VAT AND SERVICE TAX CASES (VST)

ONLINE EDITION

VOL. 6 : ISSUE DATED 20-5-2016

HIGH COURTS


Assessment--Value added tax--Default assessment--Notice--Limitation--Commissioner--"Reason to believe"--Conditions precedent for invocation of extended period of limitation--Commissioner/competent authority should record reasons to believe non-payment of tax due to concealment, omission or failure to disclose material particulars--No such "reason to believe" recorded in default assessment notice issued on July 9, 2014, for period from April 1, 2009 to March 31, 2010--Notice time-barred--To be quashed--Delhi Value Added Tax Act, 2004 (3 of 2005), ss. 32, 34(1), proviso.--ITD-ITD Cem JV v. Commissioner of Trade and Taxes (Delhi) . . . 460

----See also Commissioner (Delhi) . . . 460

Commissioner--Value added tax--Jurisdiction--Default assessment--Extended period of limitation--Conditions precedent for invocation of--Commissioner/competent authority should record reasons to believe non-payment of tax due to concealment, omission or failure to disclose material particulars--Order without jurisdiction if pre-conditions not satisfied--Delhi Value Added Tax Act, 2004 (3 of 2005), ss. 32, 34(1), proviso.--ITD-ITD Cem JV v. Commissioner of Trade and Taxes (Delhi) . . . 460

----See also Assessment (Delhi) . . . 460

Fertilizer--See Turnover (Ker) . . . 449

Jurisdiction--Value added tax--Commissioner--Default assessment--Extended period of limitation--Conditions precedent for invocation of--Commissioner/competent authority should record reasons to believe non-payment of tax due to concealment, omission or failure to disclose material particulars--Order without jurisdiction if pre-conditions not satisfied--Delhi Value Added Tax Act, 2004 (3 of 2005), ss. 32, 34(1), proviso.--ITD-ITD Cem JV v. Commissioner of Trade and Taxes (Delhi) . . . 460

Limitation--Value added tax--Default assessment--Notice--Commissioner--"Reason to believe"--Conditions precedent for invocation of extended period of limitation--Commissioner/competent authority should record reasons to believe non-payment of tax due to concealment, omission or failure to disclose material particulars--No such "reason to believe" recorded in default assessment notice issued on July 9, 2014, for period from April 1, 2009 to March 31, 2010--Notice time-barred--To be quashed--Delhi Value Added Tax Act, 2004 (3 of 2005), ss. 32, 34(1), proviso.--ITD-ITD Cem JV v. Commissioner of Trade and Taxes (Delhi). . . 460

----See also Commissioner (Delhi). . . 460

Notice--See Assessment (Delhi). . . 460

Sale price--Value added tax--Subsidy--Turnover--Fertilizer Control Order--Sale of fertilizers to consumers within State at MRP fixed by Central Government by manufacturers and importers--Subsidy disbursed by Central Government to compensate for loss suffered by them--Not includible in sales turnover--Kerala Value Added Tax Act, 2003 (30 of 2004), s. 2(lii), Expln. VII.--Indian Potash Ltd. v. State of Kerala (Ker) . . . 449

Turnover--Value added tax--Subsidy--Sale price--Fertilizer Control Order--Sale of fertilizers to consumers within State at MRP fixed by Central Government by manufacturers and importers--Subsidy disbursed by Central Government to compensate for loss suffered by them--Not includible in sales turnover--Kerala Value Added Tax Act, 2003 (30 of 2004), s. 2(lii), Expln. VII.--Indian Potash Ltd. v. State of Kerala (Ker) . . . 449

Value added tax--See Assessment (Delhi) . . . 460

----See Commissioner (Delhi) . . . 460

----See Turnover (Ker) . . . 449


PRINT EDITION

VOLUME 90 : PART 4 : ISSUE DATED 20-5-2016


HIGH COURTS


Assessment--See Writs under Constitution (Karn). . . 419

Central sales tax--See Writs under Constitution (Karn) . . . 419

Cenvat credit--Service tax--Excise duty--Manufacturer--April 2007 to June 2008--Manufacturer of piston rings, etc., availing of cenvat credit of service tax paid on activity of chrome plating done by sister concern on job-work basis--Notification No. 8/2005-ST, dated March 1, 2005 exempting services of production of goods on behalf of principal manufacturer applicable subject to payment of appropriate duty of excise by principal manufacturer--Section 5A(1A) of Central Excise Act, mandatorily requiring manufacturer of goods exempted thereunder not to pay duty of excise not applicable to conditional exemption--Also neither such mandatory requirement present in section 93 of Finance Act nor section 5A present in section 83 of Finance Act--Demand of credit of service tax availed of by manufacturer on ground inadmissible and levy of penalty--Not justified--Finance Act (32 of 1994), ss. 83, 93--Central Excise Act (1 of 1944), s. 5A(1A).--Commissioner of Central Excise v. Federal Mogul TPR India Limited (Karn) . . . 431

