VAT AND SERVICE TAX CASES (VST)

ONLINE EDITION

VOL. 4 : ISSUE DATED 17-4-2015

HIGH COURTS


Appeal--Central sales tax--First appeal to Tribunal--Exemption--Branch transfer--First appeal before Tribunal under Central Sales Tax Act lies only against Central sales tax assessment made for dealer's failure to prove transfer of goods from one State to another as not under contract of sale--Not against assessment under Value Added Tax Act or Sales Tax Act for failure to prove physical transfer of goods from one State to another--Central Sales Tax Act (74 of 1956) ss. 6A, 18A--Finance Act, 2010.--Asian Paints Ltd. v. State of Kerala (Ker) . . . 411

Branch transfer--Central sales tax--Exemption--Burden of proof--Dealer claiming exemption on stock transfer of goods to another State to prove that transfer not under contract of sale--Mere production of form F not sufficient--Open to assessing officer to call for particulars of transport of goods--Necessity to examine acceptability of declaration arises only if physical transfer of goods from one State to another proved--Central Sales Tax Act (74 of 1956) s. 6A--Central Sales Tax (Registration and Turnover) Rules, 1957, r. 12(5).--Asian Paints Ltd. v. State of Kerala (Ker) . . . 411

----See Central sales tax (Ker) . . . 416

Burden of proof--See Branch transfer (Ker) . . . 411

----See Central sales tax (Ker) . . . 416

Central sales tax--Exemption--Branch transfer--Burden of proof--Dealer claiming exemption on stock transfer of goods to another State to prove that transfer not under contract of sale--Mere production of form F not sufficient--Open to assessing officer to call for particulars of transport of goods--Necessity to examine acceptability of declaration arises only if physical transfer of goods from one State to another proved--Central Sales Tax Act (74 of 1956) s. 6A--Central Sales Tax (Registration and Turnover) Rules, 1957, r. 12(5).--Asian Paints Ltd. v. State of Kerala (Ker) . . . 411

----First appeal to Tribunal--Exemption--Branch transfer--First appeal before Tribunal under Central Sales Tax Act lies only against Central sales tax assessment made for dealer's failure to prove transfer of goods from one State to another as not under contract of sale--Not against assessment under Value Added Tax Act or Sales Tax Act for failure to prove physical transfer of goods from one State to another--Central Sales Tax Act (74 of 1956) ss. 6A, 18A--Finance Act, 2010.--Asian Paints Ltd. v. State of Kerala (Ker) . . . 411

----Transfer of goods claimed otherwise than by way of sale--Burden of proof--Assessment year 2011-12--Assessee claiming exemption on branch transfer to produce "transport documents" also along with F forms--Failure leads to adverse inference of movement of goods deemed as part of "inter-State sale"--Stage of enquiry contemplated under sub-section (2) comes only after valid declaration along with evidence of despatch of goods filed--Central Sales Tax Act (74 of 1956), s. 6A--Finance Act (20 of 2002).--Mirc Electronics Limited v. Assistant Commissioner (Ker) . . . 416

Declaration form--See Branch transfer (Ker) . . . 411

Entries in Schedule--Sales tax--Entry "articles for conveyance or packing of goods of plastics"--Covers plastic steel kettle of different sizes, plastic ghamelas of various sizes, plastic buckets of various sizes, plastic ghagar and kalshi of various sizes, plastic mugs of various sizes, lids of buckets of plastic and dalga of plastic of various sizes--Bombay Sales Tax Act (51 of 1959), Sch. C, Part I, entry 29.--Samruddhi Industries Ltd. v. State of Maharashtra (Bom) . . . 394

----Value added tax--Handheld electronic ticket issuing machine--Information technology product--Notification providing for lower tax where not elsewhere specified--Item specified in another entry--Not entitled to benefit--Karnataka Value Added Tax Act, 2003 (32 of 2004)--Notification No. FD 116 CSC 2006 (9) dated March 31, 2006.--MicroFx v. State of Karnataka (Karn) . . . 405

Exemption--See Central sales tax (Ker) . . . 411

High Court--Value added tax--Revision--Tribunal--Order by Tribunal dismissing appeal against assessment under Value Added Tax Act denying exemption on stock transfer for failure to produce proof of transfer of goods to outside State--Revision to High Court does not lie--Kerala Value Added Tax Act, 2003 (30 of 2004).--Asian Paints Ltd. v. State of Kerala (Ker) . . . 411

