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2016 (12) TMI 65 - MADHYA PRADESH HIGH COURT

2016 (12) TMI 65 - MADHYA PRADESH HIGH COURT - TMI - Printing of currency notes for Government of India - Business or not - petitioner, dealer or not - currency notes, goods or not - Held that: - Petitioner is only engaged in printing and selling of bank notes to the Reserve Bank of India, therefore, there is a sale transaction between petitioner and the Reserve Bank of India and after sale the said goods become Bank Note or currency and before such transaction it is merely goods under the defin .....

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that Union is not exempted from the levy of indirect tax under Article 285 of the Constitution.The levy under the local Act being a single point tax and the appellant having suffered the same when it purchased the material in question and same material cannot be subjected to another levy on its transfer to the contractor. This argument requires consideration of factual matrix of the case concerned, whether the levy in question is a single point tax and material purchased by the appellants had su .....

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124/2015, 1731, 1732, 1734/2016 - Dated:- 3-10-2016 - P. K. Jaiswal And Vivek Rusia, JJ. For the Petitioner : P.M. Choudhary, Advocate For the Respondent/State : Sunil Jain, A.A.G with Rohit Mangal, GA ORDER Vivek Rusia, J. Petitioner has filed the present petition under Article 226 of the Constitution of India being aggrieved by the order of assessment passed by the Additional Assistant Commissioner, Commercial Tax, State of M.P by which assessment order has been issued under section 27(6) of t .....

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6 to 23.07.06 3 W.P.No.3339/09 Entry Tax 10.02.06 to 23.07.06 4 W.P.No.3340/09 VAT 01/04/06 to 23.07.06 5 W.P.No.1586/10 CST 24.07.06 to 31.03.07 6 W.P.No.1587/10 VAT 24.07.06 to 31.03.07 7 W.P.No.1588/10 Entry Tax 24.07.06 to 31.03.07 8 W.P.No.13385/10 VAT 01.04.07 to 31.03.08 9 W.P.No.13386/10 CST 01.04.07 to 31.03.08 10 W.P.No.13387/10 Entry Tax 01.04.07 to 31.03.08 11 W.P.No.8476/12 Entry Tax 01.04.09 to 31.03.10 12 W.P.No.8477/12 CST 01.04.09 to 31.03.10 13 W.P.No.8478/12 VAT 01.04.09 to 31 .....

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P.No.6809/14 CST 10.02.11 to 31.03.12 2. All these writ petitions are being decided by a common order because common questions of law have been raised by the petitioner in all these writ petitions which are as under: 1. Whether the activity of the petitioner of printing of currency notes for Government of India can be said to constitute a Business within the meaning of the provisions of M.P. Commercial Tax Act and whether qua such activity the petitioner can be said to be a Dealer liable to pay .....

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prior to 10-02-2006 as a department of the Union of India and after 10.02.06 as a unit of Government owned corporation remaining the same mere would make the same activity a Business liable sales tax? 4. Whether the currency notes printed by petitioner for supply to the Reserve Bank of India constitute Goods in absence of currency being a freely tradable commodity or a merchandise capable of being dealt with in the market? 3. Petitioner/Bank Note Press, Dewas is a unit of Security Printing & .....

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ent Mint (Noida), Currency Note Press (Nashik), Bank Note Press (Dewas), India Security Press 9Nashik) and Security Printing Press which were earlier functioning under the Ministry of Finance, Govt. of India. SPMCIL is a company incorporated under the provisions of the Companies Act, 1956 with its headquarter at Jawahar Vyapar Bhawan, 16th Floor, Janapath, New Delhi. SPMCIL and the Govt. of India is engaged in the manufacture of security papers, minting of papers, printing currency and bank note .....

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e, Govt. of India till 09.02.2006. Thereafter on a Union Cabinet decision dated 2.09.2005 by which the Government of India has decided to corporatise the functions of all nine units under the name called Security Printing and Minting Corporation of India Limited. Office memorandum has been issued by the Ministry of Finance dated 10.2.2006 by which Govt. of Inida has decided to transfer the existing functions of these nine units in respect of production of security grade paper, coins and printing .....

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dhya Pradesh by virtue of Article 285 of the Constitution of India. After 10.02.2006 a demand has been raised by the respondent/Department for payment of taxes. The petitioner voluntarily got registered as Dealer under the provisions of the M.P VAT Act, 2002 and a certificate of registration to that effect has been issued by the Department. It is contended by the petitioner that despite registration the activities of the petitioner cannot be treated as a business, therefore, they are not subject .....

