This is a compilation of some important judgments taken from 45 VST to 62 VST with

a single judgement from 66 VST. It is hoped that judgements would be useful for all.
Prepared by
The office of OSD (VP)
Department of Sales Tax,
Government of Maharashtra, Mumbai.
Disclaimer:
This is only a compilation and does not express any views of the author of the document.
The compilation refers to the gist. Readers may please refer to the original judgement.
Although due care has been taken in preparing the gist and compiling the same, the compiler shall not be
responsible to any person for any action taken or not taken on the basis of this publication , whether directly
or indirectly, on account of any inadvertent error or omission.

Sr.
No.

Citation

Case Name

45

Swadeshi

VST

Issue
Assessing

authority

has

Decision
passed

original

The Court allowed the petition.

Classificatio
n
Assessment
1

111 (All)

Udyog V. Trade
Tax
Officer,
Kanpur
and
another

assessment order for 1996-97. On the ground

that in the assessment year 1997-98 it was
found that certain purchases were not
verifiable and, therefore, inference has been
drawn that the purchases of mustard oil for the
year under consideration were also not
verifiable and accordingly the notice for
reassessment was issued. On writ petition,

Each year is an independent

year
for
the
purpose
of
assessment.
Only
because
purchases in some other year
were not verifiable, it cannot be
used as a basis for initiating
proceedings in another year.

45
VST
255
(Karn)

Dishnet
Wireless
Limited
V.
Asstt. Commr.
Of Commercial
Taxes,
Bangalore and
others

The petitioner, an internet service operator,

extends services of broadband, web hosting,
etc, and in order to access the services, a CDROM is provided to its customers from whom
service charges are recovered. The assessment
order was passed. On remand reassessment
order was passed. The assessing authority
rejected the contention of the petitioner that
the internet services did not involve sale of CDROM and services were subjected to service
tax and passed the orders of assessments. On
writ petitions,

The Court allowed the petition.

The Court observed that the
orders
impugned
are
not
speaking orders. The Court
observed that an examination
of orders showed animate nonapplication of mind, as the
assessing
officer
without
adverting to the contentions
advanced by the petitioner in
the objections and recording
findings over the same, held the
objections untenable by placing
reliance upon the reported
opinion of this court in Bharti
Airtel Limited v. State of
Karnataka [2009] 22 VST 465,
which had been set aside by
Hon. Supreme Court.

Assessment

45
VST
361 (Guj)

Larsen
And
Toubro
Ltd.
And Another V.
Union of India
and Others.

The petitioner had manufacturing unit at

Hazira in Gujarat. He entered into four
contracts with ONGC for indivisible turnkey
projects consisting both of supply of goods and
rendition of service including labour. To execute
such turnkey contracts, the petitioners had
arranged for supply of certain goods from its
Hazira plant at Surat to ONGC at Bombay High,
which is situated around 180 kms off the
baseline of coast of India and forms part of
"exclusive economic zone". It was thus the
case of ONGC that title of goods supplied by
the petitioner to ONGC, during the course of
and in furtherance of execution of the turnkey
project, passed at Bombay High and not at
Hazira. The assessing authority held the
opinion that such sales would be covered
under the CST Act as interstate sale.

Held, allowing the petition,

when the sale of goods took
place at Bombay High, for
which the goods moved from
Hazira to Bombay High, such
movement
does
not
get
covered within the expression
"movement of goods from one
State to another" contained in
clause (a) of section 3 of the
CST Act. It is clear that the
goods had not been moved
from one State to another since
Bombay High does not form
part of any State of Union of
India.

High
sales

seas

45
VST
407
(Bom)

Vithal
Sugar
Manufacturing
Ltd. V. State of
Maharashtra
and Others.

The petitioner submitted an application on

29.7.2010 for exemption from the payment of
purchase tax under section 12B of the
Maharashtra Purchase Tax on Sugarcane Act,
1962. It was rejected. The petitioner called into
question an order passed by the State
Government in the Finance Department,
rejecting the application made by the
petitioner for exemption under section 12B of
the Maharashtra Purchase Tax on Sugarcane
Act, 1962.

Section 12B is an enabling

power. The State Government is
empowered to remit the whole
or any part of the tax payable
under the Act. The State
Government is empowered to
do so in order to encourage the
establishment of new factories
or units or for the purpose of
overcoming any difficulties in
respect of any factories or units
in
the
initial
period
of
manufacture or production of
sugar. While remitting the tax,
the State Government may do

Remission

so for such period or periods

and subject to such conditions
as may be specified. The levy of
tax is a sovereign function. The
power to remit the payment of
tax is an incidence of the
sovereign power of the State.
No assessee has a vested right
to claim a remission from the
payment of tax. An assessee
may in a given situation, be
aggrieved if a remission has
been granted to one but not to
any other assessee similarly
situated. However, in this case
a challenge on the ground of
discrimination has not been set
up with any particularity. In the
application for remission that
was submitted by the petitioner
on July 28, 2010, it was only
stated that the unit is a new
unit
and
facing
financial
difficulties.
No
details
whatsoever were furnished to
the State Government. The
State Government was in those
circumstances
justified
in
rejecting
the
request
for
remission. The exercise of the
power by State Government
cannot hence be faulted.

45
VST
544 (Ker)

Bharat
Petroleum
Corporation
Ltd.
V. State
of Kerala.

The assessing authority found that the C form

filed by petitioner to be defective and
unacceptable and disallowed the claim of
concessional rate of tax. The first appeal
authority confirmed the disallowance. The
Tribunal confirmed the order. The grievance of
the
petitioner
is
that
the
erasures,
substitutions are not sufficient to invalidate the
form. He had filed confirmation letters from the
buyers showing sale which he felt was
sufficient.

The
Court
dismissed
the
petition.
It
observed
that
checking of few C forms showed
that advance blank C form is
issued by the buyer which is
filled up by the seller which is a
procedure impermissible under
the provisions of the CST Act
because buyer should certify
correctness of the entries in the
C form. Supplementing and
substituting entries in C forms
produced by the dealer by
producing confirmation letters
from the buyers were not
permissible
and
therefore
authorities
including
the
Tribunal rightly rejected the
petitioner' claim.

Declarations

46 VST 1
(Bom)

Addl. CST, VAT

III, Mumbai. V.
Ankit
International.

The respondent filed an audit report under

section 61 in the prescribed form 704 beyond
the period prescribed. DC levied the penalty.
The Tribunal in second appeal reduced the
penalty by holding that the delay on the part of
the respondent was not deliberate. On a
appeal contending that
the under section
61(2) the Commissioner has a discretion
whether or not to impose a penalty in the first
place but once he comes to conclusion that a
penalty is liable to be imposed, he has no
further discretion in regard to the extent of the
penalty.

Held, discretion to impose

penalty
extends
also
to
quantum of penalty to be
imposed.

Penalty

46
VST
35 (Karn)

Sky
Gourmet
Catering
Pvt.
Ltd. V. Asstt.
Commr.
Of
Commercial
Taxes,
Bangalore and
Others.

The applicant was engaged in the business of

catering services which included preparation of
food. The assesse entered into agreement with
airlines for preparation of food and supply of
meals. Under the agreement the - assessee
agreed to render supply services, like loading
and
unloading
services,
transportation
services, high lifting services and allied
services
under
separate
heads.
The
consideration paid for towards cost of the food
and other services like handling, loading, etc.,
are separately charged and the bills are also
raised separately as agreed to between the
parties. The assessee is paying service tax on
the gross amounts received by it towards
handling
charges,
transportation,
lifting,
loading and unloading, etc. The assessment
order levied VAT on turnover including all the
above charges, The appellant contended the
above.

Held, allowing the appeals, (i)

that a contract for outdoor
catering is a contract for
service. By virtue of sub clause
(f) of clause (29A) of article 366
it is to be treated as a
composite contract and the
State Legislature is competent
to levy sales tax on the sale
aspect.
But that does not
empower them to levy tax on
the entire amount mentioned in
the bill.

Sale price

46
VST
79 (MP)

Cadila Health
Care Ltd. V.
Additional
Commr.
of
Commercial
Taxes
and
Others.

Whether GRD powder and GRD bix would fall

within the expression "non-alcoholic drink and
beverage"

1)In Lazarus Alosius v. State of

Kerala [2006] 144 STC 210
(Ker), the Full Bench of the
Kerala High Court held that in a
generic sense any potable liquid
except water is a "beverage".
From perusal of the language
employed by the Legislature in
entry 20(ii) of Part IV of the
1994 Act, the intention of the
Legislature is clear that an item
in order to fall under the
aforesaid entry has to be in the

Schedule
entry

liquid form which is manifest

from the words "beverages
including
syrups,
cordials,
distilled juice, ark and essences
when sold in sealed or capsuled
or cork bottles or jars".2) the
expression "beverage" as is
commonly understood means
any liquid other than water,
which may be consumed neat
or after dilution. Thus, the
products in question, namely,
GRD powder and GRD bix which
are admittedly not in liquid form
cannot be said to fall within the
relevant entries, namely, entry
20(ii) of Part IV of Schedule II of
the 1994 Act and entry 14 of
Schedule II of the Entry Tax Act.

46
VST
179 (AP)

Bharat
Electronics
Limited. V. Dy.
Commr. (CT),
no.
II
Div,
Vijaywada and
Another

The petitioner, has several units spread all over

the country. He manufactures night vision
devices
at
Machilipatnam.
The
goods
manufactured are transferred to the other units
of the petitioner outside the State. It is the
contention of the petitioner that these are not
sold by Machilipatnam unit but are to be
incorporated in the equipment manufactured
at the other units, and are eventually sold
there from to the end customers; The Dy.
Commr. rejected stock transfer claim and
levied tax as interstate sales.

It is only if the goods, which

move from one State to
another, are sold as they are
and are not incorporated in, or
do not form part of, other goods
would the question of such
transfer of goods attracting levy
of tax under the CST Act, as an
inter-State sale, arise. It is not
in dispute that the goods
supplied by the Machilipatnam
unit, to other units of BEL
located outside the State, are
merely components of, and are
incorporated in, the goods
manufactured by other units of
the petitioner - company locate
outside the State of A.P., and
the goods transferred by the
Machilipatnam unit are not sold
to the Armed Forces as they
are. The transfer of goods by
the Machilipatnam unit, to other
units of
the
petitioner
company located outside the
State, fall within the ambit of
section 6A(1) of the CST Act,
and are not inter-State sales
exigible to tax under section 6
of the Act. The order of the first
respondent, holding that the
transfer of such components by
the Machilipatnam unit to other

Branch
transfer
allowed

units of the petitioner company

situated outside the State
constitutes inter-State sales
under the CST Act, must
therefore be quashed.

10

46
VST
289
(Karn)

Desai Brothers
Ltd.
V.
Additional
Commr.
of
Commercial
Taxes Zone I,
Bangalore.

The assessee is a dealer in garlic and ginger

paste and paying tax at four per cent under
entry dealing with "fruits and vegetables".
Assessing authority passed orders levying the
tax at 12.5 per cent on the ground that garlic
paste and ginger paste are masala.

The
Court
allowed
the
petition.1) The paste that is
referred to in this entry is to be
read in conjunction with the
other items including pickles,
even though, the said entry
does not deal with ginger or
garlic paste, etc. Item No. 27 of
the First Schedule deals with
ginger and garlic. However, the
paste is not included. The
honourable Supreme Court in
the case of State of West
Bengal
v.
Washi
Ahmed
reported in [1977] 39 STC 378
(SC) has held that ginger is to
be construed as a vegetable.
Further
the
honourable

Schedule
entry

Supreme Court affirmed the

finding of the Division Bench of
the High Court which held that
green ginger would fall within
the meaning of the words
"sabji,
tarkari
or
sak".
Accordingly they held that
green ginger is a vegetable.
Ginger or garlic paste in view of
its non-mentioning in any of the
schedules, would have to be
construed into one of the
closest proximate entry No. 3 of
the
Third
Schedule
which
includes the words fruits and
vegetables, 2) The reasoning
of the revisional authority that
since garlic paste and ginger
paste is close to masala paste
and therefore the same should
be read as masala product and
consequently the tax at 12.5
per cent is applicable, cannot
be
accepted.
The
closest
reference cannot be made with
reference to masala paste but
with the reference to vegetable.
11

46
VST
359
(Mad)

Silver
Spring
Spinner (India)
V.
State
of
Tamil Nadu and
Another.

For the year 99-2000 dealer was assessed on

12.11.04. On 22.4.2005 he was sent notice for
reassessment. The contention of the petitioner
is that the reassessment notice therefore, was
barred by limitation, having been issued on
April 22, 2005, whereas the period of five years

Held, amendment made before

end of the expiry of unamended
provision applies.

Limitation

10

for assessment year 1999-2000 expired on

March 31, 2005. The section was amended wef
1.7.2002 providing limitation for assessment of
five years from date of assessment as against
five years from end of year to which
assessment related, which is not retrospective.
12

46
VST
453
(Mad)

Venkateswara
Industries.
V.
State of Tamil
Nadu.

The petitioner is engaged in the manufacture

of spares and accessories and tools for
tractors, in particular as per the specifications
given by the major tractor manufacturers
namely TAFE. Of the various spares and tools
supplied by the petitioner, "Grease gun" is one
such item was specifically designed by M/s.
TAFE (customer) and which as per petitioner is
an important accessory., He contended that the
"grease gun" manufactured and supplied to
M/s. TAFE, cannot be used by any other
manufacturer of tractors. The petitioner
claimed that the sale of "grease gun" to M/s.
TAFE, would attract the levy of four per cent
tax
as
the
said
item
falls
under
tools/accessories. According to the assessing
officer, grease gun" were not exclusive spare
parts for tractors and can be used for other
tractors also, it will fall under the residuary
clause.

The Court allowed the petition.

By virtue of the nature of its
usage "grease gun" can be used
as a device for application of
grease into the bearings and
other parts of the vehicle,
namely,
the
tractor
manufactured by M/s. TAFE. The
further
fact
that
the
manufacture of such "grease
gun" by the petitioner is
according to the specifications
of M/s. TAFE, and that it cannot
be freely used by the other
brand of tractors is one other
relevant factor to support the
stand of the petitioner that it is
a part of an implement of the
tractor manufactured by M/s.
TAFE.

Schedule
entry

13

46
VST
470(Mad)

State of Tamil
Nadu
V.
Garware Wall
Ropes

Whether custom duty drawback on export of

goods form part of sale price.

1) Where the receipt is from

any third party who has nothing
to do with the sale and the
payment has no relevance or
reference to the sale, the same
could not form part of the sale

Sale price

11

transaction; hence, there is no

question of including the same
under the head of "turnover".
2) When the duty drawback
was as per the scheme given
under the Excise and Customs
Rules and that there was no
agreement
between
the
purchaser and the seller on the
aspect of duty drawback and it
never
received
any
consideration and rightly so in
the sale effected, the question
of roping in those receipts from
the Government of India long
after the sale does not arise, to
be included in the turnover for
the purpose of assessment.
14

46
VST
512
(Mad)

Tools
Machinery And
Products
V.
State of Tamil
Nadu.

The petitioner is a dealer in motor bus

accessories. He purchased the motor bus
accessories such as glass and resold the goods
inside the State at eight per cent under entry
for auto parts and accessories. The assessing
officer has levied tax at 12 per cent as
glassware.

