VAT AND SERVICE TAX CASES (VST)

ONLINE EDITION

VOL. 3 : ISSUE DATED 26-9-2014

HIGH COURT


Assessment--See Penalty (Mad) . . . 330

Burden of proof--Sales tax--Entries in Schedule--Ayurvedic medicine or hair oil--Is on Department--Medicated oil not sold just as hair oil, but certified by Director of Ayurveda as having multifarious functions--Oil would not fall within hair oil simpliciter--Voluminous literature showing oil not merely used for hair but as medicament--Consistent stand of dealer and view of authorities in other States--Product in question to be taxed under entry dealing with medicines--Tamil Nadu General Sales Tax Act (1 of 1959), Sch. I, Part C, entry 20, Part F entry 1(ii).--State of Tamil Nadu v. Sri Ramtirth International (Mad) . . . 318

Entries in Schedule--Sales tax--Ayurvedic medicine or hair oil--Burden of proof--Is on Department--Medicated oil not sold just as hair oil, but certified by Director of Ayurveda as having multifarious functions--Oil would not fall within hair oil simpliciter--Voluminous literature showing oil not merely used for hair but as medicament--Consistent stand of dealer and view of authorities in other States--Product in question to be taxed under entry dealing with medicines--Tamil Nadu General Sales Tax Act (1 of 1959), Sch. I, Part C, entry 20, Part F entry 1(ii).--State of Tamil Nadu v. Sri Ramtirth International (Mad) . . . 318

----Sales tax--Medicated talcum powder manufactured under drug licence whose price regulated under Drugs and Cosmetics Act--Not a drug--Taxable as talcum powder--Tamil Nadu General Sales Tax Act (1 of 1959), Sch. I, Part C, entry 20(A), Part F, entry 1(iii)--Drugs and Cosmetics Act (23 of 1940), ss. 3(aaa), (b).--State of Tamil Nadu v. Glaxo India Limited (Mad) . . . 307

Natural justice--Value added tax--Penalty--Assessment--Revision--Proceedings for revision of assessment and levy of penalty--Notices proposing revision of assessment and imposition of penalty issued by assessing authority--Opportunity of hearing to be given in terms of section 40(2), before passing orders though notice not contemplated in such proceedings--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 27(1)(a), 40(2).--Ramsays Corporation Private Limited v. Assistant Commissioner (CT) (Mad) . . . 330

Notice--See Penalty (Mad) . . . 330

Penalty--Value added tax--Natural justice--Assessment--Revision--Proceedings for revision of assessment and levy of penalty--Notices proposing revision of assessment and imposition of penalty issued by assessing authority--Opportunity of hearing to be given in terms of section 40(2), before passing orders though notice not contemplated in such proceedings--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 27(1)(a), 40(2).--Ramsays Corporation Private Limited v. Assistant Commissioner (CT) (Mad) . . . 330

Revision--See Penalty (Mad) . . . 330

Value added tax--See Penalty (Mad) . . . 330

PRINT EDITION

VOLUME 74 : PART 2 : ISSUE DATED 26-9-2014


HIGH COURTS


Appeal--Sales tax--Pre-deposit--Appeal against assessment order along with application for stay--Additional Commissioner (Appeals) granting stay of 60 per cent. of disputed tax and Tribunal 80 per cent.--On facts court modifying order to extent of deposit of 10 per cent. subject to condition of appellant furnishing security of stayed amount within specified period.--Tata Motors Limited v. Commissioner, Commercial Taxes (All) . . . 251

Check-post--See Penalty (Raj) . . . 208

Declaration form--Sales tax--Penalty--Short-fall in payment of advance tax by more than fifteen per cent.--Dealer paying short-fall in advance tax prior to date of service of assessment order--Dealer in iron and steel--First sale--Requirement of declaration from selling dealer that goods already subjected to tax--Provision omitted prior to assessment year in question--Revision to restore penalty not sustainable--Karnataka Sales Tax Act (25 of 1957), ss. 6A(2), prov., 12B(4), 22A(1).--Shifa Constructions v. Additional Commissioner of Commercial Taxes (Karn) . . . 160

