VAT AND SERVICE TAX CASES (VST)

ONLINE EDITION

VOL. 3 : ISSUE DATED 19-9-2014

HIGH COURT


Appeal--Revision--Recording of facts by Tribunal--To be taken as correct--Finding that dealer did not agitate merits of classification of goods--Revision petition--Contention that finding not correct--Court will not entertain--Liberty to dealer to seek rectification before Tribunal.--Gayatri Minerals v. State of Rajasthan (Raj) . . . 274

Charge of tax--Entertainment tax--Direct-to-home operations--Not covered by charge--Notification prescribing rate of duty--Not valid--Madhya Pradesh Entertainments Duty and Advertisements Tax Act (30 of 1936), s. 3(1)--Notification dated May 5, 2008.--Reliance Communications Limited v. State of Madhya Pradesh (MP) . . . 294

Declaration form--Value added tax--Penalty--Goods in transit--Requisite form is form VAT-505 for non-ferrous scrap whether intended for sale or otherwise--Transport of copper scrap for conversion into strips, rods and bars--Failure to produce requisite declaration form--Dealer appearing in response to show-cause notice and agreeing to pay a reduced sum as penalty--Not entitled at later stage to challenge legality of levy of penalty especially since requisite form not carried with goods--Karnataka Value Added Tax Rules 2005, r. 157(1)(a)--Notification No. KSA. CR. 57/08-09 dated August 8, 2008.--CMC Commutator Pvt. Ltd. v. Additional Commissioner of Commercial Taxes (Karn) . . . 289

Entertainment tax--Charge of tax--Direct-to-home operations--Not covered by charge--Notification prescribing rate of duty--Not valid--Madhya Pradesh Entertainments Duty and Advertisements Tax Act (30 of 1936), s. 3(1)--Notification dated May 5, 2008.--Reliance Communications Limited v. State of Madhya Pradesh (MP) . . . 294

Entries in Schedule--Value added tax--Rail coaches, engines, wagons and parts thereof--Batteries manufactured by dealer to specification of Railways and sold to Railways for use in engines, wagons and coaches--Are "parts thereof"--Karnataka Value Added Tax Act, 2003 (32 of 2004), s. 4(1)(a) ; Sch. III, entry 76.--State of Karnataka v. Mysore Thermo Electric Pvt. Ltd. (Karn) . . . 280

Excise duty--See Turnover tax (Ker) . . . 297

High Court--See Revision (Raj) . . . 274

Interest--Sales tax--Turnover tax--Liquor manufacturers--Assessee-dealer engaged in compounding, blending and bottling of foreign liquor--Stopped remitting turnover tax from December 1999 in view of decision of court in Kerala Distilleries and Allied Products Limited v. Assistant Commissioner (Assessment) (I), Commercial Tax [2000] 117 STC 553 (Ker)--Insertion of Explanation in section 5(2C) to get over judgment--Dealer effecting payment pursuant to grant of stay of recovery by court by order dated April 29, 2002, for period from April 25, 2000 to April 1, 2001--Explanation to section 5(2C) inserted by Kerala Finance Act of 2001 struck down as unconstitutional on September 9, 2002 by court--Amendments by substituting sections 17 and 18, Kerala Abkari Act, 1077(ME) challenged and stay of recovery of turnover tax for period up to December 31, 2003 granted by court--On May 6, 2005 Supreme Court in State of Kerala v. Maharashtra Distilleries Ltd. [2005] 141 STC 358 (SC) holding amounts paid by Corporation to IMFL units consequent to arrangement will be liable to turnover tax in view of G. O. dated January 5, 1999--Dealer liable to include excise duty as part of its turnover after 1999--Tax due from dealer liable to interest--Kerala General Sales Tax Act (15 of 1963), ss. 5(2C), 23(3A).--South Travancore Distilleries and Allied Products v. State of Kerala (Ker) . . . 297

