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VAT and Sales Tax - Case Laws
Showing 1 to 20 of 27260 Records
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2024 (5) TMI 841 - ALLAHABAD HIGH COURT
Validity of reassessment order - disallowance of ITC claim - purchase of various raw materials to manufacture 'Mentha Oil' - 'reason to believe' to reassess the petitioner was founded on the fact that the petitioner had sold 'Mentha Oil' in the course of export, against statutory 'Form I' issued under the Central Sales Tax Act 1956 - HELD THAT:- Plainly, ITC is not part of determination of turnover or tax liablity. On the contrary, it is an allowance that arises to certain dealers in the prescribed manner, upon fulfillment of specified circumstances. That amount may be corrected both at the instance of the assessee as also the assessing officer. Once crystallized, the allowance thus created would be adjusted against the gross tax liability that may arise against the assessee. By its very nature, ITC is different and distinct from assessment/determination of turnover. It is an allowance utilized to pay tax dues. Neither the legislature intended nor there is any warrant to otherwise reach a conclusion that computation of ITC allowance is part and parcel of procedure to assess the 'turnover of sale' or 'turnover of purchase' of goods.
Again, amount of ITC admissible has been included as part of the regular assessment that may be made.
Undeniably, Section 29(1) of the Act is the only provision that could give rise to jurisdiction to initiate reassessment proceedings. It does not include within its scope an eventuality where ITC may have been wrongly computed i.e. in excess of its entitlement. In absence of any jurisdiction vested (by the legislature), in the Assessing Officer to initiate reassessment proceedings to recompute the ITC or to disallow ITC or to RITC, there is no other principle in law available, as may allow the revenue to assume that jurisdiction - jurisdiction to reassess may never arise under Section 29 of the Act - to RITC, where purchase turnover giving rise to ITC was not first disturbed under Section 29 of the Act, for reason of it's escapement. The issue whether RITC may be done where jurisdiction may have been validly initiated, is not here.
Thus, the scheme of the Act is - the computation of correct ITC may be examined by the Assessing Authority, not later than the stage of making the regular assessment order i.e. at the stage of Section 28 of the Act. That order may remain amenable to jurisdiction of suo moto revision. Suffice to note, that jurisdiction has not arisen in the present case. Therefore, the reassessment proceedings initiated against the petitioner only to RITC was without jurisdiction.
Insofar as Section 29 of the Act did not empower the assessing authority to generally initiate the assessment proceedings on a sweeping allegation of escapement of "tax" but, on a specific allegation of escapement from assessment of any turnover of a dealer etc. based on a "reason to believe" (as discussed above), there are no merit in the objection being raised by the State that the reassessment proceedings were within jurisdiction, in this case - there was inherent and complete lack of jurisdiction to reassess the petitioner only to RITC. Also, the reassessment order was passed in complete violation of principles of natural justice. On both counts, the bar of alternative remedy is lifted, in the present facts.
The writ petition deserves and is allowed.
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2024 (5) TMI 722 - ANDHRA PRADESH HIGH COURT
Violation of principles of natural justice - reliance to be placed on the report of the Commercial Tax Department at Bombay without affording an opportunity to the petitioner to cross-examine the Officers of Commercial Tax Department of the reports at Bombay - HELD THAT:- In Shalini Steels Pvt. Ltd. [2011 (2) TMI 554 - ANDHRA PRADESH HIGH COURT], the Andhra Pradesh High Court held that the cross-examination of a witness, on whose statement reliance is placed by the adjudicating authority, is no doubt a facet of the principles of natural justice, however, natural justice is no unruly horse, no lurking landmine, nor a judicial cure-all. If fairness is shown by the decision maker to the man proceeded against, the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of. Unnatural expansion of natural justice, without reference to administrative realties and other factors of a given case can be exasperating.
In Telstar Travels Private Limited v. Enforcement Directorate [2013 (2) TMI 396 - SUPREME COURT] the adjudication order was passed under the Foreign Exchange Regulation Act, 1973 and the challenge was also on the ground of violation of the principles of natural justice for not providing the opportunity of cross examination. It was argued in that case that the adjudicating authority had relied upon the statements and the reports which were inadmissible in evidence as the request for an opportunity to cross examine the witnesses had been declined and thereby violating the principles of natural justice. The Hon’ble Apex Court observed that the rules of procedure do not apply to adjudication proceedings. But that does not mean that in a given situation, cross examination may not be permitted to test the veracity of a deposition sought to be issued against a party against whom action is proposed to be taken.
The enquiry report is based on record, F-forms were not issued by the Tax Department to the petitioner’s 5 alleged agents and those were doing business in goods other than those claimed by the petitioner assessee. Some of the agents were not available at the addresses given. To disprove those facts of the report it was not necessary to afford opportunity of cross examination of the Officers of the Tax Department at Bombay. Those facts if not correct, could have been controverted by the petitioner by filing material to evidence that those agents were at the addresses given and they were dealing in goods not other than those claimed by the petitioner as also that F-forms were issued to those agents by the Tax Department at Bombay.
In passing the impugned orders there is no violation of the principles of natural justice. It could not be argued as to what prejudice has been caused to the petitioner for want of opportunity of cross examination. The procedure followed is fair and just, complying with the rules of natural justice - the procedure followed is just, fair and in consonance with the principles of natural justice. No opportunity of cross examination to the petitioner was required to be given. It has not resulted in violation of the principles of natural justice so as to interfere with the order under challenge.
No case for interference is made out in the exercise of revision jurisdiction - The Tax Revision Case is dismissed.
