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Ultra Tech Cement Ltd. Versus The Commercial Tax Officer

Taxability - procurement of Fly Ash - exemption on clearance to SEZ - manufacture of PPC and OPC cement - service charges paid on procurement of Fly Ash - whether payment to Thermal Power Station is in the nature of royalty? - Held that: - the decision of the Hon'ble Supreme Court in the case of State of H.P. and others Vs Gujarat Ambuja Cement Ltd. and another [2005 (7)353 - SUPREME COURT OF INDIA] relied upon. Therefore, the finding to the said effect and the stand taken in that regard in the .....

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been gone into in a proper prospective by the respondent. - Disallowance of exemption on clearance effected to SEZ - the respondent appears to have put the matter in cold storage for nearly ten months after the personal hearing and all of a sudden, has passed the impugned order that certain certificates produced by the petitioner are defective. However, it is seen that before doing so, no opportunity was granted to the petitioner. This Court had an occasion to consider the aspect, as regards .....

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der these two heads alone require to be reconsidered. - Writ Petition allowed - impugned order set aside insofar as the findings rendered by the Assessing Officer on the aforesaid two heads and the assessment shall be re-done, after affording an opportunity of personal hearing by clearly appreciating the scope of the agreement between the petitioner and the TNEB and the legal position which is prevailing as on date. - W.P. No.26312 to 26318 of 2015 and M.P.Nos.1 and 2 of 2015, W.P.No.26312 o .....

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lic Limited Company incorporated under the Companies Act, 1956, having its factory at Arakkonam, engaged in the manufacture of PPC and OPC cement. The Sale of cement is taxable at the rate of 12.5 % at present 14.5% under Entry 14 of part C to the First Schedule of the Tamil Nadu Value Added Tax Act, 2006 (hereinafter referred to as the Act ). For the purpose of production of cement, there are several inputs and one of the inputs is fly ash, which has been procured by the petitioner from the pow .....

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r had accordingly procured fly ash from North Chennai Thermal Power Station (hereinafter referred to as NCTPS ) on payment of service charges. The petitioner also were accounting the payments in their books for the service charges paid to NCTPS. The petitioner's case is that under the provisions of Section 3(2), Section 12 of the Act provides for charge of levy of the tax on sale as per the rate set out in the First Schedule of the Act. Expression sale is defined under Section 2(33) of the A .....

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for purchase tax under Section 12 of the Act. 5. To the audit query, the petitioner sent a reply on 24.12.2013 stating that there was no purchase at all from NCTPS and the disposal of the fly ash was part of compliance with pollution control norms undertaken by NCTPS and the petitioner had paid only service fee and no price was charged for the procurement of fly ash from NCTPS. After about 2= months, the petitioner received a notice dated 04.03.2014, which was a notice of demand, demanding purch .....

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to the fly ash and the other pertaining to the Special Economic Zone (hereinafter referred to as SEZ ) and in respect of all other issues which have been dealt with, the petitioner had pursued other remedies available under law. 7. In the Pre-Assessment Notice, it was stated that the petitioner are liable for purchase tax under Section 12 of the Act on the procurement of fly ash and treated the service charges paid by the petitioner as royalty. The Assessing Officer referred to the decision of t .....

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oner submitted the reply to the notice on 30.06.2014. A further reply on 28.04.2014 enclosing Chartered Accountant's certificate dated 28.04.2014, which gave the actual service charges paid to NCTPS for procurement of fly ash. The petitioner also raised various contentions objecting to the proposal for disallowance of exemption on clearance to SEZ units. 9. The respondent has completed the assessment and passed the impugned orders . The finding on the first issue with regard to the fly ash i .....

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mption on clearance to SEZ. The respondent pointed out certain defects in the certificates produced by the petitioner and observed that sale of cement to the units to SEZ covered by valid certificate issued by the competent authority and declarations are eligible for exemption and related Input Tax Credit will be reversed. In respect of the remaining turnover not covered by documents, it will be treated as sales liable to tax at 14.5%. Challenging these findings, the petitioner is before this Co .....

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account of Section 23 of the Contract Act. 11. It is submitted that the impugned assessment orders had been completed in utter disregard to the factual position with regard to the disallowance of exemption on clearance to SEZ are concerned, it is submitted that G.O.Ms.No.75 dated 28.06.2005 and G.O.Ms.No.193 dated 30.12.2006 gives a clear right of exemption on sales and clearance to SEZ units and developers. Therefore, the respondent ought to have considered the certificates and granted exemptio .....

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Thermal Power Station, which is nothing but royalty and to support such contention, the decision of the Hon'ble Supreme Court in the case of Behar Contractors' Association was relied on. Therefore, the respondent would state that the value of the fly ash collected from Thermal Power Station is arrived at based upon the price per metric ton at which other suppliers supplied the goods. With regard to the denial of exemption for sales effected to SEZ, it is stated that the sale of cement i .....

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ciation to substantiate the plea that the payments effected to the Thermal Power Station is in the nature of royalty. However, the said decision in the case of Behar Contractors' Association has held to be no longer good law in the decision of the Hon'ble Supreme Court in the case of State of H.P. and others Vs Gujarat Ambuja Cement Ltd. and another [2005] 142 STC 1. Therefore, the finding to the said effect and the stand taken in that regard in the counter affidavit at paragraph No.7, d .....

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into in a proper prospective by the respondent. 15. With regard to the other issue pertaining to the disallowance of exemption on clearance effected to SEZ, the respondent appears to have put the matter in cold storage for nearly ten months after the personal hearing and all of a sudden, has passed the impugned order that certain certificates produced by the petitioner are defective. However, it is seen that before doing so, no opportunity was granted to the petitioner. This Court had an occasi .....

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