Check-post--Sales tax--Transporter--Goods in transit through State--Presumption of deemed sale--Rebuttable--Vehicles transported from Gurgaon factory to Meghalaya through Assam--Transit pass obtained at check gate at Assam border by trailer driver not endorsed by officials of exit check gate--Copy of certificate issued by Superintendent of Taxes, at Byrnihat check gate, Meghalaya to show that consignment of vehicles crossed check gate on Assam-Meghalaya Border and affidavit and certificate of consignee, produced by transporter to dislodge presumption of sale in Assam--Consignee confirming that transporter delivered vehicles and dealer confirming its liability to pay tax on delivered vehicles--Authorities failed to discharge obligation in not considering worth of documents produced to rebut presumption and supported assessment only on basis of legal presumption--Matter remitted--Assam General Sales Tax Act (12 of 1993), ss. 17(6), 46(15)(a), (d).--Mukesh Carriers v. State of Assam (Gauhati) . . . 385

Commissioner--Value added tax--Revision--Order by Additional Commissioner setting aside order by first appellate authority and directing competent authority to issue revised demand notice without recording reasons--Non-speaking order--Set aside--Karnataka Value Added Tax Act, 2003 (32 of 2004).--Stovekraft Pvt Ltd. v. Additional Commissioner of Commercial Taxes (Karn) . . . 421

----Value added tax--Revision--Quasi-judicial authorities--Additional Commissioner setting aside order by appellate authority and directing prescribed authority to revise demand notice--Reasons not recorded--Non-speaking order--Set aside--Karnataka Value Added Tax Act, 2003 (32 of 2004).--Stovekraft Pvt. Ltd. v. Additional Commissioner of Commercial Taxes (Karn) . . . 423

Composition of tax--Trade tax--Works contract--Interest--Scheme providing for payment of tax at one per cent. if inter-State purchase of raw material did not exceed five per cent. of contract receipt--Regular assessment otherwise on amount in excess--Retrospective amendment of circular by notification dated October 28, 2003 providing for three per cent. if inter-State purchase of raw material exceeded five per cent.--Assessee opting under amended scheme paying tax at three per cent. including one per cent. already paid under unamended scheme for period 2000-01 and 2001-02 when inter-State purchases in excess of five per cent.--No liability on exercise of option--Exercise of option possible only after October 28, 2003--Assessee not liable to pay interest on two per cent. tax for period prior to October 28, 2003--Also interest not mentioned in circular --U. P. Trade Tax Act (15 of 1948), s. 7D.--Hira Singh Sobti Contracts Ltd. v. Commissioner, Commercial Tax (Uttarakhand) . . . 415

Declaration forms--Central sales tax--Assessment--Reassessment--Account books rejected in absence of C and F declaration forms and reassessment order passed without granting time as requested by assessee--Assessee filing all F and C forms along with application to consider same--Writ petition--Reassessment order quashed--Direction to authorities to consider declaration forms before passing any further order--Central Sales Tax Act (74 of 1956)--Karnataka Value Added Tax Act, 2003 (32 of 2004).--Berger Paints India Limited v. State of Karnataka (Karn) . . . 419

Deemed sale--See Transfer of right to use goods (Ker) . . . 438

Excise duty--See Service tax (Karn) . . . 431

Exemption--See Service tax (Mad) . . . 392

Goods--See Transfer of right to use goods (Ker) . . . 438

Government--Writs under Constitution--Laches--Writ petition filed by Government Department on October 18, 2012 challenging order passed on rectification application dated November 29, 2008--Explanations offered for delay not reasonable--Government not a special litigant--Writ petition dismissed on ground of delay and laches--Constitution of India, art. 226.--State of Maharashtra v. Kings Furniture Works (Bom) . . . 426

Input-tax credit--Value added tax--Manufacturer of castor oil and castor oil cake--Entire purchase of castor seeds intended for extracting castor oil--After first process of crushing seeds, some portion of oil remaining in residue--Castor oil cake again crushed and remaining oil extracted leaving waste, known as de-oiled cake--De-oiled cake used in furnace as fuel--No part of castor oil seeds purchased for use as fuel--No deliberate attempt by dealer to manufacture de-oiled cake for use as fuel--Disallowance of input-tax credit for use of de-oiled cake not proper--Gujarat Value Added Tax Act, 2003 (1 of 2005), ss. 11(3), 12(7)(b), 34(12).--State of Gujarat v. Jayant Agro Organics Ltd. (Guj) . . . 399

