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1979 (4) TMI 158
Issues Involved:
1. Statutory Obligation of U.P.S.E.B. to Supply Energy
2. Applicability of Section 22B of the Electricity Act, 1910
3. Validity of the Proviso to Clause 6(a)(i) of the U.P. Electricity Order, 1977
4. Allegations of Malice in Law
5. Change in Circumstances and Implied Repeal of the Order
Issue-Wise Detailed Analysis:
1. Statutory Obligation of U.P.S.E.B. to Supply Energy:
The High Court held that U.P.S.E.B. was statutorily obligated to supply energy to the Company under sections 18 and 26 of the Electricity (Supply) Act, 1948, and clause VI of the Schedule to the Act. However, the Supreme Court clarified that while U.P.S.E.B. is a licensee, section 22 of the Act, which mandates the supply of energy to every person within the area of supply, does not apply to U.P.S.E.B. The obligation under clause VI of the Schedule to the Act is applicable only where distribution mains have been laid by the Board, which was not established in this case. Therefore, the High Court's finding that U.P.S.E.B. was bound to supply energy to the Company was erroneous.
2. Applicability of Section 22B of the Electricity Act, 1910:
The Supreme Court held that the energy generated by the Renusagar Power Company, a subsidiary of the Company, was subject to control under section 22B of the Act. The Court emphasized that the definition of "energy" in section 2(g) of the Act is broad and includes energy generated and supplied under section 28. Therefore, the State Government had the authority to regulate the distribution, consumption, and use of energy generated by the Renusagar Power Company under section 22B.
3. Validity of the Proviso to Clause 6(a)(i) of the U.P. Electricity Order, 1977:
The High Court declared the proviso to clause 6(a)(i) of the Order ultra vires, holding that section 22B did not confer the power to prohibit the supply of energy to any consumer. The Supreme Court disagreed, stating that the proviso did not prohibit the supply of energy but imposed a cut of 50% in the monthly consumption of electricity, with a further regulation for consumers with their own source of generation. The proviso was a step towards regulating the supply and ensuring equitable distribution of energy. The Supreme Court found the proviso valid but chose not to restore it, given the current supply of 42.5 MW to the Company.
4. Allegations of Malice in Law:
The Company argued that the Order was made with malice in law to compel it to agree to a higher rate for energy supply. The Supreme Court examined statements by the Chief Secretary and the Minister and found no evidence of malice. The Court noted that the State Government's actions were based on genuine concerns about energy scarcity and the need for equitable distribution. The Court rejected the argument of malice in law, stating that the dominant purpose behind the Order was proper and reasonable.
5. Change in Circumstances and Implied Repeal of the Order:
The High Court held that the Order had outlived its purpose due to changes in circumstances, such as improved reservoir levels and newly commissioned units. The Supreme Court disagreed, emphasizing that the shortage of thermal energy persisted and that the overall demand for energy exceeded supply. The Court held that the Order remained valid and necessary for maintaining the supply and securing equitable distribution of energy. The Court noted that any significant improvement in energy generation could be addressed through a fresh application for exemption under clause 10 of the Order.
Conclusion:
The Supreme Court allowed Civil Appeal No. 921 of 1978 to the extent that the proviso to clause 6(a)(i) was valid but did not restore it. Civil Appeal No. 425 of 1979 was dismissed. The parties were directed to bear their own costs.
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1979 (4) TMI 157
The appellant was accused of being connected to contraband goods found in another person's premises. However, the Board found insufficient evidence to prove his involvement and overturned the penalty imposed on him.
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1979 (4) TMI 156
Whether Parliament had the power to impose special duty on the import of country liquor in Delhi?
Held that:- if excise or countervailing duty could be levied on country liquor manufactured or imported into Delhi, albeit other conditions for the levy of such duty being fulfilled, Parliament would not lack competence to levy the same only because levy of such duty on alcoholic liquors for human consumption is within the competence of a State. Merely because Parliament could not levy countervailing duty on country liquor imported into Delhi because country liquor is not manufactured in Delhi, it does not exhaust the power of Parliament to levy some other duty on the import of liquor if it is otherwise constitutionally permissible.
The present levy under the amended provisions of the Act in its application to Delhi could certainly be said to be one enacted both with the object of regulating the trade or business in intoxicants and with a view to realising the goal fixed in Article 47 of the Constitution Therefore, one can look upon this measure both as a fiscal measure and the one safeguarding public health and even public morals because it is well recognised that liquor trade is instinct with injury to individual and community and has serious side-effects recognised everywhere in every age. Therefore, there is no substance in the contention that the retrospectivity of the Ordinance is illegal and invalid. Appeal dismissed.
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1979 (4) TMI 155
Issues Involved:
1. Whether the transfers of goods by the applicant to other consortium companies against payment constituted sales.
2. Whether sales of unserviceable goods, scraps, discarded and surplus materials were taxable under the Bengal Finance (Sales Tax) Act, 1941.
