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VAT / Sales Tax - Case Laws
Showing 741 to 760 of 27514 Records
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2023 (3) TMI 1206
Validity of assessment proceedings - seeking certain modifications to the turnover returned by the petitioner - HELD THAT:- There has been substantial elapse of time from the inception of the original proceedings in October, 2014 till 2020 when the present impugned orders have been passed. Hence the following directions are issued:
(i) The petitioner will remit the taxes on the turnover that was omitted to be offered along with interest for the delay within two weeks from the date of receipt of this order.
(ii) Upon condition that the amount as above is so remitted, the objections of the petitioner filed on 22.12.2014 shall be taken into account as though they constitute an application for rectification under Section 84 of the Act, and disposed within a period of four weeks thereafter.
These writ petitions stand disposed.
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2023 (3) TMI 1119
Disallowance of exemption from payment of tax under 1996-2001 industrial policy - molasses, bagasse and filter mud - disallowance on the ground that it would amount to dual benefit because the petitioner is enjoying the benefit of deferral of purchase tax on sugarcane - sale of by-products namely, molasses, bagasse and filter mud - disallowance when the petitioner's application for granting of FAVC was pending consideration before the SLCC.
HELD THAT:- The AO (Assessing Officer) has disallowed the exemption on the premise that it would amount to dual benefit to the petitioner. The State Government have also denied the benefit which has been considered in the aforementioned writ petition. Thus, the subject matter is common in the said writ petition and this revision petition. In our considered opinion, the reasons recorded while allowing the writ petition also answer the contentions urged by the assessee and the Revenue in this revision petition and this revision petition merits consideration.
The questions of law are answered in favour of the assessee and against the Revenue - Revision petition is allowed.
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2023 (3) TMI 1066
Recovery of Outstanding dues of Bank and tax dues under the VAT / sales tax act - Priority of claims - Attachment order - Right of Auction Purchaser of property - borrowers failed and neglected to clear the outstanding dues to the Petitioner Bank - Seeking directions to issue NOC to the Petitioners for effecting the transfer of the Secured Assets in its name, without any requirement of making payment of the dues of the Respondent No.3 and/or NOC of Respondent No.3.
Whether the Petitioner Bank having registered mortgage of the secured asset with Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI) will have priority to make its claim over the claims/charge of the Sales Tax Department arising out of the dues under the Maharashtra Value Added Tax Act, 2002 (MVAT) against the borrower to enforce the mortgaged writ property in favour of the Petitioner and more particularly, when the Sales Tax Deparatment had not registered its claim with CERSAI?
HELD THAT:- The issue as to who will have priorty in view of Section 26E of SARFAESI Act was referred to the Full Bench of this Court in case of Jalgaon Janta Sahakari Bank Ltd. & Anr. [2022 (9) TMI 163 - BOMBAY HIGH COURT] where Full Bench considered Section 26-C of the SARFAESI Act and held that the proviso to Section 26-C also declares that a secured creditor, who has registered the security interest or other creditor who has registered the attachment order in its favour, shall have priority of claims over subsequent security interest created over the property in question, any transfer by way of sale, lease, assignment or licence of such property or attachment order subsequent to such registration.
This Court noted that since the equitable mortgage could be created without registration, the transaction between the lender and the borrower largely remained secret. There was no way anyone else could get an inkling thereof, until the provisions of CERSAI registration were enacted. This Court held that to curb such problems and other undesirable consequences, the Parliament designed Chapter IV-A in such a manner to include provisions which, on the one hand, would disable any secured creditor to exercise the right of enforcing security interest under Chapter III of the SARFAESI Act without the CERSAI registration (section 26D) and, on the other, enable the secured creditor, if it has the CERSAI registration, to claim priority over all other debts and all revenues, taxes, etc.
It is held that Section 26E, also beginning with a non-obstante clause, is unambiguous in terms of language, effect, scope and import. A ‘priority’ in payment over all other dues is accorded to a secured creditor in enforcement of the security interest, if it has a CERSAI registration, except in cases where proceedings are pending under the provisions of the Insolvency and Bankruptcy Code, 2016. This Court held that such registration would constitute public notice thereof. The Full Bench of this Court has held that the dues of the secured creditor shall have priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority in view of Section 26E of the SARFAESI Act.
This Court held that Section 26E of the SARFAESI Act is a subsequent legislation, as it was notified on 24th January, 2020. Subject to compliance of the terms of Chapter IV-A, Section 26E of the SARFAESI Act would, thus, override any provision in the MGST Act and the BST Act in case of a conflict with the SARFAESI Act. This Court held that Section 26D which also refers with a non-obstante clause, prohibits a secured creditor from exercising the rights for enforcement of security interest conferred by Chapter III, unless the secured interest created in its favour by the borrower has been registered with the CERSAI.
It has further held that not only therefore registration with the CERSAI has been made a mandatory pre-condition for invocation of the provisions contained in Chapter III of the SARFAESI Act, the provisions relating to debts that are due to any secured creditor being payable to such creditor in priority over all other debs and revenue, taxes etc. is available to be invoked only after the registration of security interest. It leads to the irresistable and inevitable conclusion that unless the security interest is registered, neither can the borrower seek enforcement invoking the provisions of Chapter III of the SARFAESI Act nor does the question of priority in payment would arise without such registration.
The auction purchaser have participated in the e-auction conducted by the Petitioner Bank who had priority over the secured asset in view of registration of the equitable mortgage under Section 26E of the Securitization Act with CERSAI - the Petitioner Bank is not liable to take cognizance of the claim of Respondent No.1 over the secured asset in view of the Petitioner bank having priority over the secured asset and thus, is not liable to pay any taxes or other liabilities out of sale proceeds of the secured asset to the Respondent No.1. The Auction Purchasers’ claim their rights from the Bank having priority over the secured asset which was not liable to pay any taxes to the Respondent No.1 Authority. The principles laid down by the Full Bench on this aspect clearly applies to the facts of the present case.
