“it’s not the load that breaks you down, it’s the way you … april- 2014 sales tax journal -...

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April- 2014 SALES TAX JOURNAL - 53

: Thought of the Month :

“It’s not the load that breaks you down,it’s the way you carry it.”

Volume : 53 Part - 1 April - 2014

EDITORS : N. N. PATEL - P. K. SONI

The G.S.T.B. Association 4th Floor, “C” Block, Multi Storyed Building, Lal Darwaja, Ahmedabad. Phone : 25506305 Fax : 25501731 Email : [email protected]

1. lÉÅmÉÒ »oÉÉ{ÉàoÉÒ Shri N. N. Patel-Shri P. K. Soni 32. President’s Desk Shri Devkaran L. Vaghasia 53. Scope of Tax Planning in Shri K.H Kaji 7 Works Contract4. Free Supply in Shri Abhay Desai 10 Construction Contracts5. Fraternal Twins – Shri Uchit N. Sheth 14 Central Indirect Taxes And Vat6. Recent Decisions of The Gujarat Shri Kuntal Parikh 18 High Court on Gujarat Vat Laws

7. ~ÉÚù{ÉÒ HÖqùlÉÒ +É£lÉ{Éà HÉùiÉà... ©ÉÉ±É Shri Ishwarlal S. Rudalal 23 {ÉÉ¶É ~ÉÉ©Éà±É ¾Éà«É lÉÉà ~ÉiÉ ©ÉÉ±É{ÉÒ LÉùÒqÒ ~Éù{ÉÒ ´ÉàùÉ¶ÉÉLÉ ©É³à ~ÉiÉ.. {ÉÉ. NÉÖWùÉlÉ ¾É<HÉà÷Ç{ÉÉà SÉÚHÉqÉà...

8. ÊWÅqNÉÒ - +àH HàÊ±ÉeÉà»HÉà~É Shri Sunil Sagar 259. Introspection Shri Nirav P. Shah 28

10. swËe swËe yËk÷íkkuLkk yøkíÞLkk [qfkËk Shri J. S. Amin 30 Shri Madhukar J. Amin11. Gist of Judgments-March,14 Shri Lalit M. Leuva 3512. Gist of The Judgments Shri G.D. Jain 48

13. Tribunal Judgments Shri N. N. Patel-Shri Ashok J. Patel 5014. Important High Court Judgement 55

15. X¾àù ~ÉÊù~ÉmÉ 5716. Association News 59

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SALES TAX JOURNAL - 53 April - 2014

“Having a positive mental attitudeis asking how something can be donerather than saying it can’t be done.”

7. Price of single copy of Sales Tax Journal for each month is Rs. 125/-

Annual Subscription is Rs. 1200/-

Total pages of this issue is from 1 to 64 including title.

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EDITORIALShri N. N. Patel - Shri P. K. Soni

EDITORIAL

ELECTION 2014, DO CAST YOUR VOTE FOR NATION

This year the Parliament 2014 Election is going to be a historical event, because India is the biggest democratic country over the world. From the announcement of date of Election, the Government Machinery of Election Commission is working hard to see that proper election is held at all states and the controversy of any kind can be avoided. However, it is experienced and known from News paper that election commission has received number of complaints about the attitude of many candidates or their supporters. Fate of outcome of such complaints is not known to the public.

After independence, during first election, there were two main party namely Congress party and Swatantra party, whereas in this election there are various parties contesting in the Parliament Election and hence there is a keen competition. As can be seen from the list of the members contesting this election, it can be very well found that the political carrier is now becoming business or profession instead of dedicated services to the society. If we look back to the days of independence, the political leaders were rendering their selfless services to the society with full devotion and dedication. Whereas in this election there are candidates in whose name numbers of criminal and other cases are pending in the respective court. Under such circumstances, the role of the voters is more important, because the voters have to cast their vote not keeping in mind the name of the party but they have to cast their vote to the right candidate who is going to render his service to the society. As per news report, the first, second and third phase voting figures are much encouraging, because the voting ratio in comparison to the earlier parliament election is at higher side in most of the state.

The voting in the state of Gujarat is going to take place on 30th April. The role of Advocates remains always in lime light from the days of independence. Rashtrapita Mahatma Gandhi, Sardar Vallabhbhai Patel, Motilal Nehru and many others national

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leaders were Advocates and they have not only fought for independence of India but they have also ruled as devoted and dedicated political leader after India became independent. Majority of Historical movements are leaded by the advocates.

There are numbers of new voters going to cast their votes for the first time in this Parliament election 2014. Earlier the young generation was not participating in election by casting their valuable votes, but by this Election 2014, the trend has been changed and it is found from young generation that they are eager to cast their vote.

Every party has announced their own manifesto and promise to the public for the work to be done by them if their party is elected. Even during election campaign and rallies of the political parties in their constituency, they also try to convince the public that particular type of work will be executed and promise are announced. However, it is experience of the public at large that as soon as the election is over and member is elected, thereafter for five years on very rare occasion the elected members goes in their constituency and they also forget their promise given at the time of election.

At this stage it is expected that the voters should cast their vote independently in favor of the candidate who has high integrity towards the nation and who is really keen to render its social services to the society.

We being a tax professional expect that the long-back pending implementation of GST may become possible after the new Government is formed in the Centre. A tax payer is paying income tax when he is earning in his young age. But, after he retires from his profession or business, there is not any scheme to safe guard his old age by providing any pension scheme as like the pension scheme of the employee of the Government, Bank, LIC have, after their retirement from the respective services.

Ultimately it is expected that if the right candidates are elected who may work in the interest of nation participate properly in the Loksabha on any point placed for discussion in the parliament. And to elect such right candidate is within the voting rights of the voters.

Vote for India, Vote for nation, vote for right candidate

Jai Hind - Jai Gujarat

EDITORIAL

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SHRI DEVKARAN L. VAGHASIA [email protected]

President’ s Desk

President’s Desk

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Scope of Tax Planning in Works Contract in view of Supreme Court Judgment in the case of

Larsen & Toubro Ltd. v/s. State of Karnataka (2013) 65 VST 1 (SC)

An epoch making judgment of the Supreme Court in relation to works contract in the case of Larsen & Toubro Ltd. has created lot of flutter and given anxious moments to contractors engaged in building contracts.

The tax in respect of works contract came into existence by Constitutional Amendment bringing in Article 366(29A)(b) enabling the States to levy Sales Tax on works contract in respect of goods which have gone in the construction of a building, factory etc. by the contractor. The taxability of works contract was earlier negatived by the Supreme Court by the well known decision in the case of Gannon Dunkerley & Co. reported in 9 STC 353(SC). The decision in L & T case has substantially expanded the concept on works contract including building contracts where at the final stage the building is transferred to the flat purchaser. As the decision has been fully discussed and analysed in many forums, it is not proposed to reproduce the summary of the decision at 65 VST 1 at page 45.

On the limited aspect of scope or tax planning in relation to building contract the following conclusions arrived are very relevant :

(1) For tax purposes the value of the goods at the time of incorporation in the construction is to be taken and not the value at the time of purchase of goods by the contractor.

(2) Further, value addition made for the goods will only be after an agreement is entered into with flat purchaser. Only that addition will be taxable. It therefore seems that before agreement with the flat purchaser is entered into all goods incorporated in the construction will not be taxable. It is as if the developer who is the owner of the structure has incorporated goods in the construction till agreement is entered into with the flat purchaser. The summary of conclusions arrived at by the Supreme Court is that 65 VST 1 at page 45.

K.H Kaji, Advocate [email protected]

Scope of Tax Planning in Works Contract


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In the light of the above conclusion it is necessary to examine and realize the concept of duality of the ownership of land and building. Contrary to English common law, under Indian law, owner of land and the owner of building may be different persons. Thus in the case of building contracts land is owned the owner, building by the developer. The land is given to the developer under an agreement with the developer by the owner permitting him to construct the building and to sell the flats to various purchasers along with unspecified portion of the land on which the building is constructed. Thus the owner of land does not sell the flat or the office because the same does not belong to him while the developer only sells the flat and not the land which belongs to the owner of the land. Therefore, in the final tripartite transaction the owner as well as the developer sell the flat to the flat purchaser along with unascertained portion of the land as stated above.

In this connection the Larsen & Toubro judgment confirms & the approves the conclusion arrived at by the earlier judgment of the Supreme Court in the case of K. Raheja Development Corpn v/s. State of Karnataka (2005) 141 STC 298(SC) at P. 308 where it is observed as follows :-

“It must be clarified that if the agreement is entered into after the flat or unit is already constructed then there would be no works contract. But, so long as the agreement is entered into before the construction is complete it would be works contract.”

At P. 51 of L & T judgement in 65 VST 1, it is stated as follows :-

“It may, however, be clarified that activity of construction undertaken by the developer would be works contract only from the stage the developer enters into a contract with the flat purchaser. The value addition made to the goods transferred after the agreement is entered into with the flat purchaser can only be made chargeable to tax by the State Government.

- - - - - - - - - - -

- - - - - - - - - - -

If at the time of construction and until the construction was completed, there was no contract for construction of the building with the flat purchaser, the goods used in the construction cannot be deemed to have been sold by the builder since at that time there is no purchaser. That the building is intended for sale ultimately after construction does not make any difference”.

It is therefore clear that all goods and material used in the construction of the


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building will not be taxable as works contract before the agreement is entered into by the developer with the flat purchaser. Till then the developer is using his material for construction of the building which belongs to him. It is only when the flat purchaser comes on the scene by entering into the agreement with the developer that any goods and material which have gone in the construction will become subject matter of taxation as a works contract.

As a result of the above statement of the law contained in the Larsen & Toubro judgment as well as Raheja judgment, the scope of planning to avoid VAT liability on works contract would be to complete as much construction as possible before entering into agreement with the flat purchasers. The developer can borrow moneys from financial institution or other parties but may not take advance payments from the flat purchaser before entering in to an agreement with him for sale of flat.

It is therefore submitted that in view of the pronouncement of the Supreme Court, the goods which have gone in the construction of the building prior to entering into agreement with the flat purchaser are not subject to VAT on basis of works contract because the developer is constructing the building of which he is the owner. The scope of this article is only limited to this particular aspect upto what stage cost of material and goods gone in the construction of the building would not be subject to tax as works contract.

It may be that the above view may not appear feasible to some and not possible to implement to others. However in these days of multiple taxes any escape route is welcome.

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Abhay Desai - [email protected]

FREE SUPPLY IN CONSTRUCTION CONTRACTS

3-DLao Tzu said “The key to growth is the introduction of higher dimensions of

consciousness into our awareness”. Thinking about an issue only from one-dimension may result in faulty action. This is also true for indirect taxes. One has to think from all points of view to get the best answer. This column attempts to discuss various issues pertaining to indirect taxes from all the three dimensions i.e. Central Excise, Service Tax & VAT.FREE SUPPLY IN CONSTRUCTION CONTRACTS

Many times contratee agrees to supply certain goods (steel and cement for instance) free of cost to the contractor during the execution of construction contract. This may be because contractee wants to ensure that proper quality of materials are used in construction or contractee wants to keep complete physical control on the goods or contractee can extract favourable terms from the supplier if it is directly purchased. This free supply poses valuation problems under indirect taxes. SERVICE TAX

Under construction service, service provider has two options to discharge the tax liability. Either he can pay the service tax on the actual value of service or in case if he is unable to ascertain actual value of service, he can pay under composition scheme on total value. In case where service provider discharges liability on actual value of service there is no question of including value of free supply of materials as value of material is not subjected to service tax (it may be subjected to VAT (refer next article on VAT implications)). If service provider is not able to ascertain actual value of service he can discharge service tax under composition scheme on total value by claiming abetment/exemption. Question here is whether value of free supply has to be added to total value? BEFORE NEGATIVE LIST BASED REGIME

Sec. 67 of Finance Act, 1994 provides mechanism for valuation of taxable service. Relevant provisions of Sec. 67(1)(i) & (ii) are reproduced for ready reference:

SECTION 67 Valuation of taxable services for charging service tax — (1) Subject to the provisions of this Chapter, where service tax is chargeable on any taxable service with reference to its value, then such value shall, —

(i)in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him;

Free Supply in Construction Contracts

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(ii)in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the addition of service tax charged, is equivalent to the consideration;

Explanation. — For the purposes of this section, —(a)“consideration” includes any amount that is payable for the taxable services

provided or to be providedThus Sec. 67(1)(i) will apply when consideration is in money and Sec. 67(1)

(ii) will apply when consideration also includes anything in kind. Can free supply be considered as consideration in kind and thus included in total value?

Hon. Supreme Court in case of Ku. Sonia Bhatia v. State of UP and others – (AIR 1981 SC 1274) held that consideration means a reasonable equivalent for other valuable benefit passed on by the promisor to the promise. Free supply cannot be considered as a consideration to the service provider as no part of the goods accrues to or is retained by the service provider. Service provider enjoys no benefit out of it. Hence free supply cannot be considered as a “consideration”. In such case value will be calculated as per Sec. 67(1)(i) wherein only money to be received will be considered in total value and not u/s 67(1)(ii). Hon. Delhi High Court in case of Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India [2013 – (29) STR 9] struck down Rule 5 of Service Tax (Determination of value) Rules, 2006 which purports to levy service tax on reimbursement amount as unconstitutional as what can be subjected to service tax u/s 66 & 67 is value for providing the service (quid pro quo) and not reimbursement. On this ground as well, value of free supply should not be included as it is not the consideration for providing the service.

Initially notification no. 15/2004 provided for exemption of service tax in case of construction services which is in excess of thirty-three percent of gross amount charged. This notification was replaced by notification no. 1/2006 which provided for abetment of 67% of gross amount charged. An explanation was added to both the notifications which defined gross amount charged. It is reproduced for ready reference:

Explanation - For the purposes of this notification, the “gross amount charged” shall include the value of goods and materials supplied or provided or used by the provider of the construction service for providing such service.’

As seen from above definition there is a conflict between the term “gross amount charged” appearing in Sec. 67(1)(i) and the Explanation. Explanation purports to add value of goods and materials supplied or provided or used by the provider to gross amount charged.

Larger bench of Hon. Delhi Tribunal in case of Bhayana Builders (P) Ltd. v. Commissioner of Service Tax, Delhi [2013 (32) S.T.R. 49 (Tri. - LB)] held that value of free supply will not be included in gross amount charged under the said explanation. Reasoning of Hon. Delhi Tribunal is as under:

1) In case of ambiguity aid of noscitur principle of interpretation can be taken. Said principle posits that a statutory term is recognized by its associated words i.e. in an associated context, whereby the word or phrase is not construed as if stood alone but


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in the light of its surroundings. Hon. CESTAT relied on number of judgments approving the application of noscitur principle.

2) Words “gross amount charged” appears in the preamble/explanation of the notification no. 15/2004 has to be read along with the same words appearing in Sec. 67(1)(i). Words “used by the provider” appearing in the explanation will take colour from words “gross amount charged”. As per discussion in above paragraphs, value of free supply cannot be considered as a consideration u/s 67 and hence will not form part of gross amount charged even under the explanation.

AFTER NEGATIVE LIST BASED REGIMEPost 01/07/2012 service tax law is based on negative list. Sec. 67 as cited above

which deals with valuation of service remains the same under the negative list regime. Hence even under present scenario, value of free supply cannot be considered as a “consideration” and thus will not form part of total value.

Rule 2A of Service Tax (Determination of value) Rules, 2006 provides mechanism for determination of value of service portion in execution of works contract. Rule 2A(i) provides for determining actual value of service by deducting value of goods involved in execution of works contract. Value of free supply will not form part of it as it excludes value of goods. Under this option service tax is to be paid on actual service charge. If the service provider is not able to ascertain actual service charge, composition scheme provided under Rule 2A(ii) will apply. Said sub-rule is reproduced for ready reference:

RULE 2A(ii)Where the value has not been determined under clause (i), the person liable to pay tax on the service portion involved in the execution of the works contract shall determine the service tax payable in the following manner, namely :-

(A)in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent of the total amount charged for the works contract;

(B)in case of works contract entered into for maintenance or repair or reconditioning or restoration or servicing of any goods, service tax shall be payable on seventy per cent of the total amount charged for the works contract;

(C)in case of other works contracts, not covered under sub-clauses (A) and (B), including maintenance, repair, completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings of an immovable property, service tax shall be payable on sixty per cent of the total amount charged for the works contract;

Explanation 1 to said Rule defines total amount as under:(b) “total amount” means the sum total of the gross amount charged for the

works contract and the fair market value of all goods and services supplied in or in relation to the execution of the works contract, whether or not supplied under the same contract or any other contract, after deducting-

(i) the amount charged for such goods or services, if any; and (ii) the value added tax or sales tax, if any, levied thereon :


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Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

Whether value of free supply can be construed as “goods supplied in or in relation to the execution of works contract” and thus will form part of total value as per above explanation? According to our view free supply should not form part of total value due to following reasons:

1) Sec. 67 of Finance Act, 1994 provides that service tax shall be charged with reference to its value and value shall be gross amount charged if entire consideration is in money. Larger Bench of Hon. Delhi Tribunal (supra) held that gross amount charged will not include value of free supply. Even assuming that Rule 2A(ii) provides for inclusion of value of free supply, Rules cannot override the Act. Legislators should have amended Sec. 67 along with introduction of Rule 2A(ii) to make it effective. Rule which overrides the Act cannot be followed.