The Court allowed the petition.

The
schedule
entry
for
glassware
covered
glass
products other than those
specified elsewhere, So it is
clear that when goods are
specified elsewhere the same
would not fall under entry for
glass. The dealer purchased
glass and sold only to bus
operators. Therefore the goods
would be covered by entry for
motor parts.

Schedule
entry

12

15

46
VST
549
(P&H)

State of Punjab
V.
Anapurna
Impex Pvt. Ltd.

For the assessment year 2003-04 the

assessment in respect of the assessee was
passed on 15.4.2008. Though extension of
time for framing the assessment was granted
by the Commr in exercise of power u/s 11(10)
of the Act,, it was after the expiry of the
statutory period prescribed u/s 11, i.e. three
years from the last date for filing the return. On
appeal the Tribunal set aside the assessment
as time-barred. On appeal :

Held, dismissing the appeal, the

power of Commissioner to
extend time for completing
assessment to be exercised
before assessment becomes
time barred. The high Court
followed the previous High
Court judgment in Shreyans
Industries Limited (18 VST 493).
It was held that, deferment of
assessment has the effect of
enlarging
the
period
of
limitation which did not expire
by the time the deferment order
is contemplated to be passed.
When once the period of
limitation expires, the immunity
against
being
subject
to
assessment sets in and the
right to make assessment gets
extinguished.
There
is
no
question
of
deferring
assessment which had already
become time-barred. Therefore
the order extending time for
completing the assessment for
the year 2000-01. passed on
17.8.2007, i.e. beyond three
years from the last date
prescribed for furnishing the
last return in respect of that
period as prescribed under
section 11(3) of the Act was

Limitation

13

liable to be set aside.

16

47 VST 1
(CSTAA)

Hindustan Zinc
Limited
V.
State
of
Andhra
Pradesh
and
Others.

In the concerned assessment year 1985-86,

the appellant had not disclosed the nature of
the
transactions
now
involved.
The
transactions involved are the supply of zinc to
M/s. Indian Iron & Steel Company Limited
(IISCO) and to M/s. Tata Iron and Steel
Company Limited (TISCO). The supplies to
these companies were made by the Calcutta
stock point. The modus operandi adopted was
for IISCO and TISCO to respond to offers made
by the Calcutta office of the appellant and
offering to purchase the quantities required by
them at the prevailing rates and placing orders
for purchase of their monthly requirements, on
accepting the conditions imposed by the
appellant. On information gathered in respect
of these transactions from IISCO and TISCO,
the assessing officer issued a notice to the
appellant to show cause why the two
transactions involved here, could not be
assessed to tax under the Act. The show-cause
notice indicated that it was found that it was
pursuant to orders placed on the branch office
of the appellant that the goods were sent to
the respective buyers for supply through its
branch office and thus the movement of goods
was occasioned by the orders for purchase
placed by IISCO and TISCO on the branch. The
appellant pleaded branch transfer.

The
Court
dismissed
the
petition. it is indicated that the
circumstances have to be
appreciated and that to become
an inter-State sale, it was not
even necessary that the goods
be
ascertainable
before
dispatch. In the case on hand, it
is seen that specific offers were
made by the branch office of
the appellant to IISCO and
TISCO for sale of their products
on the conditions mentioned
therein. The conditions were
accepted by IISCO and TISCO
and they placed orders on the
appellant for supply of specified
quantities of zinc of specified
purity in specified monthly
quantities.
The
authorities
below and the Tribunal cannot
be faulted for coming to the
conclusion
that
in
the
circumstances
the
orders
placed by IISCO and TISCO were
firm
orders
for
specific
quantities of the products. The
attempt of the appellant to
distance itself from the offers
and acceptance secured by the
branch office at Kolkata, can

Branch
Transfer not
allowed

14

only be considered as a
desperate attempt to get over
the effect of that part of the
transaction in assessing the
nature of the sale involved
herein. On an appreciation of
the facts indicated by the
orders under appeal, It is true
that even though the orders
placed by IISCO and TISCO
indicated
the
specified
quantities to be supplied every
month and the supplies did not
always conform to it, may not
tilt the scale in favour of the
appellant. Similarly, the fact
that in some months, more
quantities were delivered to the
companies or that the goods
sent from Visakhapatnam were
not earmarked, may not also tilt
the scale.
17

47
VST
66 (All)

Indian
Oil
Corporation
Ltd. V. CCT,
U.P., Lucknow.

The petitioner had its refinery unit at Mathura

wherein it manufactures petroleum products.
The assessing authority added the amount of
excise duty paid by the purchaser outside the
State of UP in the turnover. He found that the
applicant had not included the excise duty in
the sale price of the petroleum products which
have been transferred from its bonded
warehouse to other marketing companies
outside UP.

Held, no goods shall be

removed from any warehouse
except as on payment of duty
or, where so permitted by the
Central
Government
by
notification in this behalf for
removal to another warehouse
or for export. The aforesaid
provision clearly contemplates
that the excise duty is the
leviable on the manufactured

Sale
pricedeferred
excise duty
also a part
of it.

15

product and the duty is payable

at the point of removal. No
goods can be removed from the
factory
or
the
warehouse
without the payment of duty.
Therefore, the initial liability to
pay the Central excise duty was
on the applicant while removing
the goods from its factory or its
warehouse. However, in case if
the
permission
has
been
granted to remove the goods
from the factory or warehouse
to the warehouse licensed
under section 140 belonging to
some other person, without
payment of duty, the duty is
payable on the clearance of
goods from such warehouse. In
such
circumstances
the
payment of excise duty has only
been deferred or extended from
the stage of removal of goods
from
the
factory
or
the
warehouse of the applicant to
the warehouse of the purchaser,
but the liability to pay the
excise duty, which is chargeable
and payable under the Act, by
the manufacturer does not
cease. The incidence of excise
duty is directly relatable to
manufacture but its collection

16

can be deferred to later stage

as a measure of convenience or
expediency.
18

47
VST
207
(Karn)

O.P.
Developers. V.
State
of
Karnataka and
Others.

The assessee is engaged in the execution of

civil works contract and also undertakes
construction of apartments. The authority has
passed ex parte assessment orders for both
the years resorting to best judgment
assessment, as the assessee failed to produce
books of account before them. Aggrieved by
these ex parte orders and penalty order, the
assessee preferred two appeals before the Joint
Commissioner of Commercial Taxes (Appeals).
During the pendency of the said appeal, the
Additional Commissioner of Commercial Taxes
I, Bangalore in exercise of his revisional power
under section 22A(1) of the Act reviewed that
portion of the order of the appellate authority
which had granted the benefit to the assessee.
It is that order which is challenged by the
assessee in this appeal.

19

47
VST
343
(Delhi)

Giesccke
&
Debrient
I.P.
Ltd.
V.
Commissioner
of Sales Tax
(Delhi).

The appellant imported bank note processing

system BPS. under bill of entry which described
it as an importer and M/s. Zion Express Cargo
Private Ltd., as the cargo agent. On the basis
that this import was back to back import in
view of the order placed by Canara Bank, that
after this order was placed on the dealer, it
placed the order on German company, the
dealer claimed that the import and transfer is
covered by section 5(2) of the CST Act". The

The
Court
dismissed
the
petition;
No
revisional
jurisdiction is to be exercised in
respect of the matter which is
the subject-matter of appeal.
However, there is no prohibition
in law for the revisional
authority
to
exercise
the
revisional jurisdiction in respect
of the matter which is not the
subject-matter
of
appeal.
Merely
because
appeal
is
pending his power is not
denuded.

Revisionscope

The Court dismissed the appeal,

The appellant was the importer.
The appellant no doubt had
entered into an earlier contract
with Canara Bank, Bangalore,
but for the purpose of the said
contract the appellant was not
the agent of the supplier in
Germany. The contract between
the Canara Bank, Bangalore,

Sale in the
course
of
import
disallowed

17

20

47
VST
358
(Mad)

Kongoor Textile
Process. V. Jt.
Commissioner
(CT), Chepauk,
Chennai
and
Another.

Tribunal decided the question against the

dealer. On appeal :

was on principal to principal

basis. The obligation to comply
with the purchase order was
that of the appellant alone.
Similarly, when the appellant
entered into contract with the
German company it was a
contract
on
principal
to
principal basis. Canara Bank,
Bangalore, did not have privity
of contract whatsoever with the
German company. Any default
of the contract in the first
contract with Canara Bank,
Bangalore, would be liability
and obligation of the appellant
and not that of the German
company. Thus, they were two
independent transactions. The
imported goods could have
been diverted to another third
person, without violation/default
of the contract between the
appellant and the Canara Bank,
Bangalore.

The

The
Court
dismissed
the
petition.
When once the
revised return or original return
is filed, admitting the liability,
the payment is treated as to a
liability date backs to the date
when the payment of tax ought
to have been made. When once

petitioner is a dyeing contractor who had

effected inter-State purchases of dyes and
chemicals. Originally the assessee was under
the impression that chemicals purchased and
used in the execution of the dyeing contract
were exempted from tax. It was pointed out to
assessee that in the case of dyes, there was 50
per cent of transfer of property and in the case

Interest

18

21

47
VST
363 (Ker)

Jainulavudheen
. V. State of
Kerala.

of chemicals, there was no transfer of property

at all. Based on the resolution, the assessee
paid the taxes on 50 per cent of the dyes used
in the dying contract. Having regard to the
admission, the assessee paid the tax thereon
under the revised return. However, penalty was
levied by assessing authority.

there is default in the payment

of tax in accordance with the
provisions of the Act, the
assessee becomes defaulter,
thus
attracting
penal
consequences.
Wherever the
assessee defaults in meeting
the admitted tax liability within
the statutory period, interest is
leviable and is an automatic
one. Consistently, the view as
regards levy of interest is that it
is an automatic levy and there
is no question of discretion
reserved in the matter of levy of
penalty.

In the course of business the petitioner

purchased old vehicles from various persons,
dismantled the same and sold the items as
scrap by weight taxable at four per cent.
During the inspection the intelligence officer
noticed that scrap portion of the dismantled
vehicle is sold in the breaking yard itself and
usable automobile spare parts are recovered
by the petitioner from the dismantled vehicles
and the same are brought to shop and sold as
automobile spares. The intelligence officer
found on inspection that the items sold are
spare parts of automobiles usable as such and
so much so tax payable is at the rate shown
under the specific entry in the Act and the
petitioner's effort by showing sale as by weight
is only to avoid payment of actual rate of tax.

The
Court
dismissed
the
petition.
It
is
common
knowledge that the spares and
components
recovered
on
dismantling an old automobile
would
not
have
suffered
uniform erosion.
Scrap is
purchased only for melting and
for re-rolling the primary metal.
However, when old spare parts
are sold as such, those are for
use
as
spare
parts
in
automobiles and so much so tax
is leviable at the rate applicable
for the commodity. The findings
of the intelligence officer that
the rate of tax applicable for

Schedule
entry scrap
or not?

19

sale of old automobile spare

parts is the rate applicable to
automobile
spare
parts
is
perfectly correct.
22

47
VST
487 (Ker)

Supreme Food
Industries.
V.
State of Kerala.

The petitioner engaged in manufacture and

sale of ice cream made bulk purchases of deep
freezers and delivered the same to distributors
against security deposits almost equal to the
value of deep freezers, it was also provided
that deposit to be adjusted in 4 equal
instalments for wear and tear. He claimed that
supply of deep freezers against collection of
security from them does not amount to sale.
He made an alternate claim for input tax
credit, which is the tax paid on the purchase
thereof. The Tribunal rejected both the claims
supply of deep freezers is sale of capital goods.

Held, the transaction is a pure

sale but on credit basis payable
in four instalments. The lower
authorities
including
the
Tribunal rightly found that the
agreement does not reflect the
nature of transaction which is
nothing
but
outright
sale
camouflaging the consideration
as deposit, which will be
adjusted
in
four
equal
instalments in the course of
four years.

Sale price

23

48
VST
231 (AP)

Ramky
Infrastructure
Ltd. V. State of
Andhra
Pradesh.

The petitioner is an incorporated entity

engaged in execution of the works contract. a
dealer, who obtains certificate in form L1
exercising option for composition of tax
payable under sec Act cannot withdraw the
option during the currency of L1 certificate. A
show-cause notice was issued and the
petitioner filed objections.

The
Court
dismissed
the
petition. Option once exercised
and permission granted for
entire year, dealer not entitled
to resile and seek assessment
under
regular
provision.

Composition

20

24

48
VST
443 (SC)

Hotel Ashoka
(Indian
Tour.
Dev. Cor. Ltd.).
V.
Asst.
Commissioner
of Commercial
Taxes
and
Another.

The appellant having its duty free shops at all

major International Airports in India. At the said
duty free shops, the appellant sells several
articles including liquor to foreigners and also
to Indians, who are going abroad or coming to
India by air. The appellant claimed sale in the
course of import. The AC rejected the
contention of the dealer that the sale made by
it in the duty-free shops was a sale in the
course of import u/s 5(2) of the CST Act. # as
the goods were sold directly to the passengers
and even the delivery of goods at the duty free
shops was made before importing the goods or
before the goods had crossed the customs
frontiers of India. levied the tax on the goods
sold by the dealer in the duty-free shop.

The Supreme Court allowed the

petition and held that sale of
goods at duty-free shop in
airport is sale in the course of
import. After purchase of the
goods at the duty free shops,
passengers enter the country
by
crossing
the
customs
frontiers. The goods were
actually
delivered
to
the
customers and sales were not
effected
by
transfer
of
documents of title to the goods
and, therefore, it cannot be said
that no tax could have been
levied on the sales effected at
the duty free shops. According
to the AC, crossing of customs
frontiers had no significance
because once the goods are
brought into our country and
especially in the State of
Karnataka, all sales effected in
the State of Karnataka would be
subject to tax as per the
provisions of the Act. The duty
free
shops
situated
at
Bengaluru International Airport
are situated in the State of
Karnataka and, therefore, sales
effected at the said shops
would be taxable under the
provisions of the Act.

Sale in
course
import

21

the
of

25

48
VST
496
(Bom)

Whirlpool
of
India Ltd. V.
State
of
Maharashtra
and Others.

The petitioner was entitled to the benefits of

packages
scheme
of
incentives
1993
whereunder he was entitled to claim refund tax
paid on purchases. He submitted bank
guarantee for facilitating grant of refund. The
Dept. contended that the Commissioner was
duty bound to verify as to whether and to what
extent a refund was due.

The Court allowed the petition.

The
Commissioner
is
not
precluded from carrying out a
due verification. Refunds relate
to the public revenues. The
Commissioner as the custodian
of the public revenue is duty
bound to ensure that the
provisions of Section 51 are not
being misused and that a
refund is due. Such an exercise
is not prohibited by the statute.
However, refund applications
cannot
be
kept
pending
indefinitely. The basic purpose
of Section 51 is to streamline
the
grant
of
refunds
to
registered
dealers
and
particularly in the case of those
falling in the special category
carved out in sub-section (3).
Having
regard
to
these
provisions, the court observed
that
there
would
be
no
justification for the sales tax
department
to
keep
the
application of the Petitioner
pending for the grant of a
refund
inordinately
without
explanation.

Refund

26

48
VST
550 (MP)

Paras
Pharmaceutical
s Ltd. V. State

According to the assesse Borosoft Natural and

Borosoft Cream are items which can be used to
treat specific medical conditions and can also

The assessee accepted that

Borosoft Natural and Borosoft
Cream are not medicines.

