Rs. 6,26,563, which the petitioner challenged.
Issue 2:
The Appellate Tribunal disturbed the first appellate authority's finding on the penalty without new circumstances. The Tribunal noted that the petitioner produced a bogus document, form 32B, for exemption, which was rightly disallowed. The Tribunal reduced the penalty considering the petitioner's case as a special one, despite the creation of a bogus document.
Issue 3:
The Appellate Tribunal imposed a penalty in the absence of relevant evidence. The Tribunal found that the petitioner filed a bogus form 32B for exemption, which was created to show a non-existent entity as the first dealer in the State. Despite this, the Tribunal reduced the penalty, which was deemed improper in law.
Issue 4:
The Tribunal's decision on not setting aside the penalty was based on the failure to prove knowingly false declaration. The Tribunal concluded that the petitioner knowingly produced a bogus document for exemption, and while acknowledging the petitioner's representative's involvement, held the petitioner responsible as well due to inaction against the representative.
Issue 5:
The Tribunal's justification for not fully deleting the penalty was questioned. The Court emphasized discouraging and condemning bogus transactions and documents for tax adjudication purity. It highlighted the importance of tax revenue for the State and upheld the penalty, rejecting the petitioner's plea of ignorance regarding the bogus document.
The Court concluded that the Tribunal should not have reduced the minimum penalty, emphasizing the need to enforce the law strictly in tax matters. It expressed concern over tax evasion in the area and urged the department to take stringent action to recover rightful revenue and punish those involved in creating or filing bogus documents. The appeal filed by the State was accepted, and the appeal by the assessee was rejected, with the question of law answered in favor of the Revenue.
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2006 (11) TMI 564
Issues:
1. Validity of reassessment order under the Central Sales Tax Act, 1956.
2. Jurisdiction of the impugned orders due to the absence of a valid notice.
3. Applicability of notices served under the Bihar Sales Tax Act to reassessment under the Central Sales Tax Act.
4. Availability of alternative remedy in the absence of functioning Tribunal.
5. Demand for disputed tax amount and issuance of road permits by the Deputy Commissioner.
Analysis:
1. The petitioner challenged the reassessment order under the Central Sales Tax Act, 1956, for the period 1993-94. The main issue was the validity of the reassessment without a valid notice under section 19 of the Bihar Finance Act. The petitioner argued that the assessment order from 2001 was reopened without proper notice. However, the respondents contended that the impugned orders were passed after serving notices based on the order of remand by the appellate authority. The court examined the validity of the notice and its implications on the reassessment order.
2. Two assessment orders were initially passed in 1998 under the CST and Bihar Sales Tax Act for the year 1993-94. Subsequent appeals and remands led to revised assessment orders in 2001. The petitioner failed to produce supporting materials, leading to further remand in 2004. Notices were issued in 2005 and 2006 for reassessment under both tax acts. The petitioner argued that the notice mentioned the BST registration number, indicating assessment under BST, not CST. The court held that the notices served were applicable for reassessment under both acts, considering the interrelated nature of intra-State and inter-State sales.
3. The court determined that the notices served for reassessment under BST and CST were valid, rejecting the petitioner's claim of lack of notice under CST for reassessment. The interconnection of intra-State and inter-State sales justified the notices issued. The court emphasized the applicability of the notices under both tax acts based on relevant legal provisions and rules. The judgments cited by the petitioner were deemed irrelevant due to factual distinctions.
4. Regarding the availability of an alternative remedy, the petitioner mentioned the non-functioning Tribunal, hindering the revision process under the Bihar Finance Act. The respondents suggested moving before the Commissioner for revision under a specific section of the Act. The court clarified that pursuing revision before the Commissioner would not prejudice the parties, as the current order did not delve into the merits of the sales tax dispute.
5. Lastly, the petitioner raised concerns about the Deputy Commissioner's demand for disputed tax amounts and the withholding of road permits affecting business operations. The court directed the issuance of road permits upon payment of admitted tax and depositing a specified amount, ensuring the petitioner's business continuity amidst the ongoing dispute. The writ petition was ultimately dismissed with the specified observations and directions.
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2006 (11) TMI 563
Challenge the OIL deducted sales tax - bills for the services rendered under Contract - transfer of right to use or not - HELD THAT:- In our considered opinion, unequivocally proclaims an all-pervasive control of OIL over the appellant's equipment deployed for the execution of the contract during its subsistence. Evidently, the equipment, tools and machinery detailed by the contractor were owned by it, physical possession whereof was also permitted to be retained by it. Those were to be operated by its technically qualified personnel. The contractor was to realise rental charges therefor.
The judicially evolved principles to identify a transaction involving the transfer of right to use goods to be a sale under the Act clearly exclude the indispensability of delivery of physical possession thereof as an essential pre-condition. The other ordained features of such a transaction are, in our considered opinion, present in the instant case. The equipment, plants and machinery were available and identified by the parties. Under the contract, OIL derived the legal right to use the goods having hired the same on payment of charges. Customs duty had also been paid by it on the equipment imported by the contractor for executing the works. Under the stringent contractual terms, the contractor was bound to keep the equipment engaged exclusively for the works. The fact that the same had been operated by its technically qualified personnel does not militate against the element of exclusiveness in the use thereof for the services and benefit of OIL.