3. Whether the applicant was a dealer within the meaning of the Bengal Finance (Sales Tax) Act, 1941.
4. Whether the contract between the Government of India and the consortium was a divisible contract.
5. Whether the Board was justified in not considering the contract between the Government of India and the consortium.
6. Whether the applicant carried on the business of selling goods to its subcontractors.
7. Whether there was any sale of materials simpliciter involved in the transactions.
8. Whether there was any material before the Board to hold that the supply of materials to the subcontractors or member-contractors or the disposal of surplus materials were made with a profit-motive.
9. Whether the applicant acted as a dealer within the meaning of the Bengal Finance (Sales Tax) Act, 1941, by supplying materials to subcontractors or member-contractors or selling scrap and surplus goods.
10. Whether the supply of materials to sub-contractors or the sale of surplus or scrap materials was done systematically.
11. Whether the supply of materials to member-contractors amounted to carrying on the business of selling goods.
12. Whether the sale of scrap or surplus materials amounted to carrying on the business of selling goods.
Issue-wise Detailed Analysis:
1. Transfers of Goods to Consortium Companies:
The court found that the materials brought to the work site remained the property of the Government of India and were used solely for construction. The property in such goods would revest in the contractor only if the Government directed their clearance. Thus, the applicant could not transfer the property in the goods, and the transactions could not be considered sales. The entries in the books were for adjustment and accounting purposes, not sales.
2. Sales of Unserviceable Goods, Scraps, and Surplus Materials:
The court referred to the decision in *Davy and United Engineering Co. Ltd.* and held that the applicant could not be considered a dealer in respect of isolated sales of scrap and unserviceable materials. The retrospective operation of the extended definition of "business" had been struck down, and the applicant's primary business was construction, not selling goods.
3. Applicant as a Dealer:
The court held that the applicant was not a dealer within the meaning of the Bengal Finance (Sales Tax) Act, 1941. The main business of the applicant was construction, and the transactions connected with or ancillary to this business did not make the applicant a dealer.
4. Divisibility of the Contract:
The court disagreed with the Board's conclusion that the contract was divisible solely because it was divided into parts. The contract related solely to the construction of Durgapur Steel Works and was thus an indivisible contract.
5. Relevance of the Contract:
The court held that the contract between the Government of India and the consortium was relevant and should have been considered by the Board in determining whether the applicant was a dealer.
6. Business of Selling Goods to Subcontractors:
The court found that the transactions between the applicant and its subcontractors were not sales. The materials were provided for the purpose of construction, and the property in such goods remained with the Government.
7. Sale of Materials Simpliciter:
The court held that there was no sale of materials simpliciter involved in the transactions. The transfers were for construction purposes and did not constitute sales.
8. Profit-Motive in Supply of Materials:
The court found no material to support the Board's finding that the supply of materials to subcontractors or member-contractors or the disposal of surplus materials was made with a profit-motive.
9. Applicant Acting as a Dealer:
The court found the Board's finding that the applicant acted as a dealer to be tentative and vague, with no final conclusion reached. Thus, this question did not call for an answer.
10. Systematic Supply of Materials:
The court found no material to support the Board's finding that the supply of materials to subcontractors or the sale of surplus or scrap materials was done systematically.
11. Business of Selling Goods to Member-Contractors:
The court found no material to support the Board's finding that the supply of materials to member-contractors amounted to carrying on the business of selling goods.
12. Business of Selling Scrap or Surplus Materials:
The court found no material to support the Board's finding that the sale of scrap or surplus materials amounted to carrying on the business of selling goods.
Conclusion:
The court answered the questions referred under section 21(2) of the Bengal Finance (Sales Tax) Act, 1941, in the negative and in favor of the applicant. The reference was disposed of accordingly, with no order as to costs.
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1979 (4) TMI 154
Issues:
1. Whether the failure to deposit interest on the tax is fatal to the entertainability of an appeal.
2. Interpretation of the requirement to deposit tax before filing an appeal under section 9(1)(a) of the Act.
3. Applicability of interest accrued on tax in determining the amount to be deposited before filing an appeal.
Detailed Analysis:
1. The judgment dealt with the issue of whether the failure to deposit interest on tax is fatal to the entertainability of an appeal. The revising authority held that the failure to deposit interest is not fatal to the appeal's entertainability. The court agreed with this view, emphasizing that the requirements of section 9(1)(a) must be met, and the failure to deposit interest does not affect the appeal's validity.
2. The interpretation of the requirement to deposit tax before filing an appeal under section 9(1)(a) was a crucial aspect of the judgment. Section 9(1)(a) mandates that the appellant should deposit the amount of tax or fee admitted in the returns or any proceeding under the Act. The court referred to a Supreme Court decision emphasizing that the appellant must deposit the tax admitted in the returns or before the assessing authority. The court rejected the argument that interest accrued on the tax must also be deposited, as it is not supported by the language of section 9(1)(a).