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cause notice and granted stay restraining the respondents from taking coercive action against the petitioner. The said writ petition was finally disposed of vide order dated 9.4.2007 by directing Principal Secretary, Commercial Tax Department to consider and decide the representation filed by the petitioner and the interim order was directed to be continued till the decision by the Principal Secretary. Vide order dated 1.5.2007/9.5.2007 the Principal Secretary has rejected the representation of .....

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issue in a joint meeting between the Principal Secretary, Commercial Tax Department and the senior functionaries of the Ministry of Finance, Govt. of India. According to the petitioner the meeting was held but the issue could not be settled amicably. The Govt. of M.P maintained its view that the petitioner is a dealer engaged in the business of printing of notes and is liable to pay the taxes applicable in the State of Madhya Pradesh. During the pendency of that petition the final order of asse .....

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y the respondent on the ground that despite there is no change in the function and activities of the Bank Note Press. Petitioner is a Govt. of India undertaking and performing the sovereign function of the Govt. of India. The petitioner cannot be said to be a dealer engaged in any business activities. The sale and supply of currency is out of the definition of goods under the VAT Act, 2002. Petitioner neither comes under the category of dealer and the activities are not under the definition of b .....

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ons are not maintainable as the petitioner has not exhausted the remedy of appeal available under the Act of 2002. Respondent has placed reliance over the Memorandum and Articles of Association of SPMCIL in which the main object of the company is mentioned as business of designing of currency and bank notes, printing press for making and printing of currency and bank notes. Petitioner has filed an application for registration and got registered as dealer. The petitioner after becoming the part o .....

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is further contended that petitioner cannot get the protection of Article 285 of the Constitution of India as the Article applies to direct taxes but the VAT is an indirect tax which has been settled by the Apex Court in various cases, hence prayed for dismissal of the writ petition. 6. Shri P.M.Choudhary, learned counsel for the petitioner vehemently argued that function of the petitioner remained the same despite its corporatization after 31.01.2006. The petitioner being government company pe .....

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r supplying goods. Petitioner company is not engaged in any business activity as defined under section 2 (c) and currency cannot be termed as goods, therefore, none of these three definitions bring the petitioner within the purview of the Act, therefore, petitioner is not liable to pay taxes to the respondent/department. In support of his contention petitioner has placed heavy reliance on the following judgments. (i) That in the case of Union of India vs. State of M.P and others reported in (199 .....

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and function of the mill has not been changed and the petitioner and other units are government companies, therefore, the law laid down by this judgment is applicable and the impugned demands are liable to be set aside. (ii) that in the case of Commissioner, Custom & Central Excise vs. Smart Chip Ltd. reported in (2015) 25 ITJ 322 (M.P this Court has found that respondent/assessee discharging the statutory function of the government department under the Motor Vehicles Act amounts to business .....

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the Finance Act, 1994. (iv) In the case of Bakhtawar Singh Bal Kishan vs. Union of India (UOI) and others reported in (1988) 2 SCC 293 the Apex Court has considered the expression carries on business or personally works for gain do not refer to functions carried on by the Union of India in discharge of its executive power conferred by Article 298 of the Constitution of India. (v) In the case of Commissioner of Customs & Central Excise, Hyderabad-II and another reported in (2008) 12 VST (CES .....

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other printed materials to various departments of the Central Govt. and not to any private person, hence its activity was not treated to be trade as there was no sale of material to the Govt. of India. (vii) In the case of State of Andhra Pradesh vs. A.P. Housing Board reported in 70 STC 203 (AP) the High Court of Andhra Pradesh has considered the definition of business dealer in the context of sale by Housing Board of unused application forms, iron scrap etc. and treated as not dealer because .....

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idental activities like selling of scrap material cannot be termed as business. (viii) In the case of Commissioner of Sales Tax v. SAI Publication Fund reported in 126 STC 288 the Supreme Court has considered the definition of dealer in the matter of business of Sai Publication. The Supreme Court has found that the sole object of the Trust was to spread the message of Sai Baba Shirdi, books, literature free of cost, hence the activity does not amount to business. The main object of the Trust is .....

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dealer. (x) Shri Choudhary submits that by printing currency notes and transferring to the Reserve Bank of India is not sale under the sales of goods as there can be no sale without contract of sale and since the party in this matter had no volition of their own but were compelled by law to supply and receive goods at the price fixed under the control or the transaction between them are not 'sale', therefore, are not exigible for sale. (xi) The seven Judges bench of the Supreme Court in .....