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2024 (5) TMI 721 - MADRAS HIGH COURT
Levy of penalty under Section 27(3) of the TNVAT Act - requirement of adding gross profit and freight charges to the purchase value - difference between the sales turnover reported by the petitioner and the purchase turnover reported by its customer - violation of principles of natural justice - HELD THAT:- There is no finding of wilful non-disclosure of assessable turnover for levy of penalty, independent of the fact, that the turnover was found to have been suppressed resulting in best judgment assessment and levy of tax - The failure to examine / render a finding as to the existence of the jurisdictional fact viz., wilful non-disclosure of assessable turnover vitiates the levy of penalty.
There are divergent views expressed by this Court as to whether finding of wilful non-disclosure of assessable turnover is necessary condition precedent for invoking penalty under Section 27(3) of the Act. The Madras High Court in the various judgments had held that finding of wilful non-disclosure of assessable turnover is a condition precedent for invoking penalty under Section 27(3) of the Act and failure to render a finding of “wilful non-disclosure of assessable turnover” would prove fatal to the levy of penalty.
Reliance placed in State of Tamil Nadu v. S. M. Baba Sahib [1977 (10) TMI 93 - MADRAS HIGH COURT] where it was held that A wilful non-disclosure of assessable turnover is a necessary ingredient to make out that part of the section, namely, a deliberate intention to suppress an assessable turnover which should, in fact, have existed. It is not possible to say, merely from the fact that there has been a reassessment of escaped turnover on the basis or best judgment, that there has been a wilful nondisclosure of assessable turnover. There must be something to indicate that the turnover did in fact exist and that the assessee had wilfully not disclosed that assessable turnover.
The finding of wilful non-disclosure is a sine-qua-non for attracting penalty under Section 27(3) of the Act. Though there may be reasons for making a best judgment assessment, penalty does not automatically follow in all cases of best judgment. In the impugned orders of assessment, there is no finding of wilful non-disclosure of assessable turnover while invoking penalty under Section 27(3) of the Act. Thus, the levy of penalty is without jurisdiction.
Finding of Suppression – whether adequate to attract Section 27(3) of the Act? - HELD THAT:- This Court in the case of P.M.Perianna Pillai vs. The Commissioner, Board of Revenue (C.T.) [1979 (11) TMI 226 - MADRAS HIGH COURT] held that finding of wilful non-disclosure is not a formula and mere repetition of the above expressions would not attract levy of penalty. In other words, failure to render a finding on wilful non-disclosure would not prove fatal under all circumstances. On the other hand, it was held that if on perusal of the orders of assessment one is able to discern that there was in fact wilful non-disclosure of assessable turnover, absence of a finding to the said effect may not prove fatal - Applying the above reasoning contained in the case of P.M.Perianna Pillai and on perusal of the assessment orders, one finds that the pre-requisite for invoking Section 27(3) of the act viz., wilful non-disclosure of assessable turnover may not be available in the facts of the present case. The petitioner had discharged the liability only on the basis of the instructions/ suggestions of the Enforcement Wing Officers made during the course of inspection.
Thus, it is evident that the assessment orders only states that the reasons put forth by the petitioner for difference between the sales turnover reported by the petitioner vis-a-vis purchase turnover Tvl. Gamesa Wind Turbines Private Limited is not valid. Mere rejection of reasons / explanation for the difference of turnover reported by the petitioner and its purchaser may not necessarily result in concluding that there was wilful nondisclosure of assessable turnover.
Method of computation for discharging liability of works contract -within know ledge of the department – no suppression - HELD THAT:- There is no finding of wilful non-disclosure of assessable turnover which is a condition precedent for attracting Section 27(3) of the Act - Even on reading of the assessment orders as a whole, it is not possible to discern wilful non-disclosure of assessable turnover of the petitioner in view of the fact that the method of accounting adopted / followed by the petitioner was itself suggested / instructed by the revenue - method of accounting adopted by the petitioner which is the reason for the difference between the sales turnover reported by the petitioner vis-a-vis purchase turnover.
The impugned orders insofar as the levy of penalty under Section 27(3) of the TNVAT Act are thus set aside, the remaining portions of the impugned orders of assessment dated 21.12.2020 for the assessment years 2009-2010 to 2012-13 remains undisturbed.
The writ petition is disposed off.
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2024 (5) TMI 720 - ANDHRA PRADESH HIGH COURT
Classification of goods - HDPE woven sacks - articles of plastics falling under Item No. 187 of the I Schedule or fall under item No. 5 of the IV Schedule? - exemption from sales tax as covered by item 5 of IV schedule to APGST Act.
Whether the disputed turnovers relating to the sale of HDPE woven sacks is entitled for exemption from sales tax as covered by item 5 of IV schedule to APGST Act? - HELD THAT:- The HDPE Woven Fabrics even if included in the I Schedule under the head and sub head, entry No. 59.03 with ‘nil rate’, may be subject to or liable for the additional duties to be levied under that Act No. 58 of 1957, but, unless and until the additional duty is levied i.e actual levy, with some percentage, and not ‘nil rate’, it would be excluded from the category of goods mentioned in entry 5 of IV Schedule of the APGST Act. It would be liable to tax under APGST Act, and would not be exempted from tax under Section 8 of the APGST Act.
Woven Fabric is made with plastic granules. It may be ‘man-made fabric’ in entry 5 of the IV Schedule, but it does not qualify for exemption from tax as though included in the I Schedule of the Act No. 58 of 1957, but there is no additional duties levied on such good. The HDPE Woven Fabric being made of plastic would be an article of plastic under entry 187 in I Schedule. In Entry 187, it is not excluded. What has been excluded is HDPE Woven Sacks, which is a different item - HDPE Woven Fabric was liable for taxation under the APGST Act, 1957. The Appellate Tribunal has erroneously decided the question of law regarding the taxability or exemption from tax, with respect to the HDPE Woven Fabrics.