Packing materials--Sales tax--Entries in Schedule--Entry "articles for conveyance or packing of goods of plastics"--Covers plastic steel kettle of different sizes, plastic ghamelas of various sizes, plastic buckets of various sizes, plastic ghagar and kalshi of various sizes, plastic mugs of various sizes, lids of buckets of plastic and dalga of plastic of various sizes--Bombay Sales Tax Act (51 of 1959), Sch. C, Part I, entry 29.--Samruddhi Industries Ltd. v. State of Maharashtra (Bom) . . . 394

Revision--Value added tax--High Court--Tribunal--Order by Tribunal dismissing appeal against assessment under Value Added Tax Act denying exemption on stock transfer for failure to produce proof of transfer of goods to outside State--Revision to High Court does not lie--Kerala Value Added Tax Act, 2003 (30 of 2004).--Asian Paints Ltd. v. State of Kerala (Ker) . . . 411

Stock transfer--Central sales tax--Transfer of goods claimed otherwise than by way of sale--Burden of proof--Assessment year 2011-12--Assessee claiming exemption on branch transfer to produce "transport documents" also along with F forms--Failure leads to adverse inference of movement of goods deemed as part of "inter-State sale"--Stage of enquiry contemplated under sub-section (2) comes only after valid declaration along with evidence of despatch of goods filed--Central Sales Tax Act (74 of 1956), s. 6A--Finance Act (20 of 2002).--Mirc Electronics Limited v. Assistant Commissioner (Ker) . . . 416

----See also Branch transfer (Ker) . . . 411

Value added tax--See Entries in Schedule (Karn) . . . 405

VAT Tribunal--See Revision (Ker) . . . 411


PRINT EDITION

VOLUME 79 : PART 5 : ISSUE DATED 17-4-2015


SUPREME COURT


Interest--See Refund (SC) . . . 450

Refund--Interest--Rural employment cess and education cess--Retrospective substitution of charging provisions declared void by Court by Amendment Act with validation provision--Effect of validation provision--No refund of cess paid for period before amendment can be claimed notwithstanding interim order or final judgment of court to contrary--Judgment up-holding validity of amended provisions--Interest on cess payable chargeable from date of assessment--West Bengal Rural Employment and Production Act (14 of 1976), s. 4B--West Bengal Primary Education Act (43 of 1973), s. 78C--West Bengal Taxation Laws (Second Amendment) Act, 1989.--Agricultural Income-tax Officer v. Goodricke Group Ltd. (SC) . . . 450

Retrospective legislation--See Refund (SC) . . . 450

Validation provision--Refund--Interest--Rural employment cess and education cess--Retrospective substitution of charging provisions declared void by Court by Amendment Act with validation provision--Effect of validation provision--No refund of cess paid for period before amendment can be claimed notwithstanding interim order or final judgment of court to contrary--Judgment upholding validity of amended provisions--Interest on cess payable chargeable from date of assessment--West Bengal Rural Employment and Production Act (14 of 1976), s. 4B--West Bengal Primary Education Act (43 of 1973), s. 78C--West Bengal Taxation Laws (Second Amendment) Act, 1989.--Agricultural Income-tax Officer v. Goodricke Group Ltd. (SC) . . . 450


HIGH COURTS


Appeal--Service tax--Pre-deposit--Waiver--Period from April, 2006 to June, 2010--Assessee engaged in development of residential projects entering into agreement with intending purchaser for construction and sale of undivided share on which payments made--Show-cause notices for period from April, 2006 to June, 2010 and demand raised on ground "construction of complex" service rendered--Direction by Tribunal to make pre-deposit of certain amount--Prima facie case on merits--Nearly 40 per cent. of demand paid--Interest of revenue safeguarded--Assessee entitled to benefit of waiver of balance amount of pre-deposit.--Jain Housing v. Commissioner of Service Tax (Mad) . . . 501

----Value added tax--Pre-deposit--Stay of recovery--Dealer under licence allowed to provide connectivity to its customers between various sites for carriage of data traffic through use of VSAT--Contention of dealer in appeal that it was rendering service not liable to value added tax at all--Authority must be reasonable and balance equities in placing conditions for entertainment of appeal--Direction for deposit of cash modified by direction to produce bank guarantee--Maharashtra Value Added Tax Act, 2002 (9 of 2005), s. 2(4), (8), (24).--Tata Net Services Limited v. State of Maharashtra (Bom) . . . 472