Schedule
entry

22

of
Madhya
Pradesh
and
Others.

be used otherwise by persons who are not

suffering from any such medical problems, for
enhancement of beauty, and therefore these
items would be taxable under entry 41 of Part
III of Schedule II. Dermicool powder which is
described as a prickly heat powder is a
medicine.

Prickly heat powder is normally

used for relieving prickly heat
problem.
Dermicool
powder
which is described as a prickly
heat powder is also commonly
understood to be of use in
treating prickly problem and not
as an ordinary talcum powder.
Therefore
item
Dermicool
powder must be held to be a
medicine.

27

49 VST 1
(SC)

IFB Industries
Ltd. V. State of
Kerala.

It has a scheme of trade discount for its

dealers under which the dealer, on achieving a
pre-set sale target gets certain discount on the
price for which it purchased the articles from
the manufacturer.

Hon. Supreme court overruled

the high court judgment, and
allowed the appeal. It held that
the assessing authority shall not
reject the claim for deduction of
the amounts of trade discount
solely on the grounds that
discount amounts were not
shown in the sale invoices.

Sale
price
(discounts)

28

49 VST14
(Bom)

Commissioner
of Sales Tax,
Maharashtra
State. V. Pure
Helium (India)
Ltd.

The assessee had effected sales of Helium gas

to ONGC which is situated about 150 km from
the coast line of Maharashtra. The area falls
within the exclusive economic zone on the
continental shelf. The assessee claimed that
the sales which were effected were sales in the
course of export under Sec 5(1) of the CST Act
for the reason that Mumbai High falls beyond
the territorial waters of India.

The court held that both before

and after 15.1.1987, the sale
which was occasioned by the
movement of the goods from
the State of Maharashtra to
Mumbai High was not sale in
the
course
of
export.
The court also held that the
State has not sought to levy
sales tax in the on the basis
that there was a local sale. The
assessment
sought
to
be

Sale
to
Bombay High

23

effected on the basis that there

was a sale in the course of
interstate trade and commerce.
Having held that the state was
not justified in brining the sale
to tax as a sale in the course of
inter-state trade and commerce,
the court cannot be called upon
to
decide
any
other
hypothetical issue.
29

49
VST
98 (AP)

State
of
Andhra
Pradesh.
V.
Bharat
Sanchar Nigam
Limited.

It is contended on behalf of the petitioners service providers that the use/utility of the SIM
card remains the same in both prepaid and
postpaid connections; in the case of a pre-paid
SIM card, service charge is collected mainly for
activating the connection; service tax is paid
on this consideration as "telecommunication
service"; a SIM card is incidental to the
rendering of telecommunication service; SIM
cards are not sold by the service provider to
the subscribers, and are not chargeable to tax
under the Act; even if it is held that SIM cards
are "goods" and it is sold, the price charged for
the starter kit does not constitute the sale
consideration; sales tax is sought to be
imposed even on the activation charges
component of the value of a starter kit though
it does not amount to "sale"; Post-paid SIM
card charges, which represent the call charges
collected by the petitioners from their
subscribers, cannot be subjected to tax as
there is no sale/deemed sale of goods; and, in
any event, the purchase price of the SIM card

Held: 1. SIM cards, recharge

coupon
vouchers,
mobile
telephone rentals on post-paid
connections,
value
added
services such as ring tones,
music down loads, wall papers,
etc., and proceeds received on
sharing of infrastructure cannot
be
subjected
to
tax.
2.
Telephone
instruments,
mobile handsets, modems and
Caller
ID
instruments
are
"goods"
3. In case these goods are sold
or supplied to the subscribers
by the service providers such
"sale" or the "transfer of the
right to use these goods" would
be
liable
to
tax.
4. However, if, these goods are
procured by the subscribers
from suppliers, the monthly
charges,
paid
to
service

Schedule
entry

24

in the hands of the petitioner, and a reasonable

profit thereon, can alone be brought to tax
under the Act.
Revenue contended that,
while the SIM card enables access to the
cellular network, it can also store data of phone
calls, contact numbers, games, music, etc.; it is
capable of being bought and sold; it has utility;
it is capable of being transferred, delivered and
stored; SIM cards have all the attributes of
"goods", and can be subjected to "sale"; prepaid SIM cards are sold to customers, through
distributors, for a price; the charges collected
from the subscriber are for the SIM card; they
are not collected for the service of activating
the SIM card; SIM cards are not activated at the
time of their sale to the distributors; and the
amounts collected for issue of prepaid SIM
cards, and rentals for postpaidSIM cards,
represent the consideration for "sale" and
"deemed sale", respectively.

provider, would fall within

"telecommunication
service"
and cannot be made liable to
tax
under
the
Act.
5. If non-refundable deposits
are collected, by the service
providers
from
their
distributors, for supply of SIM
cards,
recharge
voucher
coupons and the like, cannot be
brought to tax under the
provisions
of
the
Act.
6. If the non-refundable deposit
is received against supply of
telephone
instruments,
batteries, accumulators, etc.,
these deposits would form part
of the sale consideration
7.
Likewise,
if
refundable
deposits are collected from
post-paid
subscribers
as
security for payment of dues
towards STD or ISD facilities
provided
by
the
service
provider, then such deposits,
not being "goods", cannot be
brought to tax under the Act.
8. If, however, the refundable
deposits are for supply of
telephone instrument, handset,
etc., which are "goods these
refundable deposits may also
form
part
of
the
sale

25

consideration under section

2(29)(b) of the Act, and would
be chargeable to tax under
section
4
thereof.

30

49
VST
134 (Ker)

Cadbury India
Limited.
V.
State of Kerala.

The petitioner purchased raw cocoa beans

through agents who purchased from farmers as
well as from small traders and delivered them
at the godowns of the company. There is
written agreement between the company and
the agents providing for reimbursement of
price paid to farmers/dealers, all the cost
incurred by the agents and also commission
payable to them at the agreed rate. The
assessing officer after examining the terms of
the agreement and the accounts came to the
conclusion that the agency agreement is only a
device to avoid payment of tax on the taxable
turnover which is the cost incurred by the
company until goods reach their stockyard
where delivery is given by the agents. The
assessing officer added 15 per cent of other
reimbursements to purchase price reimbursed
by the petitioners to the agent for the payment
to farmers and dealers and passed assessment
orders.

Held, dismissing the petition,

the
agency
arrangement
appears to be only a scheme for
splitting up of price between
purchase cost, transport cost,
commission, etc., to avoid tax
on part of the turnover.

Agency

31

49
VST
200
(Mad)

State of Tamil
Nadu .
V.
Mahaveer
Chemicals
Industries

The assessee herein is a dealer in chemicals,

acids and solvents. The investigation wing
inspected the premises of the assessee. The
assessee claimed interstate sale after taking
constructive
delivery of the goods The

Held, allowing the petition, the

documents accompanying the
movement of the goods show
that the journey started from
Cochin to Coimbatore. The

Sale
under
section 6(2)
of the CST
Act

26

assessee contended that after the purchase,

even before taking delivery, they effected
further inter-State sales to their end-users
within and outside the State of Tamil Nadu.
Thus, by filing EI and EII and form C
declaration, the assessee made claim under
section 6(2) of the Central Sales Tax Act, 1956.
The said claim was rejected by the assessing
authority by taking a view that the assessee
had effected sale after arrival of the goods at
Coimbatore after taking the constructive
delivery of goods at Coimbatore. Thus, the
assessing authority viewed that the assessee
was not entitled to exemption under section
6(2) of the Central Sales Tax Act. The assessing
officer pointed out that verification of the
records showed that M/s. Mahaveer Chemicals
were appointed as registered dealers to deal
with the chemicals, viz., liquid/gaseous
chemicals manufactured by M/s. Cochin
Refineries
Limited,
Ernakulam,
Kerala.
Admittedly the said Mahaveer Chemicals and
the assessee, viz. Mahaveer
Chemicals
Industries are located in the same premises, at
No. 16/56, Mill Road, Coimbatore. On the
purchase effected by M/s. Mahaveer Chemicals
from M/s. Cochin Refineries Limited, the
liquid/gaseous chemicals were transported in
tanker lorries. The transport, delivery and use
of such chemicals were covered by Central
excise provisions. As per this, there was no
necessity to maintain a godown for storing
before distributing to the ultimate buyers. The

Appellate
Assistant
Commissioner rightly pointed
out that there was no obligation
on the part of the carrier to
transport the goods further to
any place beyond Coimbatore.
Thus
the
subsequent
arrangement that the assessee
had with the same transporter
to carry the goods to another
place for a different person
however did not make the
movement a continuation of the
original inter-State sale. Further
movement done as per the
fresh invoices prepared and trip
sheets and way-bill clearly
pointed out to fresh movement
from Coimbatore to other State
and to the local purchaser from
the assessee.

disallowed

27

Revenue pointed out that verification of the

purchase invoices, transport documents and
other statements, revealed that after purchase,
M/s. Mahaveer Chemicals transported them to
Coimbatore. The transport documents revealed
that the movement of goods started from
Cochin in tanker lorries to Coimbatore and had
the end destination at Coimbatore, it being the
delivery place. After the receipt of the goods in
Coimbatore, Mahaveer Chemicals effected EI
sale to the assessee herein which was situated
in the same premises. Since the sale was
effected by transfer of documents of title to
goods, while in transit, the sale was treated as
one falling under section 3(b) of the Central
Sales Tax Act. However, as regards EII sales,
said to have been effected by the
respondent/assessee, it was pointed out that
the inspection of the business premises of the
assessee on September 9, 1995 revealed that
after taking delivery, the assessee had used
form XX delivery notes to transport chemicals
in tankers to the end-users within and outside
the State of Tamil Nadu. Thus, the authorities
came to the conclusion that on the basis of the
available materials, after the endorsement in
favour of the assessee herein, the movement
of the goods had terminated at Coimbatore
itself. There afterwards, on the assessee had
taken constructive delivery at Coimbatore
itself, the assessee effected fresh sale. The
authorities held that the claim of the assessee
for second inter-State sales could not be

28

sustained.
32

49
VST
252 (All)

Raj
Kumar
Gaba. V. State
of
U.P.
and
Others.

The sales tax dues of the assessment year

2002-03 (State) vide assessment order dated
March 18, 2006, are sought to be recovered
from the petitioner, the Chairman of the
society in the relevant period, registered under
the Societies Registration Act as "Maa Vaishno
Gramodyog Sansthan". Learned counsel for the
petitioner states that the petitioner had
resigned in the year 2004, after which a new
committee of management was elected. Shri.
Madan Lal Arora, respondent No. 5, was
elected as the Manager of the society. He had
stopped the business of the society and sold
away its entire assets in 2006.

The
Court
dismissed
the
petition. That the dues relate to
the assessment year 2003-04
when the petitioner was the
President of the society and is
still a member of the society
and dues could be recovered
from him under the bye laws
from the petitioner. Under the
bye laws it is provided that in
case of debt all members of the
society
will
be
equally
responsible.

Recovery

The real transaction noted in

the freight letter is a sale. This
is not disclosed. The entire
stock transfer claimed is similar
inter-State sales disguised as

Branch
transfer
allowed

The petitioner submits that earlier the recovery

was withdrawn on the ground that the
petitioner had resigned from the society in the
year 2004. Subsequently Trade Tax Department
in pursuance to the provisions of section 8(3)
of the U.P. Trade Tax Act, 1948 has initiated
recovery against the petitioner, as the
Chairman of the society in the relevant
assessment year, giving rise to this writ
petition.
33

49
VST
256
(Karn)

Habib
Agro
Industries.
V.
Commissioner
of commercial
Taxes,

The assessee has a manufacturing unit in

Mandya District, and a branch office at
Coimbatore. He claimed an exemption in
respect of stock transfer of de-oiled rice bran
to its branch in Coimbatore. They were duly

29

not

34

49
VST
339
(Bom)

Bangalore.

supported by form F issued by the said branch

office. At an inspection of the business
premises eight freight letter pads maintained
by the assessee for despatch of de-oiled rice
bran directly to the outside consignees were
seized containing name and address of the
purchaser, quantity sent, vehicle number in
which goods were moved from Boothana
Hosur. The assessing authority on the ground
that the F forms disclosed that bills were raised
in favour of dealers in Tamil Nadu and the
goods were dispatched from Mandya directly to
them, levied CST and penalty u/s 9(2).

stock transfer. The assessee has

disguised inter-State sales as
stock transfer, though the
goods have moved as a result
of sale directly to the ultimate
purchaser.
The
evidence
gathered showed that the good
were directly sold to the
ultimate
purchaser
with
documents of the sale bill
raised at the factory in the
name of the branch.
The
material and particularly, the
documents laid on clearly
shows the intention on the part
of the assessee to avoid the
payment of Central sales tax
and misleading the authorities.
The contents of form F are also
not true. It also discloses the
guilty
mind.
Under
these
circumstances, the authorities
were justified in disallowing the
exemption and were justified in
imposing penalty.

Taurus
Auto
Dealers
Pvt.
Ltd.
V. D.P.
Amberaoand
Another.

Whether imposing or charging of interest at flat

rate 25%
u/s 30(4) of MVAT Act
retrospectively, which came into force wef
1.4.2009 in respect of late payment of tax for
the years 2005-06, 2006-07 and 2007-08 is
valid in law

The
court
dismissed
the
petition, The only issue for
consideration before this court
is whether imposing/charging of
interest under Section 30(4) of
the Act in respect of the late
payment of tax for the years
2005-06, 2006-07 and 2007-08

Interest

30

is valid in law. It is an
undisputed position that subsection (4) of Section 30 of the
Act came into force with effect
from 1 July 2009 providing for
imposition of interest at a flat
rate at 25 per cent of the
additional tax payable as per
the revised returns. In the
present case, the audit of the
petitioner's accounts under the
Act for the years 2005-06,
2006-07 and 2007-08 took
place on 8 July 2009. Intimation
of short payment of tax under
Section 63(7) of the Act was
made on 16 July 2009 by the
Respondents. Consequent to
the above Intimation, on 20
August 2009 the Petitioner filed
revised returns for the years
2005-06, 2006-07 and 2007-08
and also paid the differential
tax demanded consequent to
the audit, aggregating to Rs.
41,38,416/- along with interest
thereon under Section 30(3) of
the Act. Sub-section (4) of
Section 30 of the Act provides
for interest at a flat rate of a
sum equal to 25 per cent of the
additional tax payable as per
the revised returns. It does not

31

provide for charging of interest

keeping in view the delay in
paying the taxes but provides
for a flat rate depending upon
the quantum of additional tax
payable consequent to filing of
the revised return. The demand
for interest is not for the period
prior to 1 July 2009 as the
interest is being charged not
with
regard
to
a
delay
(period/time wise) in making
the payment of tax to the State
but is charged at a flat rate of
25 per cent of the additional tax
payable as per the revised
returns. In the circumstances, in
the present case, no interest is
being charged for the period
prior
to
1
July
2009.
Consequently, Section 30(4) of
the Act is not being applied
retrospectively.
This
is
particularly so as all the acts
leading to the demand of
interest such as the audit,
intimation letter under Section
63(7) of the Act, filing of revised
returns and the payment of
differential tax all took place
after 1 July 2009. Merely
because a part of the requisites
for an action is drawn from a

32

time prior to its passing, that

would not make the action
retrospective.
35

49
VST
371 (All)

Diamond
Cement.
V.
State of U.P.
and Others.