Whether the STAT justified in allowing the appeals by setting aside the Revisional orders of the DC (CT)? - HELD THAT:- In Kerala Ayurveda Vydyasala Limited [1999 (1) TMI 550 - SUPREME COURT] the Hon’ble Apex Court held that the jurisdiction can be exercised by the High Court under Section 103 of the Kerala Land Reforms Act, only if the Tribunal had decided any question of law erroneously or has failed to decide the question of law. In that case, no question of law was formulated by the High Court. There was also no finding recorded that the Appellate Tribunal had either decided a question of law erroneously or failed to decide the question of law. Therefore, the Hon’ble Apex Court held that the High Court acted without jurisdiction in interfering with the orders of the appellate Tribunal.
There cannot be any dispute on the proposition of law that the power of revision is open to be exercised by this court only when the Appellate Tribunal has either erroneously decided a Question of Law or has failed to decide any Question of Law.
Present is a case of erroneously deciding a question of law. It cannot be said that the question of law has been decided according to law. The decision of the Appellate Tribunal on a question of law is erroneous. Such an order would be open to interference. It cannot be said that the order is not open for interference in the exercise of revisional jurisdiction under Section 22 of the APGST Act, 1957.
The Tax Revision are allowed.
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2024 (5) TMI 664 - BOMBAY HIGH COURT
Maintainability of petition - alternate and efficacious remedy of an appeal - Refusal to admit an appeal filed under Section 55 of the Goa Value Added Tax Act, 2005 after rejecting the Petitioner's application for condonation of delay in filing the appeal - HELD THAT:- The procedure to file an appeal is provided in Rule 33 of the VAT Rules which requires the memorandum of appeal to be accompanied by a certified copy of the order appealed against, whether in the case of a first appeal or a second appeal before the Tribunal. Sub-Section 1 of Section 35 however states that the appeal may be filed to the Appellate Authority prescribed under the Act within 60 days from the receipt of order. Reading the provisions of the Act, providing for filing of an appeal and of Rule 33 which provides for the procedure for filing the appeal, which is to be accompanied by a of the decision appealed against, it stands to reason that the original order served on the petitioner during assessment is to be retained by him, as his copy, and only if the person aggrieved and wanting to object to the whole or part of the decision desires to file an appeal, such appeal is required to be accompanied by a certified copy of the decision.
In the present case, it appears that there was no such intimation given to the Petitioner of the specific date when the certified copy would be ready, nor has the Petitioner given any intimation on or after 14.11.2018 (the date endorsed on the certified copy to the office file, when the copy was ready) as to when it was required to collect the certified copy.
Clearly from the facts of the case, the Appellate Authority was duty bound to examine all these aspects of the matter and to approach the question of limitation with a broader perspective. Instead, without examining whether the petitioner was intimated the date of collection of the certified copy or not, the Appellate Authority has, in a cursory manner and without even adverting to the provision of Rule 33 of the VAT Rules or for that matter considered the circumstances which were clearly set out in the application for condonation of delay dated 22.09.2020.
Nothing prevented the Appellate Authority from enquiring into the circumstances in which no intimation was given to the Petitioner of the first certified copy and why such certified copy had not been issued to the Petitioner the first time and a different true copy had to be issued to him on 15.09.2022. The Appellate Authority has therefore failed to exercised jurisdiction vested in it by law and has wrongly passed the impugned order refusing to condone delay in filing the petitioner's appeal.
The impugned order dated 09.08.2021 would have to be quashed and set aside, the delay in filing the appeal stands condoned for reasons stated above, and the application for condonation of delay dated 22.09.2020 stands allowed.
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2024 (5) TMI 663 - ANDHRA PRADESH HIGH COURT
Jurisdiction - power of revision under Section 32 (2) of the Andhra Pradesh Value Added Tax Act, 2005 - error apparent on the face of record or not - HELD THAT:- In Sanjay Kumar Agarwal v. State Tax Officer [2023 (11) TMI 54 - SUPREME COURT] on considering various pronouncements on the subject, the Hon’ble Apex Court summarized the gist on the scope of review, holding that 'An error which is not self-evident and has to be detected by a process of reasoning, can hardly be said to be an error apparent on the face of record justifying the court to exercise its power of review.'
There are no apparent error in the Judgment under challenge in review petition. No case for review is made out - The Review Petition is dismissed.
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2024 (5) TMI 662 - ANDHRA PRADESH HIGH COURT
Exemption from tax - Levy of turnover tax under Section 5-A (vi) of the APGST Act - second sales of Pulp Moulded Egg Trays which fell under Item 19 of the First Schedule - G.O. Ms. No. 1091 dated 31.10.1994 under Section 9 (1) of the APGST Act, 1957 grants ‘general’ exemption, from levy of turnover tax under Section 5A (1) 2nd proviso (vi) of the APGST Act, 1957 on the sales of Pulp Moulded Egg Trays manufactured by Small-Scale Industrial Units or not - exemption on the sale of Pulp Moulded Egg Trays manufactured by S.S.I is available to the manufacturing unit alone or it would also be available to the sales of such commodity by other Small-Scale Industrial Units - exemption from levy of tax under Section 8(2-A) of the Central Sales Tax Act 1956.