Interest--See Works contract (Uttarakhand) . . . 415

Manufacturer--See Service tax (Karn) . . . 431

Reassessment--See Writs under Constitution (Karn) . . . 419

Retrospective legislation--See Works contract (Uttarakhand) . . . 415

Revision--Value added tax--Commissioner--Order by Additional Commissioner setting aside order by first appellate authority and directing competent authority to issue revised demand notice without recording reasons--Non-speaking order--Set aside--Karnataka Value Added Tax Act, 2003 (32 of 2004).--Stovekraft Pvt Ltd. v. Additional Commissioner of Commercial Taxes (Karn) . . . 421

----Value added tax--Commissioner--Quasi-judicial authorities--Additional Commissioner setting aside order by appellate authority and directing prescribed authority to revise demand notice--Reasons not recorded--Non-speaking order--Set aside--Karnataka Value Added Tax Act, 2003 (32 of 2004).--Stovekraft Pvt. Ltd. v. Additional Commissioner of Commercial Taxes (Karn) . . . 423

Sale--Sales tax--Transporter--Goods in transit through State--Presumption of deemed sale--Rebuttable--Vehicles transported from Gurgaon factory to Meghalaya through Assam--Transit pass obtained at check gate at Assam border by trailer driver not endorsed by officials of exit check gate--Copy of certificate issued by Superintendent of Taxes, at Byrnihat check gate, Meghalaya to show that consignment of vehicles crossed check gate on Assam-Meghalaya Border and affidavit and certificate of consignee, produced by transporter to dislodge presumption of sale in Assam--Consignee confirming that transporter delivered vehicles and dealer confirming its liability to pay tax on delivered vehicles--Authorities failed to discharge obligation in not considering worth of documents produced to rebut presumption and supported assessment only on basis of legal presumption--Matter remitted--Assam General Sales Tax Act (12 of 1993), ss.17(6), 46(15)(a), (d).--Mukesh Carriers v. State of Assam (Gauhati) . . . 385

Service tax--Cenvat credit--Excise duty--Manufacturer--April 2007 to June 2008--Manufacturer of piston rings, etc., availing of cenvat credit of service tax paid on activity of chrome plating done by sister concern on job-work basis--Notification No. 8/2005-ST, dated March 1, 2005 exempting services of production of goods on behalf of principal manufacturer applicable subject to payment of appropriate duty of excise by principal manufacturer--Section 5A(1A) of Central Excise Act, mandatorily requiring manufacturer of goods exempted thereunder not to pay duty of excise not applicable to conditional exemption--Also neither such mandatory requirement present in section 93 of Finance Act nor section 5A present in section 83 of Finance Act--Demand of credit of service tax availed of by manufacturer on ground inadmissible and levy of penalty--Not justified--Finance Act (32 of 1994), ss. 83, 93--Central Excise Act (1 of 1944), s. 5A(1A).--Commissioner of Central Excise v. Federal Mogul TPR India Limited (Karn) . . . 431

----Works contract--Exemption--Assessee entitled to exemption if construction used or to be used either not for commerce or not for industry--Services rendered to educational institutions--Assessee under bona fide belief that services were for non-commercial purposes--Finding by Commissioner without evidence that institutions profit earning and denial of exemption--Not proper--Order set aside and matter remanded for consideration afresh--Finance Act (32 of 1994), ss. 65(105) (zzzza), 66B--Circular No. 80/10/2004-ST dated September 17, 2004.--G. Ramamoorthi Constructions (I) Pvt. Ltd. v. Commissioner (Adjudication) (Mad) . . . 392

Transfer of right to use goods--Value added tax--Deemed sale--Goods--Definition--Service tax--Letting out of hoardings fixed on structures erected on leased land to companies for advertising their products for rental charges--Is transfer of right to use goods--Assessee liable to tax--Service tax and value added tax not mutually exclusive--Payment of service tax under Central legislation does not exonerate assessee from liability for value added tax--Kerala Value Added Tax Act, 2003 (30 of 2004), ss. 2(xx), 6(1)(c).--Delta Communications v. State of Kerala (Ker) . . . 438

Transporter--See Sale (Gauhati) . . . 385

Value added tax--Deemed sale--Transfer of right to use goods--Goods--Definition--Service tax--Letting out of hoardings fixed on structures erected on leased land to companies for advertising their products for rental charges--Is transfer of right to use goods--Assessee liable to tax--Service tax and value added tax not mutually exclusive--Payment of service tax under Central legislation does not exonerate assessee from liability for value added tax--Kerala Value Added Tax Act, 2003 (30 of 2004), ss. 2(xx), 6(1)(c).--Delta Communications v. State of Kerala (Ker) . . . 438