During the subsistence of the contract, the appellant-company was neither authorised nor permitted to transfer the equipment or detail the same for others. The parties consciously limited the tax liability to the rental component only.
The provisions of the contract understandably have to be construed in the context of the service accorded to be rendered. The transfer of right to use the equipments has to be perceived in the context of the nature, manner and extent of engagement thereof. The retention of physical possession thereof by the appellant-company cannot be decisive. The parties entered into the contract understanding the implications of each and every provision thereof, which according to us, demonstrate an obvious dominion and control of OIL over the equipment used by the appellant for the execution of the works during the period of the contract. We, thus, have no hesitation to hold that the transaction in question involved transfer of right to use the equipment, plants and machinery under the lease within the meaning of section 2(33)(iv) of the Act.
Thus, no error of fact or law is discernible. We find ourselves in agreement with the conclusions recorded therein, however, for the reasons alluded hereinabove. The appeal, being without any merit, is thus dismissed.
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2006 (11) TMI 562
Issues Involved:
1. Nature of the amendment to section 22(3) of the KST Act and section 14(3) of the Entry Tax Act-procedural or substantive.
2. Commencement of the lis-whether it starts on the date of filing the return or when required to be filed.
3. Impact of the amendment on the substantive right of appeal under the un-amended provisions.
Detailed Analysis:
1. Nature of the Amendment:
The primary issue was whether the amendment to section 22(3) of the KST Act and section 14(3) of the Entry Tax Act is procedural or substantive. The court held that the amendment is substantive in nature. This conclusion was drawn from precedents such as Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh and Garikapati Veeraya v. N. Subbiah Choudhury, which established that the right of appeal is a substantive right. The court emphasized that the right of appeal is vested from the date the lis commences and is governed by the law prevailing at that time.
2. Commencement of the Lis:
The court deliberated on when the lis commences-whether it is on the date of filing the return or when the return is required to be filed. The judgment referred to Khazan Chand Nathi Ram v. State of Haryana and Deputy Commercial Tax Officer v. Cameo Exports, concluding that the lis commences on the date the return is filed or is required to be filed. This interpretation aligns with the principle that the right of appeal is vested from the initiation of the proceedings, not from the date of the decision.
3. Impact on Substantive Right of Appeal:
The court considered whether the amendment whittles down the substantive right of appeal acquired under the un-amended law. The court ruled that the amendment does not take away the right of appeal but only imposes a condition of pre-deposit for maintaining the appeal. This condition does not impair the right of appeal but is a statutory requirement that must be fulfilled. The court cited Commercial Tax Officer v. Swathi Traders and Gokak Mills v. Commissioner for Women's Compensation to support the view that the right of appeal is subject to legislative conditions, which can include pre-deposit requirements.
Conclusion:
The court concluded that the amendment to section 22(3) of the KST Act and section 14(3) of the Entry Tax Act is substantive and applies to appeals filed after the amendment, even if the returns were filed before the amendment. The lis commences on the date of filing the return, and the right of appeal is vested from that date. The amendment does not take away the substantive right of appeal but imposes a pre-deposit condition, which is a valid legislative requirement. The court directed the Tribunal to accept the appeals if the assessees comply with the pre-deposit condition within four weeks.
The questions of law were answered in favor of the Revenue, and the appeals were accepted with the condition that the assessees comply with the relevant pre-deposit provisions.
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2006 (11) TMI 561
Issues:
1. Time-limit for returning documents produced following a notice under section 28(1) of the Kerala General Sales Tax Act, 1963.
Analysis:
The High Court of Kerala deliberated on the time-limit for returning documents produced after a notice under section 28(1) of the Kerala General Sales Tax Act, 1963. The petitioner, a dealer, had produced books of account upon receiving a notice in form 51 under rule 72 of the Kerala General Sales Tax Rules, 1963. The first respondent verified the books, seized them without authority, and did not return them, prompting the petitioner to file a writ petition seeking release of the seized records. Additionally, a notice under section 45A of the Act proposing a penalty was served on the petitioner, leading to another writ petition to stay further proceedings. The court highlighted the principles that the assessment period does not control revisional jurisdiction, and the exercise of revisional power must be within a reasonable period. In this case, the court found the notice dated September 4, 2006, seeking revision after five years to be arbitrary and set it aside.
The court examined the provisions of section 28 of the Act, which empower the order for production of accounts, and rule 72 of the Rules, which governs the issuance of notices for production of accounts. It was noted that neither the Act nor the Rules provide a specific time-limit for returning documents produced following a notice in form No. 51. The court rejected the argument that sub-rule (9) of rule 34, which sets time-limits for returning seized documents, applies to documents produced based on a notice under section 28(1). The court emphasized that the authority receiving the documents cannot retain them indefinitely without reasonableness regarding the time-frame.
Furthermore, the court balanced the interests of the Revenue department and the dealer, stating that documents should be returned within a fortnight of their production to uphold fairness and reasonableness. Consequently, the court directed the return of documents produced by the petitioner within two weeks of the judgment, with the option for the petitioner to certify copies if required. The court also instructed that proceedings initiated based on a previous notice should be finalized only after providing the petitioner with an opportunity to file objections following the document's return.