The submission of the learned special counsel for the Respondent No.1 Authority that the Petitioner cannot waive their right to forfeit the earnest money deposit and to accept the balance consideration amount subsequently, depending upon the outcome of this petition filed by the Petitioner Bank, cannot be agreed upon - there is no substance in the submission made by the learned Special Counsel for Respondent No.1. If the Petitioner Bank has waived its right to forfeit the Earnest Money Deposit which is permissible in law, Respondent No.1 Authority cannot object to right of Petitioner not to waive.
The auction purchasers had never received any actual notice of the lien or constructive notice from the Respondent No.1 Authority in respect of the said writ property and thus is not liable to pay any tax separately towards the tax dues of the dealer of Respondent No.1 Authority.
Attachment order set aside - Society to issue such NOC in favour of such auction purchasers for transfer of Secured Asset in their favour without insisting for payment of the Sales Tax dues payable by the dealer, if any, however, on compliance with all other formalities, expeditiously - petition disposed off.
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2023 (3) TMI 1065
Time Limitation - Levy of penalty - suo-moto revision initiated by the respondent no. 3 was much after expiry of the period of limitation as prescribed under Sections 33 and 74 of the TVAT Act, 2004 - HELD THAT:- The respondent no. 4 after verification of the relevant documents of the petitioner had completed the assessment by assessment order dated 24.03.2015. From the face of the record, it is apparent that the respondent no. 4 on 10.07.2020 i.e. after elapse of more than five years had issued a notice under Section 70(1) of the TVAT Act, upon the petitioner wherein the petitioner was asked to appear in person or by his authorized representative and to explain as to why the assessment shall not be cancelled or modified. As per sections 33 of 74 of the TVAT Act, 2004, the issuance of notice after elapse of five years is barred by limitation.
This court prima facie on perusal of the proceeding dated 27.10.2020, order which is impugned herein, this court expresses its concern that the revisional authority has not passed any speaking order and has not dealt with the issues allowing the discounts and to say that the amounts discounted are fictitious.
Without entering into the merit of the case, the case is remanded back to the revisional authority to decide the matter afresh by passing a speaking order. It is also open for the petitioner to raise all his objections including the issue of jurisdiction and also to place any judgment in support of his contentions before the revisional authority.
Petition disposed off.
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2023 (3) TMI 1028
Levy of penalty upon the appellant under Section 51 (7) (b) of the Punjab VAT Act - penalty levied on the ground that there was mens rea to evade tax in the present case as the goods meant for trade were being transported by the dealer without proper and genuine documents with an intention to evade tax - HELD THAT:- It transpires that the department had committed a mistake by not involving M/s K.S. Steel Tubes Ltd. regarding transaction of goods from its premises without invoice. At the time of detention of vehicle and goods, the driver had produced the computerized invoice, which could have been destroyed after the vehicle had left the limits of Punjab and this fact has gone unaccounted. This invoice was not held to be genuine. More so, after about one week, the documents were produced before the designated officer during inquiry, showing purchase of goods by the appellant firm from various parties and kanda parchis. No such document was produced before the competent authority when the goods were released after accepting the bank guarantee. Once the appellant was taking the responsibility of getting the goods released, it was its own duty/responsibility to immediately produce the correct invoice. In this case, proper invoice had not been produced, rather it was a computerized invoice, which was produced after a gap of almost 10/20 days. Hence, the penalty has been rightly imposed upon the appellant, as the computerized invoice could have been easily destroyed.
In the facts of the present case, the driver had produced the invoice as well as G.R. The invoice was computerized one. The fact that the goods were loaded from the premises of M/s K.S. Steel Tubes was also substantiated by the statement of Manoj Sehgal, Manager of that firm - Keeping in view the statement given by the driver and the manager (Manoj Sehgal), penalty has been rightly imposed by the competent authority, as the appellant did not produce any invoice/document immediately after the goods were seized on 26.02.2009.
This Court is of the view that the impugned order has rightly been passed by the Tribunal and no illegality, much less perversity, has been found therein. No substantial question of law arises for consideration - Appeal dismissed.
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2023 (3) TMI 1027
Service of SCN - Whether notice N-2 was properly served to the appellant as per the provisions of order V of CPC read with rule 79 of HVAT Act? - service of notice N2 is valid if served to an unknown and unnamed person, who is neither the addressee nor his regular employee and nor a person authorized by the addressee, or not? - department is right in sending subsequent notices without mentioning or referring to Notice N-2, which had already been allegedly served and without referring to the fact that none had appeared in response to the notice N2, or not?
HELD THAT:- The assessing officer vide order dated 29.03.2013 had framed assessment under Section 15(3) of HVAT Act as well as CST Act to the tune of Rs.34,23,021/- by observing that the appellant-assessee was illegally claiming exemption from HVAT and CST by showing transactions between its sale offices and itself as branch transfers though they were interstate sales and thereby demand of tax was evaded. Against this order, the appellant had filed appeal before JETC (A) on the grounds that no notice for rejection of branch transfer and converting the same into interstate sales was ever given and further that the assessing authority had erred in treating branch transfer as interstate sales. The JETC (A) had rejected the plea that notice in form N-2 was not issued to the assessee. However, with regard to the question that the transaction as made by the appellant was branch transfer or interstate sales, the matter had been remitted to the assessing authority with direction to confront all the material which he was relying upon to the appellant.
The assessment order was passed on 29.03.2013. In such circumstances, there cannot be stated to be any force in the argument as raised by the appellant that notice VAT N-2 had not been validly served upon it. The Tribunal had also taken note of the fact that the above named Sh. Rajeev Kumar had subsequently furnished an affidavit on 17.04.2018 swearing therein that his signatures on statement dated 01.06.2017 was obtained on blank papers. The Tribunal had rejected this plea and in our opinion rightly so in view of the fact that the affidavit so sworn by Sh. Rajiv Kumar was dated 17.04.2018 i.e. only on the day when the appeal by the Tribunal had been decided. The appellant being employer of the above said Sh. Rajeev Kumar can obviously be presumed to be in a dominating position to procure such affidavit. As such, we are inclined to hold that the Tribunal had rightly observed that the statement dated 01.06.2017 was actually made by Sh. Rajeev Kumar before the officers of department affirming that notice VAT N-2 was served upon the appellant through its gatekeeper. The appellant had failed to bring any such material on record to show that the service of notice VAT N-2 was not validly effected upon it.