Whether the G.O. Ms. No. 1091 dated 31.10.1994 under Section 9 (1) of the APGST Act, 1957 grants ‘general’ exemption, from levy of turnover tax under Section 5A (1) 2nd proviso (vi) of the APGST Act, 1957 on the sales of Pulp Moulded Egg Trays manufactured by Small-Scale Industrial Units? - HELD THAT:- In exercise of the powers conferred by Section 9 (1) of the Andhra Pradesh General Sales Tax Act, 1957, the State Government issued Notification-I in G.O. Ms. No. 1091 dated 31.10.1994 granting exemption from the tax payable under A.P.G.S.T Act on the sale of Pulp Moulded Egg Trays manufactured by the Small-Scale Industries (SSI) - G.O. Ms. No. 1091 thus grants exemption on the sale of the Pulp Moulded Egg Trays manufactured by the Small-Scale industrial units. The Pulp Moulded Egg Trays which are manufactured by the Small-Scale industrial units, only, call for exemption. If not manufactured by the Small-Scale industrial units it would not be exempted.
In THE STATE OF MAHARASHTRA VERSUS SHRI VILE PARLE KELVANI MANDAL & ORS. [2022 (2) TMI 720 - SUPREME COURT], the question was whether the charitable educational institution was entitled to the exemption from payment of electricity duty post 01.09.2016 i.e. as per the provisions of the Maharashtra Electricity Duty Act, 2016? The Hon’ble Apex Court while answering the aforesaid question/issue laid down as to how to interpret and/or consider the statutory provisions in the taxing statute and the exemption notifications - The Hon’ble Apex Court held that it is for the assessee to show by construction of the exemption clause/notification that it comes within the purview of exemption. The assessee/citizen cannot rely on ambiguity or doubt to claim benefit of exemption. The rationale is not to widen the ambit at the stage of applicability. However, once the hurdle is crossed, the notification is constructed liberally.
In GIRIDHAR G. YADALAM VERSUS COMMISSIONER OF WEALTH TAX AND ANR. [2016 (1) TMI 826 - SUPREME COURT] it was held that in a taxing statute it is the plain language of the provision that has to be preferred where language is plain and is capable of one definite meaning. Purposive interpretation can be given only when there is some ambiguity in the language of the statutory provision or it leads to absurd results.
In the present case, the G.O. Ms. No. 1091 dated 31.10.1994 is under consideration which was not under consideration in the aforesaid cited judgments. Therefore, whether the notification of G.O. Ms. No. 1091, issued under Section 9 (1) falls under the ‘general’ exemption for the purposes of the APGST Act is to be considered, independently, applying the principle of law, the precedents in various judgments, depending inter alia upon the language of the Government Order as also other relevant factors.
The question whether G.O. Ms. No. 1091 is a notification granting general exemption under Section 9 (1) for the purpose of the State tax is be construed from its language for the purpose of the A.P.G.S.T Act. But that would not mean that it is a notification granting general exemption also for the purpose of the C.S.T Act. Under C.S.T Act the word ‘generally’ has been explained in Section 8(2A) of that Act, and for the G.O. Ms. No. 1091 to qualify for exemption to the assessee it will have to fulfill the requirements of Section 8(2A), which aspect would be considered shortly under Question ‘C’ as framed.
Whether the exemption from levy of tax under G.O. Ms. No. 1091 dated 31.10.1994 on the sale of Pulp Moulded Egg Trays manufactured by S.S.I is available to the manufacturing unit alone or it would also be available to the sales of such commodity by other Small-Scale Industrial Units? - HELD THAT:- In DELHI TRANSPORT CORPORATION VERSUS BALWAN SINGH AND ORS. [2019 (2) TMI 2105 - SUPREME COURT] the Hon’ble Apex Court held that it is a well settled principle of interpretation that when the words of a statute are clear and unambiguous, there cannot be a recourse to any principle of interpretation other than the rule of literal construction.
In Dr.(Major) Meeta Sahai v. State of Bihar [2019 (12) TMI 1672 - SUPREME COURT] the Hon’ble Apex Court held that it is a settled canon of statutory interpretation that as a first step, the Courts ought to interpret the text of the provision and construct it literally. Provisions in a statute must be read in their original grammatical meaning to give its words a common textual meaning. However, this tool of interpretation can only be applied in cases where the text of the enactment is susceptible to only one meaning. Nevertheless, in a situation where there is ambiguity in the meaning of the text, the Courts must also give due regard to the consequences of the interpretation taken.
The notification in clear words grants exemption on the sale of Pulp Moulded Egg Trays which are manufactured by the Small-Scale industrial units. So the exemption is on the sale if the commodity is manufactured by Small-Scale industrial units. From the plain language of the notification it does not follow that the sale should also be by the Small-Scale industrial units alone, which has manufactured it - Since the respondent herein is the Small-Scale industrial unit, we are considering the sale by SSI only and not making any observation with respect to the sale by any other dealer/assessee. So far as the respondent assessee is concerned the sale by it of the kind of the commodity exempted under G.O. Ms. No. 1091, would be entitled for exemption.
Whether the Respondent Assessee-Dealer is entitled for exemption from levy of tax under Section 8(2-A) of the Central Sales Tax Act 1956? - HELD THAT:- The Hon’ble Apex Court in Pine Chemicals Ltd. [1994 (10) TMI 262 - SUPREME COURT] observed that for attracting the exemption provided by the government order, it had to be established that (i) the goods, the sale or purchase of which is claimed to be exempt from tax, are manufactured by a large or medium scale industry and (ii) that the said goods are manufactured and sold within five years from the date the said industrial unit has gone into production - The Hon’ble Apex Court held that the idea behind sub-section (2-A) of Section 8 of the Central Sales Tax Act was to exempt the sale or purchase of the goods from the Central Sales Tax where the sale or purchase of such goods was exempt generally under the State sales tax law. It was held that due regard must be given and due meaning to the expression ‘generally’ which occur in sub-section (2-A) and which expression has been defined in the explanation. The Hon’ble Apex Court observed that if the said expression had not been there, it could probably have been possible to argue that inasmuch as the goods sold by a particular manufacturer-dealer were exempt from the State tax in his hands, they must equally be exempt under the Central Act.