----Value added tax--Penalty--Bringing goods into State for own use but putting them to commercial use--Meaning of commercial use--Goods brought by hospital declaring them as intended for own use--Use of goods in hospital--That profit generated by use--Not a case of commercial use--Kerala Value Added Tax Act, 2003 (30 of 2004), s. 70B.--State of Kerala v. Leo Hospital (Ker) . . . 158

----Value added tax--Penalty--Evasion of tax--Check-post--Goods in transit through State--Failure to produce declaration in prescribed form--Principles governing levy of penalty--Bills and other documents accompanying goods but form VAT 47 not produced--Form VAT 47 produced on next day in reply to notice to show cause against penalty--No finding that documents forged or fabricated--Penalty not justified--Rajasthan Value Added Tax Act (4 of 2003), s. 76(6).--Hiramani Food Products v. Assistant Commercial Taxes Officer (Raj) . . . 208

----Value added tax--Penalty--Import of goods without proper documents--General principles--Ingredients warranting levy of penalty--Contravention of provisions with intent to evade tax--Actual evasion need not be proved--Failure to duly fill in column 6 of form 38--Concurrent finding of authorities that omission was with intent to reuse form for successive imports with intention to evade tax--Levy of penalty justified--Uttar Pradesh Value Added Tax Act (5 of 2008), ss. 50(1), (2), 51, 54(1), table, Sl. No. 14--Uttar Pradesh Value Added Tax Rules, 2008, rr. 54, 56.--Modi Tyre Company Pvt. Ltd. v. Commissioner, Commercial Taxes (All) . . . 129

----See also Market fee (All) . . . 177

Detention--Value added tax--Offence--Goods in transit--Despatch of goods by vendor in Maharashtra to petitioner-assessee's factory at Coimbatore--Interception in Karur District and detention on ground that goods not accompanied by relevant documents--Finding that driver utilized same invoice utilised for transporting goods from Maharashtra to Coimbatore--Detention notice issued and demand of tax and compounding fee raised--Claim by assessee that instructions issued while goods on transit to transit goods to S at Trichy, a job-worker and that no sale but only a "service" of testing involved--Preliminary verification conducted by respondents showing S at Trichy had stopped business--No prima facie case made out to issue interim direction to permit assessee to take goods without payment of tax and compounding fees--Liberty granted to assessee to file revision before Joint Commissioner--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 67(5), 69, 71(5)(a)--Tamil Nadu Value Added Tax Rules, 2007, r. 15(3).--L & T Valves Ltd. v. Assistant Commercial Tax Officer (Mad) . . . 203

Entries in Schedule--Badshah masala powder--Revision--April, 2005 to September 2005--Taxable under residuary clause traceable to section 4 of Act at 12.5 per cent.--Reassessment by assessing officer pursuant to audit showing that tax paid at four per cent. by assessee--Reviewed order set aside by appellate authority--Suo motu revision of erroneous order passed by appellate authority by revisional authority--Valid--Karnataka Value Added Tax Act, 2003 (32 of 2004), ss. 4, 39(1), 64(1).--Kamala Enterprises v. Additional Commissioner of Commercial Taxes (Karn) . . . 244

Entry tax--Penalty--Payment of tax falling short of liability disclosed in return by more than 80 per cent.--Presumption of concealment--That dealer's accounts accepted and assessment made accordingly or that interest levied under section 24--Not material--Dealer aware of liability and choosing not to pay tax in full--Penalty leviable--Madhya Pradesh Commercial Tax Act, 1994 (5 of 1995), ss. 26(2), (4)(a), 69(3).--Hindustan Lever Ltd. v. Assistant Commissioner, Commercial Tax (MP) . . . 220

----Writs under Constitution--Writ petitions challenging validity of Act disposed of upholding validity--Some assessees filing special leave petitions--Supreme Court passing interim orders--One writ petition separated--Interim orders passed by Supreme Court not precedent--Petition dismissed relegating assessee to remedy under statute--Uttar Pradesh Tax on Entry of Goods Into Local Areas Act (30 of 2007)--Constitution of India, art. 226.--Gangesh Cement Pvt. Ltd. v. State of U. P. (All) . . . 235

