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Showing 61 to 80 of 518 Records

• 2000 (3) TMI 1067
  
  Issues Involved:
  1. Eligibility for deferral of sales tax.
  2. Interpretation of the eligibility certificate and agreement terms.
  3. Compliance with base production and sales volume conditions.
  4. Validity of the notice dated September 9, 1999.
  
  Issue-wise Detailed Analysis:
  
  1. Eligibility for deferral of sales tax:
  The petitioner, engaged in manufacturing goods like labels, printed advertisement materials, etc., sought an eligibility certificate for availing deferment of interest-free sales tax under a scheme introduced by the government. The second respondent issued an eligibility certificate specifying the period of eligibility from March 10, 1996, to February 28, 2001, with a maximum deferral amount of Rs. 332.66 lakhs. The deferral was applicable only on the increased volume of production/sales, with the base figure being the highest volume of production/sales in the last three years, specifically 1041.27 metric tonnes and Rs. 822.61 lakhs for the year 1995-96. The petitioner entered into an agreement on September 8, 1997, for deemed payment of deferred sales tax.
  
  2. Interpretation of the eligibility certificate and agreement terms:
  The eligibility certificate and agreement specified that the petitioner must continue paying sales tax up to the base volume of production/sales (Rs. 59.14 lakhs). Any tax liability exceeding this amount was eligible for deferral. The petitioner contended that it was sufficient to achieve either the total gross production or total sales volume to avail of the deferral facility, arguing that the tax liability should not be tied to the sales volume.
  
  3. Compliance with base production and sales volume conditions:
  The first respondent issued a notice on September 9, 1999, alleging that the petitioner violated the terms of the agreement and eligibility certificate, resulting in short payment for the assessment years 1997-98, 1998-99, and 1999-2000. The petitioner was directed to pay the shortfall of Rs. 80.68 lakhs within seven days, failing which action would be taken under para 16 of the agreement, including cancellation of the agreement. The respondents argued that both the base production volume and base sales volume must be reached before the petitioner could claim deferral of sales tax, as per the eligibility certificate and agreement.
  
  4. Validity of the notice dated September 9, 1999:
  The Tribunal emphasized that the purpose of the government orders and eligibility certificates was to support industries by providing concessions during their early stages. The Tribunal referred to a previous ruling, which stated that both base production volume and base sales volume must be reached before deferral of sales tax could be claimed. The Tribunal found that the terms of the eligibility certificate and agreement clearly required the petitioner to pay tax up to the base sales volume before availing of the deferral facility. The Tribunal rejected the petitioner's argument that achieving either condition was sufficient. The impugned notice dated September 9, 1999, was deemed valid and in accordance with the eligibility certificate and agreement.
  
  Conclusion:
  The Tribunal concluded that the petitioner must comply with the terms of the eligibility certificate and agreement, which required paying tax up to the base sales volume before availing of the deferral facility. The notice dated September 9, 1999, was upheld as valid, and the original petition was dismissed. The Tribunal emphasized the importance of adhering to the agreement unless legally modified.

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• 2000 (3) TMI 1066
  
  Issues Involved:
  1. Whether there is a sale of REP licences/exim scrips by the appellant exigible to tax under CST Act.
  2. Whether the payment by the export house to the appellant can be treated as consideration for such sale.
  3. If there is a sale/transfer of export benefit, whether it took place in the course of an export transaction outside the territory of India and not in the course of inter-State trade or commerce and therefore there is no liability to Central sales tax under the CST Act.
  
  Detailed Analysis:
  
  Re: Point (i):

  The first question is whether there is a "sale" exigible to Central sales tax. The term "sale" is defined in section 2(g) of the Central Sales Tax Act, 1956. It means any transfer of property in goods by one person to another for cash or for deferred payment or for any other valuable consideration. Section 2(d) of the CST Act defines "goods" as including all materials, articles, commodities and all other kinds of movable property, but does not include actionable claims, stocks, shares, securities and newspapers.

  In Vikas Sales Corporation v. Commissioner of Commercial Taxes [1996] 102 STC 106; AIR 1996 SC 2082, the Supreme Court considered the question whether replenishment licences/exim scrips issued as per import policy, are "goods" and whether transfer thereof is exigible to tax under sales tax laws. The Supreme Court held that replenishment licences which became export-import licence (for short "exim licence") with effect from July 3, 1991 are goods and that they were neither "actionable claims" nor "securities" which are excluded from the definition of "goods", under the CST Act and KST Act; and that transfer thereof to another constituted sale of goods within the meaning of and for the purposes of the CST Act and KST Act, exigible to tax. The following observations of the Supreme Court are relevant:

  "The REP licences (and exim scrips) have their own value. They are bought and sold as such. The original licensee or the purchaser is not bound to import the goods permissible thereunder. He can simply sell it to another and that another to yet another person. In other words, these licences/exim scrips have an inherent value of their own and are traded as such. They are treated and dealt with in the commercial world as merchandise, as goods. An REP licence/exim scrip is neither a chose-inaction nor an actionable claim. It is also not in the nature of a title deed.

  It has a value of its own. It is by itself a property-and it is for this reason that it is freely bought and sold in the market. For all purposes and intents, it is goods. Unrelated to the goods which can be imported on its basis, it commands a value and is traded as such. This is because, it enables its holder to import goods which he cannot do otherwise.

  The appellant contends that it has not "sold" or, "transferred" REP licences/exim scrips. It is stated that under the agreements entered by it with export houses, the export houses are entitled to all export benefits (that is, REP licences/exim scrips) and it is entitled to the benefit under section 80HHC of Income-tax Act and it merely gave effect to the said term of the agreement by issuing disclaimers in favour of the export house regarding the REP licences/exim scrips. It is pointed out that in pursuance of the agreements between the appellant and export houses and in view of the disclaimers, the REP licences/exim scrips were directly issued to the export houses (in the names of the export houses), by the concerned licensing authority (Joint Controllers of Exports/Imports) of the States where the export houses are situated. According to the appellant, the question of a transfer or sale of REP licences/exim scrip would arise only if the REP licence/exim scrips had been issued in its name and if it had thereafter transferred them for consideration to anyone else.