3. The judgment addressed the applicability of interest accrued on tax in determining the amount to be deposited before filing an appeal. The provisions of section 8(1) and 8(1-C) were discussed, highlighting that interest accrued on tax becomes part of the tax to be paid. However, the court clarified that the determination of appeal entertainability should be based on section 9 of the Act, which does not explicitly require the deposit of interest accrued on the tax. The court dismissed the revision, affirming that only the tax admitted by the appellant needs to be deposited for appeal validity.
In conclusion, the judgment clarified the requirements for depositing tax before filing an appeal, emphasizing that the failure to deposit interest on tax does not render the appeal invalid. The court's interpretation of section 9(1)(a) highlighted that only the tax admitted by the appellant needs to be deposited, excluding any accrued interest.
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1979 (4) TMI 153
Issues:
1. Classification of record players, record changers, and records under the U.P. Sales Tax Act.
2. Classification of transistor radios under the U.P. Sales Tax Act.
Detailed Analysis:
1. Classification of Record Players, Record Changers, and Records:
The revising authority referred two questions for the court's opinion regarding the classification of record players, record changers, and records under the U.P. Sales Tax Act. The first issue was whether these items fall under the category of items described in the notification dated 1st June, 1963, and are taxable at 10%, or if they are unclassified items taxable under section 3 of the Act. The court analyzed the notification's wording, specifically item No. 7, which includes "Gramophones and component parts thereof and records." The court noted that records, record players, and record changers are essentially similar to gramophones in function, as they reproduce sound using mechanical contrivances. The court emphasized that the term "records" in the notification refers to sound discs that emit recorded sound when played on a suitable device, regardless of the specific playback speed. Therefore, both older model records and newer records played on record players are covered under the notification. The court further determined that record players are essentially gramophones, as they serve the same purpose of playing records using a needle and speakers, with the only difference being the power source for the revolving disc. Consequently, record players were classified as gramophones under the notification. However, the court differentiated record changers from gramophones, stating that record changers are not sound-emitting devices but facilitate record changes in record players. As record changers are not essential parts of gramophones, they were not classified under the notification.
2. Classification of Transistor Radios:
The second issue involved the classification of transistor radios under the U.P. Sales Tax Act. The court examined item No. 15 of the notification, which includes "Wireless reception instruments and apparatus, radios and radiogramophones, electrical valves, accumulators, amplifiers, and loud-speakers." The court addressed the argument that transistor radios did not qualify as wireless reception instruments under the notification, contending that radios mentioned in the notification required electric valves for sound reception. However, the court disagreed, stating that a transistor radio performs the same function as a traditional radio by receiving and amplifying transmitted sound, albeit using transistors instead of electric valves. The court concluded that transistor radios sold by the assessee were indeed liable to be taxed under the notification dated 1st June, 1963.
In conclusion, the court partially allowed the revision, holding that record players, records, and transistor radios sold by the assessee were taxable under the notification, while record changers were not classified under the Act. The judgment was communicated to the revising authority as per the statutory provisions, and there was no order regarding costs due to the partial success and failure of the petition.
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1979 (4) TMI 152
Issues Involved:
1. Entitlement to purchase certain goods against C forms.
2. Misuse of C forms.
3. Amendment of the Central registration certificate.
Issue-wise Detailed Analysis:
1. Entitlement to Purchase Certain Goods Against C Forms:
The primary issue was whether the Rajasthan State Electricity Board (Electricity Board) was entitled to purchase goods such as tyres, tubes, raincoats, soaps, etc., against C forms without misuse. The court considered the argument that these goods were used for the construction, operation, and maintenance of the power system, including generation, transmission, and distribution of electricity. The court examined the relevant provisions of the Central Sales Tax Act, 1956, particularly section 8(3)(b), which specifies the goods that can be purchased at a concessional rate. The court held that motor vehicles (trucks, trolleys, trailers), their accessories, spare parts, tyres, and tubes could be purchased at a concessional rate as they were necessary for the carriage of cables, poles, wires, and other electrical equipment. The court also allowed the purchase of soaps, paints, and varnishes for cleaning and painting machinery, and raincoats and battery cells for use by linesmen during adverse weather conditions.
2. Misuse of C Forms:
The Sales Tax Officer initially objected to the purchase of certain goods against C forms, holding that they were not used for the generation and distribution of electricity, thus constituting misuse. The court evaluated the extent to which these goods were necessary for the Electricity Board's operations. It was concluded that while the purchase of iron safes and battery cells for general purposes was not justified, the purchase of battery cells for linesmen working at night, and raincoats for linesmen during rainy seasons, was permissible. The court found that the Electricity Board had rightly used C forms for the purchase of these goods to the extent indicated, but not for iron safes or for general use of battery cells, soaps, varnishes, and paints.