The petitioner separately charged freight and

claimed exemption on it. The assessing
authority rejected the claim on the ground that
petitioner
had
not
disclosed
the
challan/delivery challan. However Tribunal held
that no tax could be imposed on freight. Addl
CST granted the permission for reassessment
on the ground that charging of freight
separately was not verified., On writ,

The petition was dismissed. The

petitioner
has
apart
from
making arguments, had not
relied on any such material to
show that the petitioner had
disclosed the manner and
method of charging freight,
before any of the authorities
from the stage of assessment to
the
order
authorising
reassessment. The petitioner
had
not
disclosed
the
challan/delivery
challan/invoices. The petitioner
did not produce the details as to
how
the
goods
were
transported and the freight was
charged. The proof of charging
freight separately was not
produced nor could be verified
from the audit report, profit and
loss account, balance sheet or
trial balance. The Tribunal erred
in observing that the assessing
authority had accepted the
declared turnover, and the
account books, and that the
account books and bill books
produced before the assessing
authority shows that the freight

Sale price

33

was charged separately. The

assessing authority had clearly
observed and recorded finding
that the petitioner did not
produce the material relating to
freight and did not produce, in
spite of demand, the challan,
delivery challan, invoices and
thus rejected the plea of
exemption.
The
material
discovered by the Department
from the returns filed by the
petitioner in Central Excise
Department for levy of service
tax, the railway receipts, and
the non-production of the
document,
bill
books
and
challans, before the assessing
authority, clearly establishes
that the petitioner company did
not
produce
the
relevant
material to claim that the entire
freight was charged separately.
36

49
VST
418
(Gauhati)

State
of
Arunachal
Pradesh
and
Others.
V.
BuishiYadaMot
ors.

The dealer is an authorised dealer of Maruti

Udyog Limited , in Arunachal Pradesh. The tax
on local sales of motor vehicles is 12%. The
State Government, reduced the tax rate to 2%
on inter-state sale by issuing notification dt.
2.5.2001 u/s 8(5) of CST Act. However it was
noticed that, in order to avoid payment of local
tax, sold motor vehicles by showing addresses
of persons, who claimed to be the resident of
State of Assam. But after the sale of the

The
Court
dismissed
the
petition
of
the
State.
It
observed that the mere fact
that the vehicles have been
subsequently registered in the
State of Arunachal Pradesh will
not make the first sale intraState sale in the absence of any
material
to
show
that
notwithstanding the terms of

Inter-State
Sale

34

37

50
VST
103
(Uttra)

B.T.C.
Industries.
V.Commissione
r,
Trade
Tax/Commercia
l
Tax,
Dehradun.

vehicle, the same vehicle was brought back

and registered in Arunachal Pradesh. This gave
enough indication that the respondent was
evading payment of sales tax in terms of intraState sales tax leviable. Subsequently, in
pursuance of letter issued by Commr, Addl DC
directed vide letter dated February 7, 2002 ,
to stop selling motor vehicles to the customers
outside the State of Arunachal Pradesh with
immediate effect. The dealer challenged the
legality of the letter dt 7.2.2002, notice dt
27.5.2002. A single judge allowed the writ and
the State filed an appeal.

the contract of sale between

the petitioner and the buyers
thereof, vehicles, in question,
had not moved at all out of the
State of Arunachal Pradesh. It
was held that the movements of
the vehicles to other States was
necessitated by the contracts
themselves and the movements
of the vehicles were inextricably
interlinked with the sale and
therefore the sale is an interstate sale.

Trucks loaded with coal were intercepted. At

the time when such interception took place,
though it was held out that the intercepted
coals are meant for petitioner, there was no
document suggesting that those were tax-paid.
As a result, after obtaining security, the goods
were permitted to be released. Subsequently,
on notice to the
petitioner , penalty
proceedings were initiated. The
petitioner
contended that coal is used as fuel in its
industry and, accordingly, it has tax exemption.
The petitioner disclosed that it has issued C
form to its supplier and the intercepted coal
was being supplied under the said C form. It
was contended that since the coal was being
imported through a route, which is not
normally adopted, it cannot be held that there
was any clandestine intention in using the said
route, inasmuch as tax on coal for the
petitioner is exempted.

The
Court
dismissed
the
petition. Fact remains that in
the C form, that was issued by
the petitioner in favour of its
supplier, was all blank at the
time when the same was
handed over to the supplier of
the petitioner. The petitioner did
not indicate the particulars of
the order placed upon its
supplier,
which
is
a
requirement, as would be
evident from the form C. Form C
was purported to be utilized by
showing that the intercepted
coals were being supplied to the
petitioner. This form C was not
with the goods intercepted. This
part of the form C was inserted
therefore
subsequent
to

Declarations

35

interception of the goods in

question. By not filling up the
form C in the manner the same
was required to be filled up, i.e.,
by not mentioning the order
number in the form C, petitioner
gave a blank cheque to its
supplier, on the basis whereof
the supplier could supply coal
to the petitioner and in addition
to such coal, if it wanted to,
could deal with coal otherwise
in the State of Uttarakhand.
What was the real intention in
relation to the intercepted coal
is anybody's guess, since one
truck, it is not disputed, did not
carry any paper. That being the
situation, by reason of failure on
the part of the petitioner in
protecting itself while issuing
the form C, it failed to ensure
that the goods to be supplied
thereunder would only be
supplied to the petitioner for
being used as fuel, for which
there is a tax exemption.

38

50
VST
122
(Mad)

State of Tamil
Nadu V. Jayesh
Brothers.

"Whether, the Tribunal is right in holding the

masala powder is not food items taxable under
entry 63, Part D of the First Schedule when
there is a specific entry in item 1(ix) of Part E

Held-Masala powder not by

itself food item and will not be
covered by the entry for food.

Schedule
entry

36

of the First Schedule ?"

39

50
VST
147
(Mad)

Sundaram
Industries Ltd.
V.
State
of
Tamil Nadu.

The assessee a company engaged in

retreading of tyres on a works contract basis.
In respect of the works undertaken, the
assessee quoted a consolidated amount, which
they claimed as inclusive of tax. In the return
made, since the assessee had not separately
maintained accounts as regards the amount
referable towards transfer of property in goods
and labour charges, the assessee apportioned
70 per cent of the amount as per the statute,
as taxable turnover. The officer viewed that
since the assessee had charged a lump sum
amount and no separate amount was noted in
the bills towards collection of sales tax and
that the tax was only notionally stated so in
the accounts, the entire turnover at 70 per
cent was to be assessed to tax. The assessing
officer rejected the contention of the assessee
that there was a clear mention in the invoice to
the effect that the sale price is inclusive of
sales tax.
The assessing officer, however,
pointed out that since the transactions
involved in the execution of the works contract
are deemed sales, provisions relating to sales
are equally applicable to deemed sales and
when the tax on the sales are not separately
shown as not included in the sale price, the
petitioners were liable to pay tax. As per
Explanation (1A) to section 2(r) of the Tamil
Nadu General Sales Tax Act, 1959, any amount
charged by a dealer by way of tax separately

The
Court
dismissed
the
petition. In the instant case, the
dealer
had
charged
a
consolidated amount for the
execution of the works contract.
The indivisible contract showed
no bifurcation as regards labour
and materials. Even in the
accounts, the assessee did not
have the details on the cost of
the materials used to have a
deduction of the labour charges
from the consolidated price
charged.
The
consolidated
amount charged is stated to
include the tax element. Even
for claiming deduction on the
labour charges, the assessee
adopted
the
statutory
percentage only. In the above
circumstances,
on
a
consolidated sum thus charged,
the claim of the assessee that
the adjustment entries given in
the accounts have to be taken
as tax charged separately was
not acceptable. When the
parties to the contract have
agreed on a consolidated price
inclusive of tax, it is clear that
irrespective of how they make

Sale
price
(works
contract)

37

without including the same in the price of

goods bought or sold shall be excluded from
the turnover. Since the assessee had not
collected the tax separately from the
purchasers, the mere fact that they had been
shown separately in the accounts could not be
a justifiable ground for granting exclusion.

up the bill or the accounts, the

entire consideration will be the
turnover.

40

50
VST
302
(Mad)

Mangai
Agencies.
V.
Appellate Dy.
Commissioner
(CT),
Virudhunagar
and Another.

The appellant filed appeal against assessment

order, however he failed to appear on near 38
occasions. Then appellate authority dismissed
appeal. On writ filed after delay more than one
year and four months, contending that there
had been a violation of principle of natural
justice and order without jurisdiction,

The
Court
dismissed
the
petition. The dealer not utilising
opportunity to put forth its
cases
in
appeal
cannot
complain of violation of natural
justice.

Appeal

41

50
VST
527 (Ker)

Maggy Sunny.
V.
State
of
Kerala.

One of the departmental officers pretending to

be a consumer made a sample purchase of a
gold ornament from the petitioner's shop for
which payment was also made by the officer
based on slip prepared and issued by the
petitioner without raising any invoice and
accounting
transaction.
A
search
was
conducted which departmental authorities
recovered slip covering suppressed sales,
based on which tax evasion was determined
and penalty was levied.

The
Court
dismissed
the
petition. Trade practice of sales
through slip once established by
dept. Burden on assessee to
prove such sales entered in
regular books.

Investigation

42

51
168

Maharashtra
Chamber
of
Housing

The challenge of the petitioners is that by

amending the provisions of Section 2(24) the
State Legislature has brought within the ambit

Held:- Inclusion within works

contract of agreement for
building construction etc. in

Builders

VST

38

Industry
and
Others.
V.
State
of
Maharashtra
and Others.

and purview of the expression "sale", an

agreement for the building and construction of
immovable property which is not a works
contract.

respect of works contract valid.

43

51
VST
382
(Bom)

Premium Paper
and Board Ind.
Ltd.
V.
Jt.
Commissioner
of Sales Tax,
(INV-A)
and
Others

The petitioner who claimed Set off on

purchases claimed to have been effected from
certain vendors against the tax liability on
sales. On the ground that an investigation
revealed that the records of the certain
vendors were found to be engaged in the
activity of only issuing tax invoices without
actual delivery of goods and passing on tax
credit without paying it in the Government
Treasury , that there was a mismatch in the ITC
claimed by the dealer and the tax deposited
into the Treasury by the bogus vendors in
respect of purchases claimed to have been
made by the dealer from them, that no one
was claiming responsibility for the companies
from whom the dealers claimed to have
purchased the goods, that in the very first year
of business the turnover of three dealers high,
action of provisional attachment was made. On
a writ,

Held, dismissing petition, writ

petition challenging vires of
provision cannot be entertained
where entire claim is based of
set-off found upon assessment
to be bogus.

Input
credit

44

51
VST
413
(Uttra)

Shriya
Enterprises. V.
Commissioner
of Commercial
Taxes,
Uttrakhand

The question, which has to be decided in the

present revision is, whether potato chips is a
processed vegetable or not, and consequently
liable to be taxed at four per cent or at 12.5%.

Potato
chips
taxable
processed vegetable.

Schedule
entry

as

tax

39

45

51
VST
439
(Karn)

State
Karnataka.
Kitchen
Appliances
India Ltd.

of
V.

Subsequent to issue of tax invoice the dealer

had issued credit notes to the customers on
monthly sales performance basis incentives, in
which dealer had deducted output tax relating
to discount and remitted the balance tax to the
Dept. On the ground that rule 3(2)(c) of the
Karnataka VAT makes it mandatory on the
dealer to claim the discount separately on the
tax invoice and the tax collected should be on
the sale price less discount and there is no
provisions to claim the discounts, which are
allowed in future dates as per the trade
practices followed, the assessing authority
levied tax on the sum representing discount.
The JC (Appeal) dismissed the appeal, however
Tribunal directed deletion of tax demanded
alongwith the interest. The State filed an
appeal.

The court upheld the appeal of

the State. It observed that the
dealer had not shown the
discount in the tax invoices but
that the discount offered is
subsequent to the raising of the
tax invoice. Even though the
dealers may have a right to
revise the sale price of their
goods in accordance with
contract or otherwise, in terms
of the proviso to rule 3(2)(c),
the same would have to be
shown at the time of raising the
tax invoice. Discount on a
product cannot be offered after
a sale has taken place. A
discount is offered at the time
of sale. Once a sale takes place,
the question of offering a
discount thereafter does not
arise for consideration. In view
of the admitted fact that the tax
invoice did not contain the
discount,
subsequent
credit
notes could not be treated as
discount to claim relief.

Sale
price
(discount)

46

52
VST
49
( Delhi)

Ricoh
India
Ltd.
V.
Commissioner.
(Delhi)

Whether multi-functional printers/machines

and their spare and consumable, during the
period 1.4.2005 to 31.3.2007 are computer
peripherals taxable under entry Sch-III-41 @4%
of the Act or taxable under residual entry at
12.5%?

The multi function machines

may or may not be computer
peripheral, depending upon the
main purpose or function which
the machine was designed and
manufactured to perform. The

Schedule
entry

40

doctrine of dominant purpose of

the multi functional machine
will determine whether it is an
input
or
output
unit
of
automatic
data
processing
machine.
In
case
multi
functional
machine
is
a
duplicator or a photocopying
machine, which incidentally can
be used as a printer or a
scanner etc., the said machine
would not qualify and cannot be
treated and regarded as input
or output unit of automatic data
processing
machine.
Said
machines would not qualify
under Entry 41A and will be
covered by the residuary tax
rate. In the case the principal or
dominant purpose is to act as
input or output unit, then it
would be covered by entry 41A.
47

52
VST
120
(Chhat)

Kamesh
Traders.
V.
State
of
Chhattisgarh
and Another.

The writ petition involves the question of law

as to whether or not the products of cello
company, i.e., serving tray, flask, stainless
steel tiffin with plastic body, water jug and
hotpot (casserole) would fall within the
meaning of "utensils" under entry No. 13 of
Part II of Schedule II of the Act. The assesse
filed the petition.

The Court allowed the petition.

The question for consideration
before this court is that whether
the above-stated articles, i.e.,
serving tray, flask, stainless
steel tiffin with plastic body,
water
jug
and
hotpot
(casserole) come within the
definition of "utensils" and fall
within entry 13 of Part II of the
Second Schedule of the Act,

Schedule
entry

41

2005. Entry 13 starts with the

word "all utensils". Utensils
have a very wide connotation. It
further states that all the
utensils except utensils made of
precious metals. There is no
dispute that the above-stated
articles are not made of
precious metals and there is no
distinction whether it is made of
stainless steel, plastic or any
other metal and as such all
utensils come within entry 13 of
Second Schedule wherein VAT
payable at the rate of four per
cent.
On reading of the definitions
given
by
the
various
dictionaries, it is clear that all
the articles which are useful for
kitchen and domestic purposes,
come within the definition of
"utensils".
It is trite law that in case of
imposition of taxes, the word
should be construed in the
same way in which it is
understood in ordinary parlance
in the area in which the law is in
force.

42

48

52
VST
129
(Karn)

ACC Ltd.
State
Karnataka.

V.
of

The assessee is engaged in the manufacture

and sale of cement including ready mix
concrete. The assessee had effected sale of
ready mix concrete (RMC) to its customers and
claimed exemption on the charges collected by
it for pumping ready mix concrete at the
customers' site.