Thus, it is held that no ground has been made out for accepting the plea of the appellant that the notice VAT N-2 was not served upon it in accordance with law and, therefore, the contention raised by the appellant that in the subsequent notices, no reference as to service of previous notice VAT N-2 had been mentioned is also of no consequence - no substantial question of law has arisen in favour of the appellant.
Appeal dismissed.
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2023 (3) TMI 1026
Revisional powers of respondent-authorities under Section 61 (2) of the Haryana Value Added Tax Act, 2003 - after passing of the assessment order, no proceedings were pending under the Haryana General Sales Tax Act, 1973 - HELD THAT:- In the present case, the assessment order for the year 2002-2003 has been passed on 19.03.2007 (Annexure A-1). As per the judgment in EXCISE AND TAXATION COMMISSIONER, HARYANA VERSUS M/S FRIGOGLASS INDIA PRIVATE LIMITED AND ANOTHER [2019 (5) TMI 1178 - PUNJAB AND HARYANA HIGH COURT], period of three years would expire in the year 2006. However, this order in itself was beyond the period of limitation. Apart from this fact, the revisional authority, while exercising its powers under the Haryana General Sales Tax Act, 1973, had issued notice for revising the assessment order. On the date of issuing this notice, the authorities under the Haryana VAT Act had no jurisdiction to revise the order, as no assessment proceedings were pending when the order of revision was passed/issued.
Once, Haryana VAT Act had come into force, the authorities could not issue the said notice, as the jurisdiction to issue such notice has not been saved in the saving clause under Section 61 (2) of the Haryana Value Added Tax Act, 2003.
Hence, by applying the ratio of the aforesaid judgment on the facts of the present case, the impugned orders are held to be without jurisdiction. Since the assessment order was passed under the Haryana General Sales Tax Act, no proceedings could be initiated after coming into force the Haryana VAT Act, as has been done in the present case - Apart from that, as per the judgment passed in M/s Frigoglass India Private Limited’s case, the proceedings for the assessment year 2002-2003 had to be completed within a period of three years. However, the assessment order itself has been passed on 19.03.2007 (Annexure A-1).
Appeal allowed.
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2023 (3) TMI 1005
Retrospective withdrawal of exemption - Constitutional Validity of Notification No.II (1)/CTR/75 (b-2)/2007, dated 19.12.2007 (G.O.Ms.No.198) - vires of Sections 30 and 88 of the Tamil Nadu Value Added Tax Act, 2006 and Articles 14, 19 (1) (g), 265, 301 and 304 (a) of the Constitution of India - exemption to Waste Paper, Paper Boards and used/old bottles - refund - principles of unjust enrichment.
Whether the impugned notification(s) which imports the condition that the exemption to Waste Paper, Paper Boards and used/old bottles shall be subject to the concession that the said goods are sold on inter-state trade and tax has been paid under the Central Sales Tax Act, 1956, retrospectively is within or beyond the scope of the powers conferred on the Government in terms of Section 17 of the TNGST Act, 1959 (or) Section 30 read with Section 88 (4) of the TNVAT Act? - HELD THAT:- The question is no longer res integra. Power may be conferred to make subordinate/ delegated legislation in the shape of rules, bye-laws, notifications etc., which have retrospective operation. - Such a power may be either conferred in express words or may be inferred by necessary implication. In the absence, however, of an express or necessarily implied power to that effect, subordinate/ delegated legislation, be it a rule, a bye-law or a notification, cannot have retrospective operation.
It has been consistently held by this Court in the context of Section 17 of TNGST Act which is pari materia with Section 30 of the TNVAT Act, that while the Government is conferred with the power to grant exemption prospectively or retrospectively, the power to withdraw, annul, modify or vary a notifcation traceable to sub-Section (3) to Section 17 of the TNGST Act, cannot be exercised retrospectively.
Reliance can be placed in the case of HONEST CORPORATION VERSUS STATE OF TAMIL NADU [1997 (12) TMI 622 - MADRAS HIGH COURT] and G. PACKIRISAMY & CO. VERSUS STATE OF TAMIL NADU (AND OTHER CASES) [1994 (5) TMI 244 - MADRAS HIGH COURT] - On a reading of the above judgments it is beyond the pale of any doubt that the power of the State Government be it under Sub-section (3) to Section 17 or 30 of the TNGST Act or TNVAT Act respectively cannot modify, annul or vary a notification retrospectively. Thus the impugned notification insofar as it imports conditions which curtails or whittles the exemption for waste paper, paper board and old or used bottles is in excess of the power conferred under Sub-section (3) to Section 17 or 30 of the TNGST Act or TNVAT Act respectively.
The impugned notification travels beyond the scope of power conferred under sub-Section (3) to Section 17 (or) Section 30 of the TNGST Act and the TNVAT Act respectively and thus the impugned notification viz., Notification No.II (1)/CTR/75 (b-2)/2007, dated 19.12.2007 (G.O.Ms.No.198) is ultra vires to Sections 17 of the TNGST Act, 1959 (or) Sections 30 and 88 of the TNVAT Act, 2006, insofar as it imports conditions with retrospective effect which has the effect of curtailing/ whittling down the scope of exemption granted vide notification in G.O.Ms.No.176 dated 28.12.2006.