Notification--See Entertainment tax (MP) . . . 294

Penalty--Value added tax--Goods in transit--Requisite form is form VAT-505 for non-ferrous scrap whether intended for sale or otherwise--Transport of copper scrap for conversion into strips, rods and bars--Failure to produce requisite declaration form--Dealer appearing in response to show-cause notice and agreeing to pay a reduced sum as penalty--Not entitled at later stage to challenge legality of levy of penalty especially since requisite form not carried with goods--Karnataka Value Added Tax Rules 2005, r. 157(1)(a)--Notification No. KSA. CR. 57/08-09 dated August 8, 2008.--CMC Commutator Pvt. Ltd. v. Additional Commissioner of Commercial Taxes (Karn) . . . 289

Rate of tax--See Entertainment tax (MP) . . . 294

Rectification of mistake--See Revision (Raj) . . . 274

Revision--Appeal--Recording of facts by Tribunal--To be taken as correct--Finding that dealer did not agitate merits of classification of goods--Revision petition--Contention that finding not correct--Court will not entertain--Liberty to dealer to seek rectification before Tribunal.--Gayatri Minerals v. State of Rajasthan (Raj) . . . 274

Tribunal--See Revision (Raj) . . . 274

Turnover tax--Sales tax--Interest--Liquor manufacturers--Assessee-dealer engaged in compounding, blending and bottling of foreign liquor--Stopped remitting turnover tax from December 1999 in view of decision of court in Kerala Distilleries and Allied Products Limited v. Assistant Commissioner (Assessment) (I), Commercial Tax [2000] 117 STC 553 (Ker)--Insertion of Explanation in section 5(2C) to get over judgment--Dealer effecting payment pursuant to grant of stay of recovery by court by order dated April 29, 2002, for period from April 25, 2000 to April 1, 2001--Explanation to section 5(2C) inserted by Kerala Finance Act of 2001 struck down as unconstitutional on September 9, 2002 by court--Amendments by substituting sections 17 and 18, Kerala Abkari Act, 1077(ME) challenged and stay of recovery of turnover tax for period up to December 31, 2003 granted by court--On May 6, 2005 Supreme Court in State of Kerala v. Maharashtra Distilleries Ltd. [2005] 141 STC 358 (SC) holding amounts paid by Corporation to IMFL units consequent to arrangement will be liable to turnover tax in view of G. O. dated January 5, 1999--Dealer liable to include excise duty as part of its turnover after 1999--Tax due from dealer liable to interest--Kerala General Sales Tax Act (15 of 1963), ss. 5(2C), 23(3A).--South Travancore Distilleries and Allied Products v. State of Kerala (Ker) . . . 297

Unjust enrichment--See Service tax (CESTAT-Ahd) . . . 276

Value added tax--See Entries in Schedule (Karn) . . . 280

--See Penalty (Karn) . . . 289

Words and phrases--"Parts thereof".--Definition.--State of Karnataka v. Mysore Thermo Electric Pvt. Ltd. (Karn) . . . 280

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL

Limitation--See Service tax (CESTAT-Ahd) . . . 276

Mistake of law--See Service tax (CESTAT-Ahd) . . . 276

Refund--Service tax--Mistake of law--Unjust enrichment--No time-limit applicable to refund claim where duty paid under mistake of law--However principles of unjust enrichment applicable--Finance Act (32 of 1994)--Central Excise Act (1 of 1944), s. 11B.--Arvind Ltd. v. Commissioner of Central Excise and Service Tax (CESTAT-Ahd) . . . 276

Service tax--Refund--Mistake of law--Unjust enrichment--No time-limit applicable to refund claim where duty paid under mistake of law--However principles of unjust enrichment applicable--Finance Act (32 of 1994)--Central Excise Act (1 of 1944), s. 11B.--Arvind Ltd. v. Commissioner of Central Excise and Service Tax (CESTAT-Ahd) . . . 276


PRINT EDITION

VOLUME 74 : PART 1 : ISSUE DATED 19-9-2014


HIGH COURTS


Annual maintenance contracts--See Works contracts (Karn) . . . 48

Appeal--Value added tax--Appeal to Appellate Commissioner--Delay in filing--Condonation of delay--Appeal filed after inordinate delay--Explanation that appeal filed pursuant to order of Tribunal in favour of dealer in another case--Not sufficient--Delay not condoned.--Lupin Limited v. State of Gujarat (Guj) . . . 97