3. Amendment of the Central Registration Certificate:
The Electricity Board sought an amendment to its Central registration certificate to include "tools and plants including vehicles and other transportable goods including their spare parts, tubes, and tyres." The Sales Tax Officer rejected this application, but the Deputy Commissioner allowed it on appeal. The Board of Revenue later reversed this decision, holding that motor vehicles could not be justified for purchase on C forms. The court, however, concluded that the Electricity Board was entitled to the amendment, allowing the inclusion of these items in the registration certificate, as they were necessary for the construction, operation, and maintenance of the power system.
Conclusion:
The court answered the references by holding that the Electricity Board could purchase motor vehicles (trucks, trolleys, trailers), their accessories, spare parts, tyres, tubes, soaps, paints, varnishes, raincoats, and battery cells at concessional rates, but only to the extent necessary for specific purposes related to the generation, transmission, and distribution of electricity. The Electricity Board was also entitled to amend its registration certificate to include these items. The references were answered accordingly.
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1979 (4) TMI 151
Issues:
1. Interpretation of section 7 of the Tamil Nadu General Sales Tax Act, 1959 regarding eligibility for compounding assessment.
2. Continuance of permission granted by assessing authority under section 7(2) and (2-A) of the Act.
3. Effect of filing returns under rule 18 on the withdrawal of option under section 7.
4. Application of legal principles in granting benefit under section 7 to small dealers.
Analysis:
The High Court of Madras delivered a judgment in a revision filed against the Sales Tax Appellate Tribunal's order for the assessment year 1972-73. The Tribunal confirmed the turnover determined by the Appellate Assistant Commissioner and held the assessee eligible under section 7 of the Act for compounding. The main issue revolved around the interpretation of section 7, specifically whether the permission granted by the assessing authority continues for subsequent years and the effect of filing returns under rule 18 on the withdrawal of the option under section 7.
The Court analyzed section 7(2) and (2-A) of the Act, which provide for the continuance of permission granted subject to the dealer's eligibility and non-withdrawal of the option. It was established that the turnover did not exceed the limit of Rs. 1 lakh and there was no withdrawal of the option by the dealer. The Court emphasized that withdrawal of the option should be a formal act requiring a conscious decision by the dealer, and the mere filing of returns under form A-2 did not constitute withdrawal unless intended as such.
Furthermore, the Court highlighted that small dealers, the intended beneficiaries of section 7, may not fully comprehend the legal nuances, and assessing authorities should guide them rather than penalize unintended lapses. The Court referenced previous decisions to support the interpretation that inadvertent filing of returns should not automatically disqualify a dealer from availing the benefits under section 7.
In conclusion, the Court dismissed the revision, affirming the Tribunal's decision to grant the benefit of section 7 to the assessee. The judgment underscored the need for a lenient interpretation of provisions aimed at assisting small traders and emphasized the importance of formal and conscious actions in withdrawing options under the law.
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1979 (4) TMI 150
The revising authority questioned whether arhat charges paid by a foodgrain dealer should be taxable as part of purchase turnover. The dealer paid commission to kachcha arhatias for finalizing purchases. The court held that the commission paid must be included in the turnover of purchases as it forms part of the purchase price. The reference/revision was dismissed.
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1979 (4) TMI 149
The High Court of Allahabad held that an appeal does not lie against a recovery certificate issued by the Sales Tax Officer under section 8(8) of the Act. The appeal filed by the assessee was deemed incompetent and was dismissed. The revising authority's view was considered incorrect, and the revision was allowed. No costs were awarded as the assessee did not appear.
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1979 (4) TMI 148
Issues:
1. Imposition of penalty under section 15-A(1)(a) of the U.P. Sales Tax Act.
2. Retroactive amendment of section 9 of the Central Sales Tax Act.
3. Interpretation of the term "reasonable cause" in the context of penalty imposition.
4. Validity of penalty order under the Validating Act of 1976.
5. Jurisdiction of revising authority to set aside penalty order under section 9(2).
Detailed Analysis:
1. The Sales Tax Officer imposed a penalty under section 15-A(1)(a) of the U.P. Sales Tax Act on the assessee for failing to deposit the tax along with the return. The revising authority found that the assessee had a reasonable cause for not making the deposit, as they believed an adjustment was due to them. The authority held that the term "reasonable cause" in section 15-A(1)(a) applies to the entire provision, not just the opening part, and the penalty cannot be imposed if a reasonable cause is shown for the failure to deposit the tax.
2. The Parliament retroactively amended section 9 of the Central Sales Tax Act by introducing sub-section (2A), which allowed for the penalty to be justified by reference to the State Act as well. This retrospective amendment enabled the penalty to be imposed under the State Act even when there was no corresponding provision in the Central Act at the time of penalty imposition.
3. The interpretation of the term "reasonable cause" in the context of penalty imposition was crucial. The revising authority's finding that there was a reasonable cause for the assessee's failure to deposit the tax was upheld. It was emphasized that determining the existence of a reasonable cause is a factual inquiry, and in this case, the revising authority's decision was deemed not arbitrary.