Whether any refund consequent to a declaration that the impugned notifications are ultra vires would be subject to the doctrine of ''Unjust Enrichment''? - HELD THAT:- It was submitted that it was not a case of claim of refund, but a case where the assessment orders were made granting refund and the prayer is to direct the 1st Respondent herein to forbear from giving effect to or rely upon Notification No.II(1)/CTR/75/(81)/07 [G.O.Ms.No.198, Commercial Taxes and Registration (B2)] dated 19.12.2007, to revise or review completed proceedings granting exemption in respect of the purchases of old/ used empty bottles during the period from 1st June, 2000 to 5th September, 2006. It is submitted by the learned counsel that Doctrine of Unjust Enrichment is applicable only against a claim for refund and not to reopen closed assessment thereby resulting in recovery of any sums/amounts collected by way of or purporting to be by way of tax. We are not inclined to accede to the above prayer for we do not intend rather cannot pass orders pre-empting a quasi-judicial authority from exercising its power.
It is made clear that the above declaration on the validity of the impugned notification would not preclude the authorities to recover the sums if any collected by way or purporting to be by way of taxes if law enables/permits to do so. Needless to state that any such exercise shall be in accordance with law.
Petition disposed off.
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2023 (3) TMI 1004
Inter unit transfer of goods would constitute a sale or not - Rejection of claim of the petitioner that the transfer of goods from one unit of the petitioner company to another unit does not constitute sale - whether independent registrations are obtained by the units and whether different business are carried out by different units of the same company to conclude that two different entities are in existence?
HELD THAT:- It is found that mere independent registrations or the fact that different lines of business would not convert an inter unit transfer as constituting a ''sale''. Unless and until it is shown that there are two distinct legal entities involved in a transaction, levy of tax by treating it as a transaction of sale is wholly impermissible.
It would be relevant to refer to the following judgment of the Andhra Pradesh High Court in KCP. LIMITED VERSUS STATE OF ANDHRA PRADESH [1992 (9) TMI 330 - ANDHRA PRADESH HIGH COURT] wherein it was held that mere registration certificate obtained by different branch or unit will not by itself result in different units becoming distinct and different legal entities capable of transferring properties/goods from one entity / person to another which is a sine qua non for a transaction to be treated as a sale attracting the charging provision.
It is thus evident that unless and until there are two distinct entities, the question of sale may not arise. However, the Tribunal has not even addressed this issue and has misdirected itself in looking at the factum of independent registrations and independent lines of business to conclude that the alleged inter unit transfer would constitute sale.
It is deemed appropriate to remand the matter back to the Tribunal for examining the question on the strength of the documents whether both Hi-Tech Carbon Unit and Cement Unit are different units of Indian Rayon and Industries Limited. If the answer is in the affirmative, then the question of levy of tax cannot be sustained.
Writ petition disposed off.
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2023 (3) TMI 943
Process amounting to manufacture or not - mixture of the base paint with different colours, results in a new product or not - Revenue contended that the sale of paints which had undergone mixing (through a computerised process with the aid of a DTS machine) amounted to ‘manufacture’, thereby resulting in a new product, which was a fresh incidence of taxation - HELD THAT:- In Mahalaxmi Stores [2002 (11) TMI 112 - SUPREME COURT], this court relied on previous decisions such as Commissioner of Sales Tax Vs. Pio Food Packers [1980 (5) TMI 30 - SUPREME COURT], and Chowgule and Company(P) Limited Vs. Union of India [1980 (11) TMI 61 - SUPREME COURT] to state that the manufacturing process can vary, and that the process of producing every type of variation, or finishing of goods, would not amount to ‘manufacture’ as contained in the statute unless it resulted in the emergence of a new commercial commodity.
In Sonhbadra [2006 (8) TMI 304 - SUPREME COURT], this court while deciding the facts of the case before it cited a large number of decisions rendered in the context of what was meant by ‘manufacture.’ This court specifically noticed in Union of India V. Delhi Cloth and General Mills [1962 (10) TMI 1 - SUPREME COURT] that ‘manufacture’ meant bringing into existence a ‘new’ substance and did not mean merely to bring about some change in the substance. In Mahalaxmi Stores, it was held that processing or variation/finishing of goods would not per se amount to manufacture unless it resulted in the emergence of a new commercial commodity.
In the present case, the findings based on the expert’s evidence are that the base paint was mixed with colouring as an additive. Both of these had suffered tax. The resultant article i.e., the paint of a different shade, did not result in a new commercial product. In common parlance, the new product was nothing else but ‘paint’, and not a different article.
The High Court did not fall into error - Appeal dismissed.
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2023 (3) TMI 942
Reopening of assessment - order of assessment itself was not issued by the Authorities - HELD THAT:- The dispute raised in the present Writ Petition is squarely covered by the decision of the Division Bench of this High Court rendered in the case of State of Chhattisgarh & Ors. v. M/s Tata Teleservices Limited [2022 (12) TMI 264 - CHHATTISGARH HIGH COURT]. These Writ Appeals by the State were preferred against the Order passed by the Single Bench in Writ Petition (T) No.79/2017 on 20.3.2018. In the said Writ Petition, the Writ Court in identical set of facts had held the order of reopening of assessment to be bad when the order of assessment itself was not issued by the Authorities. The said Order of the Single Bench was subjected to challenge by the State before the Division Bench in the aforesaid Writ Appeals. The Division Bench rejected the bunch of Appeals of the State, affirming the Order passed by the Single Bench.
Similar matter which came up for consideration before the Division Bench in TAXC No.74/2022 in the matter of "M/s. Iron Junction Rajbandha Maidan, Raipur Vs. Commissioner of Commercial Tax" [2022 (9) TMI 1407 - CHHATTISGARH HIGH COURT] where keeping in view the decision rendered in the case of “M/s. Tata Teleservices Limited” [2022 (12) TMI 264 - CHHATTISGARH HIGH COURT], the Division Bench had disposed of the said Tax Case also in terms of the Order passed in “M/s. Tata Teleservices Limited”. It has been emphatically held that unless there is a specific order of assessment under Section 21(1) of the Chhattisgarh Value Added Tax Act, there cannot be reopening of an assessment made under Section 21(2) of the said Act.
In the light of the aforesaid judicial pronouncements by the Division Bench of this High Court, the present Writ Petition, being squarely covered by the same, deserves to be and is accordingly allowed.