2) Rule 2A(i) provides for determination of value of service portion in the execution of works contract by allowing the deduction of actual value of goods on which VAT is paid from gross amount charged. As discussed in above judgment of Larger Bench gross amount charged will not include value of free supply as it is not a “consideration”. Rule 2A(ii) starts with words “where the value has not been determined under clause (i)” value shall be determined under composition scheme mentioned therein. One will take recourse to composition scheme only if one is not able to segregate gross amount charged into value of service and value of goods. In this case logically one will pay tax on gross amount charged (without claiming any deduction of actual value of goods) less deemed value of goods (e.g. 60% in case of original works). If value of free supply is not included in Rule 2A(i), how can it be included in Rule 2A(ii).

3) Explanation 1 stated above provides for addition of fair market value of all goods and services less the amount charged for said goods and services. If the service receiver has charged for goods supplied by him it will form part of gross amount charged as service provider will include the value of same in his consideration. In such situation there was no need to add fair market value of said goods again to gross amount charged. Only interpretation possible is that in cases where amount charged for goods supplied by service receiver is less than fair market value, the difference has to be added to gross amount charged. This is to plug the loophole where service receiver used to under-value the goods supplied by him to lower the total amount. This will not apply to free supply as service receiver does not charge anything to service provider. Total amount will only be gross amount charged and that will not include value of free supply.

CONCLUSIONTo conclude, value of free supply will not form part of total value under old as well

as new negative list based regime.Aspects of free supply pertaining to VAT and EXCISE will be discussed in next

article.


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Uchit N. Sheth - Advocate - [email protected]

FRATERNAL TWINS – CENTRAL INDIRECT TAXES AND

VAT

Fraternal twins are siblings who are not completely identical but nonetheless they are twins. Similarly, while Central Excise, Customs, Service Tax and Value Added Tax may have their own peculiarities, they are species of the same genus. Therefore the law decided in the context of one is likely to be relevant even in the context of another. The objective of this column is to highlight decisions rendered in the context of Central Indirect Taxes which are relevant to the provisions of the Gujarat Value Added Tax Act, 2003.

Balrampur Chini Mills Ltd. v/s Union of India (2014) 300 E.L.T. 372 (All.)Issue in question

The assessee in this case was engaged in the manufacture of sugar. ‘Bagasse’ emerged during the course of the manufacturing process of sugar. Bagasse was chargeable at ‘Nil’ rate of duty under the Central Excise Tariff Act, 1985. Rule 6 of the Cenvat Credit Rules, 2004 (herein after referred to as “the Cenvat Credit Rules”) requires reversal of cenvat credit if the inputs are used in the manufacture of exempted goods. The question was that since bagasse was an exempted product whether pro-rata reversal of cenvat credit availed on inputs used in the manufacturing process was required to be made under Rule 6 of the Cenvat Credit Rules.

Statutory provision involved

Rule 6(2) of the Cenvat Credit Rules:

Where a manufacturer of provider of output service avails of Cenvat credit in respect of any inputs or input services, and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take Cenvat credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable.

Section 2(d) of the Central Excise Act, 1944

“excisable goods” means goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includes salt;

Fraternal Twins – Central Indirect Taxes And Vat

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Explanation- For the purposes of this clause, “goods” includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable.

Assessee’s contention- The assessee’s contention was that it was involved in the manufacture of sugar and not

bagasse. Bagasse only emerged as waste during the manufacturing process. Bagasse was held to be waste and not manufactured product by Hon. Supreme Court in the assessee’s own case in Civil Appeal No. 2791 of 2005 decided on 21.7.2010. Hence no input was used by it in the manufacture of bagasse and therefore no pro-rata reversal of Cenvat credit was required to be made under Rule 6(2) of the Cenvat Credit Rules.

- Chief Commissioner of Central Excise’s circular dated 3.10.2009 and CBEC circular dated 28.10.2009 wherein it was stated that the decision of Hon. Supreme Court was nullified with the insertion of Explanation to Section 2(d) of the Central Excise Act, 1944 w.e.f 10.5.2008 were bad in law. Explanation to Section 2(d) of the Central Excise Act, 1944 did not make bagasse a manufactured product.

Revenue’s contention- Per contra the revenue’s contention was that the assessee was engaged in the

manufacture of both sugar as well as bagasse. Since bagasse was admittedly an exempted product, pro-rata reversal of Cenvat credit relating to inputs used by the assessee in the manufacturing process was required to be made under Rule 6(2) of the Cenvat Credit Rules.

- Reliance was placed on the Commissioner’s circular dated 3.10.2009 and CBEC circular dated 3.10.2009 wherein it was clarified that with the insertion of Explanation to Section 2(d) in the Central Excise Act, 1944, ‘Bagasse’ was exempted excisable goods and therefore pro-rata reversal of Cenvat credit as stipulated in Rule 6 of the Cenvat Credit Rules.

Hon. Allahabad High Court’s viewHon. Allahabad High Court held that it was already settled by Hon. Supreme Court in

the assessee’s own case as well as in earlier decisions that bagasse was an agricultural waste and not a manufactured product. Bagasse only emerged during the course of manufacturing process. Therefore Rule 6 of the Cenvat Credit Rules was not applicable and no pro-rata reversal of Cenvat credit was required to be made relating to inputs used by the assessee in the manufacturing process.

In so far as the newly inserted Explanation to Section 2(d) of the Central Excise Act, 1944 was concerned, it only provided that “goods” would include any article, material or substance which was capable of being bought and sold for a consideration and such goods would be deemed to be marketable. Hon. Court observed that there was never a dispute about the marketability of bagasse even prior to the amendment. Bagasse was always being bought and sold for consideration. The question was whether bagasse was a manufactured product or not. Hon. Allahabad High Court held that the newly inserted Explanation to Section 2(d) of the Central Excise Act does not mean that Bagasse ceases to


18


be an agricultural waste as held by Hon. Supreme Court. Therefore Commissioner’s circular dated 3.10.2009 and CBEC circular dated 28.10.2009 wherein it was stated that decision of Hon. Supreme Court would be nullified with the insertion of the Explanation and that pro-rata reversal of input tax credit would be required to be made under Rule 6 of the Cenvat Credit Rules were quashed and set aside.

Similar decision of Hon. Gujarat High CourtSimilar decision was earlier rendered by Hon. Gujarat High Court in the case of

Commissioner of Central Excise v/s Sterling Gelatin (2011) 270 ELT 200 (Guj.). In this case hydrochloric acid was used in the manufacture of gelatin. Mother liquor emerged during the manufacturing process which was further used in the manufacture of di-calcium phosphate which was exempted from excise duty. Hon. Gujarat High Court held that the entire quantity of inputs was used for manufacturing gelatin. Mother liquor merely emerged during the process. Therefore hydrochloric acid could not be said to have been used in the manufacture of mother liquor or di-calcium phosphate and hence no reversal of Cenvat credit would be required under Rule 6 of the Cenvat Credit Rules. Hon. High Court relied upon the decision of Hon. Supreme Court in the case of Commissioner of Central Excise v/s National Organic Chemical Industries Ltd. (2008) 232 ELT 193 (SC) wherein it was held that when ethane and methane emerged during the process of manufacturing ethylene and propylene, identical quantity of the same inputs were used simultaneously in the manufacture of ethylene-propylene as well as ethane and methane.

Applicability of the decisions in the context of GVatSection 11(1) of the Gujarat Value Added Tax Act, 2003 (herein after referred to as

“the Vat Act”) entitles a purchasing dealer to claim input tax credit of tax paid to registered selling dealer subject to the fulfillment of conditions specified in sub-Sections (2) to (12) of Section 11 of the Vat Act. Section 11(3)(a) of the Vat Act provides that input tax credit will be admissible only if the goods are intended to be sold or used in any of the ways prescribed in the 7 clauses of that sub-section. Clause (vi) of Section 11(3)(a) of the Vat Act allows a dealer to avail input tax credit if the goods are used as raw materials in the manufacture of “taxable goods”. Proviso to Section 11(3)(a) provides that if the goods are partially for the specified purposes then input tax credit will be admissible on proportionate basis. Section 11(5)(h) of the Vat Act debars availment of input tax credit if goods are used in the manufacture of exempted goods. Section 11(8)(a) of the Vat Act requires reversal of input tax credit if the goods are actually used for any other purpose than what is statutorily allowed. Thus, even under the Vat Act, input tax credit will be required to be reversed if the goods are used as raw materials in the manufacture of exempted goods.

Therefore the question to be determined even under the Vat Act would be whether goods can be said to have been used in the manufacture of exempted goods, if a process results in simultaneous manufacture of taxable as well as exempted goods. If the ratio of the decision of Hon. Allahabad High Court in the case of Balrampur Chini Mills Ltd. (supra) as also the decision of Hon. Gujarat High Court in the case of Sterling Gelatin (supra) is applied, then it is quiet clear that if a dealer is engaged in the manufacture of taxable goods and if exempted goods simultaneously emerge in the process, then in such case it cannot


19


be said that raw materials were used in the manufacture of exempted goods and therefore no reduction of input tax credit will be required under Section 11(5)(h) or Section 11(8)(a) of the Vat Act.

Decision of Hon. Tribunal in this contextSuch proposition has been accepted by Hon. Gujarat Value Added Tax Tribunal in the

case of Jayant Agro Organics Ltd. v/s State of Gujarat S.A. No. 804 of 2010 decided on 12.7.2012. In this case the dealer was using castor seeds in the manufacture of castor oil. De-oiled cake emerged during the manufacturing process which was exempted from tax under the Vat Act. Hon. Tribunal inter alia held that it could not be said that castor seeds were used in the manufacture of de-oiled cake and therefore no reduction of input tax credit was required under Section 11 of the Vat Act.

Earlier Decisions of Hon. Tribunal under the GST ActSuch view was also earlier endorsed in a series of decisions by Hon. Tribunal in the

context of the Gujarat Sales Tax Act, 1969. The first of such decisions was rendered in the case of M/s Tetra Bone Mills v/s State of Gujarat 1969 GSTB 148. In this case the dealer was engaged in the manufacture of crushed bones out of raw bones. Bone mill emerged during the manufacturing process which was tax free goods. Rule 41(1)(d) of the Bombay Sales Tax Rules, 1959 provided that set-off would be admissible if the goods were meant for “use in the manufacture of taxable goods”. Hon. Tribunal held that the manufacture could not be said to be of waste materials such as bone mill and therefore set-off will not be required to be reversed.

Similar controversy resolved by issuing notification for remissionA similar controversy had arisen under the Vat Act for isabgol manufacturers.

‘Gola’ emerged during the process of manufacture of isabgol which was exempt from tax. The question was whether the dealers would be required to proportionately reduce input tax credit to the extent ‘Gola’ was manufactured during the process. As per the aforesaid decisions, no input tax credit reversal would have been required on simultaneous manufacture of taxable isabgol and exempted gola. However since the quantum of gola which emerges in the process is high, dispute was raised by the Commercial tax department for proportionate reversal of input tax credit. In order to resolve the issue, the State Government issued Notification No. (GHN-31) Vat 2011 S.41(1)(14)-TH dated 8.9.2011 whereby remission was granted under Section 41 of the Vat Act inter-alia for “amount of tax that becomes payable due to non admissibility of tax credit under clause (h) of sub-section (5) of section11 on account of manufacture of the said goods namely ‘gola’”.

ConclusionThus if the entire quantity of raw material is used for manufacture of taxable goods and

if an exempted by-product/waste product simultaneously emerges during the process, then dealer is not required to proportionately reverse input tax credit of tax paid on purchase of raw materials under Section 11(5)(h) or Section 11(8)(a) of the Vat Act. However if the quantum of the exempted by-product is high, then the dealer may be dragged into litigation on the issue.


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Kuntal Parikh, [email protected]

RECENT DECISIONS OFTHE GUJARAT HIGH COURT ONGUJARAT VAT LAWS

Many important recent decisions, not widely circulated as yet, but which may be helpful to the trade and legal communities are discussed in this article.

IN ABSENCE OF ASSESSMENT ORDER, RECOVERY UNDER SECTION 44 OF THE GVAT ACT IS NOT PERMISSIBEL.

[1] Tax Appeal No. 560 OF 2013The State of Gujarat Versus Welspun Gujarat Stahl Rohren Ltd.

(Date of Order 04.04.2014)

The respondent company was entitled to purchase the goods from the registered dealer at a concessional rate of tax, and could opt either for sales tax exemption or sales tax deferment incentives on the sale of goods. The respondent company had claimed the refund of input tax credit to the extent of Rs. 6,35,42,000/- against the export of goods, and therefore, the Commercial Tax authorities had serious doubt about said claim of refund of input tax credit related to exported goods.

In pursuance thereof, a notice dated 25.05.2009 came to be issued upon the respondent company under section 44 of the Gujarat Vat Act and called upon it to pay Rs. 6,35,42,000/- within three days. Under compulsion, the said amount had to be deposited by the respondent company before it pursue the matter before the appropriate higher forum.

The case of the assessee was that it was exporting the goods out of India, and therefore, input tax credit availed on purchase of raw-materials used in manufacturing of exported goods should not be adjusted toward value added tax incentive scheme. But, the stand of department that export benefits had to be adjusted against the VAT exemption limit upheld by the Commissioner while passing the order dated 13.11.2009. The Tribunal set aside the orders of lower authorities and allowed the appeal of the respondent company.

Against the order of the Tribunal, Department filed a Tax Appeal before the Hon’ble Gujarat High Court. The Hon’ble High Court held that section 44 of

Recent Decisions of The Gujarat High Court onGujarat Vat Laws

21


the Gujarat Vat Act is only a mode of recovery and not the power of authority to pass any order deciding the liability of an assessee for payment of tax or any other monies due to the Government under the VAT Act. Recovery, therefore, necessarily shall have to be provided by order as may be passed by the competent authority in terms of provisions of VAT Act. Only once the demand is quantified the question of recovering either through the special mode as provided in section 44 or through any other mode under the Act would arise. In the present case admittedly no order of assessment or any other order of quantification of the assessee’s liability was passed, straightway ordering recovery without any opportunity of hearing to the assessee was wholly not permissible.

Thus, the Hon’ble Gujarat High Court has confirmed the decision of the Tribunal of quashing the notice of recovery issued under section 44 of the Gujarat Vat Act because tax was collected from the assessee without passing any order by competent authority.

[2] Special Civil Application No. 959 OF 2014Atul Motors Pvt. Ltd. Versus The State of Gujarat


The facts of this petition are not really uncommon for the professionals in day to day practice because in this case during the search, on the spot, three cheques were recovered from the petitioner under duress without passing any order.

The contention of the petitioner was that in absence of any quantified demand, the respondents could not have recovered the amount from the petitioner. It was also submitted that neither adjudication had taken place nor assessment order has been passed, and therefore, no action of recovery of tax would have been initiated. Further, during the course of hearing, the petitioner has expressed their readiness and willingness to participate in adjudication proceedings.

The Hon’ble High Court accepted the contention of the petitioner and held that there could be no recovery of tax dues unless and until the tax demand is crystalized. In absence of any assessment, the respondent cannot recover taxes. Moreover, the respondents were directed to return three cheques to the petitioner.

My observation in nutshell:

Unless the demand is quantified, the question of recovering tax through any mode does not arise, particularly when no order has been passed by the competent authority by following the principles of natural justice.


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APPEAL CANNOT BE DECIDED ON MERITS UNLESS IMPUGNED ORDER IS PASSED ON MERITS

[3] Tax Appeal No. 688 of 2013Anil Kumar Versus The State of Gujarat


In this case the adjudicating authority passed an order confirming the tax demand along with interest and penalty. This order was challenged by the appellant before the Commissioner (Appeals) and prayed, through application, for waiver of pre-deposit pending such appeal. The Appellate Commissioner, on such application, passed an order to pre-deposit 25% of the duty and penalty by way of pre-deposit, subject to which there would be stay against the remaining unpaid amount of duty, interest and penalty. The appellant’s appeal was dismissed vide order dated 31.03.2011 since condition of pre-deposit within the time permitted was not fulfilled. This order of the Appellate Commissioner was challenged before the Tribunal, and finally decided on merits by order dated 29.04.2013.

The order of the Tribunal dated 29.04.2013, was challenged before the Gujarat High Court. During the hearing of the Tax Appeal, it was noticed by the High Court that the Tribunal had examined appellant’s grievance on merits of the assessment order, and appeal against such assessment order has been dismissed by the Appellate Commissioner on the ground of non-compliance of the condition of pre-deposit. Under the said facts and circumstances of the case, the Hon’ble High Court has held as under:

“3. The order of assessment was passed by the adjudicating authority, which was appellable by way of first appeal before the Appellate Commissioner. Section 73(4) of the Gujarat Value Added Tax Act, 2003, requires that no appeal against the order of assessment shall ordinarily be entertained by the Appellate Commissioner, unless such appeal is accompanied by proof of payment of tax in respect of which the appeal may has been preferred. Proviso to section 73(4), however, provides that the appellate authority may, if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order (a) without payment of tax, interest, if any as the case may be, of the penalty, or (b) on proof of payment of such small sum as it may consider necessary or (c) on the appellant furnishing in the prescribed manner security or such as the appellate authority may direct.