4. The Validating Act of 1976 was invoked to validate penalty orders passed earlier under the view that the Central Act authorized penalty imposition under the State law. However, it was clarified that this validation did not extend to orders that were unjustified even under the penalty provisions of the State law. The revising authority's decision to set aside the penalty order due to the reasonable cause for non-depositing tax was deemed valid and not cured by the amending Act.
5. The jurisdiction of the revising authority to set aside the penalty order was challenged based on section 9(2) of the Act. It was clarified that this section did not restrict the appellate or revisional powers regarding penalty orders. The revising authority had the right to examine the validity of the penalty order and set it aside if found unwarranted under the penalty provisions of the State law, which was precisely what occurred in this case.
In conclusion, the revision was dismissed, and the penalty order was set aside due to the existence of a reasonable cause for the failure to deposit the tax, as determined by the revising authority.
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1979 (4) TMI 147
Issues Involved:
1. Whether "hire charges" received by finance companies form part of the "sale price" under the Bengal Finance (Sales Tax) Act, 1941, and are liable to sales tax.
2. The constitutional distinction between legislative powers of Parliament and State Legislatures regarding sales tax.
3. The definition and scope of "sale" under the Bengal Finance (Sales Tax) Act, 1941.
4. The impact of hire-purchase agreements on the determination of "sale price."
5. The applicability of sales tax to hire-purchase transactions in different periods and under different legislative frameworks.
6. The jurisdiction of the Sales Tax Tribunal and the High Court under Article 226 of the Constitution.
Detailed Analysis:
1. Whether "hire charges" form part of the "sale price" under the Bengal Finance (Sales Tax) Act, 1941:
The primary issue is whether hire charges received by finance companies are part of the "sale price" under the Bengal Finance (Sales Tax) Act, 1941, thereby becoming liable to sales tax. The Court concluded that the total consideration for the hire-purchase contract, including what are termed as hire charges, constitutes the sale price. This conclusion was drawn from the definition of "sale" in Section 2(g) and the interpretation that the entire amount agreed to be paid in a hire-purchase contract is the consideration for the transfer of goods.
2. Constitutional distinction between legislative powers:
The judgment discusses the constitutional background, highlighting the different legislative powers exercised by Parliament under Article 246(4) and State Legislatures under Article 246(3). Parliament, under Article 246(4), has the power to legislate on sales tax in Union territories independently of the definition of "sale" in the Sale of Goods Act, 1930. This distinction allows Parliament to treat hire-purchase transactions as sales, even if the property in goods does not pass immediately.
3. Definition and scope of "sale" under the Bengal Finance (Sales Tax) Act, 1941:
The definition of "sale" under Section 2(g) of the Act was amended on October 1, 1959, to include transfers of goods on hire-purchase or other installment systems. The Supreme Court in Instalment Supply (Private) Ltd. v. Union of India held that under both the old and new definitions, a mere transfer of goods in a hire-purchase contract constituted a sale for the purpose of sales tax in a Union territory.
4. Impact of hire-purchase agreements on the determination of "sale price":
The Court analyzed the terms of hire-purchase agreements, noting that the total amount payable under such agreements includes both the price and hire charges. It was determined that the entire amount is the consideration for the transfer of goods and thus forms the sale price. This interpretation was consistent with the Supreme Court's decisions in similar cases, which did not distinguish between the price and hire charges once the hire-purchase contract was executed.
5. Applicability of sales tax to hire-purchase transactions:
The Court addressed the applicability of sales tax to hire-purchase transactions for different periods. It was held that receipts from hire-purchase transactions during 1958-59 were liable to tax, even if the contracts were entered into before April 1, 1958. The Court also confirmed that the rate of sales tax applicable would be the rate prevalent at the time the transfer of goods in the hire-purchase contract took place.
6. Jurisdiction of the Sales Tax Tribunal and High Court under Article 226:
The Court examined the jurisdiction of the Sales Tax Tribunal and the High Court's power under Article 226 of the Constitution. It was held that the Tribunal's decision, which followed an incorrect interpretation of the law, was without jurisdiction. The High Court decided to entertain the writ petitions despite the availability of an alternative remedy, citing the fundamental jurisdictional error in the Tribunal's orders.
Conclusion:
The Court affirmed that the total consideration for hire-purchase contracts, including hire charges, forms part of the sale price and is liable to sales tax under the Bengal Finance (Sales Tax) Act, 1941. The judgment clarified the constitutional distinction between legislative powers and upheld the applicability of sales tax to hire-purchase transactions based on the total consideration agreed upon. The High Court exercised its jurisdiction under Article 226 to correct the fundamental jurisdictional errors made by the Sales Tax Tribunal.