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2023 (3) TMI 941
Claim of exemption even after the expiry of exemption period as per the scheme - Revival of viable sick industrial units - It is the case of the petitioner company that it had suffered because of serious breakdown of law and order and was not able to submit the financial returns - HELD THAT:- It appears that in the order dated 28.01.2013 by which the writ petition was disposed of, it was recorded that the petition was filed in the year 2001 seeking a direction to revive the petitioner sick unit pursuant to a minutes of meeting dated 14.06.2000 and also to quash the order dated 22.11.2001 passed by the Board of Industries and Financial Reconstruction (BIFR). The stand of the State that the petitioner was not entitled to any relief and that the benefit had already been availing by the petitioner was recorded. It appears that a concession was made by the petitioner that a final reasoned order may be passed by the Government and on such concession, the order was passed by directing that a final decision be taken within a period of three months.
The present demand appears to be for exemption of Sales Tax beyond the period of the policy which cannot be claimed as a matter of right. This Court also finds force in the contention of the learned Standing Counsel, Industries & Commerce Department that there has been huge diversion of money of the petitioner company to other companies. A perusal of the minutes of meeting held in the chamber of the Additional Secretary, Industries & Commerce dated 14.06.2000 would show that huge amounts were diverted and the same was confirmed by the Managing Director of the petitioner.
This Court is of the opinion that the relief claimed is based on speculation and assumption and it does not appear that there is any indefeasible right of the petitioner for such relief. This Court in exercise of its jurisdiction under Article 226 of the Constitution of India does not act as a Court of Appeal and its functions are only confined to the decision making process. In the impugned order dated 20.09.2013, reasons are reflected which according to this Court are cogent and acceptable. This Court is of the further opinion that the factors which have been considered, namely, availing of the benefits of five different heads are relevant and germane to the issue at hand - Though a case has been tried to be projected of hardships to operate and run the Industry, including infrastructural and law and order problem, the petitioner company choose to set up the Industry in that location knowing fully well about the situation. It is however required to be noted that while the petitioner has highlighted the difficulties, the easy availability of raw materials for the cement Industry namely, Limestone has not been focused.
Appeal dismissed.
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2023 (3) TMI 940
Reversal of Input Tax Credit (ITC) - manufacturing / invisible loss - Interpretation of statute - construction/interplay of Section 19(2)(ii) vis-a-vis Section 19 (9) of the Tamil Nadu Value Added Tax Act, 2006 - reversal of Input Tax Credit on account of manufacturing / invisible loss - validity of Circular dated 20.10.2011 by which instructions were issued stating that wastage at all levels must be considered taking into account the nature of commodity and that the credit was to be reversed in respect of manufacturing/invisible loss in terms of Section 19 (9) of the TNVAT Act.
HELD THAT:- Input Tax Credit is in the nature of a concession and is the pivot/axis around which the VAT Scheme revolves. The State legislature has under Section 19 (2) of the TNVAT Act identified circumstances under which the benefit of Input Tax Credit is granted. Importantly, Section 19(2) (ii) of the TNVAT Act provides that Input Tax Credit shall be allowed for purchase of goods made within the State from a registered dealer for use as input in manufacturing or processing of goods in the State - thus, any goods which qualifies as an “input” under Section 2(23) of the TNVAT Act and used in manufacture or processing of goods shall be entitled to Input Tax Credit. The object behind granting the benefit of Input Tax Credit in terms of Section 19 (2) (ii) of the TNVAT Act, is with a view to promote manufacturing activity within the State.
The expressions “damaged” and “destroyed” in Section 19(9)(iii) of the TNVAT Act used to deny Input Tax Credit, must be understood to have been employed by the legislature in contradistinction to the expressions “use in manufacturing or processing of goods” employed in Section 19 (2) (ii) of TNVAT Act while allowing a dealer to claim Input Tax Credit. While the expression “use” in Section 19(2)(ii) of the TNVAT Act qualifies “manufacturing or processing of goods”, the expressions “damaged” and “destroyed” employed in Section 19(9) of the TNVAT Act are not used with reference to manufacture or processing of goods - the expressions “use in manufacture or processing of goods”, employed in Section 19 (2) (ii) of TNVAT Act is meant to convey a positive act or an act performed towards / in the direction of achieving the intended purpose/desired result viz., manufacture / emergence of a different commodity / end product. The expressions ''use'' in manufacture on the one hand and “damaged” and “destroyed” are antithetical and irreconcilable with each other.
Test of quantitative requirement of inputs to manufacture desired quantity of end product - HELD THAT:- In the case of M/s.Swadeshi Polytex Ltd., Vs Collector of Central Exercise [1989 (11) TMI 131 - SUPREME COURT], rejecting the contention of the revenue that ethylene glycol not contained in the end product viz., polyester fiber but in other waste/ by-product ought to be denied the benefit of credit, the Hon'ble Supreme Court proceeded to hold that as long as it is not possible to use a lesser quantum of ethylene glycol to produce desired quantity of polyster fabric the same is entitled to the benefit of credit as having been used in the manufacture.
The Hon’ble Supreme Court in the case of Union of India Vs. Indian Aluminium Company Ltd. [1995 (4) TMI 62 - SUPREME COURT] had also applied the test of quantitative requirements of inputs for the purpose of manufacturing the desired quantity of output, to determine whether the inputs are used in the manufacture of other goods. It was held an exact mathematical equation between raw materials used and found in the finished products is irrelevant to determine whether the inputs are used in the manufacture/processing of desired end products.
Test of indispensability - HELD THAT:- The Hon'ble Supreme Court in the case of COLLECTOR OF C. EX. VERSUS BALLARPUR INDUSTRIES LTD. [1989 (9) TMI 102 - SUPREME COURT] wherein while examining the question as to what would constitute raw material while rejecting the contention that to constitute raw material it is essential that the same must form part of the end product, held that the relevant test is not its absence in the end product, but the dependence of the end product for its essential presence at the delivery end of the process. The ingredient goes into the making of the end product in the sense that without its absence the presence of the end product, as such, is rendered impossible. This quality should coalesce with the requirement that its utilisation is in the manufacturing process as distinct from the manufacturing apparatus.