Brand name holder--See Penalty (Ker) . . . 527

Central sales tax--Writs under Constitution--Concessional rate of tax--Declaration forms--Agreement entered into by assessee with Managing Director of PVVNL (Pashchimanchal Vidyut Vitran Nigam Ltd.) for sale, supply, fitting, erection, etc., for rural electrification work for which form C/form IIID to be issued by Chief Executive Officer of PVVNL to assessee--Assessee denied concessional rate of tax on goods purchased from outside State for failure to produce form C--Writ petition praying for writ of mandamus for issuance of form C to Chief Executive Officer, Electricity Distribution Circle PVVNL--Mandamus cannot be issued to Department authority as agreement between assessee and Managing Director, PVVNL, not registered as dealer under CST Act--Only Managing Director, PVVNL can issue C forms--Department justified in restraining Executive Engineer from issuing form C to assessee and imposing a tax at a higher rate--Assessee entitled to receive form C from MD under contract--Petition dismissed with liberty to assessee to invoke arbitration clause under agreement--U. P. Trade Tax Act (15 of 1948)--Central Sales Tax Act (74 of 1956), ss. 6(2), 8(4)(a).--U. B. Engineering Ltd. v. State of U. P. (All) . . . 521

Construction of complex service--Service tax--Period from April, 2006 to June, 2010--Assessee engaged in development of residential projects entering into agreement with intending purchaser for construction and sale of undivided share--No definite demarcation of extent sold under undivided share agreement--Title to property not transferred to intending buyer--Ownership transferred to purchaser after sale deed executed subsequent to completion of construction and full payment of agreed sum--Not "construction of complex" service--Even sale in favour of ultimate owner would fall under exclusion provided in definition of residential complex--Finance Act (32 of 1994), s. 65(91a), (105)(zzzh).--Jain Housing v. Commissioner of Service Tax (Mad) . . . 501

Declaration forms--See Writs under Constitution (All) . . . 521

Discrimination--That Tribunal had earlier decided in contrary manner and Department failed to move High Court--Equality clause cannot be invoked to perpetrate mistake--Inaction of Department not to affect decision of court--Constitution of India, art. 14.--Gharda Chemicals Ltd. v. State of Maharashtra (Bom) . . . 533

Evasion of tax--See Legislative powers (Ker) . . . 546

----See Penalty (Ker) . . . 527

Exemption--Sales tax--Penalty--Incomplete or incorrect returns--Evasion of tax--Dealer declaring entire turnover in return but claiming exemption with respect to second sales--Claim based on bona fide belief that it would not be treated as brand name holder in respect of purchases from brand name holder--Not a case of suppression of turnover--Penalty not leviable--Kerala General Sales Tax Act (15 of 1963), ss. 5(2), 45A.--Nilkamal Plastics Ltd. v. Assistant Commissioner-I (Ker) . . . 527

High Court--Discrimination--That Tribunal had earlier decided in contrary manner and Department failed to move High Court--Equality clause cannot be invoked to perpetrate mistake--Inaction of Department not to affect decision of court--Constitution of India, art. 14.--Gharda Chemicals Ltd. v. State of Maharashtra (Bom) . . . 533

----Reference--Court cannot allow dealer to produce material to support claim--Bombay Sales Tax Act (51 of 1959), s. 61.--Gharda Chemicals Ltd. v. State of Maharashtra (Bom) . . . 533

----Sales tax--Reference--No power to condone delay in filing reference application--Bombay Sales Tax Act (51 of 1959), s. 61.--Additional Commissioner of Sales Tax v. Jonson and Jonson Ltd. (Bom) . . . 478

Interpretation of taxing statutes--Plain language to be seen--Gharda Chemicals Ltd. v. State of Maharashtra (Bom) . . . 533

Jurisdiction--See Reference (Bom) . . . 478

Legislative powers--Value added tax--State Legislature--Provision enabling confiscation of goods to prevent smuggling or evasion of tax--Machinery provisions ancillary to power of State Legislature to tax sale or purchase of goods--Kerala Value Added Tax Act, 2003 (30 of 2004), s. 49--Constitution of India, art. 301.--New Amal Ply Wood v. Intelligence Officer (Ker) . . . 546