4. In view of section 73(4) of the Act, therefore, such appeal could not have been entertained unless in terms of proviso, the appellate authority for reasons recorded in writing relaxed the requirement of full pre-deposit. In


23


the present case, the Appellate Commissioner exercised such powers and required the appellate to deposit 25% of the amount confirmed by adjudicating authority. When the appellant failed to fulfil such requirement, his appeal came to be dismissed. It was against this order that the appellant had preferred appeal before the Tribunal. The scope of the appeal before the Tribuanl, therefore, had to be limited to the question of finding out whether the order passed by the Commissioner insisting on the appellant depositing certain amount by way of pre-deposit was valid or not and resultantly, his decision to reject such an appeal for non-compliance with such requirement was correct or not.

5. Unless and until the answers were given to such questions, the appellant’s first appeal before the appellant authority was simply not maintainable and could not have been entertained. If that be so, the Tribunal could not have entered into merits and in the appeal before itself and given and judgment on the validity of the order of assessment. … If the Tribunal was of the opinion that the condition imposed by the Appellate Commissioner was too onerous to be fulfilled by the appellant and the facts of the case warranted interference, the Tribunal could as well have done it. In such a scenario, the Tribunal ought to have placed back to the Appellate Commissioner, on such condition that the Tribunal thought fit to impose on the appellant.”

Thus, the Hon’ble High Court has held that unless the condition of pre-deposit is being satisfied, or modified by the higher forum & complied accordingly; an appeal on merits to the higher forum against the conditional order is not maintainable or cannot be entertained by the higher forum.

My observation in nutshell:It can be said that the higher forum can decide/entertain the matter on

merits, if the impugned order has been decided or passed on merits by the lower authority. The higher forum cannot determine the appeal on merits, unless the condition of pre-deposit is satisfied by the assessee. MERELY ISSUANCE OF NOTICE IN FORM-309 IS NOT SUFFICIENT, PROPOSAL FOR IMPOSITION OF PENALTY UNDER PARTICULAR PROVISIONS IS NECESSARY

[4] Tax Appeal No. 638 of 2013Abdul Karimhaji Umarbhai Rasulbhai Versus The State of Gujarat


In this case the statutory notice in Form 309 was issued by the Commercial Tax Authorities to the appellant and called upon him to show cause as to why the


24


penalty should not be imposed under section 34(7) and under section 12(7) of the Gujarat Value Added Tax Act. Ultimately, the lower authorities levied the penalty under section 34(12) of the Gujarat Vat Act and confirmed by the Appellate Commissioner and Tribunal.

Therefore, the question before the Gujarat High Court was that whether on the facts and in the circumstances of the case, the lower authorities were right in law in confirming the penalty levied under section 34(12) of the Act though proposal to impose penalty under the said section in the statutory form no. 309 was never made.

As said above, the notice in Form 309 was served on the assessee undisputedly, but proposal therein was not made to levy penalty under section 34(12) of the Gujarat Vat Act. By issuing Form 309, the assessee was called upon to show cause as to why penalty under section 34(7) and 12(7) of the Gujarat Vat Act should not be imposed, but in the assessment order penalty was confirmed under section 34(12).

The Gujarat High Court has allowed the appeal of the appellant and held that before imposing the penalty under section 34(12) of the Gujarat Vat Act neither any statutory notice has been served upon the appellant nor the appellant has been called upon to show casue as to why the penalty under section 34(12) of the Act may not be levied/imposed. Under the circumstances, the order passed by the Adjudicating Authority, partly confirmed by the First Appellate Authority and confirmed by the Appellate Tribunal imposing penalty under section 34(12) of the Act could not be sustained and the same deserve to be quashed and set aside as the same is in breach of principle of natural justice.

My observation in nutshell:

From the above decision it can be concluded that merely issuance of Notice in Form 309 under Rule 46 of the Gujarat Vat Rules is not sufficient. The assessing authority has to call upon the assessee to show cause as to why penalty under particular section is not to be imposed upon him, and thereafter while passing the assessment order, the assessing authority can confirm the penalty, recording the reasons in writing, under the particular section proposed in the notice, but the authority cannot impose/confirm the penalty under any other section which has never been proposed in Notice 309.


25


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27


ÊWÅqNÉÒ - +àH HàÊ±ÉeÉà»HÉà~É

Sunil Sagar - Advocate - [email protected]

A{¾à ~É¾àSÉÉ{ÉÉà... Hä»Éà ¾ä «Éà NÉÖWùÉlÉÒ ±ÉÉàNÉ ?fkuý Au yk økwshkíkeyku ? fuðk Au yk økwshkíkeyku ? Ä{o, htøk, òrík, ¼qøkku¤ yLku hkuxeLkk

MktçktÄkuLke Ãkkh Sðíkk ËwrLkÞk¼hLkk økwshkíkeykuLku þçËkuLke Mkktf¤{kt Ãkqhe heíku çkktÄe ÷uðkLkwt þõÞ Au? nhøkeÍ Lkrn... Úkkuzku½ýku Ãkrh[Þ, íkkøk {u¤ðe þfkÞ Ãký ‘MktÃkqýo økwshkíkeíkk’ Lku yku¤¾ðe yu Ëw»fh, Ëwøko{, frXLk Au, y½hwt Au.

á~Þ : 1 {nkLk ði¿kkrLkf ykÕçkxo ykELxMxkELkLke nðkE MkVh{kt yuf økwshkíkeLke Mkex yu{Lke çkksw{kt níke. xkE{ÃkkMk fhðkLkk WËTuþÚke rþþwMkns Mð¼kððk¤k {nkLk ði¿kkrLkfu økwshkíke çktÄw Mk{ûk Ëh¾kMík {qfe. “[k÷ku, Lkku÷us økuE{ h{eyu. nwt ík{Lku yuf «&™ ÃkqAeþ. òu ík{u Mkk[ku sðkçk Lkrn ykÃkku íkku ík{khu {Lku Ãkkt[ zkì÷h ykÃkðk Ãkzþu yLku nwt ík{khk Mkðk÷Lkku Mkk[ku W¥kh Lk ykÃke þfwt íkku nwt ík{Lku Ãkkt[Mkku zkì÷h ykÃkeþ. çkku÷ku {tòqh Au ?”

økwshkíke økýÃkík÷k÷ Úkkuzef ûký {qtÍkÞk. yuf LkkLkfzwt ÂM{ík yu{Lkk [nuhk Ãkh [{fe økÞwt. çkkuÕÞk, “{tsqh Au, Mkh.”

ykELxMxkELk, “Ãk]ÚðeÚke [tÿLkwt ytíkh fux÷wt ?” økýÃkík÷k÷ MíkçÄ. yk¾e ®sËøke rLkVxe, ELzuûk, MkuLkMkuûk{kt rðíkkðu÷e, yu rMkðkÞ çkeswt ftE ykðzu Lkrn. íkwhík s Ãkkfex{ktÚke Ãkkt[ zkì÷h ykÃke ËeÄk. nðu ðkhku økýÃkík÷k÷Lkku. “Mkh, yuðwt fÞwt «kýe Au su ºký Ãkøk ðzu Ãkðoík [Zu Au, Ãký Qíkhíke ð¾íku yuLkk [kh Ãkøk ÚkE òÞ Au?”

nðu MíkçÄ ÚkðkLkku ðkhku - ykELxMxkELkLkku. r¾MMkk{ktÚke fkìBÃÞqxh fkZÞwt. økwøk÷ Mk[o{kt þkuÄ¾ku¤ fhe. Ãký rLk»V¤. M{kxo, yíÞtík çkwrØþk¤e r{ºkkuLku ÃkqAÞwt. Ãký fkuE sðkçk Lk {éÞku. ¾wþe ¾wþe Ãkkt[Mkku zku÷h økýÃkík÷k÷Lkk nkÚk{kt {qfe ËeÄk yLku ÃkqAÞwt, “{Lku ¾çkh LkÚke. nðu ík{u fnku yuðwt fÞwt «kýe Au ?” “Mkh {Lku Ãký fÞkt ¾çkh Au ?” ÷ku, ík{khk çkeò Mkðk÷Lkk çkeò Ãkkt[ zku÷h. nðu ykøk¤ h{ðwt Au fu ynª s ¾í{ fhðwt Au ?” ykELxMxkELkLkk” ËkuMík nðu {khe ®n{ík yLku fÕÃkLkkþÂõík yux÷e hne LkÚke. ÄLÞðkË. Þw ykh heÞ÷e SLkeyMk.”

økýÃkík÷k÷, “Mkh ík{u øk{u íkux÷k {nkLk nþku. Mk{økú rðï ykÃkLke ði¿kkrLkf rMkrØyku {kxu yLknË {kLk Ähkðu Au. y{khwt økwshkík íkku ykÃkLkwt rËðkLkwt Au Ãký ßÞkt ÃkiMkkLkku MktçktÄ nkuÞ. fkuEÃký økwshkíke MkkÚku Ãktøkk ÷uíkk Lkrn.”

á~Þ : h Mkkihk»xÙLkk nkEðu ÃkhLke yuf LkkLkfze nkuxu÷. Mk{Þ MkðkhLkk 8.00. yuf MkkËku MkeÄku


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{kýMk íkqxeVqxe MkkÞf÷ Ãkh ykðu Au. nkuxu÷Lke çknkh yuLke ÍktÍeçkkh yuõMk«uMk (MkkÞf÷) Ãkkfo fhu Au. xuçk÷ Ãkh yœku s{kðu Au. xkçkrhÞk çkuhhLku nwf{ fhu Au.” yuf fxªøk [k (yzÄe) ÷kð. yk¾k ËqÄLke. yufË{ fzf. íkkhk þuXLku fnu çknkh Ãkzu÷e {khe MkkÞf÷Lkwt æÞkLk hk¾u. Ãkt¾ku yufË{ VkMx fh yLku yksLkwt AkÃkwt ÷kð.”

á~Þ :3 ykýtË rsÕ÷kLkk ¼kËhý økk{Lkk sþ¼kE Ãkh y{urhfkÚke yu{Lkk ¼ºkeòLkku E-{u÷ ykÔÞku Au. “{kuíkefkfk økwshe økÞk Au. yu{Lkwt çkkuze fkìVeLk{kt {kuf÷wt Awt. fkìrVLk{kt ykurþfk Lke[u ík{khk {kxu çku SLMk {kuf÷wt Awt. LkkLkk Ãkkufux{kt nehkLke ðªxe Au. çkkuzeLkk zkçkk nkÚku hkzku ðku[ Au su Lkhuþfkfk {kxu Au. Ãkøk{kt heçkkufLkk þqÍ Au, su ÃkkÚko {kxu Au. þeík÷ yLku Mðkrík {kxu {uEf-yÃk fex Au su þxo{kt {qfu÷ Au. fkuxLkk r¾MMkk{kt ç÷ufçkuheLkku M{kxoVkuLk Au. çkeswt ftE {tøkkððwt nkuÞ íkku sÕËe fnuòu. {tswfkfe Ãký ynª MkeheyMk Au.”

WÃkhkuõík ºkýu ½xLkk{ktÚke yuf yuðku økwshkíke çknkh ykðu Au. fhfMkrhÞku - økýíkheçkks - íkfÍzÃke - íkfoçkks, ÔÞðnkhfwþ¤...

‘MkMíkwt, Lk{÷wt çkhkçkh íkku÷eLku’ yk økwshkíkeLkku SðLk{tºk Au. “ftEf ðksçke fhkuLku” yk yuLkwt SðLkMkqºk Au. fhkuzÃkrík øk]rnýe {kýuf[kuf{kt sÚÚkkçktÄ þkf¼kS ¾heËu Ãký WÃkhLkkt {Vík{kt {¤íkkt ykËw, {h[kt, fkuÚk{eh sðk Ëu yu ðkík{kt Mkknuçk fkuE {k÷ LkÚke.

[k÷ku, økwshkíkeykuLke ðMkíke økýíkhe fheyu yuðk WËTuþÚke fåALkk ¼qs{ktÚke yLktíkhkÞ ytíkkýeyu rðï¼ú{ý þY fÞwO. {æÞøkwshkík ÚkE {wtçkE ÃknkUåÞk. Mk{økú ¼khík{kt ðMkíkk økwshkíkeykuLke LkkUÄ fheLku QÃkzâk ÃkhËuþ. yhçke Mk{wÿ yku¤tøke ftÃkk÷k, {kuBçkkMkk, yçkkçkk, ÍeBçkkðu, Ërûký ykr£fk{kt ðMkíkk fhkuzku økwshkíkeykuLke LkkUÄ fhe. ÃkAe yux÷kLxef {nkMkkøkh Ãkkh fhe LÞqÞkufo, r{Þk{e, rþfkøkku, çkkuMxLk ÚkE çkeò Auzu ÷kuMk yuLsur÷Mk, MkkLk£kÂLMkfku, WÃkh{kt fuLkuzk{kt {kuLxÙey÷Lke økýíkhe fhe. ÃkAe yk yLktíkhkÞ çktÄw QÃkzâk - W¥kh Äúwð. íÞkt yk r{þLk Ãkqhw fÞwO. nðu y{Lku ÚkÞwt fu çkMk çkÄks økwshkíke økýkE økÞk. W¥kh ÄúwðÚke yu Ãkhík Vhe hÌkk níkk íÞkt yuLku Mkk{u yuf çkeòu økwshkíke {¤e økÞku. yu níkk - ð÷MkkzLkk rðLkeík LkkÞf. yu Ãký ykðe s ðMkíkeøkýíkhe fhðk Ërûký ÄúwðLke LkSf ykðu÷k LÞqÍe÷uLzÚke LkeféÞku níkku. ®MkøkkÃkwh, rðÞuíkLkk{, [eLk, sÃkkLk ÚkELku ynª ÃknkUåÞku níkku. rðLkeíku yLktíkhkÞLkwt ÷eMx òuÞwt yLku fÌkwt, “yk{kt yzÄe ËwrLkÞkLkk økwshkíkeykuLkku Mk{kðuþíkku ÚkÞku s LkÚke. ykuMxÙur÷Þk{kt íkku økwshkíkeykuLke yLkuf ðMkkníkku Au. yu yk ÷eMx{kt fu{ LkÚke ?” çkÒkuyu yufçkeòLkwt ÷eMx òuÞwt yLku çkÒku çku¼kLk ÚkE økÞk. yk{ çkLkðtw Mðk¼krðf Au. rðï{kt ðMkíkk økwshkíkeykuLke ðMkíkeøkýíkhe þfÞ s LkÚke.

«íÞuf økwshkíke yuf {kuçkkE÷ MktMÚkk Au. yu ÃkkuíkkLkku hMíkku MðÞt þkuÄe ÷u Au fu{fu yu Mð-f{eo Au, MðÄ{eo Au, MkknMkLkkt stíkwyku yuLkk hõík{kt Au. su yuLku õÞkhuÞ þktríkÚke stÃkðk Ëuíkkt LkÚke.

økwshkíke Ãkh ÷û{eËuðeLke yMke{ f]Ãkk Au. ¼khíke 125 fhkuzLke ykçkkËe{kt fuð¤ 6 fhkuz yk {nkþÞku Mk{økú Ëuþ{kt MkkiÚke ðÄw ELf{xuûk ¼hu Au. yu þktríkr«Þ Au. n¤e{¤eLku hnuðk{kt yuLku {ò ykðu Au. Mk{økú ¼khík{kt çkeòt hkßÞku{kt ¼kzqykík íkhefu økwshkík «Úk{ ÃkMktËøke Au. ÞwrLkÞLk Ãkç÷ef MkðeoMk îkhk ÃkMktËøke Ãkk{u÷k yrÄfkheykuLke yu{Lkk {q¤ ðíkLkhkßÞ ÃkAe «Úk{ ÃkMktËøke Au - økwshkík.


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yuLke rðþu»kíkkykuLke Mkk{u õÞkhuf rðhkurÄíkk h{qs«uhf nkuÞ Au. ËirLkfkuLke fkÃk÷eyku yufXe fhe ÃkkuíkkLke fkh{kt Ã÷kMxefLke zku÷ ÷uðk sðwt yLku ÷kELk{kt f÷kf Q¼k hnuðwt yu MkknMk økwshkíke s fhe þfu Au.

