SIR,

CASE LAW DIGEST OF SUPREME COURT IS GIVEN HEREUNDER.

J.K.JAIN’S “VAT REPORTER” : Vol. 9– Part 12 dated 24.6.2008 containing Case Laws of Supreme Court/High Court,

Notifications/Circulars issued by Rajasthan Govt. on

Value Added Tax together with its Index and Comments from Editor

SUBJECTWISE INDEX TO JUDGEMENTS THE

VAT REPORTER

VOLUME 9 2008

SUBJECTWISE INDEX TO JUDGEMENTS REPORTED

AmortisationMeaning ofAmortisation means writing off, of cost of an asset over a period of timeMoriroku UT India
(P) Ltd. v. State of U.P. & Ors (SC) ….. 126

AssessmentEscapement of taxTime limit of assessmentAssessment on account of escapement of tax must be

completed within the period contemplated u/s 10B, 12, RST Act, 1954Assessment made beyond the period of
limitation was set asideC.T.O. Special Circle, Sriganganagar v. Uma Oil & General Mills (RAJ)
…. 162
[Corresponding related provisions in Raj. VAT Act, 2003:S.26(1) and 26(3)]

AssessmentEscapement of taxTime limit of assessment upon breach of conditions of Exemption Certificate, the case
could be treated as the one of Escapement of tax under clause 9(b), Raj. Sales Tax Incentive Scheme, 1987However,
the assessment on account of escapement of tax must be completed within the period contemplated u/s 10B, 12, RST
Act, 1954Assessment made beyond the period of limitation was set asideC.T.O. Special Circle, Sriganganagar v. Uma
Oil & General Mills (RAJ) …. 163

[Corresponding related provisions in Raj. VAT Act, 2003:S.26(1) and 26(3)]

AssessmentRemand of matter to AAClassification of CapacitorsFunctional/user test, Operating Principle are not

permissible to decide the classification of goods when capacitors have been specifically included in the list prepared by
the Electronic CommissionRemanding of matter by Tribunal to AA on the basis of functional/user test, Operating
Principal was held to be ill founded and High Court was justified in entertaining the Revision PetitonState of Andhra
Pradesh & Anr. v. Concap Capacitors, Balanagar, Hyderabad & Ors (SC) …. 90

[Corresponding related provisions in Raj. VAT Act, 2003:S. 84]

[Corresponding related entry in Sch. Appended to Raj. VAT Act, 2003Sch. IVPart-A, entry 16]

Burden of ProofSince the classification adopted by the assessee has been accepted by the revenue for a long time, the
onus would on the revenue to show as to why a different interpretation should be resorted to, particularly in absence of
no change in the statutory provisionsMauri Yeast India Pvt. Ltd. and another v. State of U.P. and another (SC)…. 190

Circulars and ClarificationsBinding forceCirculars/Clarification issued by Board of Revenue are binding on AA.
Whereas the Courts and the assessee are not bound by themState of Kerala & Ors v. Kurian Abraham Pvt. Ltd. & Anr (SC)
….. 170

Circulars and clarificationsBinding force on the assesseeAssessee is not bound by the circulars & clarifications
issued by the Commissioner/Board. In case the terms and conditions of exemption notfn are satisfied by the assessee, he
would be entitled to the benefits mentioned therein irrespective of any circular issued by the Commissioner/Board
Padinjarekara Agencies Limited v. State of Kerala (SC) ….. 167
CircularsBinding forceSpecific exclusion laid down under Chapter Heading will prevailCBEC circular No. 17/90
CEX IV dated 9.7.1990 clarifying that transmission elements, switches, gears, gearing etc. when they are specially
designed for use in the vehicles of section XVII of the Central Excise Tariff Act, 1985, do not fall under chapter heading
84.83, is not relevant in view of specific exclusion of these items per chapter note 2(f) which governs chapter 87Intel
Design Systems (India) P. Ltd. v. Commissioner of Customs & Central Excise (SC)
…. 110

CircularsPowers of Board/Commissioner to issue circularTo provide fair & just administration of the Act, in the
matter of imposition and collection of tax, the Board/Commissioner is empowered to grant administrative relief to
business. Taking administrative decisions include the authority to grant Administrative ReliefsS.3(1A), Kerala GST
Act, 1963State of Kerala & Ors v. Kurian Abraham Pvt. Ltd. & Anr (SC) ….. 170