  Any transfer of property in "goods" by one person to another for valuable consideration is a sale and any consideration received for such sale is "sale price". A transaction need not be referred to as "sale" to be exigible to sales tax. If any agreement or arrangement between two parties results in transfer of goods from one to the other, there is a sale. The Import and Export Policy provided that the exporter is entitled to REP licences/exim scrips and that the exporter can transfer them to any one and enabled the transferee to import the goods permitted therein. The transfer of REP licences/exim scrips does not require any endorsement of permission from the licensing authority. A transfer of REP licences/exim scrips, which by themselves are goods, in the normal course would be by a sale invoice or letter confirming the transfer or agreement of sale coupled with delivery or by means of an endorsement of transfer on the REP licence/exim scrip itself. But, it does not mean that a transfer cannot be effected by other means. Any agreement or arrangement by which a person entitled to the REP licence/exim scrip empowers and authorises another to receive the export benefit (REP licence/exim scrip) directly from the licensing authority and undertakes to furnish the necessary disclaimer and the necessary documents to enable such other party to secure the REP licence/exim scrip directly in his name, is also a transfer of the REP licence/exim scrip. A transfer does not necessarily involve getting the REP licences/exim scrips physically by the exporter and then transferring it to someone else. If "A" is entitled to REP licence/exim scrip under the Import Export Policy, and by any stratagem or scheme, the REP licences/exim scrip to which "A" is entitled is made to be issued to "B" or to vest in "B", for a consideration paid by "B" to "A", the stratagem or scheme would itself be the agreement of sale or transfer, and the taxable event will occur, when, in pursuance of such agreement between A and B and the disclaimer issued by A, the REP licence/exim scrip to which "A" is entitled, is delivered to B, that is issued to B by the appropriate licensing authority. The act of disclaimer/renunciation for consideration, in the circumstances, is a transfer exigible to tax and the taxable event would be the issue of REP licences/exim scrips to "B". To ascertain whether there is sale, the essence of the agreement between the two parties and the reality of the transaction in its entirety should be considered and not whether there is physical delivery by the seller to buyer or whether the transaction is referred to as "sale".

  The Madras High Court in P.S. Apparels v. Deputy Commercial Tax Officer [1994] 94 STC 139, makes it clear that the transaction need not be termed as "sale" or "transfer" to be exigible to tax. In that case the assessee surrendered the REP licences to a bank for consideration.

  When the transaction was sought to be taxed, it was contended that there was no "sale" or "transfer". Repelling the said contention, the Madras High Court held:

  "Mr. Gangadharan, learned counsel appearing in W.P. No. 19467 of 1993, raised a plea that the authorities are seeking to levy sales tax also on the value or sum received by the petitioner therein on surrendering the licence in question to the specified or designated banks and the act of surrender cannot be treated as a transaction of sale attracting liability to sales tax. The learned Additional Government Pleader (Tax) submitted that if in any case it is substantiated that there was merely a surrender and no transfer or sale has really taken place such transactions may not be taxed by the assessing authorities. The submission on behalf of the petitioner, in our view, is based upon an imperfect claim on a coloured version of the nature of the transaction itself. The act of surrender is one where the licence granted is returned back to the grantor. In the context of surrender of rights generally it conveys an abdication or giving up of a right in favour of some one who also holds an interest in the very matter. The word "surrender" is an anachronistic word for the identification or description of the action of the petitioner. It is not the case of the petitioner that the licence under consideration was returned to or handed over back to the grantor-department of the Government of India but on the other hand the specific claim is that it has been delivered to the designated bank on receipt of valuable consideration therefor."

  Therefore the test is whether the export house could have received or obtained the REP licences/exim scrips, but for the agreement and consequential disclaimer by the appellant. If the answer is that the export house would have received the REP licences/exim scrips without any disclaimer or authority issued in its favour by the appellant, then there would be no transfer of sale by appellant. But, if the authority granted, and disclaimer issued, by the appellant is the basis for the export house getting the REP licence/exim scrip directly in its name, then there is a transfer by the appellant in favour of the export house.

  A reading of the agreements between the appellant and export houses make it clear that the main object of the agreement is to transfer the export benefits (REP Licences/exim scrips) from the appellant to the export houses for a consideration. The following factors, that is, (a) the appellant was responsible for any claim for defective quality of goods exported, (b) that the appellant received the entire price for the exported goods, (c) that the bills of lading were in the joint names of the appellant and the export house, (d) that the relief under section 80HHC of the Incometax Act accrued to the appellant and (e) that relief under section 80HHC could not have been availed of by the export house as it did not receive any part of the sale consideration, make it clear that but for the disclaimer by the appellant issued as per the agreements, the export benefits (REP licences/exim scrips) would have been issued in the name of the appellant and not in the names of the export house. Only the exporter is entitled to the REP Licences/exim scrips under the Import-Export Policy. If the REP licences and exim scrips which became due on account of exports by the appellant, were issued in favour of the export house instead of the appellant, it is only in view of the terms of the agreement between appellant and the export house and consequential disclaimer by the appellant. Therefore, renunciation or disclaimer of export benefits (REP licences/exim scrips) by the appellant in favour of export houses amounts to a sale taxable under the Act even though REP licences/exim scrips were directly issued in the name of the export houses.

  It is alternatively contended that the transaction between appellant and the export house is in the nature of a barter or exchange; that is, the export benefits to which appellant is entitled are exchanged for the income-tax benefits to which the export house is entitled. Reliance is placed on the decision of a learned single Judge of this Court in Steel Authority of India Ltd. v. Assistant Commissioner of Commercial Taxes ILR 1996 Kar 1136, wherein it is held that a contract relating to goods can be considered as a contract of sale only if the consideration for transfer of property in goods in favour of the transferee is money; and that if goods are agreed to be transferred for any other consideration like exchange with any other goods or services rendered, then in law, such a contract cannot be said to be a contract of sale of goods and therefore such a transaction cannot be subjected to sales tax. This contention is on the assumption that there is an exchange between the appellant and the export house, in respect of export benefits and income-tax benefits. But according to the respondents the consideration for transfer of REP licences/exim scrips, is not the "incometax benefits", but payment of a percentage of the f.o.b. value by the exporter. A clear examination would show that contention of the Revenue is correct. This is because, there is, in actual fact, no exchange of export benefits and income-tax benefits as the income-tax benefit would have anyhow accrued to the exporter (that is the appellant) and not to the export house having regard to the nature of transaction and the provisions of section 80HHC. Secondly "exchange" presuppose that the export house was entitled to some "benefit" under the Income-tax Act which was real and not illusory, and if there was no exchange, the export house would have enjoyed such "benefit ".