ËwrLkÞkLke yLkuf xÙkðu÷ yusLMkeykuLke ònuh¾çkh swyku Ãký økwshkíkeyku {kxu “{nkhks yk xÙkðu÷{kt òuzkðkLkk Au. økwshkíke Úkk¤e ÃkehMkkþu.” ¾kðkLke çkkçkík{kt økwshkíke çkktÄAkuz LkÚke fhíkku. y{ËkðkËÚke [kxoTh Ã÷uLk{kt økwshkíke hMkkuEÞk y{urhfk òÞ Au yu Mkk÷w Mk{òíkwt LkÚke. Mk{økú rðï{kt ‘{eMkfku÷’ yu fkìBÞwLkefuþLkLkwt rLk:þçË (LkkuLk ðçko÷) MkkÄLk Au. yuLke þkuÄ yLku yuLkku WÃkÞkuøk fhðk{kt økwshkíkeLku fkuE Lk ÃknkU[u.

y{kÃk fhfMkh fhe sYh Ãkzu ËkLk fhðk{kt yux÷k s þqhk Au. 1692 {kt YÃkS ÄLkS {wtçkE{kt Ãkøk {qfLkkh «Úk{ økwshkíke níkk. yu{ýu {wtçkELku çku rðÏÞkík MktMÚkkyku ykÃke. S.xe.nkuMÃkex÷ (økkufw÷ËkMk íkusÃkk÷) yLku S.yuMk.nkuMÃkex÷ (økkuhÄLkËkMk MkwtËhËkMk) {wtçkELkk ykŠÚkf søkíkLkwt yuf ÷kfzw Lkk{ - «u{[tË hkÞ[tË þuX 1863 {kt yu{Lke MktÃkr¥k níke. 9 fhkuzÚke ðÄw. ÃkkrfMíkkLkLkk yøkúýe ©u»Xe{kt su{Lke økýLkk ÚkkÞ Au yu sLkkçk yçËw÷ ÷íkeV s{k÷e økwshkíke Au. su{ýu fhkt[e ÞwrLk.Lku n{ýkts ÷k¾ku YrÃkÞkLkwt ËkLk ykÃÞwt.

{wtçkELke rðïrðÏÞkík su. su. Mfq÷ ykuV ykxoTMk økwshkíkeLke ËuLk Au. {wtçkELkwt hkuLkuxkurhÞ{, Lkuh÷-{kÚkuhkLkLke hu÷ðu÷kELk, yuÂÕVLMxLk fku÷us, Xkfhþe ÃkrhðkhLke yuMk.yuLk.ze.xe. ÞwrLkðŠMkxe. ¼khíkLkwt ©u»X fkÃkz çkòh {q¤S suXk {kfuox økwshkíkeLkwt MksoLk Au. ¼khíkLke Mkðo«Úk{ fkì{Mko fkì÷us rMkzLknk{ fku÷us yu økwshkíkeLkwt MkknMk Au. 1913{kt rð{kLkLke {wMkkVhe fhLkkh «Úk{ ¼khíkeÞ níkk - Lkhku¥k{ {kuhkhS økkuf¤ËkMk yLku yVfkuMko {e÷urLkÞ{ ELzMxÙeyk÷eMx Äehw¼kE ytçkkýe yuLz yuçkkW yku÷ økúuxuMx ykuV økúuxTMk {nkí{k økktÄe.

yLku ©u»X ¢ktríkðeh ~Þk{S f]»ýð{koLku fu{ ¼w÷kÞ ? yu fåALkk níkk. 1876 {kt MktMf]íkLkk yk «fktz rðîkLkLku {nkLk MktMf]ík¿k Mkh {kuLkeyh rðr÷ÞBMku ykufMkVkuzo ÞwrLk.{kt MktMf]íkLkk «kuVuMkhLke rLk{ýqf ykÃke. yk ÞwrLk.{ktÚke yu{.yu. yLku ÃkAe «Úk{ çkurhMxh ÚkLkkh yu «Úk{ ¼khíkeÞ níkk.

ykÍkËe Ãknu÷kt íkífk÷eLk ÷ursM÷uxeð yuMkuBçk÷eLkk «Úk{ yæÞûk níkk. rðê÷¼kE Ãkxu÷. Mkw«e{ fkuxoLkk «Úk{ [eV sÂMxMk níkk. nrh÷k÷ frýÞk. rçkúxeþ Mkhfkhu rLk{ýqf fhu÷k «Úk{ økðLkoh níkk. Mkh [tËw÷k÷ rºkðuËe - niÿkçkkËLkk rLkÍk{Lku Íççku fhLkkhe xe{{kt ºký økwshkíke níkk - MkhËkh Ãkxu÷, niÿkçkkËLkk ¼khíkLkk yusLx sLkh÷ fLkiÞk÷k÷ {wLkþe yLku ¼khíkLkk MkuLkkæÞûk sLkh÷ hksuLÿ®MknS (ykuV ò{Lkøkh). çkkuBçkuLkwt rî¼k»keÞ hkßÞ çkkuBçku «uMkezLMke níkwt íÞkhu 1952 Lkk rLkðko[Lk ÃkAe hkßÞ MkhfkhLkk 9 {tºkeyku{kt 4 økwshkíke níkk - {wÏÞ{tºke {kuhkhS ËuMkkE, Lkkýk{tºke zkì. Sðhks {nuíkk, fkLkqLk yLku rþûký{tºke rËLkfh ËuMkkE yLku ©{{tºke þktrík÷k÷ þkn. ykx÷wt ðirðæÞ çknw ykuAe «ò{kt òuðk {¤þu. yuLkk ËqhLkk ¼qíkfk¤Lkku ði¼ð yLkku¾ku Au. 2000 ð»ko Ãknu÷kt økúeMkÚke økúef YÃkktøkLkkyku ¼]økwfåA (yksLktw ¼Y[) çktËh{kt EBÃkkuxo fhkíke níke.

økwshkíke «òLkk ze.yuLk.yu. {kt MkknMk, ÃkÚÚkh íkkuze ÃkiMkk ÃkuËk fhðkLkwt nwÒkh Au. ykx÷e LkkLkfze «òLke ykx÷e rðhkx rMkrØykuLkwt fkhý þwt nþu ? fËk[ yk{kt Úkkuzku sðkçk {¤u - økwshkíke yuðe ÔÞÂõík Au suLku fuð¤ ‘þw¼’ Ãkh rðïkMk LkÚke yuLke MkkÚku ‘÷k¼’ Ãký òuEyu Au.


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INTROSPECTION

Nirav Pankaj Shah - [email protected]

IT IS THE LITTLE THINGS THAT MAKE A BIG DIFFERENCEThere was a man taking a morning walk at or the beach. He saw that along

with the morning tide came hundreds of starfish and when the tide receded, they were left behind and with the morning sun rays, they would die. The tide was fresh and the starfish were alive. The man took a few steps, picked one and threw it into the water. He did that repeatedly. Right behind him there was another person who couldn’t understand what this man was doing. He caught up with him and asked, “What are you doing? There are hundreds of starfish. How many can you help? What difference does it make?” This man did not reply, took two more steps, picked up another one, threw it into the water, and said, “It makes a difference to this one.”

What difference are we making? Big or small, it does not matter. If everyone made a small difference, we’d end up with a big difference.

THE MIDAS TOUCH

We all know the story of the greedy king named Midas. He had a lot of gold and the more he had the more he wanted. He stored all the gold in his vaults and used to spend time every day counting it.

One day while he was counting a stranger came from nowhere and said he would grant him a wish. The king was delighted and said, “I would like everything I touch to turn to gold.” The stranger asked the king, Are you sure?” The king replied, “Yes.” So the stranger said, “Starting tomorrow morning with the sun rays you will get the golden touch.” The king thought he must be dreaming, this couldn’t be true. But the next day when he woke up, he touched the bed, his clothes, and everything turned to gold. He looked out of the window and saw his daughter playing in the garden. He decided to give her a surprise and thought she would be happy. But before he went to the garden he decided to read a book. The moment he touched it, it turned into gold and he couldn’t read it. Then he sat to have breakfast and the moment he touched the fruit and the glass of water, they turned to gold. He was getting hungry and he said to himself, “I can’t eat and drink gold.” Just about that time his daughter came running and he hugged her and she turned into a gold statue. There were no more smiles left.

Introspection

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The king bowed his head and started crying. The stranger who gave the wish came again and asked the king if he was happy with his golden touch. The king said he was the most miserable man. The stranger asked, “What would you rather have, your food and loving daughter or lumps of gold and her golden statue?” The king cried and asked for forgiveness. He said, “I will give up all my gold. Please give me my daughter back because without her I have lost everything worth having.” The stranger said to the king, “You have become wiser than before” and he reversed the spell. He got his daughter back in his arms and the king learned a lesson that he never forget for the rest of his life.

What is the moral of the story? 1. Distorted values lead to tragedy.

2. Sometimes getting what you want may be a bigger tragedy than not getting what you want.

3. Unlike the game of soccer where players can be substituted, the game of life allows no substitutions or replays. We may not get a second chance to reverse our tragedies, as the king did.

A CREED FOR THOSE WHO HAVE SUFFERED

I asked God for strength, that I might achieve.

I was made weak, that I might learn humbly to obey . . .

I asked for health, that I might do greater things.

I was given infirmity, that I might do better things...

I asked for riches, that I might be happy.

I was given poverty, that I might be wise...

I asked for power, that I might have the praise of men.

I was given weakness, that I might feel the need of God.. .

I asked for all things, that I might enjoy life.

I was given life, that I might enjoy all things...

I got nothing I asked for--but everything I had hoped for.

Almost despite myself, my unspoken prayers were answered.

I, among all men, am most richly blessed!

Introspection

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su. yuMk.y{eLk-{Äwfh su.y{eLk-yuzðkufux [email protected]

swËe swËe yËk÷íkkuLkk yøkíÞLkk [qfkËk

(1) hufxeVefuþLk fkÞoðkne ËhBÞkLk........

òu ÃkûkfkhLku yøkkWLkk íkçk¬u LkðuMkhÚke hsqykík fhðkLke fu Mðíktºk (fresh) Ãkqhkðk hsq fhðkLke fu ÃkkuíkkLkku fuMk hsq fhðkLke íkf {¤e Lkk nkuÞ íkku Lkk{Ëkh fkuxo ¼q÷ MkwÄkhýkLke fkÞoðkne{kt yk {kxuLke íkf ykÃkðk {kxu Mkûk{ Au s.

Court in rectification proceedings can permit a party to lead fresh evidence or to place material on record if party not originally given a reasonable opportunity to put forth its case.

÷û{e økwzTÍ fuheÞh rðYî rºkÃkwhk hkßÞ rºkÃkwhk nkEfkuxo íkk.18-12-2013 - 68 ðeyuMkxe 167

(2) ðfoMk fkuLxÙuõx

ðfoMk fkuLxÙuõxLke fk{økehe{kt WÃkÞkuøk{kt ÷uðkíkk rðrðÄ «fkhLkk {k÷ WÃkh y÷øk y÷øk ËhLkku fkÞËkLke yLkwMkqr[Lkk Ëh {wsçkLkku ðuhku ÷økkzðkLku çkË÷u ík{k{ {k÷ WÃkh fkuE Ãký yuf s rLkÞík Ëhu (uniform rate) ðuhku ÷økkzðkLke òuøkðkE fhðkLke hkßÞ rðÄkLk{tz¤Lku MktÃkqýo yrÄfkh Au.

State legislature is competent to fix uniform rate of tax for various goods involved in execution of works contract.

fýkoxf hkßÞ rðYî rðsÞ E÷ufxÙef÷ yuLz yuLSLkeÞhªøk ðfoMk fýkoxf nkEfkuxo íkk.26-07-2012 - 68 ðeyuMkxe 172

(3) MktÞwõík ðfoMk fkuLxÙuõx WÃkh MkŠðMk xuûk ÷økkzðku

Mkhfkh îkhk çknkh Ãkkzðk{kt ykðu÷ ònuhLkk{k{kt yuðe òuøkðkE fhðk{kt ykðe níke fu MktÞwõík ðfoMk fkuLxÙuõxLke fw÷ ®f{ík{ktÚke 67 xfk ÷u¾u {k÷Lkk ðÃkhkþLke ®f{ík çkkË fÞko ÃkAe çkkfe 33 xfkLke MkuðkLke hf{ WÃkh MkŠðMk xuûk ÷økkzðk{kt ykðþu íkku yk «fkhLkwt ònuhLkk{wt ËuþLke Ãkk÷ko{uLxLke Mk¥kk{ÞkoËk{kt ykðe síkwt ònuhLkk{wt Au, íku{ Xhkðu÷ Au.


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Levy of service tax on composite works contract :

Notification granting exemption of 67 per cent towards value of materials used for computing tax payable is within the comptency of Parliament of India.

S. ze. rçkÕzMko rðYî ÞwrLkÞLk ykuV ELzeÞk yLku yLÞ rËÕne nkEfkuxo íkk.13-11-2013 - 68 ðeyuMkxe 183

(4) Ãkkxo Ãku{uLx

rððkË íkçk¬u ¼hðkLke Úkíke Ãkkxo Ãku{uLxLke hf{{kt Ëh {kMku ÃkkuíkkLkk Ãkºkfku{kt ELkÃkwx xuûkLke hf{Lkku fhðk{kt ykðíkku Ëkðku íku xuûk-¢uzexLke hf{ «kuðeÍLk÷ nkuðkÚke íkuLkku Mk{kðuþ Ãku{uLx íkhefu Lkk ÚkkÞ. ykÚke, ykðe xuûk ¢uzexLke hf{Lkwt heðMko÷ reversal Lku Ãku{uLx Ãký økýe þfkÞ Lkrn.

Pre deposit of disputed tax in appeal : Input Tax Credit claimed in monthly returns being provisional, reversal of disputed amount from input tax credit cannot be treted as payment of disputed tax.

fuçkeyuMk ÃktBÃk ÷e{exuz rðYî zuÃÞwxe fr{þLkh Mke.xe. (yuVyuMke) VkMx xÙuz yuMkuMk{uLx Mkfo÷ - 2, fkuEBçk¥kwh yLku çkeò {ÿkMk nkEfkuxo

íkk. 08-04-2013 - 68 ðeyuMkxe 244

(5) rð÷tçk {kV fhðkLke Mk¥kk

fýkpxf ðux fkÞËk{kt rððkË yhS {kuze fhðk{kt ÚkÞuu÷ rð÷tçk {kV fhðkLke xÙeçÞwLk÷Lke Mk¥kk {ÞkoËeík fhðk{kt ykðe nkuÞ íkku íku òuøkðkE{kt Lk¬e fhðk{kt ykðu÷ Mk{Þ{ÞkoËkÚke ðÄw rð÷tçk ðk¤e rððkË yhSLkku rð÷tçk xÙeçÞwLk÷ {kV Lk fhe þfu. fkÞËkfeÞ òuøkðkE {wsçk rððkË yhS hsq fhðkLke Mkk{kLÞ Mk{Þ {ÞkoËk f÷{-22(2) {wsçk 60 rËðMk níke yLku rððkË yhS {kuze Ëk¾÷ fhðk{kt ykðu÷ rð÷tçk {kV fhðkLke xÙeçÞwLk÷Lke Mk¥kk 180 rËðMkLke níke su 180 rËðMk WÃkh sýkðu÷ 60 rËðMkku WÃkhktíkLkkt níkk.

Power of Tribunal to condone delay in filing appeal registered to period specified in Statute.

“22. (2) The appellate Tribunal may admit an appeal preferred after the period of sixty days referred to in sub-section (1), but within a further period of one hundred and eighty days, if it is satisfied that the appellant had sufficient cause for not preferring the appeal within that period.

r[¬kçkkMkkðkhksw rðYî fýkoxf hkßÞ fýkoxf nkEfkuxo íkk.26-03-2013 - 68 ðeyuMkxe 253


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(6) LkkurxMk

LkkurxMk{kt yuðwt MÃkü sýkðu÷wt nkuðwt òuEyu fu fE MÃkü fkÞËkfeÞ òuøkðkE nuX¤ yrÄfkhe ÃkuLkÕxe ÷økkzðkLke Ëh¾kMík {qfe hÌkk Au.

økwshkík {qÕÞ ðŠÄík ðuhk yrÄrLkÞ{, 2003 (1 ykuV 2005) (The Act) Lke f÷{ku-12(7), 34(7) yLku (12)Lke MÃkþoíke yk çkkçkík Au.

su ðiÄkrLkf LkkurxMk rLkÞík Lk{qLkk-309 EMÞw fhðk{kt ykðe níke íku{kt økwshkík {qÕÞ ðŠÄík ðuhk yrÄrLkÞ{, 2003 (1 ykuV 2005) f÷{-34(7) yLku f÷{-12(7)Lkku s WÕ÷u¾ níkku. f÷{-34(12) Lkku fkuE MktË¼o Lk níkku.

Lkk{Ëkh økwshkík nkEfkuxuo XhkÔÞwt fu :-Held, that, before imposing the penalty under section-34(12) of the Act neither

had any statutory notice been served upon the dealer nor had the dealer been called upon to show cause why penalty under Section-34(12) of the Act should not be imposed. Under the circumstances, the order passed by the adjudicating authority, partly confirmed by the first appellate authority and confirmed by the Appellate Tribunal imposing penalty under Section-34(12) of the Act could not be sustained and deserved to be quashed as it was in breach of the principle of natural justice.