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ealer. (xii) In the case of Bhor Industries Ltd. vs. Collector of Central Excise, Bombay reported in 1989 73 STC 145 the Supreme Court has considered the definition of goods and held that to constitute goods it must be capable of being sold in the market. The material which is not marketable is not goods. In the present case also the currency is not marketable, hence it cannot be termed as goods (xiii) In the case of Collector of Central Excise, Baroda v. Ambalal Sarabhai Enterprises (P) Ltd. Re .....

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inition of goods means that constitute anything to be goods and it must have value of their own and are transferable openly in the market. (xv) In the case of Bharat Sanchar Nigam Ltd. And others vs. Union of India and others reported in (2006) 145 STC 91 the Supreme Court has considered whether sim card comes under the definition of goods. The electromagnetic waves are neither abstracted nor consumed. they are not delivered, stored or possessed and are not marketable, therefore, they cannot con .....

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ourt has considered the definition of business and held that in taxing statute the word business is normally used in the sense of an occupation, a profession with a profit motive. Every activities undertaken in sale or supply of goods would not attract sales tax. When the main activity is not business then connected incidental activities of sale would not amount to business. (xviii) In the case of Sodexo SVC India Private Limited vs. State of Maharashtra and others reported in (2016) 87 VST 528 .....

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ding those services, therefore, not treated vouchers as goods. 7. Per contra, Shri Sunil Jain, learned Senior Counsel and Additional Advocate General on behalf of the respondent/State argued that petitioner instead of filing writ petition ought to have preferred appeal before the appellate authority, therefore, writ petitions are liable to be dismissed on this ground alone. He further submits that as per the Memorandum of Association the main business of the petitioner is printing of currency no .....

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in all respect is dealer and after notification dated 10.02.2006 the petitioner is not liable to get exemption as enjoyed prior to 10.02.2006. He has further submitted that the petitioners are not entitled for the protection under Article 285 of the Constitution of India as the same is applicable to direct taxes only whereas VAT and Entry Taxes are indirect taxes for which Govt. of M.P is exclusively entitled to recover the same. He has placed reliance over the definition of direct taxes as ref .....

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rt has held that exemption on Union property under Article 285 of the Constitution of India from State taxes does not apply to levy of indirect taxes and the judgment of this Court in the case of Union of India and another Vs. State of M.P and others reported in 2004 SCC OnLine MP 607 and the judgment passed by the High Court of Patna in the case of Customs Department vs. State of Bihar reported in 2016 SCC OnLine Pat 2021 and prayed for dismissal of the writ petitions. 8. We have heard learned .....

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s concerned, Currency Note Press, Nashik and Bank Note Press, Dewas are engaged in the production of bank notes for India as well as for foreign countries using state of the art technology. More than 40% of currency notes circulated in India are printed by these two units. These units are equipped with designing, engraving, complete Pre-printing and Offset facilities, Intaglio Printing machines, Numbering & Finishing machines etc. These units have captive railway treasury wagons/carriages fo .....

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tization it is an act of reorganizing the structure of government owned entity into a legal entity with the corporate structure as found in the publicly traded companies. These companies tend to have a board of directors, management and share holders. It is about changing structure of a government or semigovernment body so that it operates on business lines with a mandate to trade profitably and an obligation to account to the government for its financial performance. Prior to 2006 when these un .....

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ity paper mill is not engaged in any business activity of selling papers of currency notes to any individual, the same are being used by other government presses for printing of currency notes of various denominations. There is no element of sale involved in the activities of the Union as papers of currency notes so manufactured are passed on to its other presses, not sold to public after printing of notes and have got no commercial value. Petitioner is discharging the sovereign function of the .....

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ence entitled for impunity from levy of taxes by virtue of Article 285 of the Constitution of India. Although there is Corporatization, change of administration and structure but still the decisions are taken by the Union government, therefore, the impugned demands are liable to be set aside. We are required to consider the effect of this judgment passed in the case of Union of India vs. State of M.P (supra) after the year 2006 when the SPMCIL has been incorporated and registered under the Compa .....

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venture or concern is carried on with a motive to make gain or profit and whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure or concern and irrespective of the volume, frequency, continuity or regularity of such trade, commerce, manufacture, adventure or concern; and (ii) any transaction of sale or purchase of goods in connection with or incidental or ancillary to the trade, commerce, manufacture, adventure or concern referred to in clause (I) that is to .....