The
Court
dismissed
the
petition.
Pumping
charges
collected from customers being
part of pre sale expenses
includible in turnover.

Sale price

49

52
VST
221
(Mad)

State of Tamil
Nadu.
V.
Kawarlal
and
Co.

The assessee herein is a dealer in

pharmaceuticals and chemicals. He claimed
exemption on the turnover as representing
high sea sales effected. In support of the claim,
the assessee filed bill of lading and high seas
agreement and pointed out that the goods in
question were cleared by the purchaser by
paying customs duty through clearing and
forwarding agent and that the assessee had
nothing to do with the clearance of the said
goods.

The petition was allowed. The

Court held that the bill of entry
not a document of title and
admittedly it carried the name
of the ultimate buyer and that
there was no denial of the fact
that
the
assessee
had
transferred the goods before it
crossed the customs station,
The only ground on which the
claim was rejected was the
difference in the name found in
the bill of entry available with
the assessee and the one with
the customs authorities. With
the title to the goods thus
endorsed even before it crossed
the customs station, the claim
of the assessee could not be
denied just based on the bill of
entry which is admittedly not a
document of title. Under section
46 of the Customs Act - Entry of
goods on importation - the
importer has to file bill of entry
before the proper officer, which

High
sales

seas

43

may be for home consumption

or for warehousing. Only on
filing the bill of entry for home
consumption that the goods are
allowed to be cleared after the
payment of required customs
duty. In the absence of any
details as to whether the said
entries relate to the one in the
bill
of
entry
for
home
consumption or any bill of entry
for warehousing, the dealer's
claim could not be denied.
50

52
VST
306
(Karn)

Essar Telecom
Infrastructure
(P.)
Ltd.
V.Union
of
India
and
Others

The petitioner having entered into contract

with various telecom/cellular operators is
required to render service in relation to passive
telecom network including operating and
maintenance.
The
assessing
authority
proposed to impose tax on providing of cellular
tower on rent to various service providers
stating that the transaction fell under the
definition of deemed sale.

Providing cellular telephony

towers on rent to various
telecom companies amounts to
transfer of right to use.

Transfer
of
right to use

51

52
VST
330
(Karn)

State
of
Karnataka. V.
Anantha
Refinery
Pvt.
Ltd.

The assessee sold oiled and de-oiled cakes in

course of inter-State trade and produced C
forms. By notification CST was reduced to two
per cent on de-oiled cakes. The assesse
claimed the benefit for oiled cakes. The benefit
was denied and in the reassessment order, the
sales tax was levied at four per cent.

Held:- Oil cake and de-oiled

cakes are different commodity :
concessional rate of tax on deoiled cake cannot be extended
to oil-cake.

Schedule
entry

44

52

52
VST
447 ((AP)

Indus
Tower
Ltd.
V.
Commercial
Tax
Officer,
Begumpet
Circle,
Hyderabad and
Others.

The petitioner is in the business of providing

telecom infrastructure support services to
several telecom operators (such as Airtel,
Vodafone, Idea, Reliance, Aircel, BSNL, etc.).
The dealer builds, operates and maintains
passive telecom infrastructure, also owned and
controlled by it. He purchased material on form
C intended for use in telecommunication
network. But he was not having license issued
by Dept. of Telecommunication and hence he
was not telecom service provider and CTO
levied the penalty as the dealer has misused
the form.

Held, allowing the petition,. The

petitioners/dealers
are
registered
as
infrastructure
provider Category 1 (IP-1) by
the DOT, Government of India,
a fact not in dispute. That they
are registered under the CST
Act; that the certificate of
registration
describes
the
petitioners
as
telecommunication
network
service providers; that the
goods purchased by them
against issue of C forms during
the
course
of
inter-State
transactions are goods specified
for
purchase
for
use
in
telecommunications
network
specified by them in para 16 of
form A application submitted for
seeking registration under the
CST Act, are also facts not in
dispute. It is also not in dispute
that the goods in respect of
which the impugned penalty
orders were passed under the
provisions of section 10A of the
CST Act were goods specified in
the list of goods stated by the
petitioners while applying for
registration under the CST Act
and
enumerated
in
the
respective
certificates
of

Declarations

45

registration, and were used for

the erection and maintenance
of
the
passive
telecommunication
infrastructure (the cell towers).
It was the contention of the
Revenue, that the petitioners
are
not
telecom
service
providers but are only engaged
in the construction of towers
equipped with generators and
other
equipment
that
are
provided to actual telecom
service providers/operators and
that the petitioners wrongly
represented
themselves
as
telecommunication
network
service providers. The Court
held the above contention and
assumption by the Revenue as
wholly
erroneous.
The
certificate
of
registration
describes the petitioner as
engaged in the business of
telecommunication
network
service
provider.
The
registration certificate issued by
the DOT, constitutes a federal
recognition that the erection
and
maintenance
of
telecom/cell
towers
is
an
activity
falling
within
the

46

legislative field enumerated in

entry 31 of List I. On this
analyses, the Revenue cannot
be heard to contend that the
petitioners
are
not
comprehended
within
the
generic
area
"telecommunications network",

53

52
VST
484
(Karn)

Assistant
Commissioner
of Commercial
Taxes,
Bangalore and
Others.
V.
Pink City

The dealer has not filed the return within the

time prescribed nor have they paid the tax.
Therefore, a penalty has been imposed under
section 72(1) of the Act. The dealers have
preferred writ petitions challenging the virus of
section 72(1) of the Act on the ground that it is
arbitrary.

Power to impose penalty within

competence
of
State
legislature.

Penalty

54

53
VST
226
(Karn)

Ali
Singhania
Bulk Carriers.
V.
State
of
Karnataka.

The petitioner own fleet of vehicles and was

engaged in transporting concrete mixture. The
agreement was to provide vehicles for
transport the produce of company from its
plant to the various customers in the city. The
adequate number of vehicles is made available
24 hours on all the seven days of the week.
The company also agreed to reimburse the
dealer for diesel and lubricants. On this ground
that the transaction amounted to transfer of
right to use.

The
Court
dismissed
the
petition. It amounts to transfer
of right to use goods as
effective control of vehicles with
company.

Transfer
of
right to use

47

55

53
VST
271
(Uttara)

Gujarat Co-op
Milk Marketing
Fed
Ltd.
V.
Commissioner
of Commercial
Taxes,
(Uttarakhand)

The assessing officer held that the product sold

by the petitioner 'Amul Masti spiced
Buttermilk" was not one of the item mentioned
in entry Sch-I-25 of the Act which exempt tax
in respect of " fresh milk, pasteurized milk,
buttermilk, separated milk, curd and Lussi".
Accordingly assessing authority levied tax on
the dealer.

Held, allowing the petition,

'Amul Masti spiced Buttermilk"
is exempt as buttermilk.

Schedule
entry

56

53
VST
355
(Gauhati)

State of Tripura
and
Others.
V.
Joy Kali
Radio Stores.

The petitioner - assessee is a manufacturer of

compressors. During inspection it was found
that the petitioner/assessee had done works
contract of repairing the defective compressor
received from their customers at Chennai, and
also the assessee had received repair charges.
The assessing officer treated the transaction as
works contract.

Held, allowing the appeal,

declaration of low profit and
high closing stock warrants
rejection of books of accounts
and assessment to the best of
judgment
in
absence
of
explanation.

Assessment

The petitioner contended that the Tribunal is

wrong in holding that the transfer of property
by way of replacement of defective parts in the
compressors while undertaking repair works
took place within the State of Tamil Nadu and
hence, the transactions are liable to tax. He
further submitted that the authorities have
failed to appreciate the fact that the
petitioner/assessee
received
defective
compressors from their dealers, who had
earlier received the same from their respective
customers to whom the said compressors were
sold by them and later, these defective
compressors were despatched to the factory at
Hyderabad for repair and reconditioning; that
the repaired compressors were taken into the

48

petitioner's/assessee's floating stock in due

course on receipt from Hyderabad. But soon
after the receipt of defective compressors, the
reconditioned compressor was given to the
authorised dealer from their floating stock and
flat rate was charged as repairing charges,
therefore, the assessing officer ought to have
appreciated that the transactions partake the
character of an exchange not exigible to tax
under the provisions of the Tamil Nadu General
Sales Tax Act.
57

53
VST
382
(Mad)

Sriram
Refrigeration
Ind.
Ltd.
V.State of Tamil
Nadu.

The petitioner its factory at Hyderabad and

supplied refrigerators to customers in Tamil
Nadu. The defective compressors were brought
to the petitioner for repairs at Chennai. When
the defective compressor is handed over, the
dealer replaced the defective compressor by a
reconditioned compressor of the same model.
The defective compressor received was
subsequently transferred to the factory in
Andhra Pradesh for rectification of the defects.
The dealer collected repair charges for the
defective compressors. On finding that the
dealer carried out works contract of repairing
the defective compressors received from their
customers at Chennai and received repair
charges, the assessing authority assessed the
replacement of defective compressor as works
contract, he gave relief of deduction at 30 per
cent towards labour charges and levied tax at
70 per cent of the turnover in respect of the
works contract and levied penalty.

The
Court
dismissed
the
petition. It is transaction of
works contract taxable.

Sale
price
works
contract

49

58

53
VST
401
(Gauhati)

BrahmputraV
ally
Construction
and Suppliers.
V.
Oil
and
Natural
Gas
Corpn.
Ltd.
And Others.

The assessee owned cranes and in pursuance

of notice inviting tenders issued by the ONGC
for hiring cranes, the assessee had entered
into the contract. The cranes were placed at
the disposal of the contractee- ONGC on dayto-day basis, without transfer of possession
and custody thereof. Operating costs including
maintenance, repair, insurance, salary of
employees were to be borne by the assessee
and it is there was no transfer of ownership of
the cranes, nor of the right to use. The
possession and custody of the cranes remained
with the assessee. The assessee contended
that there was no lease. The assessee was
paying service tax.

Held, hire of manned crane to

ONGC amounts to transfer of
right to use goods as ONGC
alone entitled exclusive use.

Transfer
of
right to use

59

54
VST
271
(Bom)

National
Organic
Chemical
Industries Ltd.
V.
State
of
Maharashtra.

The petitioner entered into a transaction with

Assam Gas for the performance of the work of
laying HDPE pipe for transportation of natural
gas. The assessing officer considered the
transaction with Assam Gas as a divisible
transaction which could be divided into two
parts, namely, sale of HDPE pipes and
installation of the same as per the contract
with Assam Gas. DC(Appeal) as well as Tribunal
affirmed order.

The petition of the assessee

was allowed. It was held that
the agreement between the
applicants and the Assam Gas
was a works contract and it
could not be divided into two
parts, namely, contract to
supply the pipes and a contract
to lay down the pipelines. The
use of HDPE pipes was an
integral part of the performance
of the contractual obligation by
the applicants. In order to
comply with the contractual
obligation
cast
on
the
applicants, the applicants were
required to do various acts set
out in clause 3 "scope of work"

Whether
divisible
or
indivisible

50

ultimately to see that the HDPE

pipes are laid for transportation
of natural gas. The acts to be
committed by the applicants
could not be divided into two
parts, namely, supply of pipes
and laying down the pipes. The
use of this term contract value
clearly
indicates
that
the
consideration payable to the
applicants was to be calculated
as a whole and not in parts. The
payment terms set out in the
said agreement speak in favour
of the applicants that the
contract was to be read as an
inter-State
indivisible
works
contract. Clause 21 specifically
mention that the work was
awarded to the applicants on a
turnkey basis. The invoices
raised at the time of taking out
pipes out of the factory
premises by the dealer for the
purposes of compliance of
excise
duty
provisions
specifically mentioned that the
articles
were
for
home
consumption and not to be sold
in the market but to be used in
performing contract. Looking to
the terms of the agreement as a
whole, the property in pipes

51

which were to be used for

creation of a pipeline would
pass
on
only
after
the
applicants completed acts to be
performed by them as per the
terms of the agreement. The
transaction to supply and laying
down
the
pipe
being
inseparable, it would constitute
works contract and to such a
works contract, the liability to
pay Central sales tax would
arise only after May 11, 2002
and since the transaction in the
present case pertains to the
period prior to May 11, 2002,
the applicant would not be
liable for Central sales tax.(ii)
that the distinction between a
divisible
contract
and
an
indivisible contract came to an
end after the 46th Amendment
to the Constitution of India,
however, liability to pay Central
sales tax covered by property in
goods involved in the works
contract could be fastened only
after May 11, 2002 when the
definition of term "sale" was
amended on account of Act 20
of 2002.

52

60

54
VST
442 (Ker)

Trivandrum
Club. V. Sales
Tax
Officer
(Luxury
Tax)
and Another.

Whether luxury tax is payable on Club

allowing guest the to stay in cottages and
rooms attached to it on rent and other charges
under the provisions of the Kerala tax on
Luxuries Act. The assessee filed the petition
against levy of tax.

The
court
dismissed
the
petition. Admittedly the tariff
charged by the appellant for the
cottages and guest rooms
attached to the club are above
the limit that attracts luxury tax
under the Act, if the collections
attract tax applicable to hotel
rooms. The Court observed that
"hotel" as defined under the Act
has a wide meaning because
Explanation covers even guest
house run by the Government
or a company or a corporation.
The appellant's contention is
that
provision
for
accommodation in cottages and
rooms provided by the club is
only to the guests of members
or for members of affiliated
clubs and, therefore, the rent
collection is not in the form of
business carried on by the club.
The
Government
Pleader
opposed the contention by
stating that guest houses of
Government and companies
which are brought within the
meaning of "hotel" under the
Explanation to the definition
clause are not engaged in
business and so much so,
renting out of rooms by the club

Luxury Act

53

need not be as business to

attract liability under the Act.
The Court expressed agreement
with the contention of the
learned Government Pleader
because under the charging
section 4(1)(i) luxury tax is
leviable for the rent collected
by
clubs
for
auditorium,
kalyanamandapam
and
hall
attached to clubs. Club as a
person liable to luxury tax is
recognised by the charging
sections and in fact, specific
provisions stated above are
there for charging luxury tax on
clubs on membership fee at the
rate of Rs. 100 per member per
year, and also on rent collected
for
auditorium,
kalyanamandapam,
etc.,
attached to clubs. The Court
observed there is no necessity
for the Department to prove
that
the
accommodation
provided to guests in cottages
and rooms attached to clubs for
residence is a business activity
of the club to levy luxury tax
thereon. Further, there is some
force in the contention of the
Government Pleader that there
is no prohibition against club

54

making profit by renting out

cottages and rooms to it's
members or to members of
affiliated clubs, and such profit
of the club will ultimately go to
the benefit of the members.
61

55 VST 1

ABB
Ltd.
V.Commissione
r, Delhi Value
added Tax.

The questions of law which arise for

consideration in this case are :"(i) Whether the
sale transactions in the present case were in
the course of the inter-State trade, so as to
attract the provisions of CST Act, 1956 ?
(ii) Whether an inter-State trade is deemed to
have been taken place in the course of
movement of goods into and inside the
country?
and
(iii) Whether the sale made to the Delhi Metro
Rail Corporation is in the course of import and
consequently exempt from the Delhi VAT Act,
2, especially section 7(c) of the DVAT Act, read
with section 5(2) of the CST Act.