Applying the test of indispensability if the inputs are indispensable for the emergence of desired end product it is not open to disallow the claim of input tax credit on the ground of manufacturing/invisible loss.
Test of Technical/Practical/Commercial inexpediency - HELD THAT:- Reliance made in the case of J.K.Cotton Spinning & Weaving Mills Co.Ltd., Vs. The Sales Tax Officer, Kanpur and Another [1964 (10) TMI 2 - SUPREME COURT] wherein the scope of the expression “in the manufacture of goods” employed in Section 8(3)(b) of the Central Sales Tax Act, while extending the benefit of concessional rate of tax was examined by Supreme Court. It was held that the expression in the manufacture of goods would encompass, the entire process carried on by the dealer for converting raw materials into finished goods. The Hon'ble Supreme Court applied the test of "commercial inexpediency" to determine whether a process would fall within the expression in the manufacture of goods, while making it clear that the expression in the manufacture of goods should not be curtailed by some theoretical possibility over looking/disregarding commercial inexpediency while examining the scope of the expressions “in the manufacture of goods”. If manufacturing/invisible loss is tested applying the test of technical/practical/commercial expediency and found that it is incapable of manufacturing the end product without the input of the requisite/utilised quantity then there cannot be a denial of input tax credit alleging manufacture/invisible loss.
The above judgments leave no room for any doubt that quantitative tally between the raw material used and the end product manufactured is foreign to the concept of manufacture. The above requirement is contrary to technical/practical/commercial expediency involved in the activity of manufacture. It is clear that once input is used in the manufacture the mere fact that it is not contained in the end product may have no bearing on the dealers entitlement to input tax credit in terms of Section 19 (2) (ii) of the TNVAT Act. Thus applying any of the above tests viz., test of indispensability, quantitative requirement, commercial expediency the irresistible conclusion is that manufacturing/invisible loss which is inevitable/unavoidable/inherent part of manufacturing process cannot be denied the benefit of Input Tax Credit in terms of Section 19(2)(ii) of the TNVAT Act invoking Section 19(9) of the TNVAT ACT.
On analysis of the scope and interplay between Sections 19(2)(ii) and 19(9) of the TNVAT Act, precedents dealing with manufacturing/invisible loss and the rules of construction referred above, it is found that Section 19(9) of the TNVAT Act would not get attracted to manufacturing/invisible loss which is inevitable and inherent part of manufacture and thus covered by Section 19(2)(ii) of the TNVAT Act.
The impugned Circular dated 20.10.2011 insofar as it is contrary to the law declared by this Court with regard to manufacturing/invisible loss is set-aside. Wherever the challenge is to the notice it is open to the appellants/petitioners to submit their objections which shall be decided in accordance with the law declared by this Court after affording the appellants/ petitioners reasonable opportunity of being heard - Petition disposed off.
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2023 (3) TMI 939
Penalty order - calculation of annual sales turnover - applicability of provisions of Section 4 of Andhra Pradesh VAT Act,2005 in general and sub-Section (9) of Section 4 of the Act in particular - HELD THAT:- A perusal of the order passed by the Assessing Officer shows that the Assessing Officer in the impugned order categorically discussed about the applicability of various provisions of law, including Section 4 and also explanation to Clause (d) of the sub-Section (9) of Section 4 of the Act and recorded the conclusions. It is not in dispute that immediately after receipt of the impugned orders, the present Writ Petitions came to be instituted before this Court. All these contentions now sought to be urged in the present Writ Petitions, in the considered opinion of this Court, can as well be agitated before the Contempt Court under the provisions of Section 31 of the Act.
In view of the availability of the alternative remedy, this Court is not inclined to go into the merits and de-merits of the case.
Petition disposed off.
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2023 (3) TMI 884
Zero Rate Sale against supply of SEZ versus Refund on Export - Sales of goods to a dealer located in a Special Economic Zone (SEZ) in the State - whether export is a condition precedent to constitute Zero Rate Sale or not - validity of Circular No.9/2013 dated 24.07.2013 - scope and ambit of Section 18 of the TNVAT Act.
Whether for a sale to a dealer located in a SEZ in the State to qualify as a "zero rate sale" in terms of Section 2(44) read with Section 18(ii) of the TNVATAct, the goods so purchased must be exported as such or consumed or used in the manufacture of other goods that are exported, by the dealer located in Special Economic Zone?
HELD THAT:- There is no uniformity in terms of the benefits /tax treatment extended with regard to sales to registered dealer in SEZ. The benefit of exemption being fairly uniform and the least of the benefit extended. Some States had granted the benefit of not just exemption but also the corresponding input tax credit which is otherwise not available to exempted goods/sales. Under the TNVAT Act, sales to SEZ is treated as a “Zero Rate Sale'', which is distinct from exemption - Under the TNGST Act exemption was thus granted in respect of sales tax, surcharge, resale tax and additional sales tax payable by any dealer on the sale of any goods made by such dealer to a registered dealer in SEZ for the purposes set-out in the said notification.
Apart from the notification in G.O.Ms.No.15 granting exemption in respect of tax payable under the said Act by any dealer on the sale of goods made by such dealer to a registered dealer for the purposes set out in the notification, sale of goods to any registered dealer located in Special Economic Zone was treated to be a “Zero Rate Sale” under Section 18 read with Section 2(44) of the TNVAT Act. Zero Rating was a concept introduced for the first time in relation to tax on sale of goods in Tamil Nadu under Section 18 of the TNVAT Act.
Zero Rate Sale is defined under Section 2 (44) of the TNVAT Act, to mean a "sale" on which no tax is payable but credit for input tax related to that sale is admissible - On a plain reading of Section 18 of the TNVATAct the benefit of Zero Rate under Section 2(44) of the Act, viz., that no tax is payable but credit for the Input Tax related to that Sales being admissible, is available to all three categories of sales mentioned in Section 18(1) of the TNVATAct.