Classification of goods:

All kinds of chemicals“Yeast” is a ‘chemical’ since it has a chemical composition/formula and has been so classified
by the Central Govt., in a circular issued under CST Act, 1956Mauri Yeast India Pvt. Ltd. v. State of U.P. & another
(SC) ….. 190

Animal driven vehicles (ADV)Whether Agriculture implementsImplements are usually regarded as “tools” used by
human beings with their hands/legs/or driven by animal/power. ADV carts used for transporting sugarcane from the
agriculture field to the sugar factory are not “agricultural implements” since such ADV carts are not part of agriculture
operations as these ADV carts begin their activity of transpiration only after the agriculture operations are over and
accordingly cannot be regarded as “tool”U.P. Trade Tax Act, 1948U.P. State Agro Industrial Corpn. Ltd v. Kisan
Upbhokta Parishad (SC) …. 1

Comments From Editor(1) The judgment so far as it laid dawn that ADV are not “agriculture implements,” is not applicable
to category of “Agricultural implements” prescribed under entry 1-Sch.-I, Raj. VAT Act, 2003, which specifically includes
under item b(24), “Animal Driven Carts” under the category of “agricultural implements.”

(2) Based on this judgements, the ‘tools’ of “trolley of tractor” will fall under the category of “Agricultural implements” and will accordingly be
exempt from tax. It has been laid down in C.T.O. v. Lila Brothers (1987) 64 STC 372 (Raj) that parts of tractors purchased from the dealer
subsequent to the purchase of tractor will be taxed at the rate applicable to tractor under the entry “tractor and spare parts thereof” (Refer page C65
point No.25 of the J.K.Jain’s book on “Law of Value Added Tax in Rajasthan”-2006 Edn.). Based on the same analogy, the spare parts and
accessories of Trolley of tractor will be exempt from tax under entry No.1 of Schedule I, to the Raj VAT Act, 2003 which describes the following
goods to be exempt from tax;

“Agriculture implements, spare parts and accessories thereof” and under sub-item (c) of this entry, ‘Trolley of tractor’ has been included as
“agricultural implements”.

Departmental determination in the case of A.N.G Auto Ltd., Ajmer reported at page No.20 of this magazine also supports this view.

Bubble-gumBubble-gum is neither a “Sweetmeat/Mithai” nor a “product of sugar confectionery item” as it is not so

called in common parlance. Bubble-gum is a type of chewing gum and is used as a mouth freshenerEntry No. 48,
notfn dated 7.9.1981, 31.3.1992 & 1.10.1994 issued under U.P. Sales Tax ActCommissioner of Trade Tax, U.P. v.
Associated Distributors Ltd. (SC) …. 213

Bullion and Specie (gold)Use of word ‘gold’ in bracket after the phrase
“Bullion and Specie” is referable to the both bullion as well as specie since it is
one single phrase and can not be bifurcatedAccordingly held that silver
bullion is excluded under this entry No. 20, Sch.I, AP GST Act, 1957Orient
Traders v. Commercial Tax Officer, Tirupati (SC)..... 134
[Corresponding related entry in Sch. appended to Raj. VAT Act, 2003Sch.III-entry 1]

Capacitors“Capacitors” specifically included in the list prepared by the Electronic Commission & as such the tax
can be levied only on the basis of such classification. In such cases, functional test, operating principle or user test are
not to be applied in regard to classification of commoditiesState of Andhra Pradesh & Anr. v. Concap Capacitors,
Balanagar, Hyderabad & Ors (SC) …. 90

Comments from EditorCapacitor is like a battery connecting the terminals to two metal plates separated by non-conducting substance. It stores
electrons and can release them later according to the needs of the system where it is used.
Copper/Brass SheetsCopper/Brass sheets fall within the scope of entry “Copper” and “Brass” since these metals are
produced in rolling mills in the form of sheets, circles, ingots, strips, rods and are being sold in the market in one of
these formsEntry Nos.116A, 116D of Sch-I to Kerala GST Act, 1963Kalidas Sheet Metal Industries P. Ltd. v. State of
Kerala (SC) ….. 120

Interpretation of notfnCommon Parlance testWords used should be understood in ordinary parlance in the area in
which the law is in forceCommissioner of Trade Tax, U.P. v. Associated Distributors Ltd. (SC)
…. 213