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2006 (11) TMI 560
Issues Involved:
1. Eligibility for exemption under Section 4A of the U.P. Trade Tax Act.
2. Use of new versus used machinery.
3. Legal implications of leasing machinery.
4. Applicability of Section 4A(2B) of the U.P. Trade Tax Act.
Issue-wise Detailed Analysis:
1. Eligibility for Exemption under Section 4A of the U.P. Trade Tax Act:
The revisionist-assessee, a private limited company, applied for an exemption certificate under Section 4A of the U.P. Trade Tax Act for six years. The exemption was initially granted but later canceled by the Commissioner, Trade Tax, on the grounds that the assessee had installed used machinery and engaged in trading rather than manufacturing. The Tribunal upheld this cancellation, leading to the present revision. The court examined whether the assessee met the definition of a "new unit" as per the relevant period's Explanation to Section 4A, which excluded factories using previously used machinery.
2. Use of New Versus Used Machinery:
The assessee argued that the machinery obtained on lease was new and had not been used in any other factory. However, the Commissioner and the Tribunal found that the machines had been used by M/s. Glossica Laminates Pvt. Ltd. for manufacturing tiles and thus did not qualify as new. The court noted that the findings of fact by the Commissioner and the Tribunal were not successfully challenged and were based on substantial evidence, including statements and documents proving the prior use of the machinery.
3. Legal Implications of Leasing Machinery:
The assessee leased the factory and machinery from M/s. Glossica Laminates Pvt. Ltd. and M/s. Northern India Tiles Corporation. The court observed that the machines obtained on lease were previously used by the original owners. The Tribunal concluded that the transfer of used machinery disqualified the assessee from claiming exemption as a "new unit." The court upheld this conclusion, emphasizing that the exemption under Section 4A is granted to the industrial unit, not the legal person, and the use of previously utilized machinery disqualifies the unit from being considered new.
4. Applicability of Section 4A(2B) of the U.P. Trade Tax Act:
The assessee contended that under Section 4A(2B), introduced retrospectively from October 12, 1983, the unit should be reconsidered for exemption even if it used old machinery. The court noted that this plea was raised for the first time in the revision and not before the Tribunal. The court held that revisional jurisdiction could not entertain new pleas requiring fresh facts and that the assessee had ample opportunity to raise this issue during the Tribunal proceedings. Additionally, the court highlighted that the exemption under Section 4A(2B) is limited to the unexpired portion of the period for which the former manufacturer was eligible, which the assessee did not apply for.
Conclusion:
The court dismissed the trade tax revision, affirming the cancellation of the exemption certificate. It held that the findings of fact by the Commissioner and the Tribunal were neither perverse nor based on no evidence. The court emphasized that the use of previously used machinery disqualified the unit from being considered new, and the assessee's late invocation of Section 4A(2B) could not be entertained at the revisional stage. The judgment underscores the importance of adhering to statutory definitions and procedural timelines in tax exemption cases.
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2006 (11) TMI 559
Levy of Entry Tax - Volvo Hydraulic Excavator - Imported the above referred two excavators - Sec 3 of the Tamil Nadu Tax on Entry of Motor Vehicles Act, 1990 - whether an excavator not running on inflated tyres, but on iron chain plates such as a caterpillar vehicle or a military tank would be a motor vehicle coming within the meaning of section 2(28) of the Motor Vehicles Act, 1988 r/w section 2(i) of the Tamil Nadu Tax on Entry of Motor Vehicles Act, 1990? - HELD THAT:- The excavator referred to in Bose Abraham's case [2001 (2) TMI 890 - SUPREME COURT] was a motor vehicle fitted with inflated tyres and not chain plates like caterpillars or military tanks.
The excavator in question in the present case is mounted on iron plates made into chain such as caterpillar vehicles or military tanks. Such an excavator is used for excavating the earth and loading in lorries and it cannot be used upon public roads, since the roads would get damaged by the chains. The excavator moves around only in work sites and it is not suitable or adapted for use in public roads. This position is also confirmed by the physical verification carried out by the respondent, as seen from his report extracted above.
The Kerala High Court in the case of Intelligence Officer, Squad No. IV, Kozhikode v. Ray Constructions Ltd.[2006 (2) TMI 602 - KERALA HIGH COURT] while considering a similar issue has held that the excavators in question having regard to its distinguishing features from the other excavators has to be held as not "motor vehicle" falling under the definition of the term defined u/s 2(28) of the Motor Vehicles Act, 1988 and therefore, not liable for entry tax. It is relevant to note that the Volvo excavators purchased by the petitioner which is the subject-matter of levy of entry tax are exactly similar to the excavators which were the subject-matter in the above referred reported decision of the Kerala High Court.
Thus, the impugned show cause notice cannot be sustained and it is hereby set aside. The writ appeal is disposed of accordingly.