G.O. Ms. No. 1091, dated 31.10.1994 grants exemption from the tax payable under Andhra Pradesh General Sales Tax Act on the sale of pulp moulded egg trays manufactured by the Small-Scale Industrial Units. On comparing G.O. Ms. No. 1091, dated 31.10.1994 with G.O. Ms. No. 159, dated 26.03.1971 of Jammu & Kashmir as was involved in Pine Chemicals Ltd. what is found is that the pulp moulded egg trays is mentioned in G.O. Ms. No. 1091, whereas in G.O. No. 159 of Jammu & Kashmir the goods were not mentioned. What was mentioned was with reference to the industrial unit, so long as it was (i) a large or medium scale industry, and (ii) it manufactured and sold goods within the five years of its going into production - the exemption vide G.O. Ms. No. 1091, dated 31.10.1994 is not a general exemption within the meaning of Section 8 (2A) of the Central Sales Tax Act. It cannot be covered under the expression ‘generally’ under Section 8 (2A) read with its explanation. Exemption under G.O. Ms. No. 1091 may be available under the State Act, Section 5-A (i) (vi), but the same would not be available under the Central Sales Tax Act, Section 8 (2A), only because exemption is available under the State Act.
All the Tax Revision Cases are dismissed.
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2024 (5) TMI 615 - UTTARAKHAND HIGH COURT
Classification of goods - rate of tax - Nylon Chips - plastic granules or not - absence of Form-C and F - to be classified under Section 29 (1) (c) of Uttarakhand Value Added Tax Act - re-assessment on the basis of change of opinion - Extended period of Limitation - HELD THAT:- In the present case, the department has taken a different view by changing the nature of the product, and not on account of wrong application of rates. Re- assessment, in such type of situation, is prohibited. The assessment order was a clear change of opinion, and was not under Section 29 (1) (c).
The other ground taken by the respondent was that the impugned order was illegal, as Section 29 (4) of the Uttarakhand Value Added Tax Act does not apply to the present case. In the instant case, the assessment year ended on 31.03.2012, and the period of limitation is to be counted from 31.12.2012. Three years & nine months from that date is 30.09.2016, and the authorization notice dated 27.02.2017, under Section 29 (4) of the Act, was issued beyond the period of limitation. The second notice was sent on 29.11.2016, and limitation had expired on 30.09.2016.
Extended period of Limitation - HELD THAT:- For seeking the benefit of enlarged period of limitation, under Section 29 (4) of the Act, reasons in writing have to be given. Moreover, there is no suppression of facts, or evidence by the respondent, with the intention to evade the payment of VAT. There is no reason given in the authorisation order and the impugned order, justifying the applicability of Section 29 (4) of the Act, where the time period of assessment, under the regular Section 29(3), had already expired.
In the present case, the Assessment Year is 2010-11, and before the end of six years, the reassessment order can be passed. The reassessment order has been passed on 25.03.2017, which is before the end of six years of the Assessment Year 2010-11, and hence the reassessment order passed under Section 29 (4) of the Act was done within limitation, and this aspect has been affirmed by the Tribunal, and the Appeals, qua this ground, has been rightly dismissed.
Whether Nylon Chips manufactured by the appellant are covered by Entry 83 of Schedule-(II) (B) of the Act? - HELD THAT:- Nylon will come under the plastic group, i.e. Plastics. The polymer manufactured by the respondent-company has been accepted to be cut into small sizes of 2 to 4 millimeters and sold to the customers. This can be called granules, which was evident from the samples presented by the respondent-company before the Tribunal at the time of hearing.
After going through the order passed by the Tribunal, the appellant-department have themselves accepted that, with respect to the Plastic Granules, when they are put into procedure by adding fillers and additives, the strength of the plastic becomes better. Further, as per the opinion given by the British Plastics Federation, and Central Institute of Plastics Engineering & Technology (CIPET), Nylon refers to a group of Plastics known as Polyamide, and there is no change in the original material (raw material) in this manufacturing process of Nylon-6. Hence, the use of raw material, i.e. Plastic Granules to produce Nylon Chips will not alter the character of Nylon Chips, being a Plastic, and under the British Plastics Federation, Nylon is considered under the Plastics group.
There is no substantial question of law, which requires to be considered in the present Revision. The Nylon Chips have been rightly held to be falling in Entry 83 of Schedule II (B) of the Act by the Tribunal.
There is no merit in the present Revision, and the same is, accordingly, dismissed.
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2024 (5) TMI 409 - ALLAHABAD HIGH COURT
Waiver of penalties imposed for late deposit of tax u/s 54(1)(1)(a) of the U.P. V.A.T Act, 2008 - application for waiver were rejected by Revenue - opportunity of hearing not granted - violation of principles of natural justice - HELD THAT:- The orders passed by the revenue authorities appear to be defective. While the petitioner may be allowed to amend the writ petition and formally seek proper relief, it is also noted that the above orders have been passed by the revenue authorities without affording opportunity of hearing to the petitioner.
Thus, no useful purpose may be served in keeping the writ petition pending or calling for Counter Affidavit at this stage, especially in view of the order proposed to be passed.
Purely in the interest of justice and on prima facie consideration, it appears, the penalty sought to be waived was penalty imposed for late deposit of tax. Therefore, impugned ex parte orders rejecting the petitioner's applications seeking waiver of penalty dated 23.12.2020 are set aside. A direction is issued to the respondent no. 4 to pass a fresh order on the petitioner's application after affording due opportunity of hearing to the petitioner. Such compliance may be made within a period of three months from today.