On the question whether the Tribunal was right in law in treating the invoices produced by the dealer as “retail invoice” even though the invoice produced contained all the essential ingredients of a tax invoice including details of tax charged separately and whether the Tribunal was right in holding that input tax credit can be allowed to the pruchasing dealer in the absence of the tax invoice, debit note or cash memo produced in lieu of tax invlice contained all requisite particulars of tax invoice, that the selling dealer was prohibited under the Act form issuance tax invoice and that the selling dealer had paid the tax amount collected from the purchasing dealer to the State Government, the court quashed the order of Tribunal to consider the issue a fresh in accordance with law and on merits after giving opportunity of hearing to all concerned.

yçËw÷ frh{ nkS{ W{h¼kE hMkw÷¼kE rðYî økwshkík hkßÞ - økwshkík nkEfkuxo íkk.21-12-2013 - 68 ðeyuMkxe 349

(7) xuMxªøk yuLz yuLkk÷eMkeMk MkŠðrMkMk

ßÞkhu fkuE Ãký Mkuðkyku WÃkh ÷køkw Ãkzíkk ðuhkLkk ËhLkku «&™ nkuE íÞkhu MkuLxÙ÷ yufMkkEÍ yuõx (1 ykuV 1944)Lke f÷{-35 S (1), 35 yu÷ (çke) {wsçk yk ytøkuLke yhS {kLkLkeÞ Mkw«e{ fkuxo Mk{ûk s ÚkE þfu Au.


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yk ytøku Lkk{Ëkh Mkw«e{ fkuxoLkk fr{þLkh rðYî «fkþ yuh £ux «k.÷e{exuz 23 yuMkxeykh 220 (fýkoxf)Lkk [wfkËkLkk Lke[u {wsçkLkk yðíkhýku æÞkLku ÷uðk{kt ykðu÷ Au.

This appeal is filed against the order under section 35G. The said provision makes it clear that an appeal shall lie to the High Court from every order not being an order, relating to among other things, to the determination of any question having a relation to the rate of duty on excise or to the value of goods for the purpose of assessment. This case, falls squarely within the phrase ‘determination of any question relating to rate of service tax’ and it is the apex court alone which has exclusive jurisdiction to decide the said question under section 35L of the Act. In that view of the matter, this appeal is not maintainable. This appeal is rejected and liberty is reserved to the Revenue to approach the apex court against the impugned order.”

WÃkhkuõík [wfkËkLkk ykÄkhu Lkk{Ëkh økwshkík nkEfkuxuo fr{þLkh©eLku {kLkLkeÞ Mkw«e{ fkuxo Mk{ûk sðkLke hò ykÃkeLku xuûk yÃke÷Lkku rLkfk÷ fhu÷ Au.

On an appeal under section - 35G(1) of the Central Excise Act, 1944 on the question whether the assessee, a provider of the “testing and analysis” services, had performed any service outside India:

Held, dismissint the appeal, that from section-35G(1) and 35L(b) of the Act it was clear that where the rate of service tax was in dispute an appeal would lie directly to the Supreme Court that not to the High Court. Since in this case, the rate of tax to be applied on the assessee was in dispute, the appeal was not maintainable.

fr{þLkh rðYî çke. yu. heMk[o ELzeÞk ÷e{exuz økwshkík nkEfkuxo íkk. 09-07-2013 - 68 ðeyuMkxe 337

(8) [uf Ãkkuü : çkkfe Lkkýk {kxu xÙuLfh ¾k÷e fhkðe {k÷Lkku fçkòu ÷u.....

yhsËkh xÙkLMkÃkkuxoh {u. fkçkúk çkÕf xÙkLMkÃkkuxo fuheÞh ÃkkuíkkLkk xÙkLMkÃkkuxoLkk ÄtÄk ËhBÞkLk ÃkkuíkkLkk yuf økúknf {u. ©e nrh yuLxh«kEÍeÍ (seltor of goods) Lkku {k÷ Ãkk{ ykuE÷ (Palm OIl) fu su {u. {nksLk xÙuzMkoLku ðu[ðk{kt ykÔÞku níkku (Buyer of goods) ¾heËLkkhLkk MÚk¤u ze÷eðhe fhðk {kxu ºký xuLfh{kt ¼heLku Ãkk{ ykuE÷ íkk.13-8-2013Lkk hkus su {k÷ ÷E sðkE hÌkku níkku íÞkhu {k÷ MkrníkLkkt xuLfh fku{þeoÞ÷ xuûk ykuVeMkh, yuLxe EðusLk çÞwhku ELËkuh îkhk hkufðk{kt ykÔÞku níkku. fkhý yu{ sýkðkÞwt níkwt fu {æÞ«Ëuþ ðuÕÞw yuzuz xuûk yuõx, 2002Lke f÷{-57(5) nuX¤ ÃkkuíkkLku {¤u÷ Mk¥kkLke Yyu [fkMkýe fhíkkt f÷{-57(6)(çke)Lke òuøkðkE {wsçkLkk ËMíkkðuòu MkkÚku hkÏÞk rMkðkÞ yk {k÷Lkwt yk


36


xuLfhku{kt ðnLk ÚkE hÌkwt nkuðkLkk fkhýu íkk.13-8-2013Lkk hkus su {k÷ ÷E sðkE hÌkku níkku íÞkhu {k÷ MkrníkLkkt xuLfh fku{þeoÞ÷ xuûk ykuVeMkh, yuLxe EðusLk çÞwhku ELËkuh îkhk hkufðk{kt ykÔÞku níkku. yk ÃkAe MkËh fkÞËkLke f÷{-57(8) nuX¤ íkk.12-9-2013Lkk hkus ËtzfeÞ ykËuþ ÃkMkkh fhðk{kt ykÔÞku. Ëtz xÙkLMkÃkkuxohu ¼he Ãký ËeÄku yLku {k÷ ¼hu÷kt xuLfhku he÷eÍ fhðkLke f÷{-57(11) nuX¤ ÷ur¾ík rðLktíke Ãký fhe. xÙkLMkÃkkuxohLke {ktøkýe [uf Ãkkuü îkhk y{kLÞ fheLku íkuLku sýkðkÞwt fu íku fþef ÔÞðMÚkk îkkh {k÷ ¾k÷e fhkðeLku Võík ¾k÷e xuLfhkus ÷E sE þfu Au. xÙkLMkÃkkuxohu íkk.3-10-2013Lkk hkus MkkuøktËLkk{wt hsq fÞwO fu ¾hu¾h yk {k÷ {u. ©e nrh yuLxh«kEMkeÍ îkhk {u. {nksLk xÙuzMkoLku ðu[e Ëuðk{kt ykÔÞku Au yLku íkuLke ðu[ký ®f{ík Ãký {u. {nksLk xÙuzMko ÃkkMkuÚke ðMkw÷e ÷eÄe Au. yhsËkh xÙkLMkÃkkuxohu {u. {nksLk xÙuzMkoLkku Ãký MktÃkfo fÞkuo fu suýu {k÷Lkku yðus ©e nrh yuLxh«kEÍLku [qfÔÞku níkku, suLkk fkhýu {u. {nksLk xÙuzMko {k÷Lke ze÷eðhe ÷uðk Ãký íkiÞkh níkku, íkÚkk su fktE ÃkuLkÕxe xÙkLMkÃkkuxoh ÃkkMkuÚke [uf Ãkkuü yrÄfkheyu ðMkq÷ fhe níke íku hf{ Ãký yhsËkh xÙkLMkÃkkuxohLku [qfðe Ëuðk íkiÞkh níkku. yk WÃkhktík xÙkLMkÃkkuxuoþLk íkÚkk {k÷Lkwt zu{hus Ãký [qfððk {u. {nksLk xÙuzMko íkiÞkh níkku. ÃkkuíkkLkk ËkðkLkk MktË¼o{kt íkuLke hsqykík níke fu íkuýu {k÷Lke Lk¬e fhu÷ ®f{ík ©e nrh yuLxh «kEÍLku [qfðe ËeÄe níke. yk MktË¼o{kt {u. {nksLk xÙuzMko ÃkkuíkkLkk çkUf Mxux{uLxLke Lkf÷ Ãký yhsËkh xÙkLMkÃkkuxohLku hsq fhe níke y™u yhsËkh xÙkLMkÃkkuxohu yk ík{k{ Ãkqhkðk [uf Ãkkuü yrÄfkhe Mk{ûk hsq fÞko níkk yLku {k÷ he÷eÍ fhðkLke rðLktíke Ëkunhkððk Ãkkuíku rðLktíke Ãký fhe níke fu M/s. Hari Enterprises has already sold the goods and therefore, for his alleged tax dues, the goods in question, cannot be detained. yk{ Aíkkt Ãký {k÷ Akuzðk{kt Lkrn ykðíkkt yhsËkh xÙkLMkÃkkuxoh îkhk Lkk{Ëkh {æÞ«Ëuþ nkEfkuxo{kt hexÃkexeþLk hsq fhðkLke Vhs Ãkze.

Úkkuzku rðhk{ ÷Eþwt !!! çkkfeLkwt ykðíkkt ytfu - yk¼kh

fkçkúk çkÕf xÙkLMkÃkkuxo furhÞh rðYî fr{þLkh ykuV fku{þeoÞ÷ xuûk #Ëkuh yLku çkeò {æÞ«Ëuþ nkEfkuxo - ELËkuh çkU[

íkk. 19-11-2013 - 68 ðeyuMkxe 235

»Éà±»É÷àKÉ W{ÉÇ±É{ÉÉà +ÅH qù ©ÉÊ¾{ÉÉ{ÉÒ 25©ÉÒ lÉÉùÒLÉà Ê{É«ÉÊ©ÉlÉ ¡ÉÊ»ÉyyÉ oÉÉ«É Uà. +ÅH {É ©É²«ÉÉ{ÉÒ £Êù«ÉÉq +ÅH ù´ÉÉ{ÉÉ oÉ«ÉÉ{ÉÉ +àH ©ÉÉ»É©ÉÉÅ Hù´ÉÉ{ÉÒù¾à¶Éà. l«ÉÉù ~ÉUÒ +É´Éà±ÉÒ £Êù«ÉÉq{Éà y«ÉÉ{Éà ±Éà´ÉÉ©ÉÉÅ +É´É¶Éà {É¾Ó. Xà Wà-lÉà +ÅH »÷ÉàH©ÉÉÅ ¾¶Éà lÉà{Éà UÚ÷H +ÅH{ÉÒ ÊHÅ©ÉlÉ ±É< +É~É´ÉÉ©ÉÉÅ +É´É¶Éà. qùàH »É§«ÉÊ©ÉmÉÉà+à »Éà±»É÷àKÉ W{ÉÇ±É{ÉÉ +ÅH A~Éù Xà lÉ©ÉÉùÉà ~ÉÒ{É HÉàe {ÉÅ¥Éù {É ¾Éà«É lÉÉà +à»ÉÉà»ÉÒ+à¶É{É{ÉÒ +ÉàÊ£»Éà WiÉÉ´É´ÉÉ Ê´É{ÉÅlÉÒ Uà.


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Lalit M. Leuva - [email protected]

Gist of Important Judgments reported in mARCH, 2014

SUPREME COURT JUDGMENTS

1. COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II V. M/S SUPER SYNOTEX (INDIA) LTD. AND OTHERS [CIVIL APPEAL NO. 4621 OF 2008 DTD. 28.02.2014]

Circular contrary to provisions of law is not binding to courts (Central Excise Act)

Facts of the caseThe assessee is a dealer registered manufacturer under the Central Excise

Act. The assessee was granted sales tax incentives by the State of Rajasthan according to which the assessee was allowed to collect tax from the buyers and to retain 75% of the tax so collected as incentive and was required to pay only 25% of the tax collected. As provided in the Central Excise Act, the amount of sales tax “actually paid” was deductible from the taxable turnover liable to excise duty.

The assessee relying upon the clarification issued by the department by the public circular deducted 100% amount of tax collected. The assessing authority took the view that only 25% amount of sales tax was actually paid by the assessee and therefore, the assessee was entitled for deduction of that amount only. The assessing authority accordingly levied tax on 75% amount of sales tax collected and retained by the assessee. The matter finally came before the Supreme Court for adjudication. Decision of the Supreme Court

The Hon’ble Supreme Court relying upon its earlier decision in case of Commissioner of Central Excise v. Rattan Melting and Wire Industries [2008] TIOL-SC-CB held that circular that is contrary to the provisions of statute is not binding to court. On above grounds and also on interpretation of the provisions of the Act the Hon’ble Supreme Court confirmed the assessment order passed by the authority imposing duty on 75% of the sales tax collected and retained by the assessee. 2. DELTA DISTILLERIES LIMITED V. UNITED SPIRITS LIMITED AND ANOTHER

[2014] 68 VST 153 (SC) Bar on civil court to direct production of documents does not apply to party in

person. It applies to Government only. (Maharashtra Value Added Tax Act, 2002)

Gist of Judgments Reported in March, 2014

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Facts of the caseThe assessee is a dealer registered under the M Vat Act. The assessee filed

returns and documents to the concerned authority as prescribed under the Act. The assessee had entered into an agreement with USL for supply and manufacture of goods. Thereafter a dispute between two parties arose and the matter went before the Arbitrator. The advocate of USL issued a notice to the advocate on record to produce before the Arbitrator the returns filed by the assessee pertaining to period of dispute. It was contended on behalf of the assessee that the Civil Court has no power to call for records of any assessee. The matter after crossing various levels came before the Supreme Court for adjudication.

Decision of the Supreme Court The Supreme Court perused the provisions of section 71 of the Act and

section 64 of the BST Act which provides that particulars contained in any return filed by the assessee are confidential and no court shall pass any order to require the Government or a Government servant to produce any such return.

The Hon’ble Court held that it is settled principle of law that the words used in a statute are to be read as they are used, to the extent possible, to ascertain the meaning thereof. Both these provisions contained a bar only against the Government officers from producing the documents mentioned therein. There is no bar against a party to produce any such document.

HIGH COURT JUDGMENTS

1. HWASHIN AUTOMOTIVES INDIA PVT. LTD. V. STATE OF TAMIL NADU [ 2014] 68 VST 014 (Mad) Generator set is not ‘machinery’ used in automobile industry. Penalty under

section 10A confirmed but reduced to 50%. (Central sales Tax Act, 1956)

Facts of the caseThe assessee is a dealer registered under the Vat Act as also under the

CST Act. The assessee is manufacturer of automobile parts. The machinery was included in the registration certificate of the assessee but the generator set was not so included. The assessee purchased DG set against Form C considering it as machinery for use in manufacture of goods. The assessing authority took the view that DG set is not machinery required for manufacture of automobile parts. He therefore imposed penalty at the rate of 150% on the purchases of DG set. The said assessment order came to be confirmed by the Tribunal also. Being aggrieved the assessee filed present revision petition before the Madras High Court.

Decision of the Madras High CourtThe Hon’ble Madras High Court held that in view of nature of business of the


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assessee it cannot be said that DG set is machinery required in manufacture of automobile parts. The DG set is used as stand by for supply of electricity in case of power failure. Therefore, the assessee could not purchase DG set against Form C. The Hon’ble accordingly confirmed the imposition of penalty.

However on submission of the assessee that this is his first year and he was misguided by his staff member who is technical person-engineer who advised that GD set is covered under term ‘machinery’ and could be purchased against C Form, the Hon’ble Court reduced penalty to 50% from 150%. 2. VITAN DEPARTMENTAL STORES & INDUSTRIES LTD V. STATE OF TAMIL NADU

[ 2014] 68 VST 070 (Mad) Transaction of allowing operation of departmental store to franchisee with

permission to use name, marks etc. held as transfer of right to use incorporeal goods. (Tamil Nadu General Sales Tax Act, 1969)

Facts of the caseThe assessee is engaged in the business of operation of super markets under

the name of “VITAN”. The assessee had developed a business plan and method in connection with the operation of supermarket. The assessee entered into an agreement with franchisee for operation of one outlet. The assessee under this contract transferred right to use its system, the licensed rights of name “VITAN” trade symbol, copy rights e.t.c to franchisee.

The assessee treated the impugned transaction as providing services and paid service tax payable on such transaction. The assessing authority in the sales tax department took the view that the transaction of permitting operation of supermarket with trade name goodwill etc. was that of transfer of right to use incorporeal goods and liable to tax under the Sales Tax Act. The matter finally came before the Madras High Court for adjudication.Submissions of the assessee before the Madras High Court

The learned counsel appearing for the assessee submitted before the Madras high Court that the impugned transaction is for providing services only and there is no transfer of right to use incorporeal goods. It was submitted that the franchisee fees received by the assessee is not for transfer of right to use goods liable to tax under the sales tax Act. It was further submitted that actionable claim is not goods liable to tax under the Act.

It was further contended that even while the franchisee agreement was in force, the assessee can use the trademark on its own and also enter into an agreement with another parties to allowing them to use such trademark. Thus, the effective control always remained with the assessee and it was never transferred to franchisee. Therefore, since the effective control was not transferred to franchisee, the transaction was not for transfer of right to use goods.