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2006 (11) TMI 558
Levy of tax on the entry of goods into any local area, in Assam, for consumption, use and sale therein - Whether the Assam Entry Tax Act, 2001 (the AET Act, 2001), is in violation of Articles 14 and 304(a) of the Constitution of India? - challenged the validity of AET (Second Amendment) Act, 2005 - Whether the impugned levy is or is not discriminatory in nature - HELD THAT:- One needs to bear in mind the constitutional scheme as reflected by Articles 301, 302, 303 and 304. A careful and combined reading of all these articles shows that while guaranteeing, with the help of Article 301, freedom of trade, commerce and intercourse throughout the territory of India and thereby putting a limitation, on the part of the Parliament as well as Legislatures of the States, not to make law, creating fiscal barriers, which would cause impediment in the free flow of goods, Article 302 relaxes this limitation in favour of Parliament by allowing the Parliament to impose restrictions in public interest. While so allowing the Parliament to impose, in public interest, restrictions on the freedom of movement of goods, Clause (1) of Article 303 restricts the Parliament from making any law, even in public interest, if such law gives preference to one State over another. This restriction is, however, subject to one exception, the exception being that the Parliament can make law, which may even be discriminatory or which may give preference to one State over another, if such discriminatory law is aimed at meeting the scarcity of the goods, in question, in any part of the territory of India.
As far as the State Legislatures are concerned, Clause (1) of Article 303 imposes one additional limitation, the limitation being that a State Legislature cannot make law giving preference or making discrimination between one State and another. What is, now, extremely important to note is that the limitation, on the part of the State Legislatures, to impose tax, which interferes with the freedom of the trade, commerce and intercourse, is lifted by Article 304(a) by allowing the Legislature of a State to impose, on goods, imported from sister States or Union territories 'any tax' to which similar goods manufactured, in its own State, are subjected, but not so as to discriminate between the imported goods and the goods manufactured in the State.
Thus, Clause (a) of Article 304 authorizes a State Legislature to impose non-discriminatory tax on goods imported from sister States even if imposition of such tax interferes with the freedom of trade and commerce guaranteed by Article 301. The principle behind the making of the provisions of Article 304(a) is that no State shall impose a tax, which discriminates between inter-State trade and commerce by providing a direct commercial advantage to the local traders. A tax will be discriminatory if it operates as a disadvantage to the importers of a specified class of goods into a State vis-a-vis the producers or manufacturers of such goods within the State. The discrimination may occur for a variety of reasons, such as, variation in the rate of tax between the imported goods and the locally manufactured ones or exemption of local goods from payment of a tax to which similar imported goods are subjected. The discrimination may also arise when a State imposes tax on an item of goods imported into its State from a sister State if no such goods are manufactured or produced at all by the State, which imposes the tax. This position of law becomes clear if the facts of the case in Kalyani Stores [1965 (9) TMI 48 - SUPREME COURT] and the decision pronounced therein are kept in mind.
Thus, from the decision of Kalyani Stores (supra), it also becomes clear that the question of discrimination has to be examined on the basis of a particular item of goods, which is the subject of an impugned levy. Viewed, thus, it is clear that for the purpose of ascertaining if the imposition of entry tax, in the present case, suffers from discrimination, the test would be whether the imposition of the impugned entry tax makes any discrimination between the goods, which are produced within the State, and the goods, which are imported into the State. A challenge to the violation of Article 304(a) can be sustained only when it is shown that the discrimination is in respect of a given item of goods and the challenge can be met if it can be shown that the item, in question, suffers from no discrimination.
When the goods, which are exempted from payment of local sales tax enter into, on being imported from outside the State, a local area of the State, the same becomes liable to payment of entry tax. Similar is the position as regard the goods, produced or manufactured within the State, but are not liable to payment of local sales tax, for, even when such goods, though produced or manufactured within the State, enter into a local area from another local area, the same becomes liable to payment of entry tax.
As regard the goods taxable under the local sales tax, it is noteworthy that when such goods, manufactured or produced within the State, go out of a local area and enter into another local area, such entry is subject to the levy of entry tax, but if, upon such entry, the goods are sold and if such sale is subject to local sales tax, the entry tax is not leviable. Similarly, such goods, which are taxable under local sales tax enactment, enter into a local area, on being imported into the State, the same becomes liable to payment of entry tax; but when, after entering into a local area, such goods are sold within that local area and since such sale is subject to local sales tax, no entry tax is, eventually, payable.
It is, thus, clear that in respect of goods, which are exempted from payment of sales tax, the levy of entry tax is on the entry of goods into a local area irrespective of the fact whether such entry is from outside the State into a local area or from one local area of the State to another local area of the State. Similar is the position of the goods, which are subject to local sales tax, for, the goods, which are produced outside the State but taxable under the local sales tax, suffer from no payment of entry tax, when such goods enter into a local area from outside the State. It is also not the pleaded case of the petitioners that goods, similar to the ones, the goods, which form the subject matter of the present set of writ petitions, are not produced or manufactured within the State of Assam.
Under Article 304(a), the tax, sought to be imposed, must not make any discrimination between the goods, which are imported from sister States, and the goods, which are produced or manufactured within the State. If the goods, similar to the ones, which are imported into the State, but not manufactured or produced in the State, such a State cannot impose a tax on such imported goods, for, the State, in such a case, cannot impose such a tax on similar goods within the State, because of non-production of similar goods within its State. The tests, therefore, are as to whether the State, which imposes a levy, produces or not the goods, which it seeks to tax on import of such goods into the State and whether the law, enacted by the State, discriminates between the goods imported into the State and the similar goods, which are manufactured or produced within the State. It is in this backdrop that the scheme of the AET Act, 2001, and, particularly, Section 5 thereof need to be examined.