Petition disposed off.
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2024 (5) TMI 360 - ANDHRA PRADESH HIGH COURT
Exemption from Tax - Classification of goods sold - emery cloth - unclassified item or not - tarpaulins - cotton fabrics or not - covered by item-174 of First Schedule to APGST Act or not - whether the first sales of emery cloth and tarpaulins are not excisable to the tax under APGST Act? - HELD THAT:- In Feno Plast Pvt. Ltd. [1994 (12) TMI 309 - ANDHRA PRADESH HIGH COURT] it has been held that the words “cotton fabrics, man-made fabrics and woolen fabrics” in item-5 must therefore be read as item-59.03 of the First Schedule to the Additional Duties Act 1957, which refers to textile fabrics, impregnated cloth-covered or laminated. It is evident from the impugned judgment that it was not disputed before the Appellate Tribunal that the based material for emery material was cloth and it was described as textile fabrics in item-59.03 which was to cover of any cloth which was impregnated covered or laminated. The emery cloth even if is based with, sand, for the purpose of its use, that does not change the basic nature of it being a cloth covered in item-5 read with item-59.03 of the First Schedule to the Additional Duties Act.
With respect to tarpaulin, in Binny Limited [1997 (9) TMI 555 - MADRAS HIGH COURT] it was held that ‘tarpaulin’ falls within the meaning of the expression ‘cotton fabrics’ under item-5 of the Fourth Schedule to APGST Act.
By reason of Section 8 of APGST Act, Tarpaulin cloth was exempt from tax and the inclusion of this item in item No. 174 made no difference - The Appellate Tribunal rightly concluded that once tarpaulin falls under cotton fabrics in item-5 of the Fourth Schedule to the APGST Act, inclusion of it in item-174 of the First Schedule would make no difference.
A perusal of the Order of the learned Appellate Tribunal (at internal page-3) shows that the emery cloth was covered under item-59.03 and was exempted as the same was liable for additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act 1957.
There are no illegality in the order of the Appellate Tribunal. No case is made out for interference, inasmuch as the Appellate Tribunal has neither failed to decide any question of law nor has decided the question of law erroneously.
The Tax Revision Case is dismissed.
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2024 (5) TMI 323 - DELHI HIGH COURT
Computation/quantification of interest on the delayed refund in terms of Section 42 of Delhi Value Added Tax Act, 2017 w.e.f. 01.06.2015 - Time Limitation - expiry of two months from the date of filing of refund of the application till 23.05.2023 when the refund was disbursed to the petitioner - HELD THAT:- Section 42 (1) of the Act mandates grant of simple interest at the annual rate notified by the Government from time to time, to a person who is found entitled to refund in case of any delayed payment.
In the instant case, refund has been sanctioned without any interest. It is an admitted position that annual rate notified by the Government for the purposes of Section 42 of the Act is simple interest @ 6% per annum.
The petition is disposed off.
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2024 (5) TMI 188 - BOMBAY HIGH COURT
Attachment by the sales tax authorities over an apartment in Mumbai - priority of charges - whether as a matter of law, the Petitioner, the auction purchaser of the Walkeshwar Flat under the SARFAESI Act, is a valid recipient of free and marketable title to it? - HELD THAT:- The Lender Bank had first priority in enforcement against the Walkeshwar Flat with effect from 24th January, 2020, having been the first to register with CERSAI, which was done on 2nd January, 2020 - Encore ARC, which conducted the auction on 28th February, 2023, acquired the entitlement to priority from the Lender Bank along with the assignment of the loans to the borrowers with attendant security interests on 21st March, 2020 - Although the DCST has repeatedly issued orders of restraint, there is no evidence of registration with CERSAI. The DCST has fairly stated on oath in an additional affidavit filed pursuant to directions by this Court, that no proclamation of sale has been issued. Therefore, in view of the law laid down in Jalgaon Janta, it cannot be said that there is a competing charge in favour of the DCST over the Walkeshwar Flat.
The attachment orders issued prior to 24th January, 2020 are of no assistance in giving priority to the DCST in claims over the Walkeshwar Flat. With no registration with CERSAI having been made by the DCST, and no proclamation of sale having been issued, the Lender Bank’s entitlement to priority has not been undermined. That entitlement flowed to Encore ARC. The consequences of such priority has led to the Petitioner having a free and marketable title free of the encumbrance claimed by the DCST.
Any attachment sought to have been issued in respect of value added tax and central sales tax dues owed by SMI, insofar as it relates to the Walkeshwar Flat, is hereby quashed and set aside. The Petitioner is entitled to have the Walkeshwar Flat registered in his name and the DCST can have no objection to such registration.
Petition allowed.
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2024 (5) TMI 123 - SUPREME COURT
Recovery of dues by adjusting them against the refund amount - Delay in processing refund - The default notices were issued after the period within which the refund should have been processed - requirement to follow timeline for refund under Section 38(3) of the Delhi Value Added Tax Act, 2004 - HELD THAT:- The language of Section 38(3) is mandatory and the department must adhere to the timeline stipulated therein to fulfil the object of the provision, which is to ensure that refunds are processed and issued in a timely manner.
In the present case, Section 38(3)(a)(ii) is relevant as both the refunds in the present case pertain to quarter tax periods. Therefore, as per Section 38(3)(a)(ii), the refund should have been processed within two months from when the returns were filed (31.03.2017 and 29.03.2019), which comes up to 31.05.2017 and 29.05.2019. The default notices are dated 30.03.2020, 23.03.2021, 30.03.2021, and 26.03.2022. It is therefore evident that the default notices were issued after the period within which the refund should have been processed. Sub-section (2) only permits adjusting amounts towards recovery that are “due under the Act”. By the time when the refund should have been processed as per the provisions of the Act, the dues under the default notices had not crystallised and the respondent was not liable to pay the same at the time.