  Let us therefore consider whether the export house would have or could have received any benefit at all under section 80HHC if there was no disclaimer thereof in favour of the appellant. The alleged benefit in question is the right to seek deduction of profits derived by the assessee from export of goods, in computing the total income of the assessee. In other words, the profit from export becomes tax-free. But, in this case, the export house did not get any part of the price, let alone any profit, in respect of the export. The price and profit of export is received by the appellant. Therefore, even if there was no disclaimer by the export house in favour of the appellant, the said 80HHC benefit would have accrued only to the appellant and in no event to the export house.

  We therefore hold that transaction between the appellant and export houses, under which the export house obtains the REP licences/exim scrips directly from the licensing authority, in pursuance of the disclaimer by appellant, amounts to a sale of REP licences/exim scrips by the appellant to the export houses.

  Re: Point No. (ii):

  The next question relates to identifying the consideration for the sale or transfer of REP licences/exim scrips. It is seen from the agreement between the parties that the actual export is by the appellant and not by the export house. Even the bill of lading is in the joint names of the appellant and the export house. The entire proceeds of exports are received by the appellant. In fact, the benefit of section 80HHC of the Income-tax Act accrues to the appellant in view of the fact that the entire proceeds of the export are received by the appellant. As no part of the proceeds of export is received by the export house, the export house could not have derived any benefit under section 80HHC. Hence, the disclaimer by the export house in favour of the appellant in regard to income-tax benefit is illusory. It is not therefore possible to accept the contention of the appellant that the disclaimer regarding the benefit under section 80HHC of the Income-tax Act by the export house is the consideration for the appellant issuing disclaimer in regard to the export benefits (REP licences/exim scrips). As already held (in para 22) the disclaimer by the export house in favour of the appellant in regard to the relief under section 80HHC of the Income-tax Act is only an empty red herring intended to deviate the attention from the real consideration.

  Under the agreement/arrangement between the appellant and the export house, the appellant as exporter does not render any service to the export house. Therefore, the question of the export house paying 2.4 per cent or any other percentage of the f.o.b. price to the appellant as service charge/ commission/premium/incentive does not arise. Necessarily therefore the said payment is only a consideration for the transfer of export benefits (REP licences/exim scrips). It is possible that the export benefits incidentally include the benefit of counting the export to the account of the export house, and thereby attain the minimum quantity of exports required to continue the recognition. Thus, by process of exclusion, all that remains under the agreement is the act of transfer of the benefits of export (REP licences/exim scrips) by the appellant in favour of the export house on the one hand and payment of a percentage of the f.o.b. price by the export house to the appellant on the other. The only inference therefore is that the said payment of a percentage of f.o.b. value by whatever name it is called, i.e., service charge, commission, premium or export incentive, is nothing but the consideration for transfer of the benefits of export, i.e., REP licences/exim scrips.

  The contention that the appellant renders some service to the export house, in agreeing to treat the export to be counted as export by the export house and thus enable the export house to reach the export target so that their recognition as export house is continued, is without substance.

  If that is so, it would mean that the appellant is giving up the benefits of export (REP licence/exim scrip), which is very valuable free of any cost. That is not what any prudent businessman would do. Nor is it the case of the appellant that they gave up such benefit free of any change.

  Re: Point No. (iii):

  The contention of the appellant is that even if it has to be held that there is a sale or transfer of export benefit, it took place in the course of the export transaction outside the territory of India and not in the course of inter-State trade or commerce, and therefore there is no liability to pay Central sales tax. This contention is not sound. The subjectmatter of sale or transfer which is being taxed is not the exported goods (marine products). The subject-matter of the sale is REP licences/exim scrips.

  The sale or transfer of REP licences/exim scrips took place in pursuance of the agreement between the appellant and the export house. As the goods (REP licences/exim Scrips) were not in existence at the time of the agreements, the transfer is completed only on delivery of the goods. In this case therefore, the taxable event is the issue of the REP licences/exim scrips in favour of the export house by the licensing authority in pursuance of the agreement and the disclaimer by the appellant. Thus, it cannot be said that the sale/transfer took place outside the territory of India.

  We do not find any error in the impugned revisional order dated January 22, 2000 passed by the Commissioner of Commercial Taxes (Karnataka). As all the points raised by appellant are answered against the appellant, it follows that there is no merit in these appeals. Accordingly, these appeals are rejected.

  Appeals dismissed.

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• 2000 (3) TMI 1065
  
  The High Court of Andhra Pradesh dismissed the petition regarding the inclusion of excise duty in sale price for assessment year 1976-77. The court found that the excise duty was refunded to buyers after collection, but it does not mean it was not part of the sale consideration. The Tribunal's decision to dismiss the appeal was upheld. The petition was dismissed with no costs.

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• 2000 (3) TMI 1064
  
  Issues:
  1. Validity of proceedings of reassessment under section 19(1) of the M.P. General Sales Tax Act, 1958.
  2. Legality of the order of reassessment passed by the Assistant Commissioner of Sales Tax, Indore.
  3. Revision of the order by the Additional Commissioner of Sales Tax, M.P., Indore.
  4. Computation of limitation period for the second notice issued under section 19(1) of the Act.
  
  Analysis:
  1. The petitioner, a partnership firm, was reassessed under section 19(1) of the Act for the second time, challenging the proceedings initiated by the Assistant Commissioner of Sales Tax, Indore, through a notice and subsequent order of reassessment. The petitioner contended that the second notice was time-barred as it exceeded the 5-year limitation period from the date of the original assessment order. The respondents argued that the limitation period should be computed from the date of the first reassessment order, not the original assessment.
  