----Input-tax credit--Manufacturer of castor oil and castor oil cake--Entire purchase of castor seeds intended for extracting castor oil--After first process of crushing seeds, some portion of oil remaining in residue--Castor oil cake again crushed and remaining oil extracted leaving waste, known as de-oiled cake--De-oiled cake used in furnace as fuel--No part of castor oil seeds purchased for use as fuel--No deliberate attempt by dealer to manufacture de-oiled cake for use as fuel--Disallowance of input-tax credit for use of de-oiled cake not proper--Gujarat Value Added Tax Act, 2003 (1 of 2005), ss. 11(3), 12(7)(b), 34(12).--State of Gujarat v. Jayant Agro Organics Ltd. (Guj) . . . 399

----See also Revision (Karn) . . . 421, 423

Value added tax authority--Quasi-judicial authority--Order should record reasons.--Stovekraft Pvt Ltd. v. Additional Commissioner of Commercial Taxes (Karn) . . . 421

Words and phrases--"Goods"--Definition.--Delta Communications v. State of Kerala (Ker) . . . 438

Works contract--Service tax--Exemption--Assessee entitled to exemption if construction used or to be used either not for commerce or not for industry--Services rendered to educational institutions--Assessee under bona fide belief that services were for non-commercial purposes--Finding by Commissioner without evidence that institutions profit earning and denial of exemption--Not proper--Order set aside and matter remanded for consideration afresh--Finance Act (32 of 1994), ss. 65(105) (zzzza), 66B--Circular No. 80/10/2004-ST dated September 17, 2004.--G. Ramamoorthi Constructions (I) Pvt. Ltd. v. Commissioner (Adjudication) (Mad) . . . 392

----Trade tax--Composition of tax--Interest--Scheme providing for payment of tax at one per cent. if inter-State purchase of raw material did not exceed five per cent. of contract receipt--Regular assessment otherwise on amount in excess--Retrospective amendment of circular by notification dated October 28, 2003 providing for three per cent. if inter-State purchase of raw material exceeded five per cent.--Assessee opting under amended scheme paying tax at three per cent. including one per cent. already paid under unamended scheme for period 2000-01 and 2001-02 when inter-State purchases in excess of five per cent.--No liability on exercise of option--Exercise of option possible only after October 28, 2003--Assessee not liable to pay interest on two per cent. tax for period prior to October 28, 2003--Also interest not mentioned in circular--U. P. Trade Tax Act (15 of 1948), s. 7D.--Hira Singh Sobti Contracts Ltd. v. Commissioner, Commercial Tax (Uttarakhand) . . . 415

Writs under Constitution--Central sales tax--Declaration forms--Assessment--Reassessment--Account books rejected in absence of C and F declaration forms and reassessment order passed without granting time as requested by assessee--Assessee filing all F and C forms along with application to consider same--Writ petition--Reassessment order quashed--Direction to authorities to consider declaration forms before passing any further order--Central Sales Tax Act (74 of 1956)--Karnataka Value Added Tax Act, 2003 (32 of 2004).--Berger Paints India Limited v. State of Karnataka (Karn) . . . 419

----Laches--Government--Writ petition filed by Government Department on October 18, 2012 challenging order passed on rectification application dated November 29, 2008--Explanations offered for delay not reasonable--Government not a special litigant --Writ petition dismissed on ground of delay and laches--Constitution of India, art. 226. --State of Maharashtra v. Kings Furniture Works (Bom) . . . 426


CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL


Commercial training or coaching service--Service tax--Penalty--Reasonable cause--Institutes of appellant-society conducting various courses--Finding by adjudicating authority that courses recognized by AICTE--Ample evidence produced before adjudicating authority and Tribunal to show courses recognized by law for time being in force--Society not liable to tax--However PGDBA course offered by one of its institutes not recognized by law and taxable--No case for imposing penalty under section 76--Penalty levied under section 78 by adjudicating authority not warranted in view of payment of tax with interest before issue of notice and bona fide belief--Finance Act (32 of 1994), ss. 78, 80.--Commissioner of Central Excise v. Sinhagad Technical Education Society (CESTAT-Mumbai) . . . 456

Penalty--See Service tax (CESTAT-Mumbai) . . . 456

Service tax--Commercial training or coaching service--Penalty--Reasonable cause--Institutes of appellant-society conducting various courses--Finding by adjudicating authority that courses recognized by AICTE--Ample evidence produced before adjudicating authority and Tribunal to show courses recognized by law for time being in force--Society not liable to tax--However PGDBA course offered by one of its institutes not recognized by law and taxable--No case for imposing penalty under section 76--Penalty levied under section 78 by adjudicating authority not warranted in view of payment of tax with interest before issue of notice and bona fide belief--Finance Act (32 of 1994), ss. 78, 80.--Commissioner of Central Excise v. Sinhagad Technical Education Society (CESTAT-Mumbai) . . . 456


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