Thus, it becomes abundantly clear that the State has not made any discrimination between the imported goods and the goods, manufactured or produced within the State, inasmuch as both the imported goods as well as the goods, produced or manufactured within the State, have been treated at par by the State so far as the levy of entry tax is concerned.
Because of what have been discussed and pointed above, levy of impugned entry tax cannot be said to be in violation of Article 304(a) of the Constitution of India and, hence, this contention of the petitioners must fail and is accordingly rejected.
Conclusions: - What crystallizes from the discussions held above, as a whole, is that the tax sought to be levied, under Section 3 of the impugned Act, on the goods specified in the Schedule as modified by the impugned notifications, issued under Sub-section (4) of Section 3 of the AET Act, 2001, the impugned Ordinance, 2005, the Assam Entry Tax (Amendment) Act, 2005, are all ultra vires, unconstitutional, null and void to the extent that the same impose entry tax on those specified goods, which form the subject-matter of the present set of writ petitions. The demand for payment of entry tax raised against the petitioners cannot, therefore, be sustained.
There is yet another aspect of this case, which needs some observation by this Court. In WP(C) No. 2650/05, an interim direction was passed to the effect that the petitioners shall file return under the AET Act, 2001, in respect of the goods, which form the subject-matter of their writ petition and that, in tune with the liability of tax payable by the petitioners, the petitioners shall furnish to the respondents/authorities concerned bank guarantee of such amount(s) of entry tax, which is leviable under the impugned notification. Even after the amendments were made, these directions were continued.
From the orders, dated 5.1.2006, what clearly emerges is that the State respondents had given an undertaking, in the appeal, that the entry tax, to be collected by them from the petitioners, in WP(C) No, 2650/2005, would be refunded to the petitioners if the said petitioners succeed in their writ petitions and it was on the basis of this undertaking that the court stayed the operation of the interim directions passed in the said writ petition. While disposing of the appeals, the Division Bench made it clear that the consequences in accordance with law, including refund of entry tax, with interest, which may accrue thereon, shall follow. Viewed thus, it is clear that since this Court finds that the impugned notifications, dated 21.8.2003, 26.8.2003, 29.9.2004 and 28.2.2005, the impugned Ordinance and the AET (Amendment) Act, 1005, are, to the extent as indicated hereinabove, not sustainable in law, it logically follows that the respondents shall, now, refund the amount or amounts, which they have, in the meanwhile, collected by way of entry tax from the petitioners aforementioned.
The writ petitions were allowed, and the impugned notifications, ordinance, and amendments to the AET Act, 2001, were declared unconstitutional. The respondents were directed not to insist on payment of entry tax by the petitioners and to refund any collected entry tax within two months.
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2006 (11) TMI 557
Appellant prosecuted for commission of an offence under Section 8/18 of the Narcotic Drugs and Psychotropic Substances Act, 1985 on the basis of a First Information Report
Held that:- Unfortunately, the High Court did not meet the reasonings of the learned Sessions Judge. The findings of the learned Trial Judge that P.W.10 had prior information, had also not been met by the High Court. The High Court was dealing with a judgment of acquittal. It was, therefore, bound to show that the findings of the learned Sessions Judge were not legally tenable.
It is well known that if two views are possible, benefit of doubt should be given to the accused. The High Court, in our opinion, could not have brushed aside the findings of the learned Sessions Judge without meeting the reasonings assigned by it as it was dealing with a judgment of acquittal. For the reasons aforementioned, the impugned judgment cannot be sustained which is set aside accordingly. The appeal is allowed.
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2006 (11) TMI 556
Issues Involved:
1. Validity of reassessment order.
2. Applicability of State Government notification fixing tax rate.
3. Requirement of compliance with sub-section (4) of section 8 of the CST Act.
Summary:
1. Validity of reassessment order:
The petitioner challenged the reassessment order dated September 19, 2005, passed by the Commercial Taxes Officer, Samastipur, which reassessed the petitioner's liability for sales tax for the period 2000-01, resulting in an additional amount of Rs. 2,11,77,970.60 plus penalty, totaling Rs. 2,27,53,885. The reassessment was based on audit objections that led to the rejection of declarations in form "D" issued by the Directorate General of Supplies and Disposal (DGS&D), and consequently, the sales were taxed at 10% u/s 8(2) of the CST Act instead of 3% as initially assessed.
2. Applicability of State Government notification fixing tax rate:
The petitioner argued that the State Government's notification dated October 13, 1986, fixed the tax rate on inter-State sales of jute bags at 3% for both sub-sections (1) and (2) of section 8 of the CST Act. The court noted that the notification, issued u/s 8(5) of the CST Act, indeed set the tax rate at 3% for sales of jute bags in inter-State trade or commerce, regardless of whether the sales fell under sub-section (1) or (2) of section 8. Therefore, even if the sales to DGS&D were not covered by sub-section (1) due to defective form "D" declarations, the tax rate should still be 3% as per the notification.