The benefits extended /granted under Section 18 of the TNVAT Act viz., Zero Rating and refund are independent nor do they overlap. Refund is not part of the benefit of Zero rating as defined under Section 2 (44) of the TNVAT Act. It is not necessary that a Zero Rate must end up/culminate/ripen into a claim of a refund - Section 18(2) and 18(3) of the TNVAT Act would get attracted only when a dealer claims the benefit of refund which is an additional benefit independent and distinct from Zero Rate Sale.
From analysis of Section 18 read with Section 2(44) of the TNVAT it is clear that the order of the learned Single Judge insofar as it finds “export” to be a pre-requisite to qualify as "Zero Rate Sale" even in respect of sales covered by Section 18(1)(ii) of the TNVAT Act is without basis and contrary to the plain language of Section 18(1) of the TNVAT Act.
The order of the learned Single Judge insofar as it holds that export is a condition which ought to be satisfied for the purpose of claiming the benefit of Zero Rate in respect of sale to a dealer located in SEZ falling under Section 18 (1) (ii) of the TNVATAct i.e., a sale on which no tax is payable but Input Tax Credit in relation to such sale is admissible, is unsustainable. However, a dealer effecting zero rate sale to claim refund it may be necessary to demonstrate that the goods have been exported as such or consumed or used in the manufacture of other goods that are exported, subject to such restrictions and conditions as may be prescribed.
The conclusions arrived are as under:
a. Section 18 of the TNVAT Act, confers two benefits viz., Zero Rate i.e., sale on which no tax is payable but on which Input Tax Credit is admissible and the second being refund in addition to the above benefit of Zero rate. The benefits are independent of each other.
b. Export of goods is not a condition precedent or sine qua non to qualify as a Zero Rate sale as long as the sale falls within clause(ii) of Section 18 (1) of the TNVATAct.
c. To claim refund in terms of the Section 18 (2) read with 18 (3) of the TNVAT Act, export of goods is an essential condition but not the benefit of Zero Rate.
d. Zero Rate is distinct from exemption and thus the provisions of Section 19 (5) of the TNVATAct would not get attracted.
e. The impugned circular is set-aside to the extent it is contrary to the law declared by this Court.
f. The provisions of Section 18 the TNVAT Act cannot be controlled by a notification under Section 30 of the TNVAT Act inasmuch as Section 18 of the TNVAT Act confers a larger benefit. It is open to an assessee to claim a larger/ greater benefit.
g. The expression sale in Section 18 of the TNVAT Act must be understood keeping in view the definition of sale under Section 2(33) of the TNVAT Act. Thus, works contract or for that matter any of the categories of mutant sales which is deemed to be sale would fall within the meaning of the expression sale employed in Section 18 of the TNVATAct.
Matter remanded back to the Assessing Authority, who shall re-do the assessment keeping in mind the law declared with regard to the scope of Section 18 of TNVAT Act - petition disposed off.
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2023 (3) TMI 883
Violation of principles of natural justice - Validity of assessment orders - case of petitioner is that the respondent(s) has levied the tax on the respective enhanced turnover without granting an opportunity of hearing to the petitioner - HELD THAT:- Admittedly, the proposals sent by the respondents through their notices dated 02.05.2017, 05.02.2019 and 19.11.2019, 22.11.2019 and 04.02.2020, they have proposed to levy tax only at the rate of 5% on the respective taxable turnover of the petitioner. But as seen from the impugned Assessment Orders, dated 11.12.2019, 09.12.2019 and 11.12.2019, the respondent(s) has levied tax on the respective enhanced turnover, which is in excess of the respective taxable turnover mentioned in the proposals dated 02.05.2019, 05.02.2019 and 19.11.2019, 22.11.2019 and 04.02.2020.
As seen from the impugned Assessment Orders, a higher rate of tax at 14.5% on the respective turnover has been made without granting an opportunity of hearing to the petitioner. Excepting for the final notice dated 22.11.2019 issued by the respondent(s) to the petitioner which discloses that the petitioner will have to furnish correct details of the purchases made by the petitioner and also discloses that in case, the purchases were made by the petitioner from a registered dealer, the levy of tax will be at the rate of 5% and in case the purchases were made from an unregistered dealer, the levy of tax will be at the rate of 14.5%, the actual figures based on the best judgment assessment of the respondent which is proposed to be made on the petitioner has not been disclosed - The learned counsel for the petitioner would categorically contend that no personal hearing was afforded to the petitioner in the impugned Assessment Orders. Since in the impugned Assessment Orders, it is not seen as to whether personal hearing was afforded to the petitioner or not, the statement of the petitioner that no personal hearing was afforded to them in the impugned assessment proceedings has to be believed.
In the instant case, admittedly as seen from the impugned Assessment Orders, the proposal notices sent to the petitioner on different dates were for different amounts, but in the impugned Assessment Orders, the tax liability of the petitioner is much more than the figure mentioned in the proposals sent to the petitioner - this Court is of the considered view that principles of natural justice has been violated by the respondent(s) before passing of the impugned Assessment order and by non application of mind the impugned Assessment Orders have been passed, since the proposal notices sent by the respondent(s) discloses a different figure than which is determined in the impugned Assessment Orders and the figure determined in the impugned Assessment Orders are much higher than the figure disclosed in the proposal notices sent by the respondent(s).
The impugned Assessment Orders have to be quashed and the matter will have to be remanded back to the respondent(s) for fresh consideration on merits and in accordance with law - Petition disposed off by way of remand.
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2023 (3) TMI 882
Recovery of arrears of tax - criminal liability of the main accused and of the guarantor - returns filed by the first petitioner for the year 2013-14 was not complete and the returns did not tally with the actual sales reported by the first accused - HELD THAT:- Though it is true that the second accused had given an undertaking to pay taxes, if the first accused fails to pay the same that cannot be the sole reason to fix the second accused also for the default committed by the first accused. Though it might be true that the second accused also liable to pay the tax arrears in view of his undertaking or guarantee given in favour of the 1st accused to the commercial tax department. However that can be done by taking civil action for recovery. Unless the second petitioner is the assessee in the eyes of the Act he cannot be implicated as an accused for the default committed on the part of the first accused, who alone is the assessee.