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1979 (4) TMI 146
The revising authority referred a question of law regarding the tax liability of chandras as painter's material. Chandras, used for giving shine to painted material, was found taxable as a painting material. The High Court held that chandras falls under the category of "all painter's materials" and is taxable accordingly. The revision was allowed, and the revising authority was directed to redetermine tax on chandras' turnover.
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1979 (4) TMI 145
Issues:
Assessment of sales tax for the years 1966-67 and 1967-68. Interpretation of Section 12 of the Rajasthan Sales Tax Act - reassessment of turnover when assessed at a lower rate than prescribed.
Analysis:
The judgment of the Rajasthan High Court, delivered by Dwarka Prasad, J., pertains to the assessment of sales tax for the years 1966-67 and 1967-68 of M/s. Motilal Omprakash. The dispute arose when the assessing authority charged tax at 6% for the sale of certain articles, later realizing it should have been at 7%. The reference applications questioned whether reassessment under Section 12 of the Rajasthan Sales Tax Act could be done for turnover assessed at a lower rate than prescribed by the Act.
The Court referred to a previous decision in Indian Hume Pipe Company Ltd. v. State of Rajasthan, where it was held that Section 12 allows reassessment not only for escaped assessment but also for assessments at too low a rate. The Court concluded that if an assessment is made at a lower rate than prescribed, recourse to Section 12 is permissible. The orders by the Deputy Commissioner and the Board of Revenue, which held otherwise, were deemed erroneous based on the precedent set by the Indian Hume Pipe case.
Despite disapproving of the lower authorities' decisions, the Court declined to call for a reference in these matters due to the insignificant amounts involved - Rs. 90.72 and Rs. 258.90. As the legal position was already established by the previous case, the Court found it unnecessary to seek a reference. Consequently, the reference applications were dismissed, and each party was directed to bear their own costs.
In conclusion, the Court clarified the interpretation of Section 12 of the Rajasthan Sales Tax Act regarding reassessment of turnover at a lower rate and emphasized adherence to established legal precedents. The judgment highlights the Court's discretion in deciding whether to call for a reference based on the significance of the amounts involved and the settled legal position.
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1979 (4) TMI 144
The revising authority questioned if labels sold by the assessee were taxable as laces under a specific notification. The court found that labels do not fit the definition of laces and overturned the authority's decision. The revision was allowed, and no costs were awarded.
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1979 (4) TMI 143
Issues Involved
1. Scope of revisional jurisdiction under the Sales Tax Act.
2. Distinction between the power of assessing escaped turnover and revisional power.
3. Correctness of the Division Bench ruling in Kassim Kannu v. State of Kerala.
4. Application of section 35 and section 19 of the Sales Tax Act.
5. Validity of the Deputy Commissioner's exercise of revisional power.
Detailed Analysis
1. Scope of Revisional Jurisdiction under the Sales Tax Act
The primary issue was whether the revisional authority under the Sales Tax Act could assess escaped turnover. The judgment clarified that revisional powers under section 35 are distinct from the power to assess escaped turnover under section 19. The revisional power is meant to correct errors in the legality, regularity, or propriety of the orders passed by subordinate officers.
2. Distinction Between the Power of Assessing Escaped Turnover and Revisional Power
The judgment emphasized that the power to assess escaped turnover is conferred on the assessing authority under section 19, while the revisional power under section 35 is vested in the Deputy Commissioner. These powers operate in different spheres, and the exercise of one does not infringe upon the other. The revisional power can address errors within the record of the case, whereas the power to assess escaped turnover can involve matters outside the original record.
3. Correctness of the Division Bench Ruling in Kassim Kannu v. State of Kerala
The Full Bench overruled the Division Bench ruling in Kassim Kannu v. State of Kerala, which had held that the revisional power under section 35 could not be used to assess escaped turnover. The Full Bench found that this ruling misunderstood the scope and effect of the Supreme Court decisions it relied upon. The correct principle is that revisional power can indeed address escaped turnover if it involves correcting errors in the original assessment.
4. Application of Section 35 and Section 19 of the Sales Tax Act
The judgment clarified that section 35 allows the Deputy Commissioner to revise any order passed by subordinate officers to correct errors, while section 19 specifically addresses the assessment of escaped turnover. The Deputy Commissioner's revisional power under section 35 is broader and can include directing the reassessment of escaped turnover if it corrects an error in the original assessment.
5. Validity of the Deputy Commissioner's Exercise of Revisional Power
The judgment upheld the Deputy Commissioner's exercise of revisional power in all three tax revision cases. In T.R.C. No. 12 of 1978, the Deputy Commissioner's remand for reassessment was deemed valid as it corrected an error in the original assessment. Similarly, in T.R.C. No. 27 of 1978 and T.R.C. No. 75 of 1978, the Deputy Commissioner's directions for fresh assessments were upheld as valid exercises of revisional power under section 35.