Held, allowing the appeals,

express stipulation of interstate
movement
of
goods
in
agreement not necessary to
constitute a sale in course
interstate sale.

Interstate
sale

62

55
VST
81 (Ker)

MGF
Motors
Ltd. V.State of
Kerala.

Whether the replacement of parts of

automobile during warranty period without
collecting any price for the same from the
vehicle owner amounts to sale that attracts
sales tax.

Held, Free replacement of parts

during warranty period amounts
to sale

Sale

63

55
VST
89 (Karn)

Sasken
Communicatio
n Technologies
Ltd. V.
Jt.
Commissioner
of commercial

Whether software development according to

specification of customer sales? The assesse
had filed the appeal stating that software
development is a service and not a sale.

The court allowed the appeal. It

was in the agreement that all
patentable and unpatentable,
inventions,
discoveries
and
ideas which are made or
conceived as a direct or indirect

Whether
SaleDevelopmen
t of Software

55

Taxes
(Appeals)-3,
Bangalore and
Another.

result of the programming or

other services performed under
the
agreement
shall
be
considered as works made for
hire and shall remain exclusive
property of the client and the
Assessee
shall
have
no
ownership
interest
therein.
Both, the source code of
developed
software
and
hardware projects of worldwide
Intellectual Property in and each
shall be owned by the client.
Therefore,
even
before
rendering service, the Assessee
has given up his rights to the
software to be developed by the
Assessee.
The considerations under the
agreement is not for the cost of
the project, the consideration is
for the service rendered, based
on time or man hours. Once the
project is developed, all rights
in respect of the said project
including
the
Intellectual
Property Rights vest with the
customer and he is at liberty to
deal with it in any manner he
likes.
The Software so developed
even before it is embedded on

56

the material object or after it is

embedded on a material object
exclusively belongs to the
customer. The title to the
project/software
to
be
developed
lies
with
the
customer even before the
Assessee
starts
rendering
service.
In fact, a careful reading of the
agreement shows that, the
employees of the Assessee and
the employees of the customer
have to work hand in hand,
consult at every stage, have
interactions and understand the
need and requirement of the
customer and through their
employees, the software is to
be developed. The end product
i.e., the ultimate software, is
not necessarily the work of any
one such service provider. It is a
collective effort.
As clear from the terms of the
agreement, on the day they
entered into agreement, there
was no software in existence. In
other words, there was no
goods
in
existence.
The
agreement is not for transfer of
software. The agreement is for

57

development of software. Even

before the software comes into
existence, the Assessee has
given up all the rights and
claims of the software to be
developed and has expressly
agreed that such a software
which may come into existence
in the end of the contract
period is the absolute property
of the customer.
64

55
VST
145
(Uttara)

State
of
Uttrakhand
and Others. V.
Nestle
India
Ltd.

Whether tomato
vegetable.

sauce

is

processed

Tomato sauce is taxable as a

processed
and
preserved
vegetable.

Schedule
entry

65

55
VST
208 (Ker)

Sanjos Parish
Hospital.
V.
Commercial
Tax
Officer,
Thrissur
and
Others.

In these writ petitions, where hospitals being

established by public ltd co with profit motive.
Therefore, if in hospitals, medicine and other
consumables sold to patient and bills are
raised then such transactions are taxable?

Held:- Hospitals are liable to get

themselves registered and pay
tax on sale of medicine and
consumables to patients.

Sale
of
medicines

66

55
VST
278 (MP)

P.K. Plastics. V.
Commissioner
of Commercial
Tax, MP and
Others.

Petitioner is engaged in the business of

purchase and sale of plastic and steel items.
Filed an application for determining the rate of
tax on the items purchased and sold such as
water jug and bottle, lunch box etc.
The
Commissioner, held that only the water jug is
covered within the meaning of utensils taxable
@ 5% and that the remaining items are taxable
@ 13%.

Held:- Entry
"all kinds of
utensils
and
enamelled
utensils"
not
restricted
to
utensils used in kitchen alone
but also extends to items of
daily household use.

Schedule
entry

58

67

55
VST
420
(Bom)

Commissioner
of Sales Tax,
Maharashtra
State, Mumbai.
V.
RamdasSobhra
j.

Whether ink, lacquer and chemicals used in

job-work of plate making with plates supplied
by customers are taxable.

The Court followed its decision

in Matushree textiles. It held
that the lacquer and ink were
materials used in plate making
and property in them passed on
in the execution of the contract
of plate making under the Act.
There was transfer of property
in ink and lacquer.

Works
Contract

68

56
VST
163
Gauhati

Bhola
Ram
Kanoo V. State
of Assam and
Others.

Whether, "raabgur" is to be exempted from

payment of tax under the Assam General Sales
Tax Act, 1993 by treating the same as "gur"
which is exempted from tax under entry 17 of
Schedule I of the Act or by treating the same
as a "cattle feed" which is also exempted from
tax under entry 50 of the said Schedule.

The
Court
upheld
the
contention of the assessee. It
held that though Rabgur is a
form of gur it is a distinct item
and not the same as gur. The
stand of the petitioners that the
rabgur is not fit for human
consumption is not disputed.
Though it may other uses the
revenue had not disputed the
stand of the petitioner that it
can also be used as cattle feed.
Held, rabgur exempt as cattle
feed.

Schedule
entry

69

56
VST
441
(Mad)

State of Tamil
Nadu V. Steel
Authority
of
India
and
Another.

The dealer entered into contract with the

foreign co for conversion of S.S. strips in to
coin blank. The dealer thereafter entered into
an agreement with the Government of India for
the manufacture and supply of twenty five and
fifty paise stainless steel coin blanks. In this
agreement, the dealer was described as the
supplier whereas the Indian Government mint
was described as the purchaser. The payment

Held, that conjunct reading of

both the agreements would
make it clear that these two
agreements are independent to
one another and were in no way
connected with one another.
The
first
agreement
was
entered by the dealer as a
purchaser with the foreign

Sale in the
course
of
import ( not
allowed)

59

to the supplier for the supply of coin blanks

was to be made through irrevocable letters of
credit to be opened by the purchaser through
the SBI in favour of the supplier. The supplier
had to ensure that the coin blanks were
manufactured strictly as per specifications.
The question as to whether the dealer was
eligible for the claim of exemption u/s 5(2) of
CST Act.

company for conversion of steel

strips into coin blanks and the
second agreement was entered
into by it as a supplier with the
Indian Government Mint for
supply of steel strips. In the first
agreement the dealer acted in
the capacity of a supplier for a
valid consideration and in the
second agreement it acted as
the purchaser to the Conversion
Agent for a valid consideration.
There was no privity of contract
between the local purchaser,
namely, the Government and
the foreign seller. Under the
CST Act tax is leviable on sale
and not because of the
movement of goods. To claim
exemption under Section 5(2) of
the Act, the sale or purchase of
goods should be deemed to
take place in the course of the
import of the goods into the
territory of India. The assesse
dealer had not established that
there was any term or condition
prohibiting the diversion of the
goods after the import i.e., the
inextricable link between the
transaction of the sale and the
actual import making sale in the
course of import. Moreover, in

60

order
to
qualify
for
the
exemption, the goods must
move from the foreign country
to India in pursuance of the
conditions in the contract of
sale between the foreign seller
and the local purchaser, but, in
the present case, the goods
were imported from the foreign
country to India in pursuance of
the
contract
entered
into
between the foreign seller and
the dealer, which was not the
local
purchaser.
The
transaction took place between
the parties had amply made it
clear
that
the
sale
contemplated under Section
5(2) had not taken place and,
even assuming that there was
an import of goods from Italy,
such import was not occasioned
as a result of sale by a dealer in
Italy. Therefore, the dealer was
not entitled to the benefit of
section 5(2).
70

56
VST
452
(Gauhati)

Reckitt
Benckiser India
Pvt.
Ltd.
V.
State of Assam
and Others.

Whether the product "Harpic", "Lizol" are

pesticides and "Dettol".
falls under the
category of drugs and medicine.

The Court allowed the petition.

"Harpic", "Lizol" are pesticides
and "Dettol" falls under the
category of drugs and medicine
and not a toilet article.

Schedule
entry

61

71

57
VST
55 (AP)

Santhosh
Builders. V. Dy.
Commissioner
of Commercial
Taxes
(CT),
Nellore
and
Others.

The dealer was serviced the order of

assessment long after expiry of prescribed
time limit for passing order. No proper
explanation for delay was given. The assesse
file dpetition.

The Court allowed the petition.

In view of the circumstances, it
must be presumed that the
order was not passed on the
date it is purported to have
been passed but it was passed
beyond the period of limitation
prescribed. Consequently, the
order cannot be sustained being
barred by limitation and is
accordingly quashed.

Assessment

72

57
VST
179 (AP)

Kumar
Metallurgical
Corp Ltd. V. Dy.
Commercial
Tax
Officer,
Nalgonda and
Another.

The petitioner availed loans from banks

hypothecating movable assets and immovable
properties sought a reference under the SICA
to the BIFR in 03-04. The Asset Reconstruction
(ARCIL) obtained security interest and initiated
action under the SARFAESI Act. While the
petitioner was busy agitating against the
proceedings under the SARFAESI Act before the
DRT, DRAT and this court, the BIFR passed
order on July 22, 2005 to the effect that the
reference pending before them shall stand
abated in terms of the third proviso to section
15(1) of the SICA. A notice of attachment was
issued for non payment of sales tax.

The
Court
dismissed
the
petition. Section 16C of the
APGST Act has non-obstante
clause. It creates first charge on
the property of the dealer in
favour of the Government which
can claim priority in recovery of
debts. Section 38C of the BST
Act also provided first charge in
favour of the Government in the
recovery of sales tax dues.
Section 22 of the SICA does not
in any way bar the proceedings
for recovery of sales tax
arrears. Therefore the notice of
attachment issued u/s 27 of the
Revenue Recovery Act could not
be faulted.

Recovery

73

57
VST
275 (AP)

Jitender Roller
Flour Mills. V.
Assistant

The petitioner disclosed export turnover and

consignment sales claimed to be transfers to
its branches and agents in other States and

The court allowed the petitions.

Since the petitioner had filed
the F forms for periods in

F form

62

Commissioner
(CT)
LTU,
Charminar Div,
Hyderabad.

claimed exemption on the above The assessing

authority passed an order allowing exemption.,
Subsequently, on the ground that the F forms
submitted
by
the
petitioner
covered
consignment sales periods in excess of one
calendar month, contrary to the stipulation of
rule 12(5) of the Rules) and passed the order of
revision of the assessment order withdrawing
the exemption allowed on specific turnover. On
writ petitions:

excess of one calendar month

and these F forms were before
the assessing authority when he
passed the initial order were
accepted,
this
cannot
be
revised as it is a case of lack of
diligence on the part of the
assessing authority, not liable
to be corrected.

74

57
VST
284 (AP)

State of A.P.
V.
Hindustan
Cables Ltd.

Whether even in the absence of a provision

under the CST Act for forfeiture of excess tax
collected by a registered dealer, forfeiture
could be ordered by recourse to the provisions
under the local Act.

Held- following SC judgement in

Khemka and Co 9 35 STC 571)
and India carbon (106 STC 460)
a provision for forfeiture of tax
is a fortiori a substantive
provision and not a mere
procedural prescription. Since
the CST Act contained no
provision authorizing forfeiture
of excess tax collected but not
remitted to the Revenue, no
forfeiture could be ordered on
forfeiture provisions in the local
Act,.

Forfeiture

75

57
VST
373
(Mad)

West
Coast
Industries
(Exports)
Pvt.Ltd.
V.
State of Tamil
Nadu.

The assessee engaged in manufacturing and

trading of hosiery goods purchased furnace
oil,
distribution
pipes,
copper
cable,
transformer, electrical goods, demineralising
plant, circular trolley and M.S. trolley and water
storage tank by issuing declaration in form C
which were not mentioned in RC. The first
appellate authority levied a minimum penalty

The Commissioner had issued

instructions that wherever a
dealer had purchased goods on
the basis of C form without,
including them in the certificate
under the CST Act either
inadvertently
or
out
of
ignorance, no penalty need be

Declarations

63

76

57
VST
415
(Gauhati)

A.R.N.V.
Chemicals Pvt.
Ltd. V. State of
Assam.

in respect of all above goods except aluminium

sheets. Considering the fact that these items
were not entered in the registration certificate,
the issuance of form C was a violation
attracting penal action under section 10A of
the CST Act, levied penalty at 150 per cent on
the differential tax.

levied under section 10(b) of

the CST Act. Therefore the first
appellate authority confirmed
minimum penalty in respect of
goods
like
furnace
oil,
distribution pipes. Copper cable,
transformer
and
electrical
goods which are directly used in
manufacturing activity of the
assesse and have a bearing on
his
business.
However,
aluminium sheets do not have a
direct bearing. It is not close to
the
enumerated
items
mentioned in the RC and
therefore the assessee cannot
plead
ignorance
of
law.
Therefore levy of penalty on
the purchase of aluminium
sheets which were used for
factory roofing purposes and
which could not in any manner,
be brought anywhere near the
enumerated entries confirmed.

They make bulk purchase of loose detergent

powder. The purchased powder is then packed
by the petitioner in unit containers and is
offered for second sale to the customers. The
assesse challenged in a writ petition the order
of the revisional authority holding that packing
of the detergent powder amounts to
"manufacture".

Held, allowing the petition, the

process of packing/re-packing of
detergent powder does not
convert the original product into
anything other than detergent
powder.

Manufacture

64

77

57
VST
484
(Orissa)

Tata Steel Ltd

and Others. V.
State of Odisha
and Others.

The questions in writ petitions."(i) Whether the

entry tax can be levied and/or imposed on the
value of the goods imported by the petitioners
from outside the country ? (ii) Whether such
entry tax under the aforesaid Act can be levied
and/or imposed on import of plant and
machinery for establishing a plant in the State
of Odisha ? (iii) Whether the entry tax can be
levied on certain raw materials and goods
imported from outside the country and
purchased from outside the State when such
materials have not been listed in the schedule
appended to the Orissa Entry Tax Act ?and (iv)
Whether the Orissa Entry Tax Act,, is violative
of entry 83 of List I of the Seventh Schedule
and article 246 of the Constitution of India ?"

i) Restriction under article 286

of the Constitution could not be
applied in entry 5 of List II of
the Seventh Schedule to the
Constitution. Thus the levy of
entry tax on goods imported
from outside the country was
not hit by article 286(1) of the
Constitution
(ii) The taxable event under the
Entry Tax Act is entry of specific
goods into a local area. whereas
custom duty on import of goods
into territory of India. When the
former is a subject-matter of
legislation by the State, the
latter relates to entry 83 of List I
of the Seventh Schedule. There
is no overlapping in the exercise
of
legislative
power.
(iii) The Act is a tax in lieu of
octroi incident of which are
similar to that of entry tax.
When the levy of octroi on
imported goods was upheld by
different courts there is no
reason why entry tax on
imported goods cannot be
upheld. iv)A plain reading of
the charging section under the
Orissa Entry Tax makes it clear
that the Legislature has no
intention that imported goods

Entry tax on
steel

65

are intended to be left out from

the charging section. "Outside
the State" means any place
outside the State and includes
all places outside the State as
well as outside the country.
(iv) The plant, which is brought
in knock down condition, is a
combination of machinery in a
systematic manner so as to
produce goods and, therefore, it
is coming within the definition
of machinery and, hence, it is
liable for entry tax.
78

58
VST
43 (Ker)

HDFC
Bank
Ltd.
V.
Intelligence
Officer
(IB),
Dept.
of
Commercial
Tax, Edapally,
Kochi
and
Another.