----Value added tax--Stay of recovery pending disposal of appeal--Order directing conditional stay without giving reasons for condition--Liable to be set aside--Matter remanded for decision afresh--Kerala Value Added Tax Act, 2003 (30 of 2004)--Archana Agencies v. Commercial Tax Officer (Ker) . . . 90

----See Input-tax credit (P&H) . . . 53

----See Service tax (Cal) . . . 103, (P&H) . . . 78

----See Writs under Constitution (All) . . . 20

Assessment--See Refund (Delhi) . . . 73

----See Works contract (Karn) . . . 48

Bank--Value added tax--Liability to tax--Dealer--Definition--"Any person who carries on the business of buying and selling"--Bank selling pledged goods to recover loans--Sale is in course of banking business--Bank is a dealer--Orissa Value Added Tax Act, 2004 (4 of 2005), ss. 2(7), (9), (12), 9, 10, 11, 14.--State Bank of India v. State of Odisha (Orissa) . . . 120

Business--See also Bank (Orissa) . . . 120

Capital goods--See Input-tax credit (Karn) . . . 9

Central sales tax--See Rate of tax (Karn) . . . 95

Commissioner--See Writs under Constitution (All) . . . 20

Company--See Recovery of tax (All) . . . 88

Consignment transaction--See Exemption (All) . . . 34

Dealer--See Bank (Orissa) . . . 120

Declaration forms--See Input-tax credit (P&H) . . . 53

Declared goods--See Rate of tax (Karn) . . . 95

Deferment of tax--Trade tax--Interest--Closure of unit--Deferment allowed till closure of unit--Dealer bound to deposit tax within three months of closure--Failure to do so--Dealer liable to interest--U. P. Trade Tax Act (15 of 1948), s. 8(2A)--U. P. Trade Tax Rules, 1948, r. 43.--Devyani Foods Ltd. v. State of U. P. (All) . . . 81

Directors--See Recovery of tax (All) . . . 88

Entries in Schedule--Value added tax--Margarine--Includes both table margarine and industrial or bakery margarine--Industrial margarine not to be treated as different based on use--Not an edible oil--Kerala Value Added Tax Act, 2003 (30 of 2004), Sch. III, entry 38(19)(d)--Notification G. O. (P) No. 4/2006/TD (S. R. O. No. 82 of 2006), dated January 21, 2006, entry 64(8)--Customs Tariff Act (51 of 1975), heading 1517.10.--Foods, Fats and Fertilizers Ltd. v. State of Kerala (Ker) . . . 56

Entry tax--Penalty--Order by Tribunal that dealer not liable as goods sold within same local area confirmed by court in revision--Penalty notice issued to dealer on ground that petitioner failed to collect tax at source on sales to unregistered dealers--Not valid--Relevant provision providing for realization of tax not universally applicable--Would not apply to sales made within same local area--U. P. Trade Tax Act (15 of 1948), s. 8D(6)--Uttar Pradesh Tax on Entry of Goods into Local Areas Act (30 of 2007), s. 12.--Ajay Kumar Agarwal v. State of U. P. (All) . . . 6

Exemption--Sales tax--Sales Tax Incentive Scheme, 1998--Assessee-manufacturer of woollen yarn taking land and part of building on lease by registered lease deed--District Level Screening Committee rejecting assessee's application for availing of benefit under Scheme, inter alia, on ground property on lease industrial in nature and that while converting land in 1994 prior permission not taken from competent authority as required--Tax Board confirming order on basis criteria laid down for fulfilling terms and conditions in Scheme not fulfilled--Orders rejecting claim justified--Rajasthan Sales Tax Act, 1994 (22 of 1995).--Ganesh Woollen v. District Level Screening Committee (Raj) . . . 30

----Trade tax--Industrial units--Expansion--Exemption on production in excess of base production--Base production includes quantity of stock transfer/consignment transaction--U. P. Trade Tax Act (15 of 1948), s. 4A.--Asian Paints India Ltd. v. Dy. Commissioner (Assessment) Commercial Tax (All) . . . 34
----See also Works contract (All) . . . 20