  2. The court considered the interpretation of the expression "order of assessment" in section 19(1) of the Act based on precedents like Commissioner of Sales Tax, M.P. v. Jeewa Khan and J.K. Textiles v. Additional Sales Tax Officer. It was established that an "order of assessment" does not include a reassessment order. The court noted that the amendment to section 19(1) did not alter this interpretation, emphasizing that the word "assessment" refers to the original assessment under section 18.
  
  3. The Additional Commissioner's attempt to distinguish previous decisions based on the unamended provision of section 19(1) was deemed misconceived. Reference to a Supreme Court decision in Deputy Commissioner of Commercial Taxes v. H.R. Sri Ramulu was also found irrelevant as it pertained to a different context of revisional powers. The court clarified that the limitation period for second reassessment should be calculated from the date of the original assessment order, not the first reassessment order.
  
  4. Consequently, the court ruled in favor of the petitioner, declaring the second reassessment proceedings as time-barred. The order of reassessment and the revision order were quashed, leading to the allowance of the petition. The notice and orders in question were invalidated, and no costs were awarded, with any security amount to be refunded to the petitioner upon verification.

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• 2000 (3) TMI 1063
  
  Issues:
  - Dispute over the levy of 12% tax on sales of milk products
  - Claim of penalty under section 12(3)(b) of the Act
  
  Analysis:
  1. Dispute over 12% Tax Levy:
  - The case involved a dispute regarding the levy of 12% tax on sales of milk products totaling Rs. 57,17,537. The assessing authority proposed the tax along with a penalty of 100% of the tax amount due to discrepancies in tax payment. The petitioner argued that the brand name "Cocomilk" was unregistered, questioning the tax levy. However, both the Appellate Assistant Commissioner and the Appellate Tribunal upheld the 12% tax levy, stating that registration of the brand name was not necessary for taxation under the relevant Act.
  
  2. Penalty under Section 12(3)(b) of the Act:
  - The Appellate Tribunal confirmed the penalty corresponding to the tax levy issue. The petitioner contested the penalty, claiming no wilful omission and no basis for the penalty. However, the Tribunal found that the penalty was justified under section 12(3)(b)(iii) of the Act due to the discrepancy between the tax assessed and the tax paid exceeding 25%. The Tribunal emphasized that penalty under this section is warranted for incorrect or incomplete returns, regardless of wilful intent. The Tribunal concluded that the penalty was correctly applied as per the provisions of the Act, and there was no basis for interference.
  
  In summary, the Tribunal dismissed the tax revision case, upholding the 12% tax levy on milk products and the corresponding penalty under section 12(3)(b) of the Act. The Tribunal found no errors in the application of tax and penalty provisions, emphasizing the legal requirements and precedents governing such cases.

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• 2000 (3) TMI 1062
  
  Issues Involved:
  1. Legality of the seizure under Section 11(4) of the Bengal Amusements Tax Act, 1922.
  2. Jurisdiction of the High Court versus the West Bengal Taxation Tribunal under Article 323B of the Constitution of India.
  3. Validity of the notification dated 20th September 1985.
  4. Requirement of prior sanction for seizure under Section 11B of the Bengal Amusements Tax Act, 1922.
  5. Legitimacy of the Bureau of Investigation's actions under the repealed Bengal Finance (Sales Tax) Act, 1941.
  
  Detailed Analysis:
  
  1. Legality of the Seizure under Section 11(4) of the Bengal Amusements Tax Act, 1922:
  The petitioner, operating a cinema hall, was subjected to a seizure conducted by the Sub-Inspector of Police, Bureau of Investigation, under Section 11(4) of the Bengal Amusements Tax Act, 1922. The court found that the seizure was not backed by any legal foundation, as there was no dispute regarding the payment of advance tax by the petitioner. The court emphasized that the seizure was not conducted for the purpose of levy, assessment, collection, or enforcement of any tax, which would have been the only valid grounds for such action.
  
  2. Jurisdiction of the High Court versus the West Bengal Taxation Tribunal under Article 323B of the Constitution of India:
  The respondents argued that the High Court lacked jurisdiction to hear the case, citing Article 323B of the Constitution, which mandates that disputes regarding levy, assessment, collection, and enforcement of tax should be handled by the West Bengal Taxation Tribunal. However, the court clarified that the Tribunal's jurisdiction is limited to matters directly related to tax enforcement. Since the issue at hand was the legality of the seizure and not a tax dispute, the High Court retained jurisdiction.
  
  3. Validity of the Notification dated 20th September 1985:
  The notification authorized certain officers to act under Section 11 of the Bengal Amusements Tax Act, 1922. The court found that this notification became ineffective after the repeal of the Bengal Finance (Sales Tax) Act, 1941, and the introduction of the West Bengal Sales Tax Act, 1994. Consequently, actions taken under this notification were deemed inoperative and illegal.
  
  4. Requirement of Prior Sanction for Seizure under Section 11B of the Bengal Amusements Tax Act, 1922:
  The court noted that under Section 11B of the Bengal Amusements Tax Act, 1922, a complaint must be filed before a Magistrate, and the Magistrate cannot take cognizance of the offense without prior sanction from the State Government. The seizure in question did not have such sanction, rendering it illegal. Post facto ratification of the seizure was also deemed unsustainable.
  
  5. Legitimacy of the Bureau of Investigation's Actions under the Repealed Bengal Finance (Sales Tax) Act, 1941:
  The court held that the Bureau of Investigation, as constituted under the repealed Bengal Finance (Sales Tax) Act, 1941, could not operate under the new West Bengal Sales Tax Act, 1994. Therefore, any actions taken by the Bureau under the old Act were invalid.
  
  Conclusion:
  The High Court quashed the notification and the subsequent proceedings, declaring the seizure illegal. The seized articles were ordered to be returned to the petitioner. The court emphasized that the High Court retained jurisdiction in this matter, as it did not fall within the purview of the West Bengal Taxation Tribunal's jurisdiction under Article 323B of the Constitution. The writ petition was allowed, and no costs were imposed.