Limitation--See Reference (Bom) . . . 478

Manufacture--Sales tax--Set-off--Goods used in manufacture of other goods for sale--Purchase of scientific equipment and material for research--Purchase of cement for strengthening foundation of plant--Not for manufacture of goods for sale--Tax paid thereon not eligible for set-off--Bombay Sales Tax Rules, 1959, r. 41D.--Gharda Chemicals Ltd. v. State of Maharashtra (Bom) . . . 533

Penalty--Sales tax--Incomplete or incorrect returns--Evasion of tax--Dealer declaring entire turnover in return but claiming exemption with respect to second sales--Claim based on bona fide belief that it would not be treated as brand name holder in respect of purchases from brand name holder--Not a case of suppression of turnover--Penalty not leviable--Kerala General Sales Tax Act (15 of 1963), ss. 5(2), 45A.--Nilkamal Plastics Ltd. v. Assistant Commissioner-I (Ker) . . . 527

Precedents--General principles.--Additional Commissioner of Sales Tax v. Jonson and Jonson Ltd. (Bom) . . . 478

Pre-deposit--Value added tax--Appeal--Stay of recovery--Dealer under licence allowed to provide connectivity to its customers between various sites for carriage of data traffic through use of VSAT--Contention of dealer in appeal that it was rendering service not liable to value added tax at all--Authority must be reasonable and balance equities in placing conditions for entertainment of appeal--Direction for deposit of cash modified by direction to produce bank guarantee--Maharashtra Value Added Tax Act, 2002 (9 of 2005), s. 2(4), (8), (24).--Tata Net Services Limited v. State of Maharashtra (Bom) . . . 472

----See also Service tax (Mad) . . . 501

Recovery of tax--See Appeal (Bom) . . . 472

Reference--High Court--Court cannot allow dealer to produce material to support claim--Bombay Sales Tax Act (51 of 1959), s. 61.--Gharda Chemicals Ltd. v. State of Maharashtra (Bom) . . . 533

----Sales tax--High Court--No power to condone delay in filing reference application--Bombay Sales Tax Act (51 of 1959), s. 61.--Additional Commissioner of Sales Tax v. Jonson and Jonson Ltd. (Bom) . . . 478

Service tax--Appeal--Pre-deposit--Waiver--Period from April, 2006 to June, 2010--Assessee engaged in development of residential projects entering into agreement with intending purchaser for construction and sale of undivided share on which payments made--Show-cause notices for period from April, 2006 to June, 2010 and demand raised on ground "construction of complex" service rendered--Direction by Tribunal to make pre-deposit of certain amount--Prima facie case on merits--Nearly 40 per cent. of demand paid--Interest of revenue safeguarded--Assessee entitled to benefit of waiver of balance amount of pre-deposit.--Jain Housing v. Commissioner of Service Tax (Mad) . . . 501

----"Construction of complex" service--Period from April, 2006 to June, 2010--Assessee engaged in development of residential projects entering into agreement with intending purchaser for construction and sale of undivided share--No definite demarcation of extent sold under undivided share agreement--Title to property not transferred to intending buyer--Ownership transferred to purchaser after sale deed executed subsequent to completion of construction and full payment of agreed sum--Not "construction of complex" service --Even sale in favour of ultimate owner would fall under exclusion provided in definition of residential complex--Finance Act (32 of 1994), s. 65(91a), (105)(zzzh).--Jain Housing v. Commissioner of Service Tax (Mad) . . . 501

Set-off--Sales tax--Goods used in manufacture of other goods for sale--Purchase of scientific equipment and material for research--Purchase of cement for strengthening foundation of plant--Not for manufacture of goods for sale--Tax paid thereon not eligible for set-off--Bombay Sales Tax Rules, 1959, r. 41D.--Gharda Chemicals Ltd. v. State of Maharashtra (Bom) . . . 533

State Legislature--See Legislative powers (Ker) . . . 546

Stay--See Appeal (Bom) . . . 472

Value added tax--Legislative powers--State Legislature--Provision enabling confiscation of goods to prevent smuggling or evasion of tax--Machinery provisions ancillary to power of State Legislature to tax sale or purchase of goods--Kerala Value Added Tax Act, 2003 (30 of 2004), s. 49--Constitution of India, art. 301.--New Amal Ply Wood v. Intelligence Officer (Ker) . . . 546
----See also Appeal (Bom) . . . 472