High Court--See Input-tax credit (P&H) . . . 53

Hotels and restaurants--See Service tax (Uttara) . . . 86

Industrial units--See Exemption (All) . . . 34, (Raj) . . . 30

Input-tax credit--Value added tax--Dealer failing to produce documents for claiming benefit--Appeal--High Court--Dealer to produce form VAT C-4 and tax invoices before assessing authority--Assessing authority to verify them and pass fresh order in accordance with law--Haryana Value Added Tax Act (6 of 2003), s. 8.--JMD Building Material Supplier v. State of Haryana (P&H) . . . 53

----Value added tax--Restrictions--Dealer carrying out job-work in course of business--Tax paid on raw materials used in job-work--Dealer entitled to credit--That no output tax paid by dealer not relevant--Denial of input-tax credit on notified capital goods--But capital goods purchased for use in manufacture of taxable goods and in computing, issue of tax invoice or sale bills security and storing information--Benefit dependent on use to which goods put--Assessing authority to examine--Input-tax credit available only when dealer has paid output tax within State--Question of fact to be decided on material on record--Dealer not entitled to deduction of input-tax irrespective of whether goods sold within State or outside--Karnataka Value Added Tax Act, 2003 (32 of 2004), ss. 10, 11(a)(3), (5), 12 ; Sch. VI, entry 3.--State of Karnataka v. Ashok Iron Works Private Limited (Karn) . . . 9

Interest--See Deferment of tax (All) . . . 81

Job-work--See Input-tax credit (Karn) . . . 9

Limitation--See Appeal (Guj) . . . 97

Manufacture--Sales tax--Definition--Amendment to include "in relation to marble and stone, hammering, cutting, sizing or polishing"--Dealer carrying out hammering and cutting to produce smaller stones but not polishing--New commercial product emerges--Activity is manufacture--Gujarat Sales Tax Act, 1969 (1 of 1970), s. 2(16) (as amended with effect from April 1, 1989).--Mahalaxmi Metal Quarry v. State of Gujarat (Guj) . . . 1

Manufacturer--See Works contract (All) . . . 20

Natural justice--See Works contract (Karn) . . . 48

Penalty--See Entry tax (All) . . . 6

Pre-deposit--See Service tax (Cal) . . . 103, (P&H) . . . 78

Rate of tax--Central sales tax--Goods other than declared goods--Animal feed--Taxable either at rate of 10 per cent. or at rate applicable in State, whichever was higher--Central Sales Tax Act (74 of 1956), ss. 6(2), 8(2)(b).--Karthik Industries v. Additional Commissioner of Commercial Taxes (Karn) . . . 95

Recovery of tax--Value added tax--Company--Directors--Dues of dealer-company not recoverable from personal assets of director--Recovery citation issued against company showing name, inter alia, of director as a proprietor--Set aside to extent it operates against personal assets of director--Uttar Pradesh Value Added Tax Act (5 of 2008), s. 2(h).--Kanwar Hasan v. State of U. P. (All) . . . 88

----See also Appeal (Ker) . . . 90

Refund--Value added tax--Assessment--Objections by assessee pursuant to assessment not decided within eight months--Argument that objections deemed to have been allowed accepted by Tribunal and directions given to refund amount claimed--Department's appeal before court rejected as time-barred and court ordering deposit of certain sum within specified period with Registrar General to be placed in fixed deposit in assessee's petition--Special leave petition filed before Supreme Court by Department allowed in part and matter remitted--Writ petition before court by assessee contending refund claims to be allowed--On facts directions to refund amounts deposited in court subject to assessee furnishing bank guarantee of 35 per cent. of amount deposited and furnishing indemnity bond--Delhi Value Added Tax Act, 2004 (3 of 2005).--Ikea Trading (India) v. Value Added Tax Officer (Delhi) . . . 73