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• 2000 (3) TMI 1061
  
  The Kerala High Court modified penalty orders, reducing penalty to Rs. 5,000 as there was no tax evasion. The petitioner's goods were exempted, so only Rs. 5,000 penalty was justified. Excess amount paid to be refunded.

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• 2000 (3) TMI 1060
  
  The High Court of Punjab and Haryana quashed a notification that retrospectively amended Schedule "B" of the Punjab General Sales Tax Act, 1948. The court ruled that such retrospective amendment was impermissible and ordered the notification to be operative only from the date of its publication in the official gazette, February 18, 1999.

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• 2000 (3) TMI 1059
  
  Issues:
  1. Interpretation of items under the Kerala General Sales Tax Act, 1963.
  2. Classification of PVC fittings under specific items in the First Schedule.
  3. Dispute between Revenue and assessee regarding the categorization of PVC fittings.
  4. Applicability of specific entries for different assessment years.
  5. Legal principles governing the interpretation of terms like "sanitary fittings" and "water supply."
  
  Analysis:
  The High Court of Kerala addressed four applications filed by the Revenue challenging the conclusion of the Kerala Sales Tax Appellate Tribunal regarding the classification of PVC fittings under the Kerala General Sales Tax Act, 1963. The Tribunal had categorized PVC fittings-elbows, tees, and couplings under item 145/101 of the First Schedule instead of item 217/149 as contended by the Revenue. The Revenue argued that PVC fittings should be classified as "water supply and sanitary equipments and fittings" under item 217/149, while the assessee claimed they fell under item 145/101 related to "plastics and articles of plastics."
  
  For the assessment years in question, the entries in the First Schedule differed according to the interpretations of the Revenue and the assessee. The Tribunal's decision was based on the specific entries for each assessment year. The Revenue emphasized that PVC fittings are used in conjunction with PVC pipes for water supply and sanitary purposes, supporting their classification under item 217/149. Conversely, the assessee highlighted the diverse applications of PVC pipes, including non-sanitary uses like electrical connections, justifying their classification under item 145/101.
  
  The Court referred to legal precedents to interpret terms like "sanitary fittings" and "water supply." Citing the State of U.P. v. Indian Hume Pipe Co. Ltd., the Court defined "sanitary fittings" as materials used in lavatories or bath-rooms, excluding underground water supply pipes. It was noted that PVC pipes have varied uses beyond water supply and sanitary applications, leading to a factual finding that they were not exclusively used for such purposes. Referring to Deputy Commissioner of Sales Tax v. G.S. Pai & Co., the Court upheld the Tribunal's decision in the absence of contrary evidence from the Revenue. Additionally, a division Bench's observation in N.R. Somasundaran Nair v. State of Kerala reinforced the interpretation of "water supply" in conjunction with "sanitary fittings."
  
  In conclusion, the Court dismissed the applications, affirming the correctness of the Tribunal's conclusions and emphasizing the factual nature of the findings regarding the usage of PVC fittings.

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• 2000 (3) TMI 1058
  
  Issues Involved:
  1. Suppression of stock and turnover.
  2. Disallowance of exemption under Section 5(3) of the CST Act.
  3. Penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act.
  
  Issue-wise Detailed Analysis:
  
  1. Suppression of Stock and Turnover:
  
  The Appellate Tribunal confirmed the suppression of stock and turnover as follows:
  - Excess Stock: During an inspection on August 12, 1993, the assessee admitted to having an excess stock of 313 pieces of leather. The assessee's claim that these were received for color dyeing was rejected due to lack of documentary evidence. Similarly, the excess stock of 1,946 pieces of finished leather was not accepted as job-work stock because the job-work register did not reflect these transactions.
  - Misclassification: The Tribunal upheld the suppression of Rs. 81,920 related to the last purchase of raw skins, rejecting the claim that it was subsequently accounted for, as no stock account was produced.
  - Total Suppression: The Tribunal sustained an actual suppression of Rs. 3,07,820 and added 50% for estimated suppression, refixing the total suppression at Rs. 4,61,730.
  
  2. Disallowance of Exemption Under Section 5(3) of the CST Act:
  
  The Tribunal disallowed the claim of exemption for raw hides and skins under Section 5(3) of the CST Act, citing that:
  - Different Commodities: Following the Supreme Court's decision in K.A.K. Anwar & Co. v. State of Tamil Nadu, raw hides and skins and dressed hides and skins are considered different commodities. Therefore, the purchase of raw hides and skins does not qualify for exemption under Section 5(3) because the exported commodity (dressed hides and skins) is different from the purchased commodity (raw hides and skins).
  - Legal Precedents: The Tribunal referred to the Supreme Court's decisions in Sterling Foods v. State of Karnataka and Vijayalaxmi Cashew Company v. Deputy Commercial Tax Officer, which reiterated that if the goods purchased and the goods exported are different commercial commodities, exemption under Section 5(3) is not applicable.
  
  3. Penalty Under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act:
  
  The Tribunal upheld the penalty levied under Section 12(3)(b) for the following reasons:
  - Automatic Penalty: Given the suppression and the assessment made to the best judgment, the penalty is a corollary to the assessment under Section 12(2).
  - Quantum of Penalty: The penalty, which is the difference between the tax assessed and tax paid, was deemed appropriate and in accordance with the law.
  
  Conclusion:
  
  The Tribunal found no merit in the petitioner's arguments and upheld the Appellate Tribunal's decisions on all counts. The suppression of Rs. 4,61,730 was confirmed based on factual findings, the disallowance of exemption under Section 5(3) was justified by legal precedents, and the penalty under Section 12(3)(b) was deemed appropriate. Consequently, the tax revision case was dismissed at the admission stage.

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• 2000 (3) TMI 1057
  
  Issues involved:
  The judgment questions the rejection of an appeal by the Appellate Deputy Commissioner based on delay, the starting point of limitation for filing an appeal, the power of the appellate authority to condone delay, and the entitlement to refund of tax paid under an invalid provision.
  