3. Requirement of compliance with sub-section (4) of section 8 of the CST Act:
The State's counsel contended that compliance with sub-section (4) of section 8, which requires the furnishing of proper declarations, was necessary to avail the benefit of the reduced tax rate under the notification. However, the court distinguished the present case from the Supreme Court decision in State of Rajasthan v. Sarvotam Vegetables Products, noting that the Rajasthan notification only applied to sub-section (1) of section 8, whereas the Bihar notification applied to both sub-sections (1) and (2). Thus, the failure to produce valid form "D" declarations did not alter the applicable tax rate of 3% under the Bihar notification.
Conclusion:
The court found that the reassessment order was not in conformity with the law, as the applicable tax rate should have been 3% as per the State Government notification, regardless of the defective form "D" declarations. Consequently, the impugned order was set aside, and the writ application was allowed with no order as to costs.
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2006 (11) TMI 555
Issues Involved:
1. Rejection of interest payment claim under the Central Sales Tax Act, 1956.
2. Rejection of interest payment claim under the Orissa Sales Tax Act, 1947.
3. Validity of the interim order for refund with interest.
4. Applicability of judicial precedents cited by the petitioner.
Detailed Analysis:
1. Rejection of Interest Payment Claim under the Central Sales Tax Act, 1956:
The petitioner, a public limited company engaged in cement manufacturing, challenged the Sales Tax Officer's order dated June 21, 2001, which rejected their claim for interest payment for the year 1994-95 under the Central Sales Tax Act, 1956. The court found that the rejection was based on sound reasons, as the refund did not arise from the High Court's order but from the first appellate authority's order. The court stated, "the refund which was granted to the petitioner does not arise out of the order of the High Court, but from the order of the first appellate authority."
2. Rejection of Interest Payment Claim under the Orissa Sales Tax Act, 1947:
Similarly, the petitioner's claim for interest under the Orissa Sales Tax Act, 1947, was also rejected. The Sales Tax Officer argued that since the refund was granted pursuant to Section 14 of the OST Act within 90 days, no interest was payable. The court upheld this reasoning, stating, "refund was granted pursuant to section 14 of the OST Act and the said refund having been granted within a period of 90 days, no interest can be granted to the petitioner."
3. Validity of the Interim Order for Refund with Interest:
The court examined whether the interim order for refund with interest, issued on March 13, 1997, was still valid. The interim order stated, "in case the petitioner succeeds, it will be entitled to refund and the refund will be effected with interest in the prescribed manner from the date of deposit notwithstanding any formal application ultimately." However, since the writ petition was ultimately dismissed, the court ruled that the interim order lost its force. The court emphasized, "It is well-settled that an interim order merges with the final and it cannot survive after the final order is passed."
4. Applicability of Judicial Precedents Cited by the Petitioner:
The petitioner cited several judicial precedents to support their claim for interest:
- Tata Refractories Ltd. v. Sales Tax Officer: The court distinguished this case, noting that the direction for interest was given at the final disposal of the writ petition, unlike the present case where the writ petition was dismissed. The court stated, "the facts in the present case and the facts in the case of Tata Refractories Ltd... stand on totally different footing."
- Union of India v. Justice S.S. Sandhawalia (Retd.): The court found this case irrelevant as it dealt with service benefits and not tax refunds. The court noted, "the direction to refund with interest to the petitioner was conditioned on the success of the writ petition, but the writ petitioner had not succeeded."
- Sandvik Asia Ltd. v. Commissioner of Income-tax: The court acknowledged the principles laid down in this case but noted that the statutory provisions for interest on refunds were followed in the present case. The court stated, "the principles which have been laid down in the case of Sandvik Asia Ltd... have been followed in this case."
- IDL Industries Ltd. v. State of Orissa: The court found this Full Bench judgment irrelevant as it dealt with reassessment and not the current issue of interest on refunds.
Ultimately, the court dismissed both writ petitions, concluding that there was no error in the Revenue's order dated June 21, 2001. The court stated, "For the reasons discussed above, this court cannot accept the contention of the learned counsel for the petitioner and does not find any error in the order dated June 21, 2001 passed by the Revenue." Both petitions were dismissed without any order as to costs.
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2006 (11) TMI 554
Levy entry tax - goods imported - Restrictions as to imposition of tax on the sale or purchase of goods - article 286 of the Constitution of India - Whether the State is competent to levy entry tax on the goods imported into a local area from outside country? - HELD THAT:- Since the restrictions, imposed by article 286, are only on the levy of tax on the sale and purchase of goods, the State is competent to levy entry tax by virtue of entry 52 of List II of the Seventh Schedule to the Constitution of India on the goods imported into any local area from outside the State for use, consumption or sale therein. Thus, there is no merit in the contention advanced, on behalf of the petitioners, that the State has no power to levy entry tax on the goods imported into any local area from outside the State even if such entry is for the purpose of use, consumption or sale in the local area.
In the present case, the language of section 3 read with section 2(1)(b) of the Act is very clear that the Assam Entry Tax Act, 2001, provides for levy of entry tax on entry of specific goods into a local area from another local area or from outside the State only and the same does not provide for levy of entry tax into local area from outside the country and, hence, no entry tax can be levied on entry of specified goods into a local area imported from outside the country.