The appellant-department is therefore not justified in retaining the refund amount beyond the stipulated period and then adjusting the refund amount against the amounts due under default notices that were issued subsequent to the refund period.
The impugned judgment directing the refund of amounts along with interest as provided under Section 42 of the Act affirmed - appeal dismissed.
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2024 (5) TMI 122 - MADRAS HIGH COURT
Condonation of delay in filing petition - Belated writ petition - by oversight Vakalat was not filed - appellate Tribunal by two separate cryptic orders has allowed the appeals filed by the Commercial Tax Department - HELD THAT:- Although there is a delay in approaching this Court, the substantive right of an assessee cannot be denied, particularly in a peremptory manner by passing a cryptic order. The dismissal of the application for restoring the appeal and allowing the appeal of the Commercial Tax Department without any reasonings especially when the order of the Appellate Commissioner is detailed has to be construed as an arbitrary order and therefore, it is liable to be set aside. It could have been different, if the order is passed on merits.
The impugned orders can be set aside and the appeals be restored back to the file of the Sales Tax Appellate Tribunal for disposal of all the four appeals together on merits and in accordance with law. The petitioner is directed to file Vakalat and file the notes and submissions, if any, as per the procedure followed by the Appellate Tribunal.
Petition allowed.
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2024 (5) TMI 61 - BOMBAY HIGH COURT
Recovery of Tax Dues versus Secured Creditors - Continued assertion of rights by the State of Maharashtra against the purchaser of two properties auctioned - priority of security interest and its enforcement over the Secured Assets - enforcement of a mortgage created by an erstwhile owner of the properties - HELD THAT:- Once an enforcement of a security interest is effected against a secured asset, the enforcement of the subsequently registered security interest would lead to an entitlement to any surplus or residual proceeds arising out of the enforcement of the prior security interest, and by no stretch could the subservient security interest be regarded as a fresh and wholesome security interest to be enforced again against either the asset in question or against the purchaser of such asset.
Following directions and declarations have been issued:-
a) SBI enjoys priority of security interest and its enforcement over the Secured Assets, as compared with the interests of the State;
b) SBI having sold the Secured Assets pursuant to the enforcement measures under the SARFAESI Act (not only by reason of the priority under Section 26-C(2) but also by reason of Section 26-E of the SARFAESI Act), was entitled to be paid in priority over the State tax authorities. By a conjoint reading of the two provisions, the enforcement against the Secured Assets led to a clean and clear title free from the purported encumbrance claimed by the State’s tax authorities being vested in the Petitioner, who is the purchaser of the Secured Assets in the auction;
c) The State’s tax authorities are indeed entitled to any residual proceeds from the sale towards discharge of the Borrower’s dues owed to them. Towards this end, SBI is directed to provide to the State, a statement of accounts in respect of the dues owed by the Borrower to SBI and the appropriation of sale proceeds by SBI pursuant to the auction of the Secured Assets;
d) Consequently, mutation entries indicating an interest enjoyed by the State’s tax authorities over the Secured Assets towards tax dues are directed to be removed within a period of two weeks from today. The registrar’s office is also directed to register the transfer of the Secured Asset from the erstwhile owners to the Petitioner in accordance with law, within a period of two weeks from today; and
e) Nothing contained in this judgement is an expression of an opinion on the right of the State’s tax authorities to undertake enforcement action in accordance with law against any other assets, properties and persons that are not subject matter of a registered security interest registered in favour of any secured creditor under the SARFAESI Act, and which may therefore be amenable to enforcement for recovery of tax arrears owed by the Borrower.
The Writ Petition is disposed of accordingly.
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2024 (5) TMI 2 - SC ORDER
Permission for withdrawal of petition - new management of the petitioner will not be held responsible for any outstanding statutory dues and other claims for the period prior to the commencement of CIRP - HELD THAT:- Bearing in mind the developments that have taken place in the matter, the Special Leave Petition stands disposed of as having become infructuous - The Special Leave Petition is, accordingly, disposed of as withdrawn.
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2024 (4) TMI 1035 - SUPREME COURT
Penalty for diversion and unlawful sale of foreign liquor - Applicability of the relevant rule for imposition of penalty - whether it is the rule that existed when the violation occurred during the license period of 2009-10 or the rule that was substituted in 2011 when proceedings for penalty were initiated? - HELD THAT:- The operation of repeal or substitution of a statutory provision is thus clear, a repealed provision will cease to operate from the date of repeal and the substituted provision will commence to operate from the date of its substitution. This principle is subject to specific statutory prescription. Statute can enable the repealed provision to continue to apply to transactions that have commenced before the repeal. Similarly, a substituted provision which operates prospectively, if it affects vested rights, subject to statutory prescriptions, can also operate retrospectively.
The principle governing subordinate legislation is slightly different in as much as the operation of a subordinate legislation is determined by the empowerment of the parent act. The legislative authorization enabling the executive to make rules prospectively or retrospectively is crucial. Without a statutory empowerment, subordinate legislation will always commence to operate only from the date of its issuance and at the same time, cease to exist from the date of its deletion or withdrawal. The reason for this distinction is in the supremacy of the Parliament and its control of executive action, being an important subject of administrative law.
The regulatory process requires the Government to deal with the problem of diversion and unlawful sale of foreign liquor and also provide an appropriate penalty and punishment. The process of identifying a crime and prescribing an appropriate punishment is a complex and delicate subject that the State has to handle while making rules and enforcing them. The gravity of the offence, its impact on society and human vulnerability are taken into account to provide the required measure of deterrence and reform - depending on the nature of offence, the proportionate penalty is required to be modulated from time to time.