  Issue 1: Rejection of appeal based on delay
  The petitioner filed an appeal against an assessment order with a delay of 533 days, contending that certain oil sales were subjected to higher tax rates. The appellate authority rejected the appeal citing lack of power to condone the delay beyond 30 days, as per the Andhra Pradesh General Sales Tax Act, 1957. The petitioner failed to provide reasons for the delay or file a separate petition for condonation.
  
  Issue 2: Starting point of limitation for filing an appeal
  The petitioner argued that the starting point of limitation for filing the appeal should be from the date of knowledge of a relevant court judgment, but the court held that the appeal must be filed within the period prescribed by the statute. The court emphasized that the remedy of appeal is governed by specific statutory provisions and the starting point of limitation is the date of service of the order.
  
  Issue 3: Entitlement to refund of tax paid under an invalid provision
  The court discussed the principles related to refund of tax paid under an unconstitutional law, highlighting the need to prove that the tax burden was not passed on to buyers to be eligible for a refund. The petitioner's inability to demonstrate that the tax was not collected from purchasers led to the conclusion that no refund would be granted. The court emphasized the importance of avoiding unjust enrichment and protecting the public exchequer.
  
  In conclusion, the court dismissed the writ petition, stating that the petitioner was not entitled to any relief and had engaged in speculative litigation after consenting to the assessment earlier. The court highlighted the importance of not promoting unjust claims for tax refunds and upheld the decision to reject the appeal based on delay.

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• 2000 (3) TMI 1056
  
  Issues Involved:
  1. Jurisdiction of the Deputy Commissioner to initiate proceedings under Section 10-B.
  2. Legality and propriety of the order passed by the assessing authority under Section 21.
  3. Scope of the revisional power of the revising authority under Section 10-B.
  4. Error in remanding the matter to the Deputy Commissioner for further inquiry.
  
  Issue-wise Detailed Analysis:
  
  1. Jurisdiction of the Deputy Commissioner to initiate proceedings under Section 10-B:
  The core argument presented by the revisionist was that the Deputy Commissioner lacked jurisdiction to initiate proceedings under Section 10-B of the U.P. Sales Tax Act. It was contended that once the notice under Section 21 was discharged by the assessing authority, there was no order under Section 21 to be revised. The assessing authority had initially held that there was no adverse material against the dealer, thus allowing the original assessment order to stand. The revisionist relied on the precedent set in Commissioner of Sales Tax, U.P., Lucknow v. Angan Lal Fakir Chand, arguing that the power of revision does not extend to an order under Section 21 where the notice is merely discharged.
  
  2. Legality and propriety of the order passed by the assessing authority under Section 21:
  The Tribunal found that the assessing authority had committed illegality and impropriety by discharging the notice under Section 21 without proper inquiry. The Tribunal observed that the dealer had not disclosed any purchases against form III-B from M/s. Star Paper Mills, Saharanpur, and this information was already on the record of assessment. The Tribunal held that the discharge of the notice was not justified, given the material on record indicating purchases from M/s. Star Paper Mills. The Deputy Commissioner, therefore, had jurisdiction to revise the order dated September 7, 1989, passed under Section 21.
  
  3. Scope of the revisional power of the revising authority under Section 10-B:
  Section 10-B(1) of the Act empowers the revising authority to call for and examine the record relating to any order passed by a subordinate officer and to pass such order as it thinks fit upon satisfaction of the legality or propriety of the order. The court clarified that this provision does not exclude the power to revise an order passed under Section 21. The court distinguished the present case from the precedent cited, noting that the facts and circumstances were different. The court emphasized that the revising authority has the power to correct errors in the assessment order if the material on record was not properly considered by the assessing authority.
  
  4. Error in remanding the matter to the Deputy Commissioner for further inquiry:
  The Tribunal remanded the matter to the Deputy Commissioner for further examination and decision after giving the dealer an opportunity to address the objections. However, the court found that this was an error. The revising authority is limited to examining the legality and propriety of the order based on the material already on record and does not have the authority to conduct further inquiries or gather additional material. The court held that the matter should have been remanded to the assessing authority instead, to pass an appropriate order after complying with the directions given by the Tribunal.
  
  Conclusion:
  The court concluded that the Deputy Commissioner had the jurisdiction to revise the order dated September 7, 1989, under Section 10-B. However, the Tribunal erred in remanding the matter to the Deputy Commissioner for further inquiry. The proper course was to remand the matter to the assessing authority for a fresh decision. The revision was partly allowed, upholding the Tribunal's decision to remand the matter but directing that it be remanded to the assessing authority instead of the Deputy Commissioner. The petition was partly allowed.

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• 2000 (3) TMI 1055
  
  Issues:
  Levy of sales tax on bricks used in works contract prior to amendment of Tripura Sales Tax Act, 1976 in 1984.
  
  Analysis:
  The judgment in Civil Rule Nos. 49, 50, and 51 of 1991 addresses the issue of whether sales tax can be levied on bricks manufactured and used in works contracts before the 1984 amendment of the Tripura Sales Tax Act. The petitioner-firm executed consolidated contract works for road improvement using self-manufactured bricks. The assessing authority misinterpreted the law and raised tax demands, which were confirmed by higher tax authorities. The key question was whether the bricks used in works contracts constituted a sale for tax purposes. The court referred to relevant Supreme Court and High Court decisions to analyze the nature of works contracts and the applicability of sales tax.
  
  The court cited the Hindustan Aeronautics Ltd. case, where it was established that a contract for works does not become a sale merely because property passes during the contract. Additionally, the Builders Association of India case upheld the levy of sales tax on goods involved in works contracts. The court also referenced the Sailesh Chandra Nandi case, where it was held that no tax could be levied on materials used in works contracts that did not involve a sale within the state. Applying these precedents, the court determined that the bricks used in road improvement works did not constitute a sale under the Tripura Sales Tax Act before the 1984 amendment.
  
  The court concluded that prior to the 1984 amendment, the materials used in works contracts, including the bricks in question, were not taxable under the law. The assessment orders were deemed incorrect, and the decisions of the Assistant Commissioner of Taxes and the Tripura Sales Tax Tribunal were set aside. The matter was remitted back to the Superintendent of Taxes for reassessment in line with the court's decision. The writ petitions were allowed, with no costs imposed on either party.