Multifunctional digital copier machineEntry No.3-Part ‘A’-Schedule IV, Raj. VAT Act, 2003Commodity is required
to be classified based on its main use keeping in view of its prevalent trade and common parlance. ‘Digital Copier’ is
known as “Copier machine” in trade parlance and its main use is copying. Fax, printer and scanning are its additional
work. It is neither a “computer system and its peripherals” since the copying and fax functions are carried out without
the aid of computer. It can not be called a computer printer since printing is only one of its functions out of four
functions.As such Multifunctional Digital Copier does not fall within the purview of entry No. 3 of I.T. Products,
viz.,“Computer system and peripherals, computer printers and electronics diaries”Ricco India Ltd. v. Additional
Commissioner (Law), Commercial Tax, Jaipur (TBDB) ….. 262

Parts and accessories of motor vehiclesPlastic name plates for motor vehicles are “Accessories of motor vehicles”
under chapter Heading 87.08 & 87.14, Central Excise Tariff Act, 1985, and are not classifiable as ‘Articles of Plastics’
Pragati Silicons Pvt. Ltd v. Commissioner of Central Excise, Delhi (SC)
…. 143

Parts and accessories of motor vehiclesRail Assembly front seat (omni), Adjuster/ Assembly Slider seat, Rear Back
lock Assembly are only adjuncts to improve the efficiency and convenience of the ‘Seat’ in a motor vehicle and cannot
be termed to form “parts of the seat” under Sub-Heading 9401, Central Excise Tariff Act, 1985 Since ‘seats’ are
complete in themselves without these mechanisms. They are covered by the expression “accessories of motor vehicles”
under Sub-Heading 8708Commissioner of Central Excise, Delhi v. Insulation Electrical (P) Ltd. (SC)
…. 139
Roasted (dry/oil) Cashew nuts, Peanuts, AlmondHSN (Harmonised System of Nomenclature) is a safe guide for the
purpose of deciding issues on classification of goods. It contains list of goods that are traded irrespective of the fact
whether they are manufactured and taxable or not. Accordingly, Roasted Cashew nuts, Peanuts, Almonds after their
salting/seasoning are classifiable as “Preparation of nuts” under heading 20.01 in chapter 20 of the Central Excise
Tariff Act, 1985Commissioner of Customs & Central Excise, Goa v. Phil Corporation Ltd. (SC)
…. 81

Roasted (dry/oil) peanuts, pista, cashew nuts & almondsHSN (Harmonised System of Nomenclature) is a safe guide
for the purpose of deciding issues on classification of goods. Accordingly, Roasted Peanuts, Pista, Cashew nuts,
Almonds after their salting/seasoning are classifiable as “Preparation of nuts” under heading 20.01 in Chapter 20 of the
Central Excise Tariff Act, 1985 and this activity is deemed to be ‘manufacture’ u/s 2(f)(ii)SKB Dryfruits Marketing Co.
Pvt. Ltd. v. Commissioner of Central Excise, New Delhi (SC) …. 220

Satilon/tuflon coated cookwareSatilon/tuflon coating makes the aluminium articles non-sticky and are not covered
by the term “Aluminium house hold utensils made of aluminium and aluminium alloys.” In common parlance too,
aluminium cookware with such coating are not understood as aluminium wareEntry 5, 104-First Schedule to Kerala
GST Act, 1963 Hawkins Cookers Limited v. State of Kerala (SC) …. 216

Switches, Control Box and other electrical apparatus manufactured as per drawing & design supplied by Ministry of
Defence and used in Tank and Armoured fighting vehiclesWhether parts of plant and machinery or Electrical Goods
Terms of Heading and Section/Chapter notes will decide the classification of excisable machinery and equipment falling
under chapter 85. Switches, Control Box etc. are goods used for switching/protecting electrical circuits for making
connections to or in electrical circuits and are specifically covered under Chapter Heading 85.36CSH 8536.90 of
Central Excise Tariff Act, 1985. As such these items are not covered as “Parts of Armoured Vehicles” under Chapter
Heading 871 even though they are used solely with the Armoured Vehicles. These goods classifiable under CSH 8536.90
as “Parts of Electrical equipments”Intel Design Systems (India) P. Ltd. v. Commissioner of Customs & Central Excise
(SC) …. 110

Comments from EditorAlso see Rajasthan High Court case:Assistant Commissioner v. Ramnarayan & Brothers (2007) 8 Vat Reporter 293.