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oods, directly or otherwise, whether for cash, or for deferred payment or for commission, remuneration or other valuable consideration and includes - (i) a local authority, a company, an undivided Hindu family or any society (including a co-operative society), club, firm or association which carries on such business; (ii) a society (including a cooperative society), club, firm or association which buys goods from, or sells, supplies or distributes goods to its members; (iii) a commission agent, .....

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of a dealer residing outside the State and buys, sells, supplies or distributes goods in the State or acts on behalf of such dealer as - (i) a mercantile agent as defined in the Sale of Goods Act, 1930 (III of 1930); or (ii) an agent for handling goods or documents of title relating to goods; or (iii) an agent for the collection or the payment of the sale price of goods or as a guarantor for such collection or payment, and every local branch of a firm or company situated outside the State, shal .....

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ng a bank, an insurance company, a transport company and the like which whether or not in the course of business buys, sells, supplies or distributes goods, directly or otherwise, for cash or for deferred payment, commission, remuneration or for other valuable consideration, shall be deemed to be a dealer for the purposes of this Act: 2(m) Goods means all kinds of movable property including computer software but excluding actionable claims, newspapers, stocks, shares, securities or Government st .....

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t or for other valuable consideration and includes - (i) a transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (ii) a transfer of property in goods whether as goods or in some other form, involved in the execution of works contract; (iii) a delivery of goods on hire purchase or any system of payment by instalments ; (iv) a supply of goods by any unincorporated association or body of persons to a member thereof .....

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other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and purchase of those goods by the person to whom such transfer, delivery or supply is made, but does not include a mortgage, hypothecation, charge or pledge; Explanation - (a) Notwithstanding anything contained in the Sale of Goods Act, 1930 (III of 1930), where a sale or purchase of goods takes place in pursuance of .....

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ller or by the purchaser, whether the assent of the other party is prior or subsequent to such appropriation; and (b) Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of clause (a) shall apply as if there were separate contracts in respect of the goods at each of such places; (c) Notwithstanding anything to the contrary contained in this Act or any other law for the time being in force, two independent sales or purchases shall, for th .....

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ce, when the goods specified in Schedule II are transferred from a unit of a dealer to another unit of the same dealer for sale or for consumption or use in / for manufacture of goods specified in Schedule II in such unit and the dealer holds separate registration certificate for each of such units. 11. That the Bank Note Press after procuring the raw material prints the currency notes and sell the same to the Reserve Bank of India and receives the sale consideration. This fact is not disputed b .....

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ticles which are agreed to be served before the sale or under the contract of sale. Any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise whether for cash or for deferred payment would be a dealer as defined under section 2(i). By virtue of Explanation II the Central or a State Government or any of their departments or offices which whether or not in the course of business, buy, sell, supply or distribute goods, directly or otherwise, f .....

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ransaction of sale or purchase of goods in connection with or incidental or ancillary to the trade, commerce, manufacture like unserviceable goods, discarded goods, scrap, waste material would also be a business. Now we are required to examine in conjoint reading of these four definitions whether petitioner would be liable to pay the Entry Tax after 2006. As per the Memorandum of Association under the Companies Act, 1956 the main object of the company is to carry on the business of designing of .....

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greement to be entered into with the Government of India, to acquire or to take over the management, control, operations and maintenance of production/printing/manufacture of security grade paper, coins and medallions, currency and bank notes, stamps, non-judicial stamp papers, passport, visas and related documents, security paper, postage stamps and stationary, scrips, security certificates, government securities, bonds share certificates, cheques, demand draft, identity cards, ink and other re .....

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ny other undertaking, company or concern which the Government of India may authorize from time to time, with the assets and liabilities, wholly or partly, including contractual rights and obligations on such terms and conditions as may be set out in the said agreement with the Government of India. 2. (a) To carry on the business of designing of currency and bank notes, printing press for making and printing of currency and bank notes for the Government of India, Reserve Bank of India or for any .....

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ments; judicial and nonjudicial stamps; cheques, demand drafts and security papers/documents for Banks, Financial Institutions, Postal Authorities and like bodies and other agencies; ink and other related material; smelting of god, silver and other precious metals to be used in the minting of coins; and such other documents as may be required by the Central and/or State Governments, Public Sector Undertakings, municipal and local bodies, Financial Institutions, any other governmental/non-Governm .....

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n object of the company is to do the business of designing and printing of currency notes. When the company is engaged in the business as defined under section 2(d) of the VAT Act, 2002 then it acts as a dealer also as per section 2(i) of the Act because it is buying, selling and supplying of currency directly or otherwise and as the definition of the goods all kinds of movable property are goods. Though the word currency is not mentioned in the definition of 'goods' but the currency pri .....