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• 2000 (3) TMI 1054
  
  Issues:
  1. Denial of eligibility certificate by respondent No. 1 under the "Sales Tax Incentive Scheme for Industries, 1986".
  2. Delay in responding to the application for eligibility certificate.
  3. Interpretation of the eligibility criteria based on the no objection certificate from Gujarat Pollution Control Board.
  4. Consideration of the period of manufacturing activity and possession of the no objection certificate.
  
  Analysis:
  The petitioner raised concerns regarding the denial of an eligibility certificate by respondent No. 1, crucial for availing benefits under the "Sales Tax Incentive Scheme for Industries, 1986". The petitioner's application for the certificate, submitted in December 1989, faced prolonged scrutiny without a response until June 1999, citing cessation of drug manufacturing and lack of a no objection certificate from the Gujarat Pollution Control Board as reasons for denial.
  
  During the hearing, the petitioner's counsel argued that the petitioner should have been granted the eligibility certificate based on the possession of a valid no objection certificate until March 1994, despite discontinuing drug manufacturing in October 1996. The respondent contended that the petitioner's manufacturing halt at the time of inspection and the limited validity of the no objection certificate justified the denial.
  
  Upon review, the Court acknowledged the petitioner's possession of a valid no objection certificate until March 1994 and the continuation of drug manufacturing until October 1996. The Court opined that the petitioner should have been granted the eligibility certificate for the period during which manufacturing and the no objection certificate were valid, emphasizing the prolonged inaction by respondent No. 1 after the application submission in 1989.
  
  Consequently, the Court directed respondent No. 1 to reassess the petitioner's case, considering the valid no objection certificate and the manufacturing timeline, instructing a reevaluation and issuance of the eligibility certificate or a reasoned order by a specified date in 2000. The Court ruled in favor of the petitioner, maintaining an interim relief until a set date.
  
  In conclusion, the judgment highlighted the importance of considering the circumstances surrounding the application, the possession of necessary certificates, and the period of manufacturing activity in determining eligibility for the incentive scheme, emphasizing the need for a timely and fair assessment by the concerned authority.

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• 2000 (3) TMI 1053
  
  The High Court of Andhra Pradesh upheld the Tribunal's decision to grant conditional stay pending appeal against the Joint Commissioner's order under the A.P. General Sales Tax Act. The Court found no illegality in the Tribunal's decision, stating that sub-section (6-A) of section 21 does not create a bar against granting stay in this case. The Court highlighted that the omission of the Joint Commissioner in the sub-section is significant, allowing for the grant of stay in such situations. The tax revision case was dismissed, and the petition was also dismissed.

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• 2000 (3) TMI 1052
  
  Issues:
  1. Classification of heat exchangers under the Tamil Nadu General Sales Tax Act, 1959.
  
  Detailed Analysis:
  The main issue in this case was the classification of heat exchangers under the Tamil Nadu General Sales Tax Act, 1959. The Appellate Tribunal had to determine whether heat exchangers fell under entry 41-D of the First Schedule to the Act, which included generators, generating sets, transformers, and their parts and accessories. The Tribunal noted that the heat exchangers were used as attachments for higher capacity engines and were essential for cooling the engine in a generator to ensure its efficiency.
  
  The Appellate Tribunal observed that the generators and their parts and accessories were specifically mentioned in entry 41-D of the First Schedule, and not under entry 81. The petitioner argued that heat exchangers were used in various industries and should not be classified solely as parts or accessories of generators. The petitioner contended that the correct tax rate should be 8% under entry 81, rather than 12% as per entry 41-D.
  
  The Government Advocate supported the classification made by the Appellate Tribunal, emphasizing the indispensable nature of heat exchangers as accessories for generators. However, upon careful consideration of the contentions and records, the Tribunal found that heat exchangers were not merely parts of generators but were used as accessories to enhance generator efficiency. The Tribunal noted that heat exchangers were also utilized in various industries based on tailored requirements, such as in chemical and refinery services to prevent intermixing of fluids.
  
  Ultimately, the Tribunal held that the generic expression of "parts and accessories" did not cover heat exchangers, as they were not specifically mentioned in the First Schedule to the Act. Therefore, the classification of heat exchangers for the relevant assessment year was determined to be under entry 81 of the First Schedule, taxable at 8%. As a result, the tax revision case was allowed, and the Tribunal ordered the decision to be observed and executed accordingly, with the petition being allowed.

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• 2000 (3) TMI 1051
  
  Issues Involved:
  1. Validity of the circular/letter dated August 16, 1993, issued by the Commissioner of Taxes, Assam.
  2. Interpretation of the Assam General Sales Tax Act, 1993, concerning sales tax on goods purchased before July 1, 1993.
  3. Competence of the Commissioner of Taxes in issuing the circular.
  4. Applicability of the provisions of the Assam Finance (Sales Tax) Act, 1956, post-repeal by the Assam General Sales Tax Act, 1993.
  5. Impact of repeal and savings provisions under Section 74 of the Assam General Sales Tax Act, 1993.
  
  Issue-wise Detailed Analysis:
  
  1. Validity of the circular/letter dated August 16, 1993, issued by the Commissioner of Taxes, Assam:
  The petitioner challenged the circular dated August 16, 1993, issued by the Commissioner of Taxes, Assam, as ultra vires of the Assam General Sales Tax Act, 1993. The circular mandated registered dealers to pay sales tax on the sale of goods to unregistered dealers or consumers, irrespective of whether the goods were purchased before or after July 1, 1993.
  
  2. Interpretation of the Assam General Sales Tax Act, 1993, concerning sales tax on goods purchased before July 1, 1993:
  The petitioner argued that under the Assam Finance (Sales Tax) Act, 1956, component parts of motor vehicles were taxed at the point of first sale at 12%. The Assam General Sales Tax Act, 1993, which came into force on July 1, 1993, introduced a tax at the point of the last sale at 6%. The petitioner contended that goods purchased before July 1, 1993, should not be subject to the new tax regime.
  