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Submissions of the revenue before the Madras High CourtThe learned counsel appearing for the revenue referring to clause XIV of the

agreement which deals with “termination” submitted before the Madras High Court that this clause gives a clear indication as regards the right transferred by the assessee and the rights so transferred are right to use intangible property including the trademark.

Decision of the Madras High Court

The Hon’ble Madras High Court perusing the contract held that the assessee had transferred the right to use VITAN system, the licensed right of their names, marks, systems, insignia, symbols and goodwill. The transaction done by the assessee is not a claim nor it is a debt or a beneficial interest in the moveable property but the right transferred by the assessee is a right in the trademark, trading style which are incorporeal rights and intangible things and transfer of such incorporeal rights and are exigible to tax.

The Hon’ble High Court held that under the contract the assessee has transferred their right to use their trademark, goodwill, reputation exclusively to the franchisee in respect of particular outlet. In event of misuse of such exclusively licensed right rendered, the franchisee had to face action including termination of agreement in terms of clause XVI of the said agreement.

The Hon’ble High Court held that this is a case where goods which are in the nature of intangible or incorporeal goods were available for delivery. There was consensus ad idem to the identity of such goods. The transferee has the legal right to use the goods. During the period of agreement, it was an exclusive right given to the transferee by the assessee in respect of a particular store. It is not merely a license to use goods. During the period of agreement the assessee could not transfer such goods with particular reference to the exclusive right given in respect of a particular store to any other party. Thus, all the attributes to constitute transfer of right to use goods have been fulfilled and therefore, the transaction is that of transfer of right to use incorporeal goods.

The Hon’ble High Court further held that for transferring the right to use trademark, it is not necessary to handover the trademark to transferee or give control or possession of the trademark to him. This could be done merely by authorizing the transferee to use the same. The right to use trademark could be transferred simultaneously to any other person also. The assessee has retained the liberty to use the trademark; however at the same time he transferred the right to use incorporeal goods exclusively in favour of the franchisee in respect of specified outlet for a definite period of time. Therefore, it is not a mere license or transfer or mere right to enjoy but transfer of right to use intangible goods.


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3. V. S. ENGINEERING (P) LTD V. STATE OF ANDHRA PRADESH [ 2014] 68 VST 087 (AP) No sale by contractor to contractee of the free issue material supplied by

contractee to contractor (Andhra Pradesh General Sales Tax Act, 1957)

Facts of the caseThe assessee is engaged in the business of works contract and a dealer

registered under the AP Sales Tax Act. The assessee entered into contract with the Railways for manufacture and supply of mono block pre-stressed concrete sleepers. The Railways issued to the contractor material like fastenings, cast iron inserts, and strands e.t.c. free of cost for use in said works contract. The assessing authority took the view that the contract was not works contract but was for sale of goods. He accordingly held that there was sale of the free issue materials to Railways. The matter finally came before the A.P. High Court for adjudication.

Decision of the A.P. High CourtThe Hon’ble A.P. High Court perused the fact that the material was issued to

the assessee was free issue materials. The railways have not charged any sum from the assessee for said FIM. The assessee also has not charges any sum from the railways for the said FIM. Therefore, there was no sale of FIM by the assessee Railways. 4. COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS V.FERROMATIK

MILACRON INDIA LTD [ 2014] 68 VST 101 (Guj) Circular instructions are binding to revenue (Central Excise Act)

Facts of the caseThe assessee is a manufacturer registered under the Excise Act. The assessee

is engaged in manufacture of injection molding machines. The assessment order was passed in case of assessee wherein the Cenvat credit of Rs. 5 01 561-00 was disallowed. The said assessment order came to be confirmed by the Commissioner in first appeal. The assessee preferred second appeal before the Tribunal wherein the Tribunal accepting the submissions of the assessee allowed the second appeal and set aside the assessment order. Being aggrieved, the revenue filed present Tax Appeal before the Gujarat High Court.

Decision of the Gujarat High CourtThe Hon’ble Gujarat High Court perused the fact that the revenue involved

in this matter was Rs. 5.01 lakh. The High Court also perused the instructions issued by the Ministry of Finance fixing the revenue limit with respect to filing of appeals before the various authorities. The said limit was fixed in order to reduce the litigation before the Tribunal and the High Court. The Hon’ble High Court also


42


perused the fact that the revenue limit fixed for appeals to be filed before the High Court was Rs. 10 lakhs. Thus, as per the instructions of the department, this appeal could not have been filed before the High Court.

The Hon’ble High Court held that the departmental instructions are binding to revenue. The Hon’ble High Court accordingly dismissed the Tax Appeal filed by the revenue.

Note:[The departmental instructions, even contrary to law, would be binding to

revenue where there is no direct judgement of the High Court or the Supreme Court on the issue. However, if there is any such judgement, then that judgement would prevail.]5. STATE OF GUJARAT V. CHEMOIL ADANI PVT. LTD [ 2014] 68 VST 117 (Guj)

Delay of 210 days in filing tax appeal by the State condoned in view of heavy revenue stake (Gujarat Value Added Tax Act, 2003) Facts of the case

The revenue filed tax appeal before the Gujarat High Court against the order of the Tribunal dtd. 27.09.2012. The said Tax appeal was late by 210 days. The revenue therefore filed a civil application before the Gujarat High Court praying for condonation of delay in filing Tax Appeal. Submissions of the revenue before the Gujarat High Court

The learned counsel appearing for the revenue gave details of the proceedings as under:

Date Proceedings05.10.2012 Tribunal order received10.10.2012 Inspector put note on file about the judgement03.12.2012 G.A. II, III & IV put further note on file04.12.2012 G.A. I gave his remarks on file01.01.2013 Proposal sent to Finance department for filing Tax Appeal12.02.2013 Permission received from the Finance Department

Immediately papers sent to Government Pleader for filing Tax Appeal

The learned counsel submitted before the High Court that heavy revenue stake is involved in the matter and in view of the Supreme Court decision in case of Commissioner of Income Tax v. West Bengal Infrastructure Ltd. reported in [2011] 334 ITR 269 (SC) and the Gujarat High Court decision in case of State of Gujarat v. Wellspun Gujarat Stahl Rohren Ltd. reported in [2013] VST 1 VST-OL 558 (Guj) the delay in filing Tax Appeal should be condoned.


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Submissions of the assessee before the Gujarat High CourtThe learned counsel of the assessee relying upon the Supreme Court decision

in case of Office of the Chief Post Master General v. Living Media Ltd. reported in [2012] 54 VST 188 (SC) submitted that the delay should not be condoned.

Decision of the Gujarat High CourtThe Hon’ble Gujarat High Court considering the heavy revenue stake involved

in the matter and following the judgements cited by the counsel of the revenue condoned the delay in filing Tax Appeal. 6. SRI VENKTESWARA TRADING COMPANY V. DEPUTY COMMERCIAL TAX

OFFICER-I, CIRCLE-II, ONGOLE, PRAKASAM DISTRICT AND ANOTHER [ 2014] 68 VST 130 (AP) Notice sent by RPAD returned back with endorsement as “refused” or “not

available in house” is valid service of notice. (Andhra Pradesh Value Added Tax Rules, 2005)

Facts of the caseThe assessee is a dealer registered under the A.P. Vat Act. The assessee

is engaged in business of pulses, vegetable oil etc. The assessing authority on 18.02.2012 issued a notice to the assessee for production of books of accounts. In pursuant to this notice the accountant of the assessee attended the office of the assessing authority and produced books of accounts. Thereafter, according to the assessee, without making further inquiry or issuing mandatory show cause notice in Form 305A the assessing authority passed the assessment order on 23.08.2012 and raised dues against the assessee.

In the impugned order, the assessing authority stated that the show cause notice in Form-305A dtd. 18.07.2012 was issued to the assessee on 04.08.2012 and was also sent on email address of the assessee on 06.08.2012 but since the assessee did not remain before the assessing authority, the assessment order came to be passed ex-party. Being aggrieved of the assessment order, the assessee filed present writ petition before the A. P. High Court.

Submissions of the assessee before the A.P. High CourtThe learned counsel for the assessee submitted before the A.P. High Court that

he has never received statutory Show cause notice in Form-305A and therefore, the assessment passed contrary to the principles of natural justice is bad in law. It was also contended that the assessee went liver operation on 30.03.2012 and since then he could not run the business.

Submissions of the revenue before the A.P. High CourtIt was further submitted that the assessee was issued a Show-cause notice in


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Form 305A on 18.07.2012 by registered post and the same was returned back with the endorsement “refused return sender”. Again notice was sent on 25.07.2012 which was also received back with endorsement “no such adr returned for want of door”. Thereafter, another notice was issued on 04.08.2012 by registered post which also was received back with endorsement “left return sender”. It was contended that since there was no response from the assessee, the assessing authority had no other option but to pass an ex-party assessment order.

Re-submissions of the assessee before the A.P. High CourtIn reply to the submissions of the revenue it was submitted on behalf of

the assessee that the assessee was in Uma Diabetic Center, Vijaywada from 26.07.2012 to 04.08.2012 and therefore, the question of refusing the notice does not arise and the averment made by the revenue is not correct.

Decision of the A. P. High CourtThe Hon’ble A. P. High Court perused the provisions contained in rule 64 for

service of notice. The service of notice by registered post is included in the said rule. The Hon’ble Court observed that all the notices were issued to the assessee by registered post but were received back with endorsement thereon.

The Hon’ble Court referred the Supreme Court decision in case of C. C. Alvi Haji v. Palapetty Muhammed [2007] 137 Comp cas 692 (SC) wherein the Hon’ble Supreme Court held that when a notice is sent by registered post and is returned with endorsement “refused” or “not available in the house”, it is presumed that the notice is served.

In view of the facts of the case, the Hon’ble High Court held that the assessing authority strictly adhered to the procedure for service of notice contained in rules. The Hon’ble High Court accordingly dismissed the writ petition with clarification that the dismissal of said writ petition would not adversely affect the right of the assessee to file appeal before the appellate authority as provided under the Act. 7. ATITHI GOKUL AUTOMOBILE WORKS V. UNION OF INDIA [SCA NO. 798 OF

2014 DTD. 06.03.2014]

Ex-Parte Order of the Tribunal directing the assessee to pre-deposit Rs. One crore came to be set aside on reasonable cause, with cost. (Central Excise Act)

Facts of the caseThe assessee is a dealer registered under the Act. The assessee had

challenged the assessment order before the Tribunal (CEGAT). The matter was listed before the Tribunal on 4.4.2013. The assessee sought adjournment on the ground that they want to engage Senior Counsel in the matter. The next dates 27.05.2013 and 11.07.2013 were fixed but the assesse sought adjournment. Lastly the matter was fixed for hearing on 22.8.2013. On that day also the assessee


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sought an adjournment on ground of illness of the representative of the assessee. The Tribunal rejected the request for adjournment and passed an order for payment of Rs. 1 crore as pre-deposit. The assessee filed Misc. Application before the Tribunal for review of the said order which came to be rejected by the Tribunal. Being aggrieved, the assessee filed present writ petition before the Gujarat High Court.

Decision of the Gujarat High CourtThe Hon’ble High Court held that there cannot be slightest doubt that having

filed the appeal before the Tribunal, the assessee ought to have pursue the same with all seriousness. Repeated adjournments were neither justified nor can be found and fault with the Tribunal in not adjourning the proceedings time and again.

However, the Hon’ble High Court observed that on last date the reason pressed was sickness of representative of the assessee and an ex-parte order for pre-deposit of sizeable amount of Rs.1 crore was passed by the Tribunal. In these facts the Hon’ble Court held that the assessee deserves one last opportunity to argue the petition for waiver of pre-deposit on merits before the Tribunal. This however, cannot be done unconditionally. The assessee must pay reasonable heavy cost for availing such an opportunity.

In view of above, the Hon’ble High Court set aside the order of the Tribunal and fixed 21.04.2014 the date of hearing before the Tribunal. The Hon’ble Court directed the assessee to pay Rs. 50 000-00 with the Gujarat State Legal Services Authority by 31.3.2014.8. LUPIN LIMITED V. STATE OF GUJARAT [TAX APPEAL NO. 92 OF 2014 DTD.

07.03.2014]

Appeal filed on the basis of Tribunal judgement in other case. Delay not condoned. (Gujarat Value Added Tax Act, 2003)

Facts of the caseThe assessee is a dealer registered under the Act. The assessee is a

manufacturer of drugs and medicines. The assessee purchased fuels from the registered dealers under the Act by paying tax on such purchases. The fuels so purchased were used by the assessee in the manufacture of taxable goods. The assessee accordingly claimed tax credit under section 11 of the Act in respect of the tax paid on purchases of fuels. However, in terms of provisions of section 11(3b)(ii) the assessee reduced such tax credit by 4% of the turnover of goods used in manufacture of the goods stock transferred outside the State of Gujarat. The assessee again in terms of provisions of section 11(3b)(iii) of the Act further reduced tax credit by 4% of the value of the fuels used in manufacture of taxable goods. Thus, after deducting tax credit both under section 11(3b)(ii) and 11(3b)(iii) the assessee claimed balance tax credit under the Act.


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The Gujarat Vat Tribunal in case of Reliance Industries Ltd. [SA No.76-77 of 2011 dtd. 26.04.2012] held that when tax credit has been reduced under section 11(3b)(ii) on the purchases of fuels, it would not be necessary to again reduce tax credit on the same turnover of fuels under section 11(3b)(iii). According to the assessee, when he came to know about this judgement, he filed appeal against the assessment orders passed in his case wherein the tax credit had been reduced twice. The said first appeal came to be dismissed. The assessee filed second appeal before the Tribunal against the impugned order. The said appeal was late by 836 days. The assessee, therefore, filed an application for condonation of delay in filing said appeal. The Tribunal also rejected the application for condonation of delay. Being aggrieved, the assessee filed present Tax Appeal before the Gujarat High Court.

Submissions of the assessee before the Gujarat High Court

The learned counsel appearing for the assessee submitted before the Gujarat High Court that when the Assessing Officer passed the order the law was not clear. It was only when the Tribunal rendered its judgement in case of Reliance Industries that interpretation of the statutory provisions became clearer. It was contended that the issue being covered in favour of the assessee technical grounds should not come in his way in substantial justice.

Decision of the Gujarat High Court

The Hon’ble Gujarat High Court held that explanation rendered for condonation of delay is not sufficient. At the relevant time, against the order passed by the assessing Officer, the assessee carried no further challenge. Merely because much later it was decided in a particular manner by a Court or Tribunal would not give reason to the assessee to prefer the appeal. It is true that the Appellate Commissioner had power to condone the delay. It is equally true that the Courts normally adopt a liberal approach in considering the explanation for delay caused in filing the appeals since substantial justice is the primary concern. However, that does not mean howsoever long, delay should be condoned whether there is sufficient explanation or not.

The Hon’ble High Court referred to a well-known decision of the Constitution Bench of Supreme Court in case of Mafatlal Industries Ltd. v. Union of India reported in 1997(89) ELT 247(SC). In this case, the Hon’ble Supreme Court considered various issues including the right of an assessee to seek refund of duty on the basis of decision rendered in another case. It was held that it is not open to any person to make a refund claim on the basis of a decision of a Court or Tribunal rendered in the case of another person. He cannot also claim that the decision of the Court/Tribunal in another person’s case has led him to discover the mistake of


47


law under which he has paid the tax nor can he claim that he is entitled to prefer a writ petition or to institute a suit within three years of such alleged discovery of mistake of law.

Following above referred judgement, the Hon’ble Gujarat High Court affirmed the order of the Tribunal and dismissed the Tax Appeal filed by the assessee.9. PAVAN AGRO INDUSTRIES V. DEPUTY COMMERCIAL TAX OFFICER-I,

ANANTAPUR DISTRICT,ANDHRA PRADESH AND OTHERS [2014] 68 VST 300 (AP)

No tax can be collected without proper assessment order (Central Sales Tax Act, 1956)

Facts of the case

The assessee is a dealer registered under the A.P Act as well as the Central Sales Tax Act. The assessee is a dealer in cotton seed oils. The assessee send two tankers of cotton seed oil to his consignment agent outside the State. The said two tankers were intercepted by the officer of the department. According to the said authority, the required documents were kept with the tankers. The assessing authority accordingly seized the goods.

The assessee requested to the assessing authority that there was no tax liability on him since the impugned transactions were of stock transfer of goods. The assessing authority rejected the submissions of the assessee and directed him to pay 5% tax along with penalty. To avoid damage to goods, the assessee paid tax and penalty as directed and got the goods released. Thereafter the assessee filed writ petition before the A. P. High Court and challenged the said action of the authority.

Decision of the A. P. High Court

The Hon’ble High Court also referred to the full Bench judgement on the issue in case of Ambica Lamp House v. CTO [2005] 142 STC 551 (AP). The Hon’ble Court held that it is clear from the ratio laid down by the Full Bench that until and unless the assessment is made no liability can be fastened on the dealer and the Commercial Tax Department is not entitled to collect tax/penalty/compounding fee by coercion at the time of inspection alleging suppression of turnover or such other irregularities.