Evasion of tax--See Penalty (All) . . . 129, (Raj) . . . 208

Exemption--Sales tax--General principles--Industrial policy of State--Does not by itself grant exemption--Dealer specifically claiming and allowed exemption in accordance with particular notification--Not entitled to contend after availing of exemption for eight years that notification not in accordance with industrial policy--U. P. Trade Tax Act (15 of 1948)--Notification No. TT-2-780/XI-9(226)/94-U.P. Act-15/48-Order-95, dated March 31, 1995--Notification No. T.T.-2-1711/XI-9(460)/94-U.P. Act 15-48-Order 96, dated July 19, 1996--Notification No. T.T.-2-1712, dated July 19, 1996--Notification No. TT-2-640/XI-9(640)/94-Act-15-48-Order-97, dated February 21, 1997.--Yamaha Motors India Pvt. Ltd. v. State of U. P. (All) . . . 163

Inter-State sale--See Market fee (All) . . . 177

Jurisdiction--See Entries in Schedule (Karn) . . . 244

Market fee--Trader--Definition--Purchase of bamboo for manufacture of paper--Dealer is trader--Purchase from outside State by dealer within market area--Agreements with transporters indicating they acted as agent of purchasing dealer--Documents establishing intention to complete sale within market area--Not a case of completion of sale outside State--Issue of C form and payment of Central sales tax not relevant factors--Whether sellers producers or traders not ascertainable--Purchasing dealer liable to pay mandi fee--U. P. Krishi Utpadan Mandi Adhiniyam (25 of 1964), ss. 2(a), (y), 17(iii)(b)--Central Sales Tax Act (74 of 1956), s. 8(1)--U. P. Krishi Utpadan Mandi Niyamavali, 1965, r. 2(1)(xviii)--Central Sales Tax (Registration and Turnover) Rules, 1957, r. 12.--Star Paper Mills Limited v. State of U. P. (All) . . . 177

Natural justice--Penalty--General principles--Not to be mechanically imposed--Importance of affording opportunity of hearing.--Hiramani Food Products v. Assistant Commercial Taxes Officer(Raj) . . . 208

Notification--Sales tax--Exemption--General principles--Industrial policy of State--Does not by itself grant exemption--Dealer specifically claiming and allowed exemption in accordance with particular notification--Not entitled to contend after availing of exemption for eight years that notification not in accordance with industrial policy--U. P. Trade Tax Act (15 of 1948)--Notification No. TT-2-780/XI-9(226)/94-U.P. Act-15/48-Order-95, dated March 31, 1995--Notification No. T.T.-2-1711/XI-9(460)/94-U.P. Act 15-48-Order 96, dated July 19, 1996--Notification No. T.T.-2-1712, dated July 19, 1996--Notification No. TT-2-640/XI-9(640)/94-Act-15-48-Order-97, dated February 21, 1997.--Yamaha Motors India Pvt. Ltd. v. State of U. P. (All) . . . 163

Offence--Value added tax--Goods in transit--Detention--Despatch of goods by vendor in Maharashtra to petitioner-assessee's factory at Coimbatore--Interception in Karur District and detention on ground that goods not accompanied by relevant documents--Finding that driver utilized same invoice utilised for transporting goods from Maharashtra to Coimbatore--Detention notice issued and demand of tax and compounding fee raised--Claim by assessee that instructions issued while goods on transit to transit goods to S at Trichy, a job-worker and that no sale but only a "service" of testing involved--Preliminary verification conducted by respondents showing S at Trichy had stopped business--No prima facie case made out to issue interim direction to permit assessee to take goods without payment of tax and compounding fees--Liberty granted to assessee to file revision before Joint Commissioner--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 67(5), 69, 71(5)(a)--Tamil Nadu Value Added Tax Rules, 2007, r. 15(3).--L & T Valves Ltd. v. Assistant Commercial Tax Officer (Mad) . . . 203

Penalty--Entry tax--Payment of tax falling short of liability disclosed in return by more than 80 per cent.--Presumption of concealment--That dealer's accounts accepted and assessment made accordingly or that interest levied under section 24--Not material --Dealer aware of liability and choosing not to pay tax in full--Penalty leviable--Madhya Pradesh Commercial Tax Act, 1994 (5 of 1995), ss. 26(2), (4)(a), 69(3).--Hindustan Lever Ltd. v. Assistant Commissioner, Commercial Tax (MP) . . . 220

----General principles--Not to be mechanically imposed --Importance of affording opportunity of hearing.--Hiramani Food Products v. Assistant Commercial Taxes Officer (Raj) . . . 208