In short, no entry tax can be imposed by the State on the goods imported into a local area from outside the country. In fact, such is not the legislative intent, for, section 3 read with section 2(1)(b) of the AET excludes goods brought into a local area, in Assam from outside the country in the course of import of such goods into the territory of India. In the case at hand, as the entry of the specified goods into a local area of the State is in the course of import into the territory of India, such import is not subject to levy of entry tax under the AET Act.
Hence, the imposition of entry tax on the goods, in question, cannot be sustained and is, therefore, set aside and quashed. The respondents are directed not to insist on payment of entry tax by the present petitioners.
Thus, this writ petition shall stand disposed of.
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2006 (11) TMI 553
Issues:
1. Cancellation of registration under the Madhya Pradesh Commercial Tax Act, 1994.
2. Requirement of informing authorities about changes in business premises.
3. Jurisdiction of the High Court to examine the correctness of the impugned order.
4. Imposition of penalty for failure to furnish information regarding a change of address temporarily.
Analysis:
1. Cancellation of Registration:
The petitioner, a private limited company registered as a dealer under the Madhya Pradesh Commercial Tax Act, 1994, faced cancellation of registration by the Commercial Tax Officer due to the absence of business activities at the registered address. The petitioner contended that business operations were temporarily shifted due to construction work nearby. The revisional authority upheld the cancellation, leading to the current petition challenging the order.
2. Requirement of Informing Authorities:
The respondents argued that under section 48 of the Act, a dealer must inform the prescribed authority about changes in business premises within the specified time frame. Rule 12 of the Niyam, 1995 outlined the obligation to provide information in writing to the registering authority regarding any changes in business operations. The petitioner failed to notify the authorities about the temporary change in business premises, although regular tax returns were submitted.
3. Jurisdiction of the High Court:
Citing legal precedents, the High Court affirmed its jurisdiction to review the impugned order passed by the respondents. The court emphasized the constitutional authority under articles 226 and 227, highlighting that the curtailment of revisional jurisdiction does not diminish the High Court's power to issue writs of certiorari or exercise superintendence.
4. Imposition of Penalty:
Considering the petitioner's failure to timely inform the authorities about the temporary change in business address, the court allowed the petition, quashing the orders canceling the registration. The court directed respondent No.1 to levy the maximum penalty permissible under the law for the petitioner's non-compliance. The judgment emphasized the importance of adhering to regulatory requirements and the consequences of breaching such obligations.
In conclusion, the judgment addresses the cancellation of registration, the obligation to inform authorities about business premises changes, the High Court's jurisdiction to review orders, and the imposition of penalties for non-compliance with regulatory requirements.
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2006 (11) TMI 552
Issues:
1. Review of a judgment passed by a learned single judge in M.P.No.1276 of 1989 regarding the validity of section 7(5) of the M.P.Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976.
2. Consideration of the Supreme Court's decision in State of Madhya Pradesh v. Bharat Heavy Electricals [1997] 106 STC 604; [1997] 7 SCC 1 regarding the discretion of the sales tax authority in imposing penalties.
Analysis:
1. The applicants (Revenue) filed an application under Order 47, Rule 1 of the Civil Procedure Code seeking a review of the order dated April 7, 1998, passed by a learned single judge in M.P.No.1276 of 1989. The learned A.A.G. argued that the judgment of a division Bench of the court in Western Coalfields Ltd. v. State of Madhya Pradesh had been reversed by the apex court in State of Madhya Pradesh v. Bharat Heavy Electricals. The Supreme Court's decision was not brought to the notice of the learned single judge, who proceeded based on the division Bench decision and ruled in favor of the respondent. The High Court noted that failure to cite a decision before the court cannot be a ground for seeking review. The Supreme Court in BHEL's case stated that the presumption regarding penalties under section 7(5) of the Adhiniyam is rebuttable, and the dealer must rebut it. The Court also highlighted that the sales tax authority has the discretion to impose a penalty less than the prescribed ten times the evasion amount based on the circumstances of each case. Therefore, the High Court found no justification for reviewing the impugned order and dismissed the application for review without costs.
2. The High Court emphasized that the failure to bring a decision to the notice of the court cannot be a valid ground for seeking a review. The Supreme Court's ruling in BHEL's case clarified that the presumption regarding penalties under section 7(5) of the Adhiniyam is rebuttable and must be rebutted by the dealer. Additionally, the Court acknowledged that the sales tax authority has the discretion to impose a penalty lower than the prescribed ten times the evasion amount based on the facts and circumstances of each case. As such, the High Court found no merit in reviewing the order and dismissed the application for review without imposing any costs.
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2006 (11) TMI 551
Appeal against the decision of High court in Union of India v. Hindustan Zinc Ltd. [2006 (5) TMI 44 - HIGH COURT RAJASTHAN] dismissed by the Apex Court. - In this case high court while allowing Cenvat / Modvat Credit on MS/SS plates held that, it is an integral part of the process with which the primary machines are engaged. Looked from these aspects, there is no impediment for the goods in question qualifying as capital goods eligible for Modvat credit. - Decided against the revenue.