Conclusion
The Full Bench judgment affirmed that the revisional power under section 35 of the Sales Tax Act is broad and can include addressing escaped turnover if it corrects an error in the original assessment. The Division Bench ruling in Kassim Kannu v. State of Kerala was overruled, and the orders of the Sales Tax Appellate Tribunal were affirmed in T.R.C. No. 12 of 1978 and set aside in T.R.C. Nos. 27 and 75 of 1978. All revisions were dismissed with no order as to costs.
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1979 (4) TMI 142
The High Court of Allahabad dismissed the revision petition regarding whether "lal and chura" fall under cooked food or foodgrains category. Lal is considered puffed rice obtained by parching, similar to kheel and chirwa, which are different forms of rice. The court's decision aligns with previous rulings and the revising authority's view was upheld. The revision petition was dismissed with no costs.
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1979 (4) TMI 141
Issues Involved:
1. Justification for annulling the assessment order for want of notice.
2. Requirement and implications of notice in best judgment assessment under section 7(3) of the U.P. Sales Tax Act.
3. Procedural and jurisdictional aspects of issuing notice under section 7(3) versus section 21.
4. Consequences of non-issuance or non-service of notice.
Detailed Analysis:
1. Justification for Annulling the Assessment Order for Want of Notice:
The primary issue was whether the additional revising authority was justified in annulling the assessment order for the year 1967-68 due to the absence of notice to the assessee. The Court examined the necessity of notice in the context of best judgment assessments under section 7(3) of the U.P. Sales Tax Act. It concluded that the dealer is entitled to notice before a best judgment assessment is made, even if no return is filed. However, the absence of notice does not annul the proceedings but requires the assessment order to be set aside and the dealer to be given an opportunity to be heard.
2. Requirement and Implications of Notice in Best Judgment Assessment under Section 7(3):
The Court analyzed section 7(3) of the U.P. Sales Tax Act, which deals with the determination of turnover and assessment of tax. The section mandates that if no return is submitted, the assessing authority must determine the turnover to the best of its judgment after making necessary inquiries. The Court emphasized that the term "inquiry" implies a broader scope, necessitating notice to the dealer. The judgment clarified that the power to assess to the best of judgment is distinct from the jurisdiction to determine turnover without notice. The Court held that for a valid best judgment assessment, notice to the dealer is essential, even if the dealer has not filed a return.
3. Procedural and Jurisdictional Aspects of Issuing Notice under Section 7(3) versus Section 21:
The Court compared the procedural requirements of section 7(3) with section 21 of the Act, which deals with escaped assessments. It noted that while section 21 explicitly requires notice as a condition precedent for reassessment, section 7(3) implies the necessity of notice through its procedural requirements. The Court distinguished between the two sections, stating that in section 7(3), notice is procedural and pertains to the exercise of jurisdiction, whereas in section 21, it is jurisdictional and a condition precedent. Consequently, the failure to issue notice under section 7(3) is a procedural irregularity that can be remedied, unlike in section 21 where it affects jurisdiction.
4. Consequences of Non-Issuance or Non-Service of Notice:
The Court addressed the implications of not issuing or serving notice in the context of best judgment assessments. It concluded that the absence of notice does not render the assessment proceedings void but requires the assessment order to be set aside. The dealer must then be afforded an opportunity to be heard. The Court rejected the argument that non-issuance or non-service of notice should lead to the annulment of proceedings, emphasizing that such procedural irregularities can be corrected by the assessing authority or through appellate and revisional mechanisms.
Conclusion:
The Court answered the referred question in the negative, favoring the Commissioner of Sales Tax and against the assessee. It held that in best judgment assessments under section 7(3), where no return is filed, the dealer is entitled to notice. However, if the assessment order is passed without notice or service of notice, the order should be set aside, and the dealer should be given an opportunity to be heard. The proceedings are not liable to annulment. The revising authority's order annulling the assessment was set aside, and the matter was remanded for reconsideration in light of the Full Bench's decision. The petition was allowed without any order as to costs.
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1979 (4) TMI 140
Issues Involved:
1. Maintainability of writ applications under Article 226(3) of the Constitution.
2. Definition and interpretation of "sale" and "sale price" under the Central and State Sales Tax Acts.
3. Treatment of escalation claims in sales contracts.
4. Validity of assessment based on balance sheet and trading account entries.
5. Timing of tax liability accrual for escalated claims.
6. Acceptance of declaration forms for concessional tax rates.
Issue-wise Detailed Analysis:
1. Maintainability of Writ Applications under Article 226(3) of the Constitution:
The preliminary objection raised was that statutory appeals are provided against the assessments, and since the petitioner has not availed of these alternate remedies, the writ applications are not maintainable under Article 226(3) of the Constitution. The petitioner argued that the impugned demands infringed rights guaranteed under Article 19(1)(f) and (g) as well as Article 31 of the Constitution. The court agreed with the petitioner, stating that the bar on account of alternate remedy is not applicable in this case, thereby overruling the preliminary objection.