----Sales tax--Short-fall in payment of advance tax by more than fifteen per cent.--Dealer paying short-fall in advance tax prior to date of service of assessment order--Dealer in iron and steel--First sale--Requirement of declaration from selling dealer that goods already subjected to tax--Provision omitted prior to assessment year in question--Revision to restore penalty not sustainable--Karnataka Sales Tax Act (25 of 1957), ss. 6A(2), prov., 12B(4), 22A(1).--Shifa Constructions v. Additional Commissioner of Commercial Taxes (Karn) . . . 160

----Value added tax--Bringing goods into State for own use but putting them to commercial use--Meaning of commercial use--Goods brought by hospital declaring them as intended for own use--Use of goods in hospital--That profit generated by use--Not a case of commercial use--Kerala Value Added Tax Act, 2003 (30 of 2004), s. 70B.--State of Kerala v. Leo Hospital (Ker) . . . 158

----Value added tax--Evasion of tax--Check-post--Goods in transit through State--Failure to produce declaration in prescribed form--Principles governing levy of penalty--Bills and other documents accompanying goods but form VAT 47 not produced--Form VAT 47 produced on next day in reply to notice to show cause against penalty--No finding that documents forged or fabricated--Penalty not justified--Rajasthan Value Added Tax Act (4 of 2003), s. 76(6).--Hiramani Food Products v. Assistant Commercial Taxes Officer (Raj) . . . 208

----Value added tax--Import of goods without proper documents--General principles--Ingredients warranting levy of penalty--Contravention of provisions with intent to evade tax--Actual evasion need not be proved--Failure to duly fill in column 6 of form 38--Concurrent finding of authorities that omission was with intent to reuse form for successive imports with intention to evade tax--Levy of penalty justified--Uttar Pradesh Value Added Tax Act (5 of 2008), ss. 50(1), (2), 51, 54(1), table, Sl. No. 14--Uttar Pradesh Value Added Tax Rules, 2008, rr. 54, 56.--Modi Tyre Company Pvt. Ltd. v. Commissioner, Commercial Taxes (All) . . . 129

Pre-deposit--See Appeal(All) . . . 251

Precedent--See Entry tax(All) . . . 235

Reassessment--See Entries in Schedule(Karn) . . . 244

Recovery of tax--Sales tax--Appeal--Pre-deposit--Appeal against assessment order along with application for stay--Additional Commissioner (Appeals) granting stay of 60 per cent. of disputed tax and Tribunal 80 per cent.--On facts court modifying order to extent of deposit of 10 per cent. subject to condition of appellant furnishing security of stayed amount within specified period.--Tata Motors Limited v. Commissioner Commercial Taxes (All) . . . 251

Revision--Entries in Schedule--Badshah masala powder--April, 2005 to September 2005--Taxable under residuary clause traceable to section 4 of Act at 12.5 per cent.--Reassessment by assessing officer pursuant to audit showing that tax paid at four per cent. by assessee--Reviewed order set aside by appellate authority--Suo motu revision of erroneous order passed by appellate authority by revisional authority--Valid--Karnataka Value Added Tax Act, 2003 (32 of 2004), ss. 4, 39(1), 64(1).--Kamala Enterprises v. Additional Commissioner of Commercial Taxes (Karn) . . . 244

Sale--Market fee--Trader--Definition--Purchase of bamboo for manufacture of paper--Dealer is trader--Purchase from outside State by dealer within market area--Agreements with transporters indicating they acted as agent of purchasing dealer--Documents establishing intention to complete sale within market area--Not a case of completion of sale outside State--Issue of C form and payment of Central sales tax not relevant factors--Whether sellers producers or traders not ascertainable--Purchasing dealer liable to pay mandi fee--U. P. Krishi Utpadan Mandi Adhiniyam (25 of 1964), ss. 2(a), (y), 17(iii)(b)--Central Sales Tax Act (74 of 1956), s. 8(1)--U. P. Krishi Utpadan Mandi Niyamavali, 1965, r. 2(1)(xviii)--Central Sales Tax (Registration and Turnover) Rules, 1957, r. 12.--Star Paper Mills Limited v. State of U. P. (All) . . . 177