The petitioner - banks have conceded turnover

on the sale of gold bars during the relevant
period and paid tax at one per cent, on the
premise that the commodity sold will fall within
the relevant entry of gold bullions. But the
returns were rejected and the turnover was
assessed at four per cent treating the
commodity as one falling within entry 4(4) of
the Third Schedule to the KVAT Act. In this
regard, the Commissioner of Commercial Taxes
had issued a clarification in exercise of power
vested under section 94 of the KVAT Act . In
the said clarification, issued on September 29,
2008, it is held that 10 grams of rectangular
gold bars, being semi-manufactured gold
would fall within entry 4(4) of the Third
Schedule with HSN Code 7108.13.00. The
assessing
authorities
found
that
the
rectangular gold bars dealt with by the

The
court
dismissed
the
petition. Following the Kerala
High Court judgement in HDFC
Bank ( 36 VST 338), the gold
bar dealt with by the petitioner
- banks cannot be treated as
gold bullion coming within entry
1(2) of the Second Schedule to
the KVAT Act with HSN Code
7108.12.00. But it can only be
considered
as
"semimanufactured" form of gold
falling within entre 4(4) of the
Kerala Act coming within HSN
Code 7108.13.00.(ii)

Schedule
entry

66

petitioner - banks cannot be regarded as

bullion since they are not raw or unwrought
gold or gold in mass. The assesse filed a writ.
79

58
VST
262
(Gauhati)

Data Plus Info

Chanel. V. V.
State of Assam
and Others.

The petitioner modernized the industrial unit

and limited its manufacturing activities to
production
of computer stationery.
For
production of computer stationery the raw
materials used are paper rolls and carbon
rolls.In order to qualify any product as
computer stationery, the said product must be
perforated on both sides/edges of the paper
and must also be foldable. Such perforation
must be of certain specifications so that such
paper can be fed into the computer printers
and if it is a continuous paper, such paper
must be horizontally perforated so that the
continuous paper can be folded and torn off.
Therefore, unless such paper is subjected to
such perforation with certain specifications, the
same cannot be used as computer stationery.
While ordinary paper may be also used for
computer printing, computer stationery having
distinct characters as stated above is used only
for computer printing. The computer stationery
carries a distinct identity in the common trade
parlance.

The court allowed the writ

petition. The activity of the
petitioner,
involving
certain
processes with the aid of
machines by integrating plain
paper with carbon and which is
perforated
under
certain
specifications, and known in the
common trade parlance as a
computer
stationery,
would
qualify as a manufacturing
process. The process applied
results into transformation of
the two commodities of paper
and carbon used as raw
materials to an integrated and
non-separable
product
assuming an identity of a
different article or commodity
known as computer stationery
in the common trade parlance.

Schedule
entry

80

58
VST
290
(Mad)

Ajey&
Sons
Oils (Madras) P.
Ltd. V. State of
Tamil Nadu.

The petitioner herein is a dealer in Vanaspathi

and Edible oil. The petitioner had effected sales
to Andaman Customers and had shown the
turnover as inter-state sales and charged at
four percent against the C form. The
documents seized at the time of inspection

The High Court confirmed the

findings of the Tribunal that
there was nothing on the record
to show that the dealer had a
contract with
the Andamans
dealers and towards that end,

Inter-state
sales

67

81

58
VST
341
(Gauhati)

Hindalco
Industries Ltd.
and
Another.
V.
State
of
Assam
and
Others.

revealed that the goods were delivered to the

agent at Madras. Assessments were made
assessing the turnover under TNGST Act,
rejecting the dealer's contention that the
purchasers at Andaman have no office or a
branch place of business at Madras. Most of
their requirements of grocery, edible oils,
vanaspathi are to be ordered at Madras and
moved to Andamans from their nearest port.,
viz., Madras harbour. The assesse claimed
inter-state sales.

effected sales, resulting in

movement
of
goods
from
Chennai to Andamans. In the
absence of any material the
turnover was assessable under
TNGST Act and the sales were
not inter-state sales.

The petitioner is engaged in the business of

manufacturing and dealing in aluminum and its
products. The petitioners paid tax at the rate of
four per cent on the sale of aluminum rolled
products manufactured by it treating the same
to be covered under entry 26 of the Second
Schedule to the Act.The petitioner filed a
petition under section 105 of the Act before
Commissioner, seeking clarification as to why
the aluminum ingots, wire rods and rolled
products and extrusions should not fall within
the ambit of entry 26 of the Second Schedule
to the Act. The Commr. clarified that such
product would be taxable at 12.5%. The
assesse challenged the petition.

The Court allowed the petition,

observing that giving of reason
is an indispensable sine qua
non
in
quasi-judicial
adjudications. The order by
Commissioner contains omnibus
observations that in a number
of cases aluminium rolled
products had been held to be
different from aluminium and
that it also did not come under
extrusions which is not proper.
The
contention
of
the
petitioners that in the context
of entries in entry 26 of the
Second Schedule, the words
"extrusions of those" would
mean secondary products of
aluminium like sheets, plates,
foils, etc. had also not been
gone into. Therefore the order
passed by Commr. was to be

Assessment

68

quashed.

82

59
VST
237
(P&H)

Prem
Enterprises. V.
State of Punjab
and Another.

The appellant has contended that POP is

exempted from tax as it is powdered gypsum
falling under entry no A-16 for fertilisers. The
Commissioner rejected the contention of the
appellant that the gypsum has the same
chemistry as that of POP and thus tax-free. It
has many uses such as in plaster, cement,
paints and ornamental stones. The intention of
entry A-16 i.e. gypsum used only in relation to
improvement of quality of soil. POP is not
gypsum and not tax-free.

The court dismissed the appeal,

The appellant has brought POP
within the State of Punjab.
Though the chemical properties
may be similar, but the fact
remains that the uses of
gypsum and POP are different.
Entry 16 of Schedule A exempts
fertilizers
from
tax.
The
definition is inclusive which
includes gypsum as a fertilizer.
Entry 16 exempts fertilizer from
tax, whereas POP cannot even
remotely be used as a fertilizer.
Therefore, POP does not fall
within entry 16 of Schedule A.
As a matter of fact, the order
dated August 27, 2008 of the
Excise
and
Taxation
Commissioner holding that POP
does not fall within entry 16 has
attained finality.

Schedule
entry

69

83

60
VST
163
(Karn)

United
Agencies.
V.
Assistant
Commissioner
of Commercial
Taxes, II Circle,
Bangalore and
Others.

The appellant is a registered dealer of old

newspaper and waste paper. The appellant
claimed exemption from tax liability on the sale
of above items as exempted. But the assessing
authority did not grant exemption and
assessed tax on the ground that the appellant
is liable to pay tax treating the sale of old
newspaper as waste paper.

Held, Sale of newspapers for

purpose other than reading
news not exempted.

Schedule
entry

84

60VST
241
(P&H)

Daya Ram And

Company.
V.
State
of
Harayana.

Penalty notice served on friend of assessee.

Held, service of penalty notice

on friend of assessee is not
valid notice.

Service
Notice

85

60
VST
245
(Mad)

A.V.R.
Agencies.
V.
Assistant
Commissioner
(CT), Tirupur .

The Asst. Commr. refused to issue forms F and

C States, stating that they could be misused.

The Court allowed the petition.

That the Department has not
been in a position to show that
the request of the petitioner for
the issuance of forms F and C
cane be refused for the reason
that such forms could be
misused.

Declarations

86

60
VST
270
(P&H)

Rathi
Udyog.
Ltd. V. State of
Haryana
and
Others.

Initially, the Assessing Authority finalized the

assessment.
Subsequently, a show-cause
notice was served upon the petitioner after it
was discovered that the turnover of the
assessee has escaped assessment during the
year in question as the appellant has made
unaccounted sales of iron and steel. In the
show-cause notice, it was stated that the
appellant has suppressed sales. The appellant
filed its reply admitting that the sales worth Rs.
31,41,663 exclusive of tax could not be

The Court dismissed the appeal

of the assessee. After framing
of
the
assessment,
the
information came to the notice
of the Assessing Authority that
the appellant has not reflected
certain sales in the return
submitted by it. The Assessing
Authority found that not only
the appellant has purchased
iron and steel from different

Assessment

70

of

reflected in the returns due to bona fide

omission of their clerk.
It was found that assessee - firm has
suppressed considerable turnover during one
month only and deserves to be assessed to tax
to the best of the judgment
The learned counsel for the appellant has
vehemently argued that the best judgment
assessment could be resorted to only after the
rejection of books of accounts that too during
the course of assessment proceedings. The
assessing officer while issuing show-cause
notice has quantified the daily turnover for
addition to the gross turnover without
returning a finding that account books
produced by the appellant are to be rejected. It
is only after recording a finding and that too
after giving an opportunity of hearing to the
appellant, the account books could be rejected
by the Assessing Authority and could proceed
to frame best judgment assessment. Since no
such procedure was adopted, therefore, the
order passed under the Act are not sustainable.
87

60
VST
289
(Mad)

State of Tamil
Nadu.
V.
V.S.S.
and
Company.

The assessee, manufacture of groundnut oil

and oil-cake. On finding that there had been
incorrect maintenance of accounts and there
has been a shortage of groundnut kernel,
which according to the assessing officer
indicates that the dealer crushed kernel
without recording in the accounts and sold
resultant oil and oil-cake outside the accounts

dealers, which are not reflected

in the accounts, but also the
sales were also not reflected.
Therefore,
the
Assessing
Authority proceeded to frame
the best judgment assessment.
Once the sales are proved to be
outside the said books of
accounts, a fact not disputed by
the appellant, the rejection of
the books of accounts is
necessary consequence.

Held, dismissing the petition of

the
Revenue,
electricity
consumption
cannot
be
sustained for the reason that
the consumption can be supply
of
water
for
agricultural
purposes or any other purposes
and hence cannot be relied.

Assessment

71

and therefore, the claim of exemption made by

the assessee on account of consignment sales,
was disallowed. The tax was assessed based
on the estimate purely on the electricity
consumption made by the assesse. He
estimated the turnover on the basis of the
electricity consumption applying statistical
data for consumption of electricity and the
conclusion that there has been suppression
and imposed tax and penalty.
88

60
VST
295 (Raj)

Commercial
Tax
Officer,
Baran
V.
Ganesh
Lal
Goya & Sons.

The assessing authority imposed tax on the

sale of AC generator sets in residuary entry at
10 per cent. The Tax Board by has held that
AC generator set is taxable at four per cent
entry "all kinds of generating sets" at four per
cent and, therefore,

Held, entry No. 41 "all kinds of

generating sets" is wide enough
to cover the AC generating sets
also during the relevant period.

Schedule
entry

89

60
VST
350
(P&H)

Eco
Auto
Components
Ltd. V. State of
Haryana
and
Others.

Where the appeal filed by the petitioner

challenging certain orders by the Tribunal was
dismissed as withdrawn, with liberty to the
appellant to take recourse to the legal
remedies availing to it in accordance with law.
WP filed seeking quashing of the same orders.

The
Court
dismissed
the
petition and held that the
petitioner
could
not
be
permitted to invoke the writ
jurisdiction of this court after
the petitioner has withdrawn
the appeal filed against the
orders now impugned in the
writ petition.

Appeal

90

60
VST
491
(Gauhati)

Sunil Chandra
Dey & Partner.
V.
Food
Corporation of
India
and
Others.

The petitioner is carrying out contract for

transportation of food-grains of the (FCI) in
terms of the work order. The FCI made
deduction from the bills of the petitioner at
four per cent as per mandate of the rules in
pursuance of the letter of the Principal

Held, allowing petition,

the
perusal of rule 7(1) and 7 (2) of
the Rules 2005, would show
that the deduction of four per
cent from the bills is referable
to tax liability and not de hors

TDS

72

Secretary, drawing attention to provisions in

Act and Rule providing for tax deduction at
source. The petitioner moved this writ petition
on the ground, that the provisions for
deduction from the bills of the petitioner,
without reference to the tax liability was
beyond the legislative competence of the
State. It has further been submitted that the
provision for deduction of tax at source had to
have nexus with the tax due or likely to be due.

thereof. Thus, deduction of four

per cent from the bills of the
petitioner cannot be without
considering its tax liability. This
being the settled legal position,
the petitioner may give a
declaration as to it taxable
turnover out of the payment of
the bill.

91

61 VST 5
(Cal)

Crompton
Greaves Ltd. V.
Assistant
Commissioner
of Commercial
Taxes,
Corporate Div
and Others.

The petitioner collected sales tax on the basis

of invoice from purchasers of goods and issued
credit notes later on as trade discount and /or
incentive giving them credit of tax charged on
such incentives, filed returns on the basis of
actual collection of tax after the tax was
deposited. The Dept rejected the claim of trade
discount on the ground that factually trade
discount was not made known to the purchaser
at the time of sale. The full price has been
realised with tax at the time of issuance of bill.

Held, dismissing the appeal,

that the petitioner herein had
realized the full price with the
sales tax and surcharge without
any mention of discount being
allowed
in
any
manner
whatsoever. It was not a
discount, which was known and
understood at the time of
removal of the goods. There
was no whisper in the invoices
as to discount being allowed.
No recurring credit scheme was
also introduced to allow the
purchasers to get the discount
through the credit notes. It was
not turnover discount through
issuance of credit notes to
encourage turnover of sales.

Sale
price
-discount

92

61

Commissioner
of Sales Tax,

The department referred the following question

The appeal was dismissed. The

Court observed that the terms

Whether
insurance

VST

73

is

23 (Bom)

Maharashtra
State, Mumbai.
V.
Kolsite
Indistries.

:
1) Whether, insurance charges will not form
part of sale price, as it was borne by the buyer
independently and separately and also the
parties did not intend, as contained in clause
(h) of section 2 of the CST Act, 1956, ?
(2)Whether, the Tribunal was entitled to take
different view from its earlier view, pertaining
to same issue, in respect of the different
assessment years in view of the evidence
submitted by the respondent before it :

in the documents like the

agreement,
the
quotation,
marine cover notes, specimen
sale invoice clearly revealed
that the delivery of goods was
to be effected by the assessee
is ex-works and assesse had not
taken any risk upon themselves
qua the goods upon delivery.
The respondent, in no uncertain
terms,
clarified
in
the
agreement
that
unless
otherwise agreed, the quoted
price is exclusive of the charges
payable of packing, carriage,
freight and insurance. There is
no material to show that there
was any agreement to the
effect that the quoted price is
inclusive of insurance. It is also
categorically agreed that the
delivery
of
the
equipment/machinery is to be
taken at the works of the
company.
However,
if
the
equipment/machinery is desired
to be delivered at a particular
site, the same can be arranged
at
the
discretion
of
the
respondent at the buyers cost
and risk, irrespective of which
the delivery shall be construed
as complete at the works of the

a
part of
sale price

74

company. These clauses clearly

establish that the transactions
was/were entered into by and
between the respondent and
the
buyers
on
a
clear
understanding
that
the
insurance charges would be
charged
separately
and
therefore it cannot be construed
to be forming part of the "sale
price". Again, the Marine Cover
Note further goes to show that
the declaration for insurance is
to be made immediately after
the dispatch of the goods. Since
the delivery is ex-works and the
amount acknowledged in the
Marine Cover Note is only a
deposit,
the
Tribunal
was
correct in reaching a conclusion
that the insurance came into
force after the dispatch of the
goods. This finding as well as
explanation of the respondent
that the amount of insurance
charges was paid by the buyer
subsequently after adjusting the
amount of deposit mentioned in
the Marine Cover Note is also
supported by the addendum to
the Cover Note, by which
addendum the sum insured was
increased by Rs. 10,000 and

75

thereby the insurance company

collected extra sum for the
additional premium. Therefore
the Tribunal was correct in
holding that the insurance
charges were not part of the
sales price u/s 2(h) of the CST
Act 1956.
93

61
VST
89 (Cal)

Anatech
Instruments
Pvt.Ltd.
V.
Commercial
Tax
Officer,
Sealdah
Charge
and
Others.