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22 bank means Reserve Bank of India shall have sole right to issue bank notes in India and may for the period which shall be fixed by the Central Govt. Under section 23 issue of bank notes shall be conducted by the Reserve Bank of India and finally under section 26 every bank note shall be legal tender at any place in payment or on account for the amount expressed therein and shall be guaranteed by the Central Government. In view of the above notification unless bank notes are issued by the Rese .....

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nless a contrary intention appears, apply to all currency notes of the Government of India issued either by the Central Government or by the Bank in like manner as if such currency notes were bank notes, and reference in this Act to bank notes shall be construed accordingly. (2) On and from the date on which this Chapter comes into force the Central Government shall not issue any currency notes. 23. Issue Department.-(1) The issue of bank notes shall be conducted by the Bank in an Issue Departme .....

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der character of notes.- (1) Subject to the provisions of sub section (2), every bank note shall be legal tender at any place in India in payment, or on account for the amount expressed therein, and shall be guaranteed by the Central Government. (2) On recommendation of the Central Board the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination shall cease to .....

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upreme Court of India over which Shri Choudhary has placed reliance (i) State of Haryana vs. Government of India Photolitho Press (supra). In this case the judgment traveled up to Supreme Court after the decision taken by the Sales Tax Tribunal. The Tribunal after evaluating the evidence and material on record came to the conclusion that government supplies stationary material to various departments free of cost and such activity is not commercial and the Central Government is not carrying on an .....

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unused application forms, iron scrap etc. because the Housing Board is undertaking work of framing and execution of housing schemes and not acting as a dealer. But in the present case Bank Note Press is held to be engaged in the activity of printing and selling which is said to be the main business of the petitioner, therefore, facts of that case are distinguishable. (iii) Likewise in the case of Commissioner of Sales Tax v. Sai Publication Fund (supra) reliance has been placed that object of th .....

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he seven judges judgment of the Supreme Court in the case of Vishnu Agencies (Pvt.) Ltd. vs. Commercial Tax officer and Dhanyalakshmi Rice Mills vs. Commercial Tax Officer (supra) on the point of sale of goods and involvement of volition in the definition of sale but in this case petitioner is engaged in sale of goods which are available to the consumers at fair prices. Some times they are required to provide as essential commodity like cement, cotton, coal or iron. They are required to supply t .....

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hence this judgment of the Supreme Court nowhere helps the petitioner. (v) In the case of Bhor Industries (supra) according to the petitioner the jute mattings and PVC tapes which are not marketable are not treated as goods. The Apex Court has considered the definition of goods under the provisions of Central Excise where certain articles within the schedule are not dutiable, therefore, they were not treated as goods. The concept of Sales Tax is entirely different with Excise. (vi) That in the c .....

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mmissioner of Commercial Taxes and another (supra) the import licenses called REP licenses or Exim Scrips were not treated as goods for the purpose of Tamil Nadu General Sales Tax Act. These licenses and scrips were not considered as goods in the context of movable property because therein definition of 'goods' means all kinds of movable property. Since these licenses were not treated as property, therefore, they were not treated as goods, therefore, the facts of the case are distinguish .....

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n the present case, as no goods element are involved, the transaction is purely one of service. There is no transfer of right to use the goods at all. (ix) In the case of Sunrise Associates (supra) the Supreme Court has considered lottery tickets as not a good because lottery ticket has no value in itself and it is a mere piece of paper. It represents a chance or a right to win a prize, hence excluded from the definition of goods. On purchasing of the lottery ticket the purchaser has a right to .....

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to its customers who transfers the same to other employees who is called users and they use them from affiliates. The issue came for consideration whether these vouchers can be treated as goods for the purpose of levy of octroi or local body tax. The Sodex was licensed to do this activity by the RBI under the provisions of Payment and Settlement Systems Act, 2007 which provides for regulation and supervision of payment system in India as designated by the RBI. The vouchers are not sold to its cu .....

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ompanies Act. 16. In all above cases issue traveled up to the Supreme Court after adjudication by the appellate authority or Tax Tribunal but here petitioner approached this Court against the assessment order. Hence, we examine the issue on the basis of the material brought on record by the petitioner as well as respondents. That it might be a situation prior to 2006 when Govt. of India was directly engaged in the printing of currency and supplied to the RBI as there was no sale between them but .....