The single Judge as well as the Division Bench have adopted two different approaches and we have not agreed with either of them. The single Judge was of the view that the amendment by way of substitution has the effect of repealing the law which existed as on the date of repeal. We have already explained the limitation in this approach. The Division Bench on the other hand, held that levy of penalty is substantive law, and as such, it cannot operate retrospectively. This again is a wrong approach. The substituted penalty only mollifies the rigour of the law by reducing the penalty from four times the duty to value of the duty.
The judgment of the Division Bench of the High Court set aside - appeal allowed.
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2024 (4) TMI 957 - ANDHRA PRADESH HIGH COURT
Validity of assessment order - Levy of penalty u/s 53(1)(ii) of the AP VAT Act - wilful evasion of tax or not - SCN also do not categorically mention that it was a case of wilful evasion of tax - SCN barred by time limitation - Section 21(4) of AP VAT Act, 2005 - HELD THAT:- As seen from the show cause notice dated 24.06.2021 there is a mention of under declaration of 14.5% purchases during the year 2016-17. It is also mentioned that penalty proceedings would also be issued separately as the dealer was found to have committed offence under the provision of AP VAT Act. In the revised show cause notice also it is mentioned that the petitioner consumed lot of time and avoided production of records in-time. Provisions of Section 21(5) of the Act were made applicable to the facts of the case.
Now coming to the applicability of the extension of period of limitation by the Hon’ble Supreme Court in view of the then prevailing Covid situation. The Hon’ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [2021 (3) TMI 497 - SC ORDER] has considered the difficulties that may be faced by the litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings and extended the period of limitation in all such proceedings irrespective of limitation prescribed under the general law or special laws whether condonable or not.
The period of limitation has to be extended to all proceedings including the issuance of show cause notice or passing of assessment orders or filing of appeals before the Appellate Tribunals against the orders which arise out of the show cause notices and the assessment orders - That apart, Section 21(5) of the AP VAT Act would entitle the authorities to conduct the assessment within a period of six years of the date of filing of the return or the first return relating to such offence. It is explicitly mentioned in the show cause notice dated 24.06.2021 that it was the case of under declaration of purchases during the year 2016-17. In our considered opinion this would suffice for proceeding with the assessment within a period of six years from the date of filing of the return or first return relating to such offence. That apart on these grounds the writ petitions deserves to be dismissed. There is an efficacious, alternate and statutory remedy available for the petitioner.
Petition dismissed.
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2024 (4) TMI 956 - DELHI HIGH COURT
Interest on delayed refund - relevant period for calculation of refund - Section 42(1) of the DVAT ACT, 2004 - HELD THAT:- Reference may be had to Article 25 of the Schedule to the Limitation Act, which stipulates that the period of limitation for “money payable for interest upon money due from defendant to the plaintiff” is 3 years and the time from which the period begins is when the interest becomes due.
The petitioner would be entitled to interest for a period of three years immediately preceding the filing of the subject petition till the date payment was made of the petitioner. The rate of interest applicable would be @ 6 % per annum in terms of Notification No. F.3(59)/Fin.(T&E)/2005-06/903 Dated 30th November, 2005 whereby the annual rate notified by Central Government is 6% per annum.
This petition is disposed of directing the respondents to pay interest @6% on Rs. 37,99,453/- refunded on 28.07.2022 for the period of three years immediately preceding the filing of the petition till the date of disbursal of refund to the petitioner.
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2024 (4) TMI 955 - UTTARAKHAND HIGH COURT
Time limitation for passing assessment order - Classification of goods - Polymer Nylon Chips - classifiable under Entry 83 Schedule-II(B) of the Uttarakhand Value Added Tax Act, as “Plastic Granules” or not - whether re-assessment, under Section 29(4) of the Act could be made on the change of opinion, especially keeping in view that the same records had already been scrutinized by the Assessing Authority?
Time limitation for passing assessment order - HELD THAT:- As per Section 29(7) of the U.P. Commercial Tax Act, reassessment can be made within a period of 8 years after expiry of the Assessment Year. In the present case, as per the Uttarakhand Value Added Tax Act, Section 29(4) deals with the procedure for doing reassessment - In the present case, the Assessment Year is 2011-12, and before the end of six years, the reassessment order can be passed. The reassessment order has been passed on 27.03.2017, which is before the end of six years of the Assessment Year 2011-12, and hence the reassessment order passed under Section 29(4) of the Act was done within limitation, and this aspect has been affirmed by the Tribunal, and the Appeals, qua this ground, has been rightly dismissed.
Whether Nylon Chips manufactured by the appellant are covered by Entry 83 of Schedule-(II)(B) of the Act? - HELD THAT:- The appellant-department have themselves accepted that, with respect to the Plastic Granules, when they are put into procedure by adding fillers and additives, the strength of the plastic becomes better. Further, as per the opinion given by the British Plastics Federation, and Central Institute of Plastics Engineering & Technology (CIPET), Nylon refers to a group of Plastics known as Polyamide, and there is no change in the original material (raw material) in this manufacturing process of Nylon-6. Hence, the use of raw material, i.e. Plastic Granules to produce Nylon Chips will not alter the character of Nylon Chips, being a Plastic, and under the British Plastics Federation, Nylon is considered under the Plastics group - There is no substantial question of law, which requires to be considered in the present Revision. The Nylon Chips have been rightly held to be falling in Entry 83 of Schedule II(B) of the Act by the Tribunal.
There is no merit in the present Revision, and the same is, accordingly, dismissed.
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