The Hon’ble A.P. High Court referred to provisions of section 6A of the Central Act which provides that the burden of proof in case of stock- transfer is on the dealer who claims that he is not liable to pay tax under the said Act and for the said purpose he has to furnish the assessing authority within the prescribed time a declaration in form F obtained from the consignee.


48


The Hon’ble High Court also referred to provisions of rule 12(7) of the Central Rules which provides for furnishing of F Form within three months from the end of the month in which transfer took place.

In view of above provisions the Hon’ble High Court held that liability of tax has not accrued at the time of interception of the vehicles. Tax liability can be fastened on the dealer only after assessment. Without making assessment the recovery and collection of tax is without authority of law. The Hon’ble accordingly allowed the writ petition filed by the assessee and directed the assessing authority to refund within eight weeks the amount of tax and penalty along with interest of 6% to the assessee. 10. TEBLIK DRUGS LIMITED V. STATE OF MADHYA PRADESH AND ANOTHER

[2014] 68 VST 308 (MP)

C Form containing transactions of two divisions having separate Vat RC- Original produced before one authority and photocopy before other authority- Photo copy held valid. (Central Sales Tax Act, 1956)

Facts of the case

The assessee is a dealer registered under the M.P Act as well as the Central Sales Tax Act. The assessee is having two divisions in the State of M. P. Both the units are having separate Vat TIN for such divisions under jurisdiction of different assessing authorities. Both the divisions made inter-State sales to one party outside the State of M.P. The purchasing dealer issued single C Form containing transactions of both the units. The assessee produced original copy of the said C form before one assessing authority and photocopy of the said C Form before the authority. In the assessment, the photocopy came to be disallowed and the full tax came to be assessed. The matter finally came before the M. P. High Court for adjudication.

Submissions of the assessee before the M.P. High Court

The learned counsel for the assessee submitted before the High Court that the requirement of submitting the original declaration in Form C under the Central Act is directory and not mandatory. It was submitted that the “original” C Forms are available with the Department in file of the manufacturing division of the assessee. Thus, view taken by the assessing authority is perverse and bad in law.

It was submitted that the M. P. Rules are subordinate rules which cannot prevail upon the scheme of the Central Act. The scheme of the Act shows that when original C Form is lost, duplicate can be issued on furnishing an indemnity bond. Therefore, it is not necessary that original C Form should have been produced before the assessing authority in all the cases. The assesse also cited and relied


49


upon the decision in case of Manganese Ore (India) Ltd. v. Commissioner of Sales Tax reported in [1991] 83 STC 116 (MP)

Submissions of the revenue before the M.P. High Court

The learned counsel for the revenue submitted before the M.P. High Court that as provided under the Rules, a dealer has to furnish the original copy of C Form before the assessing authority. The assessee cannot take benefit unless he furnishes the original C Form as provided in rule 8(2) of the M.P. Sales Tax (Central) Rules, 1957. The counsel relied on the Supreme Court decision in case of India Agency v. ACST, Bengaluru [2005] 139 STC 329 (SC) to support his contentions.

Decision of the M. P. High Court

The Hon’ble High Court held that the judgement of M.P. High Court in case of Manganese Ore is not overruled by the Supreme Court in India Agency case. The facts in both the case are different. The Hon’ble Supreme Court also took note that the Karnataka Rules and the M.P. Rules were different.

The Hon’ble M.P. High Court took note of the statement made at Bar by both the parties that the rules are almost same. In the above case, all original C Forms were lost whereas the case on hand all the original C Forms are with the department and the same were filed in in case of marketing division of the assessee and this fact is admitted by the department.

The Hon’ble High Court accordingly held that the case of assessee is fully covered by the decision of the M.P. High Court in case of Manganese Ore; which is also approved by the Supreme Court. In view of this, the Hon’ble Court held that the assessee is entitled to concessional rate of tax as if he had filed original declaration form C before the assessing authority.

Hà÷±ÉÖÅ HÉ©É HùÉà UÉà +à {ÉÊ¾, ~ÉiÉ Hà´ÉÒ ùÒlÉà HÉ©É HùÉà UÉà +à ©ÉÖtÉ{ÉÒ ´ÉÉlÉ Uà.

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50


SHRI G. D. JAIN [email protected]

Gist of the Judgements

COMMISSIONER, TRADE TAX Vs.

KASHI FOOD PRODUCTS PVT. LTD.

[IN THE ALLAHABAD HIGH COURT-LUCKNOW BENCH]

[2014] 69 VST 131(All)

(1) ´Éà~ÉÉùÒ¸ÉÒ AnÉù¡Éqà¶É©ÉÉÅ £àG÷ùÒ «ÉÖ{ÉÒ÷ yÉùÉ´Éà Uà.

(2) »Éqù¾ÖÅ yÉÅyÉÉ ©ÉÉ÷à ́ Éà÷ HÉ«ÉqÉ +{´É«Éà ́ Éà~ÉÉùÒ¸ÉÒ+à 29/03/1990 oÉÒ 28/03/1995 {ÉÉ »É©É«É ©ÉÉ÷à{ÉÖÅ +à±ÉÒY¥ÉÒ±ÉÒ÷Ò »É÷Ô£ÒHà÷ ©Éà³´Éà±É.

(3) l«ÉÉù¥ÉÉq ´Éà~ÉÉùÒ¸ÉÒ+à yÉÅyÉÉ{ÉÒ WN«ÉÉ ¥Éq±ÉÒ{Éà +{«É WN«ÉÉ+à ±É< NÉ«Éà±É.

(4) »Éqù¾ÖÅ HÅ~É{ÉÒ{ÉÉ ÊeùàG÷»ÉÇ©ÉÉ ~ÉiÉ £àù£Éù oÉ«Éà±É Uà.

(5) yÉÅyÉÉ{ÉÒ WN«ÉÉ lÉoÉÉ ÊeùàG÷»ÉÇ©ÉÉÅ £àù£Éù oÉà«É±É ¾Éà< Êe»÷ÄÒG÷ ±Éà´É±É H©ÉÒ÷Ò+à +NÉÉA +É~Éà±É +à±ÉÒY¥ÉÒ±ÉÒ÷Ò »É÷Ô£ÒHà÷ Hà{»É±É Hùà±É.

(6) ´Éà~ÉÉùÒ¸ÉÒ+à ÷ÄÒ¥«ÉÖ{É±É »É©ÉKÉ +~ÉÒ±É qÉLÉ±É Hùà±É Wà©ÉÉÅ ÷ÄÒ¥«ÉÖ{É±Éà ´Éà~ÉÉùÒ¸ÉÒ{ÉÉà qÉ´ÉÉà ©ÉÅWÚù ùÉLÉÒ +à±ÉÒY¥ÉÒ±ÉÒ÷Ò »É÷Ô£ÒHà÷ SÉÉ±ÉÖ ùÉLÉ´ÉÉ{ÉÉà +Éqà¶É Hùà±É.

(7) ÷ÄÒ¥«ÉÖ{É±É{ÉÉ +Éqà¶É »ÉÉ©Éà »ÉùHÉù¸ÉÒ+à ¾É<HÉà÷Ç »É©ÉKÉ ~ÉÒ÷Ò¶É{É qÉLÉ±É Hùà±É.

¾É<HÉà÷â {ÉÒSÉà{ÉÉ lÉÉùiÉÉà y«ÉÉ{Éà ±ÉÒyÉà±É Uà.

(1) »Éqù¾Ö «ÉÖ{ÉÒ÷{Éà +àH WN«ÉÉ+à oÉÒ ¥ÉÒY WN«ÉÉ+à ±É< NÉ«Éà±É Uà. lÉà©ÉW HÅ~É{ÉÒ ÊeùàG÷»ÉÇ©ÉÉÅ £àù£Éù HùÒ {É´ÉÖ ¥ÉÉàeÇ ¡É»oÉÉÊ~ÉlÉ Hùà±É ¾Éà´ÉÉ UlÉÉÅ lÉà{ÉÉoÉÒ +É~Éà±É +à±ÉÒY¥ÉÒ±ÉÒ÷Ò »É÷Ô£ÒHà÷ Hà{»É±É oÉ< ¶ÉHà {É¾Ò.

A~ÉùÉàGlÉ lÉ©ÉÉ©É HÉùiÉÉà{Éà y«ÉÉ{Éà ±É< ¾É<HÉà÷â cùÉ´Éà±É Uà Hà

+à±ÉÒY¥ÉÒ±ÉÒ÷Ò »É÷Ô£ÒHà÷ SÉÉ±ÉÖ ùÉLÉ´ÉÉ ¥ÉÉ¥ÉlÉ{ÉÉà ©ÉÉ{É{ÉÒ«É ÷ÄÒ¥«ÉÖ{É±É {ÉÉà SÉÖHÉqÉà «ÉÉàN«É Uà.


51


UTTAM MARKETING Vs.

APPELLATE DEPUTY COMMISSIONER (CT) II (FAC),CHENNAI AND ANOTHER

[IN THE MADRAS HIGH COURT]

[2014] 69 VST 136(Mad)

(1) ´Éà~ÉÉùÒ¸ÉÒ lÉÉ©ÉÒ±É{ÉÉeÖÅ ùÉV«É©ÉÉÅ yÉÅyÉÉà SÉ±ÉÉ´Éà Uà.

(2) ´Éà~ÉÉùÒ¸ÉÒ{ÉÒ 2009-10 {ÉÒ +ÉHÉùiÉÒ©ÉÉÅ ´Éà~ÉÉùÒ¸ÉÒ+à ©ÉÉÅNÉà±É <{É~ÉÖ÷ ÷àG»É JàÊe÷ {ÉÉà qÉ´ÉÉà {ÉÉ©ÉÅWÚù Hùà±É.

(3) ´Éà~ÉÉùÒ¸ÉÒ+à eà~«ÉÖ÷Ò H©ÉÒ¶{Éù¸ÉÒ »É©ÉKÉ +~ÉÒ±É qÉLÉ±É Hùà±É.

(4) ´Éà~ÉÉùÒ¸ÉÒ+à +~ÉÒ±É{ÉÒ »ÉÉ©Éà ©ÉÉÅNÉiÉÉ »ÉÉ©Éà »÷à{ÉÒ +ùY qÉLÉ±É Hùà±É.

(5) +à~Éà±Éà÷ eà~«ÉÖ÷Ò H©ÉÒ¶{Éù¸ÉÒ+à ¶ÉùlÉÒ »÷à +É~Éà±É. +{Éà »Éqù¾ÖÅ ¶ÉùlÉ ©ÉÖW¥É 25% {ÉÒ ùH©É §Éù´ÉÉ WiÉÉ´Éà±É. +{Éà ¥ÉÉHÒ{ÉÒ ùH©É ©ÉÉ÷à ¥ÉáH NÉàùÅ÷Ò +É~É´ÉÉ WiÉÉ´Éà±É.

(6) +à~Éà±Éà÷ eà~«ÉÖ÷Ò H©ÉÒ¶{Éù¸ÉÒ{ÉÉ ¥ÉáH NÉàùÅ÷Ò ùWÚ Hù´ÉÉ{ÉÉ +Éqà¶É »ÉÉ©Éà ¾É<HÉà÷Ç©ÉÉÅ ùÒ÷ ~ÉÒ÷Ò¶É{É qÉLÉ±É Hùà±É.

(7) »Éqù¾ÖÅ ùÒ÷ ~ÉÒ÷Ò¶É{É©ÉÉÅ ´Éà~ÉÉùÒ¸ÉÒ+à ùWÚ+ÉlÉ Hùà±É Hà ´Éà~ÉÉùÒ¸ÉÒ+à yÉÅyÉÉà SÉÉ±ÉÖ ùÉLÉ´ÉÉ ©ÉÉ÷à ©ÉÉ±É LÉùÒq´ÉÉà ~Éeà +{Éà lÉà{ÉÖÅ ´ÉàSÉÉiÉ ~ÉiÉ oÉÉ«É.

¥ÉáHà NÉàùÅ÷Ò +É~É´ÉÉ ©ÉÉ÷à 100% Êe~ÉÉà\ÉÒ÷{ÉÒ ©ÉÉÅNÉ Hùà±É.

A~ÉùÉàGlÉ ¾ÊHGlÉà ´Éà~ÉÉùÒ¸ÉÒ ¥ÉáH NÉàùÅ÷Ò ùWÚ HùÒ ¶ÉH´ÉÉ{ÉÒ ~ÉÊùÎ»oÉÊlÉ©ÉÉÅ Uà W {É¾Ò.

A~ÉùÉàGlÉ lÉ©ÉÉ©É ¾ÊHHlÉÉà{Éà y«ÉÉ{Éà ±É< ¾É<HÉà÷â cùÉ´Éà±É Uà Hà ´Éà~ÉÉùÒ¸ÉÒ+à ¥ÉáH NÉàùÅ÷Ò{ÉÒ WN«ÉÉ+à ~É»ÉÇ{É±É ¥ÉÉà{e +É~É´ÉÉ{ÉÒ ~Éù©ÉÒ¶É{É +É~É´ÉÒ

A~ÉùÉàGlÉ lÉ©ÉÉ©É HÉùiÉÉà{Éà y«ÉÉ{Éà ±É< ¾É<HÉà÷â cùÉ´Éà±É Uà Hà

´Éà~ÉÉùÒ¸ÉÒ+à ~É»ÉÇ{É±É ¥ÉÉà{e +É~ÉàoÉÒ +à~Éà±Éà÷ eà~«ÉÖ÷Ò H©ÉÒ¶{Éù¸ÉÒ+à +~ÉÒ±É{ÉÉ Ê{ÉHÉ±É »ÉÖyÉÒ »÷à +ÉàeÇù +É~É´ÉÉ +Éqà¶É Hùà±É Uà.


52


TribunalJudgements

Shri N.N.Patel-Shri Ashok J.Patel [email protected]

1. As provided in section 18 the tax credit can be c/f for the subsequent year after adjusting the amount of tax determined payable u/s 13 of the vat act.Because of rate difference the vendor had issued credit notes against purchase of goods made in year 2006-07 for which the appellant was required to reveres tax credit. However, on account of mistake on the part of the account the tax credit was not reversed during 2006-07. The appellant on coming to the knowledge of the said mistake reversed tax credit while filing return for the year 2007-08. There was tax credit of Rs. 73,625/- was in balance at the end of the year 2006-07, which was carried forwarded for the subsequent year 2007-08. The Ld. Assessing Officer while passing assessment order for the year 2006-07 reduced purchase turnover to the extent of credit notes given for rate difference in calculating the tax credit and further he again reversed tax credit to the tune of Rs. 26,840/- in respect to the credit note of rate difference. He reversed twice tax credit in passing of the assessment order. Accordingly, there was thrice reversal of tax credit, twice by the Assessing Officer in passing of the assessment order for the year 2006-07 and reversal of tax credit by the appellant himself while filing returns for the year 2007-08. The first appeal preferred against the assessment was partly allowed in which tax credit reversed twice was modified by reducing it one time. The penalty levied u/s 34(7) and 34(12) were reduced from 150 % to 50 %.The appellant brought to the notice of the Hon’ble Tribunal that there was excess amount of tax credit of Rs. 73,625/- was in balance at the end of the year 2006-07 and as provided in section 18, the amount of tax credit of Rs.26,840/- reversed on account of credit notes shall requires to be adjusted against the said balance amount of tax credit. Accordingly, there will be not any tax dues which attract the penalty. Hon’ble Tribunal referred section 13 of the Act. Hon’ble Tribunal also referred section 18 of the Act. Hon’ble Tribunal held that the amount of tax determined on account of credit notes of the vendor shall requires to be adjusted against the amount of tax credit which remains in balance at the end of the year 2006-07. Hon’ble Tribunal set aside the penalty levied u/s 34(7) and 34 (12) of the VAT Act.M/s. Sagar Hardware and Plywood Center, S. A. No. 874 of 2012 decided on 20/12/12. Reported at 2012 GSTB Part III Page 1487.

Tribunal Judgements

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2. R. C. application was rejected on account of mistake of the appellant of not giving details of the partner who was doing business earlier and as there was no godown. The Hon’ble Tribunal referred judgment in the case of m/s. m. a. traders, s. a. no. 408 of 2010 decided on 26/03/12 and Hon’ble Kerala high court judgment in the case of M/s. K. S. Salim, 11 VST page 11 and directed authority to consider further documents submitted by the appellant and to decide the matter. The provisional registration was granted subsequent to the application made by the appellant. The appellant submitted required documents. During visit to the place of business, it was found that earlier the appellant was doing kirana business in the name of M/s. Keval Traders and there was no godown. The appellant explained that there was mistake in not giving information of the earlier business activity of the partner and occupying godown place is under consideration. The Ld. Registering Authority rejected registration application. The first appeal was also rejected. The appellant submitted relevant facts before Hon’ble Tribunal and also relied on the judgment in the case of M/s. M. A. Traders (supra) and in the case of M/s. K. S. Salim (supra) Hon’ble Tribunal referred relevant facts and considering judgments relied on by the appellant remanded matter back to the authority for deciding it fresh keeping in mind the observation made in the judgments relied on by the appellant.