Sale--See Bank (Orissa) . . . 120

----See Works contract (All) . . . 20, (Uttara) . . . 93

Sales Tax Incentive Scheme--See Exemption (Raj) . . . 30

Service tax--Appeal--Pre-deposit--Application for waiver--Services of liaisoning and monitoring of movement of coal to plants of cement manufacturing companies--Show-cause notice for recovery of tax under "business auxiliary service" for period September, 2004 to June 2005 invoking extended period of limitation--Commissioner (Appeals) directing appellant to deposit Rs. 30 lakhs as pre-deposit holding that prima facie case not made out--Writ petition--Order not assigning any reason for such direction--Whether imposition of 100 per cent. penalty justified, that no information deliberately withheld by appellant to avoid liability and that appellant paying tax as commission agent from June 16, 2005 when service became taxable--Not considered--Order directing appellant to deposit Rs. 30 lakhs and order dismissing appeal for failure to deposit after writ petition filed--Set aside--Central Excise Act (1 of 1944), s. 35F--Finance Act (32 of 1994), s. 73(1), proviso.--Distant Horizon Orchard Private Ltd. v. Commissioner (Appeals), Central Excise (Cal) . . . 103

----Appeal--Pre-deposit--Waiver--When to be granted.--Distant Horizon Orchard Private Limited v. Commissioner (Appeals), Central Excise (Cal) . . . 103

----Appeal--Pre-deposit--Composite contracts for construction of residential flats--Appeal before Tribunal with stay application against demand raised--Tribunal after considering prima facie case and balance of convenience granting waiver of pre-deposit and stay further proceedings subject to appellant depositing Rs. 9.5 lakhs along with interest on total demand (excluding penalty) for entertainment of appeal--Justified--Finance Act (32 of 1994).--D. P. Singh Chadha v. Commissioner of Central Excise (P&H) . . . 78

----See also Value added tax (Uttara) . . . 86

Stay--See Appeal (Ker) . . . 90

Stock transfer--See Exemption (All) . . . 34

Tax deduction at source--See Entry tax (All) . . . 6

Tribunal--See Service tax (P&H) . . . 78

Value added tax--Service tax--Hotels and restaurants--40 per cent. of billed amount to customer having food or beverage in restaurant brought under service tax net by notification--No value added tax imposable thereon--Uttarakhand Value Added Tax Act (27 of 2005)--Finance Act (32 of 1994)--Service Tax (Determination of Value) Amendment Rules, 2012.--Valley Hotel & Resorts v. Commissioner, Commercial Tax (Uttara) . . . 86

----See Appeal (Guj) . . . 97, (Ker) . . . 90

----See Entries in Schedule (Ker) . . . 56

----See Input-tax credit (Karn) . . . 9, (P&H) . . . 53

----See Recovery of tax (All) . . . 88

----See Refund (Delhi) . . . 73

----See Works contract (Karn) . . . 48, (Uttara) . . . 93

Words and phrases--"Dealer"--Definition.--State Bank of India v. State of Odisha (Orissa) . . . 120

----"Manufacture"--Definition.--Mahalaxmi Metal Quarry v. State of Gujarat (Guj) . . . 1

----"Manufacturer"--Definition.--P. N. C. Infratech Ltd. v. State of U. P. (All) . . . 20

----"Sale", "works contract"--Definitions of.--Iravanshi Builders and Developers v. Commissioner, Commercial Tax (Uttara) . . . 93

Works contract--Value added tax--Annual maintenance contracts--Dealer paying tax on 10 per cent. of turnover for several years--Assessment made on basis of statements from dealer's customers on 75 per cent. of turnover--Not proper--Dealer to be furnished with copies of statements and given opportunity to be heard and if necessary cross-examine--Assessment to be made thereafter in accordance with law--Karnataka Value Added Tax Act, 2003 (32 of 2004).--Wipro Limited v. State of Karnataka (Karn) . . . 48

----Value added tax--Civil works contractor--Manufacturer--Concessional rate of tax--Diesel oil and furnace oil--Sale to registered dealer for manufacture of taxable goods against certificate prescribed by Commissioner--Contract for construction of National Highway--Application by manufacturer of hot mix material for construction of roads, for issuance and authenticating form D based on notification dated January 10, 2008 and circular dated January 14, 2008--Show-cause notice for rejection on ground transfer of property involved in execution of works contract resale not entitled for form D--Not justified--Definition of "manufacturer" alone relevant for availing of benefit of notification--Section 13 not applicable to diesel and furnace oil, non-vat goods--"Sale" included transfer of property in goods involved in execution of works contract--Writ of mandamus issued directing Deputy Commissioner to issue and authenticate certificates in form D--Uttar Pradesh Value Added Tax Act (5 of 2008), ss. 4(1)(c), (4), 13(1), 59.--P. N. C. Infratech Ltd. v. State of U. P. (All) . . . 20