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the form of 10th Annual Report 2014-15 in the official website of SPMCIL. In the office address of C.M.D9- SPMCIL it is mentioned with proud that company has produced 8358 million pieces of bank notes which 4.24% higher than the last year production of 8018 million pieces. The company has also produced 7929 million pieces of coins. Security Paper Mill, Hoshangabad has produced 3266 MT. Of security papers. The sale turn over of the company has increased to 4408.38 crores in 2014-15. The financia .....

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s/Extraordinary Items(Net) 5.46 10.20 Profit/(Loss) after Extraordinary Items (Net) 281.77 346.72 Less: Tax Expense Provision for Current Tax - 164.21 Provision for Deferred Tax 70.3 34.20 Taxes of Earlier Year - 2.08 Profit/(Loss) After Taxation 352.07 214.63 Proposed Dividend & Tax - 50.22 Transferred to General Reserve - 21.46 Balance transferred to P&L A/c - 142.9 (from the official website of SPMCIL) 17. The Bank Note Press, Dewas has produced 2582 pieces of bank notes in the year 2 .....

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relates 1 Service Tax on amounts paid to CPWD/Reverse Charge Mechanism ISP, Nashik 4474267 2012-2013, 2013-2014 2 Service Tax on amounts paid to CPWD/Reverse Charge Mechanism ISP, Nashik 1133841 2014-2015 3 Municipal Tax ISP, Nashik 5988190 2008-2015 4 TDS SPM, Hoshangabad 2012280 2007-08 to 2014-15 5 Pensionary Charges SPM, Hoshangabad 118197914 2008-09 to 2011-12 6 Professional Tax IGM, Mumbai 2500 2014-15 7 Central Sales Tax IGM, Kolkata 1753000 2007-08 8 Tax Deducted at Source IGM, Kolkata .....

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ial Tax, Bhopal SPM, Hoshangabad 2010-11 to 2012-13 VAT, CST and Entry Tax 92163627 Appellate Tribunal (Commercial Tax) SPM, Hoshangabad 2006-07 to 2009-10 Entry Tax 82240971 High Court Indore BNP, Dewas - Property Tax 15000000 High Court Jabalpur BNP, Dewas - VAT 145947 High Court Indore BNP, Dewas - CST 33697529 High Court Indore BNP, Dewas - VATm ET & CT 268293345 High Court Indore BNP, Dewas Sales Tax 1064912612 At High court & Tribunal ISP, Nashik 10.02.06 to 31.03.10 Salex Tax 1352 .....

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not engaged in the business of buying and selling, therefore, the sale of unserviceable material, scrap etc. would not be a transaction in connection with or incidental or ancillary to such trade or business hence is also not sale. As per the definition of business sale of the unserviceable goods, discarded goods, scrap or waste material, sale or purchase of goods also comes under the category of business. This issue came up for consideration before the Supreme Court in the case of the District .....

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rt in the aforesaid case is reproduced below: 1. The short question which arises for consideration in this appeal by certificate is whether the appellant, the Northern Railway, Jodhpur is liable to pay sales tax on the sales of unserviceable materails and scrap etc. for the period in question. 2. In view of the definition of the word 'business' in Section 2 of the Rajasthan Sales Tax Act (Act No.29 of 1954) as introduced with the retrospective effect by the Rajasthan Taxation Laws (Amend .....

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ate Government or any of their departments, a local authority, a company, an individed Hindu Family or any society (including a cooperative society) club, firm or association which carries on such business. 3. As already indicated by Section 2 of the Rajasthan Taxation Laws (Amendment) Act, 1965 (Act No.9 of 1965), Section 2 of the Rajasthan Sales Tax Act, 1954 (Rajasthan Act No.9 of 1954), was amended. Clause (cc) of Section 2 provides: 'Business includes- (i) any trade, commerce or manufac .....

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f goods carried on without without any profit motive by- (i) any charitable or religious institution in the performance of its functions for achieving its avowed objects; and (ii) an educational institution, where such sale, supply or distribution is made to its students. 4.The contention of the appellant was that it was not carrying on the business of buying and selling and therefore the sales of unserviceable material and scrap iron etc. would not be a transaction in connection with or inciden .....

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not it is carried on with a motive to make gain or profit. So even if it be assumed that the activity involved in selling unservideable material and scrap iron etc. would not amount to carrying on business in the normal connotation of that term, it would be 'business' within clause (i) of that sub-clause as introduced by the amending Act. 6. We also think that there is no fallacy in thinking that the railway since it is concerned in the activity of transportation is engaged in commerce w .....

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