M/s. K. S. Steels, S. A. No. 207 and 208 of 2012 decided on 18/07/12. Reported at 2013 GSTB Page 1.

3. Hon’ble Tribunal held that penalty u/s 34(7) and 34(12) can be imposed even though the tax dues are determine on account of the single offence. However, the Hon’ble Tribunal reduced the amount of penalty from 150 % to 20 % u/s 34(7) and 34(12) of the VAT Act. The tax dues were determined payable on account of levy of purchase tax u/s 9(4) of the VAT Act. The appellant purchased isabgul from the commission agents who were holding permission to pay lump sum tax u/s 14(B) of the Act. However, the levy of purchase tax u/s 14(B) was held not payable by virtue of the notification issued u/s 5(2), if the agricultural products are used in the manufacturing of taxable goods and the goods so manufactured are sold within the state. The appellant has purchased isabgul from the commission agent of the state but it was send to its factory situated at Aburoad outside state of Gujarat for processing and the processed isabgul was exported from the processing unit at Aburoad. Accordingly, the appellant was held liable to pay purchase tax u/s 9(4) while passing assessment order for the year 2006-07. The Ld. Assessing Officer also imposed penalty u/s 34(7) and 34(12) of the Act. Both the penalties were levied @ 150 % of the amount of purchase tax levied u/s 9(4) of the Act. The appellant submitted relevant facts that under

Tribunal Judgements

54


which circumstances the purchase tax u/s 9(4) was not paid along with the returns. The appellant contended that the purchase tax u/s 9(4) was paid along with the interest prior to passing of the assessment order. In view of the facts of the case and considering payment made prior to passing of the assessment order, it was contended that the amount of penalty levied u/s 34(7) and 34(12) were requires to be removed. It was also argued that for the single offence of not paying purchase tax u/s 9(4) both the penalty u/s 34(7) and 34(12) cannot be levied. The appellant also relied on the judgment of Hon’ble Supreme Court in the case of M/s. Hindustan Steel Ltd. 25 STC 211. The Hon’ble Tribunal held that the appellant had committed breach of section 34(7)(b) by submitting incomplete or incorrect return in order to evade or avoid payment of tax. The Hon’ble Tribunal referred section 34(7) and 34(12) and held that both the section provide for levy of penalty under different contingency. Accordingly, the Assessing Officer was right in levying penalty u/s 34(7) and 34(12) of the Act. However the Hon’ble Tribunal considering various circumstances and facts of the case of not paying purchase tax along with the returns reduced the amount of penalty from 150 % to 20 % levied u/s 34(7) and 34(12) of the Act.M/s. Jyoti Overseas Pvt. Ltd. S. A. No. 577 of 2011 decided on 06/09/12. Reported at 2013 GSTB Page 43.

4. The item chirfal is spices as covered by entry 134 of schedule ii of the GST Act.The S.M.R. orders were passed in which the item chirfal was held liable to tax as covered by entry 195 of schedule II of the GST Act. The applicant contended before Hon’ble Tribunal that chirfal is used in the manufacturing of garam masala and hence is spices as covered by entry 134 of schedule II of the GST Act. The appellant relied on the judgment of Hon’ble Gujarat High Court in the case of M/s. S. K. Mundra, reported at 142 STC 360 in which it was held that the popular meaning which is assigned in common parlance by the people conversant or dealing with subject matter or article would attribute to it has to be taken in to consideration. The applicant also relied on the Supreme Court judgment in the case of M/s. Baidyanath Ayurved Bhavan Ltd. reported at JT (2009) 6 SC 29. The applicant also submitted certificates of the manufacturer of garam masala regarding use of chirfal in the manufacture of garam masala. Hon’ble Tribunal found out the meaning of the chirfal from the internet website and also referred the dictionary meaning of the chirfal i.e. kabab china is a chirfal. Hon’ble Tribunal set aside S.M.R. order and upheld the view of the Ld. Assessing Officer levying tax on sale of chirfal as covered by entry 134 of schedule II of the GST Act.M/s. Janata Brothers, R. A. No. 24 and 25 of 2009. - M/s. Gandhi Brothers, R. A. No. 26 of 2009 decided on 25/09/12. Reported at 2013 GSTB Page 66.

Tribunal Judgements

55


5. The Hon’ble Tribunal held that section 11 (3) (b) of reduction of tax credit @ 4% is not applicable in case where the goods purchased in the state is transferred to the another state for doing job work if the goods are send back to the state and are sold in the state of Gujarat.The Ld. Assessing Officer while passing assessment order for the year 2006/07 has reduced the tax credit @ 4% as provided in section 11 (3) (b) of the taxable goods purchased in the state and transferred to Daman for doing job work of manufacturing of Nylon filament yarn. The Ld. Assessing Officer relied on determination order u/s 80 and the Hon’ble Tribunal judgment delivered in the case of M/s. JCT Ltd. The appellant purchased Nylon POY Yarn from M/s. GSFC and transferred to M/s. Madhusudan Synthetics Daman for conversion of it in to Nylon filament yarn. The tax credit was claimed on the purchases of Nylon POY Yarn. The appeal was summarily dismissed as the appellant did not made payment of pre deposit amount. The appellant contended before Hon’ble Tribunal that section 11(3)(b) is not applicable in the case because the goods transferred to the Daman was only for doing job work of converting Nylon POY Yarn in to Nylon Filament Yarn. The goods transferred for doing job work was came back to the state and there after the sales of goods were made from the state of Gujarat. The appellant had satisfied the requirement of section 11(3)(a) of the Act. Accordingly, the appellant was entitled to claim tax credit and section 11(3)(b) is not applicable in the facts of the case. The appellant referred section 11(3)(a) and relied on the judgment of Hon’ble Supreme Court in the case of M/s. East India Cotton Manufacturing Co. Ltd. reported at AIR 1981 SC 1610. The appellant also relied on the circular of the Commissioner of Sales Tax, Maharashtra and the circular of Commissioner of Commercial Taxes, Karnataka in which the identical issue was answered in favour of the appellant. The appellant relied on Rule 7 of the Delhi VAT Rule 2005 in which the tax credit reduced while transferring goods outside state was held entitled to claim tax credit so reduced when the dealer brings such goods back into Delhi for sale. The appellant also relied on the relevant provision under the Punjab VAT Act, 2005. As regard interpretation of statute the appellant relied on the judgment of Hon’ble Supreme Court in the case of M/s. Filip Tiago De Gama of Vedem Vasco De Gama reported at AIR 1990 SC 961 and other judgments. The Hon’ble Tribunal referred section 11 (3) (a), section 11 (3) (b) and Supreme Court judgment in the case of M/s. East India Cotton Manufacturing Co. Ltd. (Supra) and held that section 11 (3) (b) regarding reduction of tax credit is not applicable in the case of the appellant. The state has preferred tax appeal before the Hon’ble Gujarat High Court which is yet not decided.

M/s. Madhusudan Texturisers Pvt. Ltd. S.A. No. 365 of 2011. Decided on 27/09/12. Reported at 2012 GSTB Page 72.

Tribunal Judgements

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6. The claim of concessional rate of tax on the interstate sale of goods made against form “c” is held admissible upon production of duplicate counter foil of declaration form “c”, where the original counter foils were misplaced by the department. The appellant submitted original counter foil of declaration form “C” to the concern Inspector during the course of assessment proceedings. However, the assessment order was not passed as the concern assessing officer was transferred to another office. The appellant was asked to remain present in the assessment proceeding by another Assessing Authority and was asked to submit declaration form “C” in support to the claim of interstate sale. The appellant pointed out that he had already submitted original counter foils of declaration form “C” at earlier stage. Appellant submitted duplicate counter foils of declaration form “C” and also requested to allow the claim of interstate sale made against form C. The Ld. Assessing Officer insisted for production of original counter foil of declaration form “C” and has ultimately rejected the claim of interstate sale made against form C and levied tax at full rate. The appellant contended before Hon’ble Tribunal that it had submitted original counter foil of declaration form C at earlier stage. The appellant filed detail affidavit stating relevant facts of submission of original counter foil of declaration form “C”. The Hon’ble Tribunal considering facts of the case directed assessing officer for passing of the assessment order by accepting duplicate counter foil of declaration form “C”.

M/s. P M Rathod and Co. S.A. No. 827 of 2010 decided on 15/10/12. Reported at 2013 GSTB Page 100.

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Tribunal Judgements

57


IMPORTANT HIGH COURT JUDGEMENT

Recovery of Tax - Cheques Collected From Dealer in Course of Search - No Adjudication Proceedings or Final Demand Raised Against Dealer - Held that there was no ground permitting The Department to start Recovery at this Stage. The Department shall Return Three Cheques Collected from The Dealer.

IN THE HIGH COURT OF GUJARAT AT AHMEDABADCORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Ms. JUSTICE SONIA GOKANISPECIAL CIVIL APPLICATION No. 959 of 2014ATUL MOTORS PVT LTD & 1.... Petitioner(s)Versus

STATE OF GUJARAT & 1.... Respondent(s)Appearance:Mr. UCHIT N SHETH, ADVOCATE for the Petitioner(s) No. 1 2 Mr. JAIMIN GANDHI AGP for the Respondent(s) No. 1 NOTICE SERVED BY DS for the Respondent(s) No. 2

14th February 2014ORAL ORDER

(PER : HONOURABLE Mr. JUSTICE AKIL KURESHI)

On 22nd January 2014, the Court had passed the following order :“

1. The petitioners are the authorised distributors of Maruti cars. They have been filing returns under the Value Added Tax Act, 2003 (hereinafter referred to as ‘the Act’) regularly. It is the contention of the petitioners that they recover certain handling charges from the customers, which are in the nature of post sales services. On such handling charges, according to them, they are not required to pay the Value Added Tax (hereinafter referred to as ‘VAT’), since such handling charges cannot form a part of sale value of the car. The respondents carried out search operations in the premises of the petitioners on December 25, 2013 and raised the issue of nonpayment of VAT on handling charges.

2. The learned counsel for the petitioner submitted that under coercion the petitioners were made to make epayment of Rs.15,28,972/= and Rs.24,323/=

Important High Court Judgement

58


in two separate payments. Over and above this, the respondents have also under duress taken three cheques from the petitioners. Total amount of such cheques is to the tune of Rs.1,86,12,518/. The learned counsel for the petitioner further submitted that so far there has been no adjudication on this issue and no assessment orders have been passed by the authorities. He submitted that in absence of any quantified demand, the respondents cannot recover the same. The petitioners are ready and willing to participate in any adjudication proceedings and put forth their point that they are not required to pay any tax under the Act on the handling charges so recovered by them. In any case, without any finalised demand, the coercive recovery would not be permissible.

3. Issue notice, returnable on February 14, 2014. Till further orders, the respondents shall not deposit for encashment the three cheques issued by the petitioners. Direct Service is permitted.”

In response to the notice issued, the respondent had appeared and filed reply.

Upon hearing learned counsel for the parties, the controversy in the present petition gets substantially narrowed down. The case of the petitioner is that there could be no recovery of tax dues unless and until the tax demand is crystallized. In absence of any assessment, the respondent cannot recover taxes.

On the other hand, learned AGP relied on the affidavitinreply to contend that in any case, the power for passing provisional attachment order is not taken away.

From the affidavitinreply filed by the respondents, we do not notice any ground permitting the respondents to start recovery at this stage. The insistence on collecting cheques from the petitioners, therefore, cannot be countenanced. Under the circumstances, the respondents shall return three cheques collected from the petitioner to them latest by 28th February 2014. This is without prejudice to the power of the competent authority to pass appropriate order, if so found necessary to protect the interest of revenue.

Petition is disposed of accordingly.

{Akil Kureshi, J.}

{Ms. Sonia Gokani, J.}

Important High Court Judgement

59


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60


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(4) {ÉÉ«É¥ÉÉ ´ÉÉÊiÉÎV«ÉH´ÉàùÉ HÊ©ÉüÉù wÉùÉ Task Approve H«ÉÉÇ ¥ÉÉq ´Éà~ÉÉùÒ »É¥ÉÅÊyÉlÉ »É©É«ÉNÉÉ³É{ÉÖÅ e-Return ~ÉÉàlÉÉ{ÉÉ Login ID ©ÉÉù£lÉà +~É±ÉÉàe HùÒ ¶ÉH¶Éà.

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(6) +É ©ÉÖW¥É +~É±ÉÉàe Hùà±É e-Return {ÉÉ ùÒ÷{ÉÇ scrutiny {ÉÉ ÷É»H »ÉÅ¥ÉÅÊyÉlÉ PÉ÷H HSÉàùÒ{ÉÉ +ÊyÉHÉùÒ¸ÉÒ{ÉÉ ±ÉÉàNÉÒ{É©ÉÉÅ W{Éùà÷ oÉ¶Éà. »ÉÅ¥ÉÅÊyÉlÉ +ÊyÉHÉùÒ+à £ùY«ÉÉlÉ ùÒ÷{ÉÇ scrutiny{ÉÒ HÉ«ÉÇ´ÉÉ¾Ò lÉÉlHÉÊ±ÉH Êq{É-60©ÉÉÅ ~ÉÚiÉÇ Hù´ÉÉ{ÉÒ ù¾à¶Éà.

A~ÉùÉàGlÉ »ÉÖSÉ{ÉÉ+Éà{ÉÖÅ »ÉÅ¥ÉÅÊyÉlÉ lÉ©ÉÉ©É +ÊyÉHÉùÒ+Éà+à SÉÖ»lÉ~ÉiÉà ~ÉÉ±É{É Hù´ÉÉ{ÉÖÅ ù¾à¶Éà.

»É¾Ò/- ´ÉÉÊiÉÎV«ÉH ´ÉàùÉ HÊ©ÉüÉù NÉÖWùÉlÉ ùÉV«É, +©ÉqÉ´ÉÉq.

FOUR beautiful thoughts of life:*************************Look back & get Experience!Look Forward & See Hope!

Look Around & Find Reality!Look within & Find Your self.

Never listen to other people’s tendencies to be negative or pessimistic. because they take your most wonderful dreams and wishes away from you — the ones you have in your heart!

Always think of the power words have. Because everything you hear and read will affect your actions! Therefore, ALWAYS BE POSITIVE!

Be DEAF when people tell YOU that you cannot fulfill your dreams!


61


ASSOCIATION NEWS

Shri Urvish V. Patel - Shri Tejash R. Shah

»ÉÉoÉÒ Ê©ÉmÉÉà,

´ÉÉÊºÉÇH »ÉÉ©ÉÉ{«É »É§ÉÉ{ÉÒ lÉä«ÉÉùÒ+Éà oÉ< ù¾Ò Uà. »É§«É Ê©ÉmÉÉà{Éà WiÉÉ´É´ÉÉ{ÉÖÅ Hà {ÉÒSÉà{ÉÒ £àH±÷Ò ©ÉÉ÷à{ÉÉ »É§«ÉÉà{ÉÉ ¥ÉÉ³HÉà{ÉÉ ©ÉÉSÉÇ-2013 ~ÉUÒ{ÉÉ ´ÉÉÊºÉÇH ~ÉÊùiÉÉ©ÉÉà +à»ÉÉà»ÉÒ+à¶É{É{ÉÒ +ÉàÊ£»Éà lÉÉ. 15©ÉÒ ©Éà 2014 »ÉÖyÉÒ©ÉÉÅ ©ÉÉàH±ÉÒ +É~É¶ÉÉà.

Prize List For The Year 2014-15 AGM

Sr. No

Name of Prize Examination head

1 Shri Rajnikant S. Mehta 2nd LLB

2 Smt. Sudha R. Mehta Prize InterC.A. Examination

2.1 Smt. Sudha R. Mehta Prize Final C.A. Examination

3 Late Shri C. B. Shah H.S.C. Commerce Examination

4 Shri.Anjanikumar C Shah Prize New S.S.C Examination

5 Shri R.M.Shah Prize T.Y.B.Com. Examination

6 Smt. Dinaben D Vasavada Marit Prize

M.com / MBA / MCA / MSc. / MBBS Examination

7 Late Shri Anil.N Sheth Prize P-E1 ( Inter C.A)

8 Shri Kanubhai G. Parikh B.B.A./B.C.A.

9 Shri Dilipbhai R. Shah First L.L.B.

10 Shri Suryakant N Patel H.S.C Science Examination

11 Shri Harish N Shah Third LLB

12 Panalal Jambuwala and Association

Special LLB.

SÉÉ±ÉÖ ´ÉºÉÇ{ÉÒ Hàù©É ÷Ö{ÉÉÇ©Éà{÷ SÉÉ±ÉÖ oÉ< NÉ«Éà±É Uà +{Éà SÉà»É ÷Ö{ÉÉÇ©Éà{÷Ö 2-5-2014oÉÒ ¶É° oÉ¶Éà.

AÊ´ÉÇ¶É ´ÉÒ. ~É÷à±É lÉàW»É +Éù. ¶ÉÉ¾ »ÉàJà÷ùÒ »ÉàJà÷ùÒ

ASSOCIATION NEWS

62


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“it’s not the load that breaks you down, it’s the way you … april- 2014 sales tax journal -...

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