The assesse challenged the order of the

tribunal which held that the smoke meter and
gas analyzer used to examine whether the
engines of the automobiles conform to the
norms of pollution and these instruments
and/or machines are pressed into operation
before the automobiles are put on sale or for
use on road would be machinery as mentioned
in item No. 54B, Schedule C of the VAT Act. The
assessee was of the opinion that it is covered
by entry for Tools.

The Court partly allowed the

petition. It held that these two
machines having measuring
functionality cannot be treated
as plant and machinery merely
because
the
manufacturers
used the same. They are not
required
for
manufacturing
automobile in any sense. The
word "tools" is of wide import,
and the Legislature has made it
clear that measuring tools of
various descriptions that can be
operated manually and power
operated or otherwise are
includible there under.

Schedule
entry

94

61
VST
272 (Ker)

Kochi
Refineries Ltd.
V.
State
of
Kerala.

The assessment involved is CST assessment.

On account of non-production of C forms, its
turnover of inter-State sales to the extent not
covered by C forms was assessed at the higher
rate. Since it was unable to get the C forms
and, therefore, assessment at higher rate got
confirmed. However, when the Tribunal heard
the appeal the petitioner could produce C

The petition was dismissed.

That the C forms should have
been
produced
at
the
assessment stage itself and
even for accepting belated C
forms, the assessee has to
furnish explanation. Tribunal
took
a
lenient
view
in

Declarations

76

95

61
VST
324
(Bom)

Timex
Art
Dcor Pvt. Ltd.
V.
State
of
Maharashtra
and Others.

forms for Rs. 2.46 crores. The Tribunal took a

very lenient view and allowed the petitioner's
claim by directing the assessing officer to grant
concessional rate in respect of C forms
obtained later. The assesse filed revision
petition seeking more time to produce the
forms.

petitioner's case and accepted

all the C forms produced before
them. This in fact amounts to
condonation of delay by the
Tribunal in the production of C
forms without which the same
could not have been ordered to
be accepted. In any case the
Tribunal has no powers to grant
further time for the petitioner to
try for C forms for the balance
turnover. So much so, the
Tribunal did not grant time
requested for by the petitioner.

The petitioner filed VAT returns for 2008-09

and 2009-10 and claimed input-tax credit/setoff on the purchases claimed to have been
effected from certain vendors against its tax
liability of sales. Information was received by
the Department from the Economic Intelligence
Unit to the effect that certain vendors/suppliers
of the petitioner were fictitious and bogus tax
invoices had been issued to the petitioner
without the actual delivery of goods and for
passing off tax credit without payment or
deposit in the treasury. The Assistant
Commissioner of Sales Tax, Investigation
Branch, conducted a search on the premises of
the dealer. The director was confronted with 13
purchase invoices in response to which he
stated that these bills were given to him by
agents in the market and were accounted by
the petitioner in the purchase register for the

The
Court
dismissed
the
petition. (i) under Sub-section
(1) of Section 73, the State
Government is empowered to
publish or disclose the names of
any dealers or other persons if
it is of the opinion that it is
necessary or expedient in the
public interest to do so. The
State is also empowered to
publish any other particulars
relating to any proceedings
under the Act in respect of such
dealers
and
persons.
The
publication by the State on the
website falls within the enabling
provisions of Section 73(1). (ii)
That whether and what stage
the State should carry out the

Input
credit

tax

77

claim of input-tax credit. The director stated

that he did not know the whereabouts of the
dealers; that no supporting documents for the
movement of goods were available with him;
that he had no details of the transporters and
was unable to explain the disposal of the goods
purchased from those parties. The statement
of one vendor, K. V. Shah, was also recorded
and he stated that he had never actually sold
or purchased any goods; that he did not
possess sale or purchase registers and that the
entire operation was being supervised by a
hawala operator by the name of Pradip Vyas.
The affidavit stated that no sale has been
effected to the petitioner and that in his
proprietary business, he issued bogus tax
invoices to different dealers.
On the website
of the Sales Tax Department, a list was put up
on July 12, 2012 of beneficiary dealers against
whom police complaints were lodged after April
1, 2011. The claim of the petitioner appears as
a beneficiary in that list. On writ petition
contending that a first information report was
first filed on October 22, 2012. that the name
of the petitioner was uploaded on the website
on July 12, 2012 even prior to the filing of the F.
I. R. that there was no basis to initiate
proceedings under section 73 of the Act, by
publication on the website, when the
assessment was pending. And that it was the
duty of the Department to pursue the hawala
dealers who have collected tax.

assessment of hawala dealers

was
not
a
matter
for
determination
in
these
proceedings.
The
petitioner
could not possibly assert that
its assessment in accordance
with law must be deferred until
an assessment is carried out in
the
first
instance
against
hawala
dealers.
The
Department was justified in
taking necessary steps to
complete the assessment of the
petitioner in accordance with
law.
A
web
of
complex
transactions has been put into
place to defraud the revenue
and we do not in the course of
this
judgment
intend
to
circumscribe in any manner
whatsoever the full range of
powers vested in the State
Government through its Sales
Tax Department for ensuring
that due steps are taken to curb
or as the case may be deal with
hawala
transactions
which
posed a serious threat to the
revenue of the State.

78

96

61
VST
445 (Cal)

Cipla Ltd. V.
Dy.
Commissioner,
Commercial
Tax, Corporate
Div.
and
Others.

The petition was filed by the assessee

challenging the disallowance of assessee's
claim of stock transfer under section 6A of the
Central Sales Tax Act, 1956 against the F forms
covering transaction of stock transfer for more
than one month in violation of rule 12(5) of the
Central Sales Tax (Registration and Turnover)
Rules, 1957.

The petition was allowed. The

Court observed that the proviso
to rule 12(5) provides that a
single declaration might cover
transfer of goods, by a dealer to
any other place of business, or
agent or principal,
effected
during a period of one calendar
month. There is nothing in the
rules which can be construed to
vitiate a declaration form only
on the ground that it covers
transactions exceeding a period
of over one month.

Declarations

97

61
VST
455
(Bom)

President Trade
and Exim Corp
and Another. V.
State
of
Maharashtra
and Others.

The Tribunal has directed the petitioner to pay

an amount of Rs. 50,000 for the assessment
year 2005-06, Rs. 4 lacs for the assessment
year 2006-07 and Rs. 4.50 lacs for the
assessment year 2007-08 on a writ, contending
that for the assessment year 2007-08 the
petitioner was entitled to a refund of
approximately Rs. 27.74 lakhs and therefore,
no order of deposit warranted :

Petition
of
the
assessee
dismissed. The Tribunal had
duly taken the note of the fact
that for the assessment year
2007+08 there was a refund to
extent of Rs. 27.74 lakhs but
having regard to the total tax
liability for the assessment year
2005-06 , 2006-07 and 2007-08
which was about Rs.1.43 crores,
the direction for deposit of an
amount of Rs. 9 lakhs for the
remaining two years could not
be regarded as arbitrary or
contrary to law. The merits of
the
submission
that
the
petitioner is entitled to a set-off
and
that
the
provisions
contained in section 48(2) read

Input
credit

Tax

79

with section 48(5)of the MVAT

Act would not be attracted
could be considered by the Dy.
Commr (Appeals) when the
appeal was taken up.
98

61
VST
465 (All)

Skyline
Engineering
Contracts
(India) Pvt. Ltd.
V.
Commissioner,
Commercial
Tax, Lucknow.

The petitioner had been awarded a works

contract for the construction of new lecture hall
complex, Samtel Centre, Boy's hostel. In order
to arrive at the value of the contract, the value
of the electrical works have been separately
shown in the contract. However, the case of
the applicant is that the contract was one
composite indivisible contract for the execution
of the aforesaid contract. The applicant applied
for compounding under the compounding
scheme. The compounding in respect of the
civil work has been accepted excluding the
value
determined
for
electrical
works.
However, the compounding in respect of the
civil work was accepted excluding the value
determined for electrical works. The assessee
filed the petition.

The petition was allowed. A

perusal of the contracts reveals
that in each contract the scope
of the work are mentioned. A
composite and consolidated
price of the entire work is also
mentioned.
Only
for
the
purposes of the convenience
and for determination of the
value of the entire contracts,
the price of the electrical work
has been separately shown
though the electrical work was
also a part of the main
contracts. Merely because the
value of the electrical works
was shown separately in the
contracts. The same cannot be
excluded from the composite
value fixed for the entire
contracts. The contracts are
admittedly civil in nature which
also includes the electrical
works.

Works
contracts

99

61
VST
478
(Karn)

State
Karnataka.
Modayil

The petitions filed by the revenue challenging

tribunal order which set aside the order of the
assessing authority and held that the assessee

The petition allowed. In the

invoice raised, the assesse has
shown the amount payable

Sale price

of
V.

80

Properties
Ltd.

100

62
VST
197 (MP)

(P)

is not liable to pay any sales tax on the

transportation charges mentioned in the
invoice .

towards transportation charges

separately and value of goods is
shown separately. The amount
was payable within 60 days
from the date of invoice. Apart
from these, no documents were
produced to show at what point
the title passed. Therefore it is
clear title passed to the
consignee at time of delivery.
All amounts received prior to
the delivery constitute the
value of the goods which may
include
the
transportation
charges. There is nothing in the
document to show that the
transportation
charges
are
directly
paid
to
the
transporters.
Moreover,
the
transportation charges is fixed
to a particular unit. Under these
circumstances, it cannot be said
that the transportation charges
collected form part of the postsale expenditure and cannot be
included in the total turnover.

AAR KAY Agro

Spring
Industries.
V.
State
of
Madhya
Pradesh
and
Others.

The petitioner had filed C forms, which were

found defective. In the C form, the purchase
order was not mentioned. It is submitted that
the petitioner be permitted to file afresh
correct C forms duly issued by the competent
authority. It is submitted that to rectify the
error in C form, the petitioner be allowed an

The Court followed the

judgement of the supreme
Court in Ambuja cement ( 142
STC 1). Under rule 12(7) of the
CST Act, the declaration form
could be filed at a subsequent
point
of
time
and
not

Declarations

81

opportunity to file fresh C form.

necessarily along with returns.

That means that the provisions
requiring filing of declaration
forms along with the return is a
directory provision and not a
mandatory provision. The object
of the rule is to ensure that the
assessee is not denied a benefit
which is available to it under
law on a technical plea.

101

62
VST
216
(Mad)

Aspick
Engineering
(P.)
Ltd.
V.
State of Tamil
Nadu.

The
assessee
effected
sale
to
M/s.
VijayashreeColata ,Warora and claimed the
sale as an inter-State sale. The assessing
officer, viewed the sale as a local sale, on the
ground that the purchaser had taken delivery
inside the State. The Appellate authority held
that the assessment was rightly made. Further
Tribunal rejected the assessee's case, on the
ground that the price was ex-godown; that the
purchaser had taken delivery and moved the
goods inter-State at its own cost. Thus, the sale
was only a local sale. The Tribunal further
pointed out that the goods were insured by the
buyers themselves and the sellers were
relieved of the liability after the delivery. On a
revision petition,

The petition was allowed. It was

not denied by the assesse that
the transactions were not
governed
by
a
written
agreement. The terms of the
agreement between the parties
are evident only by the
despatch details, indicative of
the understanding between the
parties. It was clear that sale
and movement were intimately
connected, that the movement
of goods was consequences of
sale. The HC held it as an interstate sale.

Inter-state
sales

102

62
VST
241 (AP)

Mahabaleswar
appa& Sons. V.
Assistant
Commissioner
(LTU),
Anantapur and

The petitioner is engaged in the business of

mining .Theysupplied iron ore to an exporter
and claimed exemption as "sales for export"
u/s 5(3) of the CST Act. He produced H form, as
required under section 5(4) of the Act for the
entire year, was accepted and assessment was

Under -rule 12(10)(a) a dealer is

required to file a declaration
signed by the exporter in form
H to the prescribed authority up
to the time of assessment by
the assessing authority. A plain

Declarations

82

Others.

completed granting exemption. The revisional

authority issued notice proposing to withdraw
the exemption under section 5(3), on the
ground that H forms for quarterly periods were
not submitted.

reading of rule 12(10)(a) does

not, in any manner, support the
view that they are required to
be filed for quarterly periods,
and not for entire year. Even a
machinery provision has to be
read in a
manner that is
workable.

103

62
VST
388
(Delhi)

Varun
Beverages Ltd.
V.
Commissioner
of Value Added
Tax (Delhi).

The petition was regarding the classification of

Slice which was classified by the tribunal as a
food article. It was contended that the content
is water-based. The product "Slice" had a
composition of 69.52% water, 1.08 Alfonso
Mango, 15.56% Totapuri Mango, 13.05% Sugar,
and .79% preservatives. The question therefore
was whether fruit based pulp based drink was
classifiable as "food article".

The predominant contents of

the mango pulp drink, in this
case , is water ( 70%). The
mango pulp content is 17%. The
Court observed that the product
does not claim to be a fruit juice
and therefore it cannot be
urged
to
have
minimum
modicum of nutritive properties.
If the product had been milk
based it might have been
different. The mango pulp is at
best an energy giver and in all
cases a thirst quencher and
cannot be called a food article.

Schedule
entry

104

65VST
260
(Mad)

Jayam& Co. V.
Assistant
Commissioner
(CT)
Main
Amindakarai
Assessment
Circle, Chennai
and Another.

The section 19(20) of the Tamil Nadu VAT Act

was challenged as arbitrary. The section said
that 'notwithstanding anything contained in
this section, where any registered dealer has
sold goods at a price lesser than the price of
the goods purchased by him. the amount of
the input tax credit over and above the output
tax of those goods shall be reversed.

The selling dealer gave discount

after issuance of the tax invoice
and charging VAT on the selling
price, extending discount to the
petitioner which were in the
form of credit notes. On receipt
of
the
credit
notes
the
purchasing dealer calculated
the purchase price taking into

Sale priceITC
on
discount

83

account the discount and fixed

the same as the purchase price.
By
value
addition
the
purchasing dealer sold the
goods to the consumer and VAT
was calculated on the sale price
fixed by the purchasing dealer
by considering the discount
Thus he took excess tax credit
as the VAT paid by him was less
that the VAT paid by him to the
first selling dealer 9 before
discount) .High Court upheld
the validity of the amendment
as the above method caused a
dent in State revenue.

84