Writs under Constitution--Central sales tax--Concessional rate of tax--Declaration forms--Agreement entered into by assessee with Managing Director of PVVNL (Pashchimanchal Vidyut Vitran Nigam Ltd.) for sale, supply, fitting, erection, etc., for rural electrification work for which form C/form IIID to be issued by Chief Executive Officer of PVVNL to assessee--Assessee denied concessional rate of tax on goods purchased from outside State for failure to produce form C--Writ petition praying for writ of mandamus for issuance of form C to Chief Executive Officer, Electricity Distribution Circle PVVNL--Mandamus cannot be issued to Department authority as agreement between assessee and Managing Director, PVVNL, not registered as dealer under CST Act--Only Managing Director, PVVNL can issue C forms--Department justified in restraining Executive Engineer from issuing form C to assessee and imposing a tax at a higher rate--Assessee entitled to receive form C from MD under contract--Petition dismissed with liberty to assessee to invoke arbitration clause under agreement--U. P. Trade Tax Act (15 of 1948)--Central Sales Tax Act (74 of 1956), ss. 6(2), 8(4)(a).--U. B. Engineering Ltd. v. State of U. P. (All) . . . 521


CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL


Business support services--See Service tax (CESTAT-New Delhi) . . . 461

Construction of complex service--Service tax--Constructions on own properties by builders/developers and sale of residential units to their parties thereafter--Service not rendered to another person--Not taxable--Finance Act (32 of 1994), s. 65(105) (prior to July 1, 2010).--C. C. E. & S. Tax v. Flowmore Builders Pvt. Ltd. (CESTAT-New Delhi) . . . 499

Export of service--Service tax--Business support services--Appellant rendering business support services to G in Ireland for remuneration in convertible foreign exchange--Services meant for use in business of G, Ireland, who paid for services--G, Ireland, to be treated as recipient of services--Export of services--Not liable to tax in India--Finance Act (32 of 1994), s. 65(104c), (105)(zzzq)--Export of Services Rules, 2005. --GECAS Services India Private Limited v. Commissioner of Service Tax (CESTAT-New Delhi) . . . 461

Interest--Service tax--Transaction of taxable service with associated enterprise--Payment of tax--Explanation to rule 6(1), introduced with effect from May 10, 2008 cannot be treated as clarificatory Explanation having retrospective effect--Debit entries, made by appellant during period prior to May 10, 2008--Appellant to be treated as having made payments only in August, 2009 when payments actually made--Demand of interest for alleged delay in discharging tax liability by due date--Not sustainable--Finance Act (32 of 1994), s. 67--Service Tax Rules, 1994, r. 6(1).--GECAS Services India Private Limited v. Commissioner of Service Tax (CESTAT-New Delhi) . . . 461

Retrospective legislation--See Service tax (CESTAT-New Delhi) . . . 461

Service tax--Construction of complex service--Constructions on own properties by builders/developers and sale of residential units to their parties thereafter--Service not rendered to another person--Not taxable--Finance Act (32 of 1994), s. 65(105) (prior to July 1, 2010).--C. C. E. & S. Tax v. Flowmore Builders Pvt. Ltd. (CESTAT-New Delhi) . . . 499

----Export of service--Business support services--Appellant rendering business support services to G in Ireland for remuneration in convertible foreign exchange--Services meant for use in business of G, Ireland, who paid for services--G, Ireland, to be treated as recipient of services--Export of services--Not liable to tax in India--Finance Act (32 of 1994), s. 65(104c), (105)(zzzq)--Export of Services Rules, 2005.--GECAS Services India Private Limited v. Commissioner of Service Tax (CESTAT-New Delhi) . . . 461

----Transaction of taxable service with associated enterprise--Payment of tax--Interest--Explanation to rule 6(1), introduced with effect from May 10, 2008 cannot be treated as clarificatory Explanation having retrospective effect--Debit entries, made by appellant during period prior to May 10, 2008--Appellant to be treated as having made payments only in August, 2009 when payments actually made--Demand of interest for alleged delay in discharging tax liability by due date--Not sustainable--Finance Act (32 of 1994), s. 67--Service Tax Rules, 1994, r. 6(1).--GECAS Services India Private Limited v. Commissioner of Service Tax (CESTAT-New Delhi) . . . 461
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