----Sales tax--Sale or works contract--Contract for supply of ready mix cement concrete mixture--Dealer to provide men and materials to lay concrete mixture on area specified by purchaser--Dealer responsible for quality of concrete and laying--Dealer liable for compensation in case of leakage--Absence of word "works contract" in agreement not relevant--Transaction not sale but works contract--Puducherry General Sales Tax Act (6 of 1967).--Thirumalai Ready Mix Concrete v. State of Puducherry (Mad) . . . 247

Single point tax--See Penalty (Karn) . . . 160

Stay--See Appeal (All) . . . 251

Supreme Court--See Entry tax (All) . . . 235

Value added tax--See Offence (Mad) . . . 203

---See Penalty (All) . . . 129, (Ker) . . . 158

Words and phrases--"Commercial use"--Meaning of.--State of Kerala v. Leo Hospital (Ker) . . . 158

----"Trader"--Definition.--Star Paper Mills Limited v. State of U. P. (All) . . . 177

Works contract--Sales tax--Sale or works contract--Contract for supply of ready mix cement concrete mixture--Dealer to provide men and materials to lay concrete mixture on area specified by purchaser--Dealer responsible for quality of concrete and laying--Dealer liable for compensation in case of leakage--Absence of word "works contract" in agreement not relevant--Transaction not sale but works contract--Puducherry General Sales Tax Act (6 of 1967).--Thirumalai Ready Mix Concrete v. State of Puducherry (Mad) . . . 247

Writs under Constituion--Entry tax--Writ petitions challenging validity of Act disposed of upholding validity--Some assessees filing special leave petitions--Supreme Court passing interim orders--One writ petition separated--Interim orders passed by Supreme Court not precedent--Petition dismissed relegating assessee to remedy under statute--Uttar Pradesh Tax on Entry of Goods Into Local Areas Act (30 of 2007)--Constitution of India, art. 226.--Gangesh Cement Pvt. Ltd. v. State of U. P. (All) . . . 235

----See also Offence (Mad) . . . 203

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL


Cenvat credit--Service tax--Input service--Commission agent--Manufacturer--Credit of tax paid on services received from commission agent--Appellants showing that agents not only acted as commission agents but also indulged in procuring orders, an aspect of sales promotion--Entitled to Cenvat credit of tax paid on services received from commission agents--Cenvat Credit Rules, 2004, r. 2(l).--Bhuruka Gases Ltd. v. Commissioner of Central Excise, Customs and Service Tax (CESTAT-Bang) . . . 150

----Service tax--Input service--Manufacturer--Commission agent--Limitation--Assessee availing of Cenvat credit on basis of bill raised by commission agent--Contract showing that agents were promoting sales--Requirement of name and address of person receiving taxable service in bill/invoice not mandatory--Cenvat credit rightly availed of--On facts no suppression of facts--Extended period of limitation not invocable--Cenvat Credit Rules, 2004.--Novozymes South Asia Private Ltd. v. Commissioner of Central Excise (CESTAT-Bang) . . . 144

Commission agent--See Service tax (CESTAT-Bang) . . . 144, 150

Input service--See Service tax (CESTAT-Bang) . . . 144, 150

Limitation--See Service tax (CESTAT-Bang) . . . 144

Manufacturer--See Service tax (CESTAT-Bang) . . . 144, 150

Sales promotion service--See Service tax (CESTAT-Bang) . . . 150

Service tax--Cenvat credit--Input service--Commission agent--Manufacturer--Credit of tax paid on services received from commission agent--Appellants showing that agents not only acted as commission agents but also indulged in procuring orders, an aspect of sales promotion--Entitled to Cenvat credit of tax paid on services received from commission agents--Cenvat Credit Rules, 2004, r. 2(l).--Bhuruka Gases Ltd. v. Commissioner of Central Excise, Customs and Service Tax (CESTAT-Bang) . . . 150

----Cenvat credit--Input service--Manufacturer--Commission agent--Limitation--Assessee availing of Cenvat credit on basis of bill raised by commission agent--Contract showing that agents were promoting sales--Requirement of name and address of person receiving taxable service in bill/invoice not mandatory--Cenvat credit rightly availed of--On facts no suppression of facts--Extended period of limitation not invocable--Cenvat Credit Rules, 2004.--Novozymes South Asia Private Ltd. v. Commissioner of Central Excise (CESTAT-Bang) . . . 144
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