----Value added tax--"Sale"--Definition of--Sale includes an agreement for carrying out construction of immovable property or commissioning of any immovable property--Sale of immovable property after construction not liable--Uttarakhand Value Added Tax Act (27 of 2005), s. 2(40), (55).--Iravanshi Builders and Developers v. Commissioner, Commercial Tax (Uttara) . . . 93

Writs under Constitution--Alternative remedy--Sale to registered dealer for manufacture of taxable goods against certificate prescribed by Commissioner--Application by manufacturer of hot mix material for construction of roads, for issuance and authenticating form D--Show-cause notice for rejection based on order by Commissioner on application by another party--Order binding on assessing authority--No appeal lies--Writ petition praying for issuance of mandamus to issue and authenticate certificates in form D--Maintainable--Constitution of India, art. 226--Uttar Pradesh Value Added Tax Act (5 of 2008), ss. 4(1)(c), (4), 13(1), 59.--P. N. C. Infratech Ltd. v. State of U. P. (All) . . . 20


CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL

Abatement--See Service tax (CESTAT-New Delhi) . . . 100

Cenvat credit--See Service tax (CESTAT-Ahd) . . . 38

Commercial and industrial construction service--See Service tax (CESTAT-New Delhi) . . . 100

Maintenance and repair of building--See Service tax (CESTAT-New Delhi) . . . 100

Penalty--See Service tax (CESTAT-Mumbai) . . . 116, (CESTAT-New Delhi) . . . 100

Residential complex construction service--See Service tax (CESTAT-New Delhi) . . . 100

Service tax--Penalty--Consideration paid during period 2008-09 and 2010-11 by assessee for services received from group companies abroad--Discharging liability on reverse charge basis belatedly with interest and intimating Department with request no notice for levy of penalty be issued--Adjudicating order passed confirming tax with interest and imposing penalties under section 76 for period prior to May 11, 2008 when section 78 amended and under sections 77 and 78 thereafter--Liability to pay tax arose in January 2009, and section 76 not invocable especially when penalty considered under section 78--On facts no intention to suppress any information with intention to evade tax--Section 80 invocable--Penalty under sections 77 and 78 not imposable--Finance Act (32 of 1994), ss. 76, 77, 78.--Calderys India Refractories Ltd. v. Commissioner of Central Excise (CESTAT-Mumbai) . . . 116

----Penalty--Reasonable cause--Assessee paying tax on "commercial and industrial construction service " and "residential complex construction service" prior to May 1, 2006 --Paying tax on amount received for maintenance and repair of immovable property of clients (taxable with effect from May 1, 2006) after availing of abatement of 67 per cent. under Notification--Under bona fide belief that maintenance and repair of building was covered under section 65(25)(b)--Reasonable cause for not paying amount short-paid--Penalty levied under section 78 deleted--Finance Act (32 of 1994), ss. 65(25)(b), (64), 78 --Notification No. 1/2006 dated March 1, 2006.--Vascon Engineering Pvt. Ltd. v. CCE (CESTAT-New Delhi) . . . 100

----Works contract service--Determination of taxable value--Cenvat credit--No dispute as to gross value charged by assessee rendering works contract service--Assessee choosing not to exercise option to pay service tax under composition scheme--Discharging full tax on entire value of contract and availing of Cenvat credit of duty paid on inputs used for rendering works contract service--Correct--Finance Act (32 of 1994), s.67--Service Tax (Determination of Value) Rules, 2006, r. 2A--Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, r. 3--Cenvat Credit Rules, 2004, r. 2(l).--S. V. Jiwani v. Commissioner of Central Excise and Service Tax (CESTAT-Ahd) . . . 38

Value of taxable service--See Service tax (CESTAT-Ahd) . . . 38

Works contract service--See Service tax (CESTAT-Ahd) . . . 38



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