Since the complaint has been given against this petitioner by presuming culpability on his part for failing to pay the tax, there is no basis for this criminal case. The undertaking or the guarantee executed by the second accused in favour of the 1st accused to the department can be at the best called as an agreement and for which the petitioner can be attached with contractual liability but not criminal liability.
In order to serve the ends of the justice and to prevent the abuse of the process of the Court, the proceedings against the second accused alone should be quashed - Petition allowed.
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2023 (3) TMI 831
Disallowance of Input Tax Credit (ITC) arising out of the alleged mismatch between the returns filed by the petitioners when compared with the returns and annexures filed by the purchasing / selling third party dealers - reversal of ITC on the allegations that there has been no actual movement of goods qua the transactions in question.
HELD THAT:- A Bench of this Court in the case of M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [2017 (3) TMI 536 - MADRAS HIGH COURT] had issued certain directions for conduct of verification and assessment in such matters. While some of these directions have been complied with in the present cases, learned counsel concur on the position that there are other conditions that have been set out under Circular No.5 of 2021 dated 24.02.2021 that yet remain to be complied.
The second issue relating to movement of goods has been the subject-matter of detailed deliberations in a batch of cases in W.A.No.2607 of 2021, wherein orders have been reserved by the Tax Bench on 01.12.2022. In the interregnum, the Hon'ble Supreme Court has also had occasion to pronounce judgment in the case of THE STATE OF KARNATAKA VERSUS M/S ECOM GILL COFFEE TRADING PRIVATE LIMITED [2023 (3) TMI 533 - SUPREME COURT] on the same issue, though in the context of the Karnataka Value Added Tax Act - thus, there is direction to the assessing authority to await decision in W.A.No.2607 of 2021 and complete the assessments thereafter in light of the judgment of the Hon'ble Supreme Court in Ecom Gill Coffee Trading Private Limited and the decision of the Division Bench within a period of 12 weeks from date of pronouncement of the decision in W.A.No.2607 of 2021.
These writ petitions are disposed off.
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2023 (3) TMI 830
Validity of order of passed by the Revisional authority - Non-speaking order - Refund of the excess amount paid - jurisdictional error in completing the assessment, on the part of Commissioner of Taxes - case of petitioner is that the Commissioner of Taxes without assuming jurisdiction under Section 70(1) of the Act the order has been passed - HELD THAT:- In the case in hand, there is no jurisdictional error in the assessment of the assessing authority, and accordingly, the respondent no. 2 has acted beyond section 70(1) of the Act. This casual approach of the respondent no. 2 cannot be permitted since he is trying only to prevent the payment of refund amount to the petitioner.
The respondent authorities acting as quasi judiciary authority by invoking the power under statute are expected to act judiciously, but they are not expected to work as money generating authority. Very often it is noticed by this court that the orders are passed by the respondent authorities in an arbitrary manner which is driving the Tax-payers/dealers to file appeals by depositing 50% of the disputed tax while filing statutory appeals. But for the casual approach of the respondent-authorities, a Tax-payer/dealer cannot be put to hardship. Such action of the respondent-authorities cannot be appreciated. The impugned order dated 21.05.2020 is due of its nature. This is nothing else, but a burden on the business class. This court finds that the officers need to be more vigilant and tax-payers friendly. Accordingly, a cost of Rs. 25,000/- is imposed upon the revisional authority, and the said amount to be paid from his salary to the credit of Tripura High Court Bar Association for passing such orders.
Petition allowed.
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2023 (3) TMI 829
Legality of default assessment framed by the VATO - levy of penalty - sales of SKO were exempted from tax or not - alleged clerical error in reported sale in return - contravention to provision of Section 86(10) of DVAT Act - Opportunity of hearing not provided - violation of principles of natural justice - HELD THAT:- The Appellate Tribunal accepted the appellant’s contention that it was not afforded any opportunity to clarify the doubts that had crept in the mind of OHA regarding genuineness of transportation of goods for the reason that the Value Added Tax Inspectors (hereafter ‘VATI’) were unable to verify the transportation of goods by some transporters. The Appellate Tribunal was of the view that it would be in the interest of justice to afford the appellant an opportunity to substantiate its claims regarding inter-state sales. Accordingly, the Appellate Tribunal remanded the matter to the OHA for consideration and decide afresh. Similarly, the Appellate Tribunal also remanded the matter to OHA to consider the movement of goods in respect of invoice dated 20.05.2005.
The question regarding levy of penalty under Section 86(10) of the DVAT Act with regard to inter-state sales was also remanded for consideration afresh by the OHA.
Whether the Arbitral Tribunal had erred in not accepting that there was a clerical error in reporting the sales as ₹1,38,82,000/- instead of ₹13,82,000/-? - HELD THAT:- It is relevant to note that there is no dispute that the tax computed in the said returns was commensurate with the turnover of ₹13,82,000/-. The appellant claims that the same was correctly computed. Thus, prima facie, the contention that a typographical error had crept in the sales figure as reported is not insubstantial - More importantly, it is not disputed that the appellant had produced his books, which were subjected to audit. The same would have clearly revealed the sales turnover as recorded in the books of accounts.
The appellant had also filed a revised return which was produced before the Appellate Tribunal. In addition, the appellant had also filed a chartered accountant’s certificate confirming that the turnover as reflected in the books of account for the relevant period is ₹13,82,000/- - this Court is unable to concur with the decision of the Arbitral Tribunal to disregard the revised returns or the chartered accountant certificate, which are undeniably relevant for deciding the question whether a typographical error had crept in the returns.
The impugned order, to the extent that it outrightly rejects the appellant’s contention that its turnover was erroneously reported at ₹1,38,82,000/- instead of ₹13,82,000/-, is set aside. This issue is remanded to the OHA to consider afresh - appeal disposed off.
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