2. Definition and Interpretation of "Sale" and "Sale Price" under the Central and State Sales Tax Acts:
Section 2(g) of the Central Sales Tax Act defines "sale" as "any transfer of property in goods by one person to another for cash or for deferred payment or for any other valuable consideration." The definition in the State Act is similar. "Sale price" is defined as "the amount payable to a dealer as consideration for the sale of any goods." The court referred to the case of State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd., emphasizing that for a transaction to constitute a sale, there must be an agreement for transferring title to goods, supported by money consideration, and the property must actually pass in the goods.
3. Treatment of Escalation Claims in Sales Contracts:
The court examined the escalation clause in the contracts, which allowed for price adjustments based on variations in costs. It was determined that the escalation claim does not become "sale price" until accepted by the buyer or adjudicated by an arbitrator. The court agreed with the petitioner that until acceptance or arbitration, the escalated demand is merely a claim and not payable. Therefore, the escalated amount was not "sale price" before 31st March 1975, and no tax was exigible under either the State or Central Act.
4. Validity of Assessment Based on Balance Sheet and Trading Account Entries:
The Sales Tax Officer had relied on the balance sheet and trading account, which included the escalated demand as part of the turnover. The court held that the conduct of the assessee could not convert the escalated demand into sale price. The court cited the Supreme Court decisions in Commissioner of Income-tax, West Bengal-I v. India Discount Co. Ltd. and Kedarnath Jute Mfg. Co. Ltd. v. Commissioner of Income-tax (Central), Calcutta, which supported the view that mere inclusion in the balance sheet does not alter the legal character of the amount.
5. Timing of Tax Liability Accrual for Escalated Claims:
The court determined that tax liability for escalated claims accrues when the buyer accepts the claim or when the arbitrator admits it. Upon either eventuality, the petitioner can draw up a bill, and the entire claim becomes sale price. If the assessment has not been made, the assessee can file a revised return within the stipulated period. Otherwise, the turnover should be assessed in the year when the bill is raised.
6. Acceptance of Declaration Forms for Concessional Tax Rates:
The court found merit in the petitioner's argument that the Sales Tax Officer was unjustified in refusing to accept declaration forms for the turnover of Rs. 13 lakhs, which was part of the escalated claim. The declarations were issued in the subsequent year, but the turnover related to the year 1974-75. The court held that it would not be possible for the buyer to issue a declaration before accepting the escalated claim.
Conclusion:
The court concluded that the present demands should be vacated, and the Sales Tax Officer should reframe the assessments, giving the petitioner full opportunity to represent its case. The assessments should be made in accordance with the law and guidelines provided regarding when the escalated claim becomes sale price and the acceptance of declaration forms. Both writ applications were allowed, with no order for costs.
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1979 (4) TMI 139
Issues:
Interpretation of section 9(2) of the Central Sales Tax Act regarding seeking opinion of the Commissioner on the rate of tax under the Act.
Analysis:
The appeal involved a crucial point regarding whether an assessee can request the Commissioner's opinion on the appropriate tax rate under the Central Sales Tax Act. The key issue revolved around interpreting section 9(2) of the Central Act, which empowers the state authorities to assess and collect taxes under the Act. The contention arose when the Commissioner of Sales Tax refused to entertain the assessee's query on tax rates under the Central Act, citing that only questions under the U.P. Sales Tax Act could be referred and answered under section 35. The crux of the matter lay in determining the scope of the term "reference" in section 9(2) and whether it encompassed inquiries related to the Central Sales Tax Act.
The court analyzed the wide-ranging language of section 9(2) of the Central Sales Tax Act, emphasizing that the intent was to utilize the machinery provided by the State Act for assessments under the Central Act. While the provision did not explicitly specify the type of reference contemplated, the court noted that if the proceedings under section 35 bore the essential characteristics of a reference, they should align with the overarching objective of conducting assessments in accordance with state laws. It was highlighted that proceedings under section 35 initiated with an application by the assessee seeking the Commissioner's opinion, akin to a reference process. The court drew a distinction between proceedings under section 35 and those under section 11 of the Act, noting that both aimed to declare the law on a point, with the effect being given later by the revising authority.
Ultimately, the court held that a proceeding under section 35 functioned as a reference made by the assessee to the Commissioner for opinion on specified questions, as outlined in section 35(2) of the Act. Consequently, the Commissioner of Sales Tax was deemed competent to decide on the application's merits, and his refusal to entertain it based on the Central Sales Tax Act's liability was deemed erroneous. As a result, the appeal was allowed in favor of the assessee, with costs assessed at Rs. 200.
In conclusion, the judgment delved into the interpretation of statutory provisions, particularly section 9(2) of the Central Sales Tax Act, to ascertain the scope of seeking the Commissioner's opinion on tax rates under the Act. It underscored the importance of aligning assessment proceedings with state laws and upheld the assessee's right to solicit the Commissioner's opinion on tax matters, thereby setting a precedent for similar cases involving reference requests under tax legislation.
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