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2006 (11) TMI 550
Whether the provisions of the Payment of Gratuity Act, 1972 shall prevail over the rules framed by Coal India Limited, holding company of Respondent No. 1, known as Coal India Executives' Conduct Discipline and Appeal Rules, 1978?
Held that:- The appellant was not charged with nor was given an opportunity that his gratuity would be withheld as a measure of punishment. No provision of law has been brought to our notice under which, the President is empowered to withhold gratuity as well, after his retirement as a measure of punishment. Therefore, the order to withhold the gratuity as a measure of penalty is obviously illegal and is devoid of jurisdiction.
For the reasons aforementioned, the impugned judgment cannot be sustained which is set aside accordingly. The appeal is allowed.
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2006 (11) TMI 549
Appointment of arbitrator - Held that:- In case appointment is not made in time on the request made by the contracting party then in that case the power of the High Court to appoint arbitrator under Section 11 of the Act will not be denuded. We cannot allow administrative authorities to sleep over the matter and leave the citizens without any remedy. Authorities shall be vigilant and their failure shall certainly give rise to cause to the affected party. In case, the General Manager, Railway does not appoint the arbitral tribunal after expiry of the notice of 30 days or before the party approaches the High Court, in that case, the High Court will be fully justified in appointing arbitrator under section 11 of the Act. It is the discretion of the High Court that they can appoint any railway officer or they can appoint any High Court Judge according to the given situation. As a result of our above discussion, we allow these appeals, set aside the orders of the High Court. We direct the General Manager, Railway to appoint arbitral tribunal within a period of 30 days from the date of receipt of a certified copy of this order. The arbitral tribunal so appointed shall enter into the matter and dispose of the arbitration proceedings as expeditiously as possible. Consequently, the appointment of Justice Y.V.Narayana as arbitrator is set aside. There would be no order as to costs.
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2006 (11) TMI 548
Issues:
Challenge to Form No.4 notice dated 25.7.2005; Acceptance of Form "F" and Form "H" after final assessment order; Revision of assessment under Section 55 of TNGST Act; Delay in filing appeal against assessment order.
Analysis:
The petitioner, engaged in Cotton Yarn manufacturing, challenged a notice dated 25.7.2005, disputing the non-submission of Form "F" for a value of Rs.5,43,138 and Form "H" for Rs.11,70,863. The petitioner argued that these forms could be accepted post final assessment. The respondents contended that the assessment order had finality as no appeal was filed. They highlighted the petitioner's failure to furnish Form "H" for 7 years and Form "F" for the mentioned values. The assessing officer proposed taxing the amounts as direct interstate sales due to non-submission of required forms. The counter-affidavit emphasized the petitioner's admission of proposed tax and penalty without objection, leading to the final assessment order. The respondents argued against reconsideration under Section 55 of the TNGST Act, citing no error in the assessment order and lack of basis for revision after five years.
The court noted the absence of bona fide claims from the petitioner, as evidenced by non-submission of Form "H" and lack of proof. The petitioner's legal contentions for revision under Section 55 were dismissed due to factual discrepancies presented in the counter-affidavit. The court observed that the petitioner's intentions seemed to prolong litigation and evade tax payment. The petition was deemed lacking in merit, filed without proper explanation for delays, and solely based on self-serving documents and representations. The court concluded that without material for the authority to consider, the petitioner's claims for revision could not be entertained, especially without filing an appeal against the assessment order. The relief sought by the petitioner was denied, and the writ petition was dismissed without costs, citing delays, lack of prima facie merit, and the petitioner's apparent attempt to avoid tax payment on technical grounds.
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2006 (11) TMI 547
Issues involved:
Interpretation of Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 regarding liability to pay differential rate of tax between seller and purchaser based on Form XVII declaration.
Detailed Analysis:
1. Background and Facts:
The petitioner, a registered dealer, sold aluminium extrusion at a concessional rate of 3% against Form XVII declaration. The respondent later proposed to revise the assessment, directing the petitioner to pay the differential rate of tax. The petitioner objected, citing Section 3(3) of the Act.
2. Legal Provisions Involved:
Section 3(3) of the Act provides for a concessional rate of tax for sales of goods for specific purposes. The petitioner argued that the respondent's order to pay the differential rate of tax was not in accordance with the provisions of the Act.
3. Previous Court Orders and Precedents:
The petitioner referred to a previous judgment where it was held that tax and penalty for contravention of Form XVII conditions could be imposed only against the purchasing dealer, not the seller, as per Section 3(3) of the Act. Another unreported judgment supported this view.
4. Court Decision and Rationale:
The Court analyzed the legal provisions, precedents, and the specific facts of the case. It concluded that the respondent's decision to make the petitioner pay the differential rate of tax was unsustainable. Citing binding precedents, the Court set aside the respondent's order and allowed the writ petition. No costs were awarded.
5. Final Judgment:
The Court held that based on the legal interpretation of Section 3(3) of the Act and in line with previous judgments, the respondent's decision was not sustainable. The impugned order was set aside, and the writ petition was allowed. The connected Writ Petition Miscellaneous Petition was dismissed with no order as to costs.
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