  3. Competence of the Commissioner of Taxes in issuing the circular:
  The petitioner asserted that the Commissioner acted beyond his jurisdiction in issuing the circular, which was contrary to the provisions of the 1993 Act. The State Counsel argued that the Commissioner was competent to clarify the provisions regarding the levy of tax on the second/last sale.
  
  4. Applicability of the provisions of the Assam Finance (Sales Tax) Act, 1956, post-repeal by the Assam General Sales Tax Act, 1993:
  The court examined whether any indefeasible right was vested in the registered dealers under the 1956 Act concerning goods purchased before July 1, 1993, and sold after that date. The 1956 Act did not provide for tax at the last point of sale, whereas the 1993 Act introduced this requirement.
  
  5. Impact of repeal and savings provisions under Section 74 of the Assam General Sales Tax Act, 1993:
  The court analyzed Section 74 of the 1993 Act, which provided for the repeal of the 1956 Act and other laws. The court noted that the new taxation policy, effective from July 1, 1993, introduced a double point tax system, including a tax at the last point of sale. The court held that the provisions of the 1993 Act were clear and that the tax at the last point of sale was applicable regardless of when the goods were purchased.
  
  Conclusion:
  The court dismissed the writ petition, holding that the circular issued by the Commissioner of Taxes was valid and within the scope of the Assam General Sales Tax Act, 1993. The court found that the new tax regime applied to sales made on or after July 1, 1993, regardless of when the goods were purchased. The stay order granted earlier was vacated, and no order as to costs was made.

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• 2000 (3) TMI 1050
  
  The Rajasthan High Court dismissed a revision petition against an order by the Rajasthan Tax Board, which set aside previous orders related to a case involving the transportation of goods. The court found that there was no intention to evade tax and upheld the decision to not sustain the penalty imposed by the assessing officer. The revision petition was dismissed with no costs.

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• 2000 (3) TMI 1049
  
  Issues:
  1. Correctness of conclusions in Lovely Thomas v. State of Kerala [1999] 113 STC 505
  2. Burden of proof on the source of unaccounted purchases
  3. Adverse inference on unposted books of accounts
  
  Analysis:
  
  1. The judgment questions the conclusions in Lovely Thomas v. State of Kerala [1999] 113 STC 505, where it was stated that the Revenue must explain the source of unaccounted purchases. The Court emphasizes that the burden of proof lies with the assessee to provide evidence on the source of purchase. The judgment cites the Indian Evidence Act and clarifies the distinction between "burden of proof" and "onus of proof." It rejects the conclusions in Lovely Thomas' case, highlighting the continuous process of shifting onus in the evaluation of evidence.
  
  2. Regarding the burden of proof on the source of unaccounted purchases, the Court states that the assessee must prove the source by proper and cogent evidence. The judgment explains that the burden of proof never shifts, but the onus of proof can shift based on the evidence presented. It emphasizes that the assessee is entitled to produce evidence and draw inferences from it. The Court highlights the importance of reliable evidence in establishing ownership and rejects the notion that the Revenue must explain the unaccounted purchases.
  
  3. The judgment addresses the issue of adverse inference when books of accounts are not fully posted during inspection. It states that the correctness of the books and returns filed by the assessee is initially their responsibility. If the explanation for incomplete posting is acceptable, no adverse inference should be drawn. However, if the explanation is unsatisfactory or contradicts the evidence, an adverse inference can be made. The Court emphasizes that each case's fact-situation determines whether an adverse inference is warranted. It concludes that if accounts are not fully posted and the assessee fails to establish otherwise, the inevitable inference is that the accounts are not properly maintained, allowing for best judgment assessment.
  
  In summary, the judgment clarifies the burden of proof on the source of unaccounted purchases, rejects certain conclusions from a previous case, and provides guidance on drawing adverse inferences from unposted books of accounts based on the evidence presented.

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• 2000 (3) TMI 1048
  
  Issues:
  Interpretation of entry 29 of the Fifth Schedule for exemption of firewood or charcoal sold for domestic use excluding sales to hotels.
  
  Analysis:
  The controversy in the appeals revolved around the interpretation of entry 29 of the Fifth Schedule, exempting firewood or charcoal sold for domestic use excluding sales to hotels. The assessing authority initially did not accept the assessee's claim, but the appeal before the Joint Commissioner of Commercial Taxes (Appeals) was allowed based on later exemptions granted by the assessing authority and the finding that firewood was sold to the Central prison. The appellate authority ruled that unless sales were made to hotels, no tax could be levied, setting aside the tax levied on sales to the Central prison for domestic use.
  
  The revising authority took a different view, considering supplies made to M/s. HAL and M/s. MPM Ltd. for use in their canteens as taxable, contrary to the domestic use exemption. Legal precedents were cited, emphasizing that the plain natural meaning of language used in statutes must prevail, and courts cannot add, alter, or modify words unless necessary to prevent absurdity or inconsistency. The appellate authority's decision was supported by the argument that the intention of the Legislature was to grant exemption only for domestic use.
  
  The assessee argued that the term "domestic use" had been previously considered in legal cases, highlighting its general application to supplying services or comforts commonly found in homes. The court delved into the etymology of the word "domestic" and referenced previous judgments to support the interpretation of "domestic electrical appliances" as items generally used for household purposes, even if not exclusively used in homes.
  
  The court concluded that the legislative intent behind entry 29 was to exempt firewood or charcoal sold for domestic use, with hotels being the only exception subject to tax. The revising authority's decision to tax supplies to institutions like M/s. HAL and M/s. MPM was deemed inconsistent with the law, as the entry specifically excluded sales to hotels from the domestic use exemption. The court emphasized that the canteens of such institutions could not be equated with hotels for tax purposes based on previous legal interpretations.
  
  By providing an exception for hotels in the entry, the legislature aimed to differentiate between domestic use and commercial use, clarifying that without this exclusion, even hotel use would have been considered domestic. The court ultimately allowed the appeals, ruling that supplies made to the Central prison for domestic use could not be subjected to tax, in line with the legislative intent and legal principles governing statutory interpretation.

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