“Vaseline white Petroleum jelly”“White Petroleum Jelly (Non perfumed)” was held to be Drug in view of its
inclusive wide definition given under the Drugs and Cosmetics Act, 1940, consistent interpretation as ‘Drug’ by the
revenue for several assessment years and placing no material on record by the revenue for a different classification of
the productU.P. Trade Tax Act, 1948Ponds India Ltd. (Merged with H.L. Ltd.) v. Commissioner of Trade Tax, Lucknow
(SC) ….. 239

Concessional rate of taxThe assessee, a manufacturer of cement, purchased Iron & Steel (which where included in
R.C.) for erection, repairs and maintenance of Plant and Machinery employed for manufacturer of cement, at
concessional rate of tax against Declaration Form ‘C’Held that purchase falls within the ambit of rule 13, CST
(Regn. & Turnover) Rules, 1957 read with S.8(3)(b), CST Act, 1956 and penalty u/s 10A, CST Act for misuse of
declaration form, is not imposableC.T.O., Spl. Circle, Ajmer v. Shree Cement Ltd., Beawar (RAJ) ….
70

Declaration Form ST 17Penal consequencesGoods purchased at concessional rate of tax against Declaration form
ST 17. Sale of those goods took place prior to their use in the mining operation of the petitionerHeld that the
petitioner is guilty of giving wrong declaration and is liable to pay the difference amount of taxS.10(1), 10(2), RST Act,
1994Hindustan Zinc Ltd. v. Commercial Taxes Officer, Special Circle, Udaipur (RAJ) ….. 179

Declaration formsUse of forms after 3 yearsRule 23, RST Rules, 1995All the transactions have been duly recorded
in the books of the assessee and there is no intention to evade tax which is the prime objective of the Act. Use of
declaration forms beyond the permissible time limit is nothing but a technical error, which does not warrant imposition
of additional tax & interestC.T.O. v. Ramkishore & Company (TBDB) …. 27

Declared GoodsEffect of exemption under State ActExemption operates after the levy and does not negate the
liability to tax and as such the liability to tax u/s 5, Kerala GST Act, 1963 remains unaffected by an exemption u/s 10.
Therefore, the respondent cannot validly shift the burden of tax on the purchaser u/s 5A of the State Act, since by virtue
of S.15, CST Act, once goods made liable to tax cannot be made to suffer additional tax liabilityPeekay Re-rolling Mills
(P) Ltd. v. The Assistant Commissioner & Anr. (SC) …. 222

Doctrine of Unjust enrichmentAn assessee is not permitted to retain a benefit to which he was not entitled to.
Accordingly, excess amount collected from customers towards tax has to be deposited in the Govt. treasuryState of
Andhra Pradesh & Anr. v. Concap Capacitors, Balanagar, Hyderabad & Ors (SC)
…. 90
GoodsInternet software sold on floppyReady to use starter kitUse of floppy/compact disk in selling self developed
Internet software, is only incidental.In fact it is the “Internet facility”, which is being sold and is not goods liable to
sales taxAssistant Commissioner (A/E) v. Data Infosys Ltd. (TBDB) …. 261

Escaped Assessment/Re-assessmentAssessment done based on circulars issued treating field latex and centrifugal latex
as the same commercial commodity. Re-assessment based on subsequent judgment of High Court treating both the
commodities as different commodities, is not permissible since AA are bound by the circulars issued by the department
S.3(1A), Kerala GST Act, 1963 and Entry 110, Sch.I, KGST Act, 1963State of Kerala & Ors v. Kurian Abraham Pvt. Ltd. & Anr
(SC) ….. 170

[Corresponding related provisions in Raj. VAT Act, 2003:S.26]

Escaped AssessmentTime limitBreach of conditions of Raj. Sales Tax Incentive Scheme, 1987Assessee awarded
benefits under the Incentive Scheme during the year 1998-99 and therefore time limit of 5 years per S.30, RST Act,
1994 for proceeding to make escaped assessment expired on 31.3.2004. As such no action can be taken by AA to comply
with the order dated 16.5.2005 of Addl. Commissioner (AE)Aone Marble Mill Pvt. Ltd. v. Additional Commissioner
(AE), Jaipur (TBDB) …. 50

Corresponding related provision in Raj. VAT Act, 2003:S.26(3).

Evasion of TaxPenalty proceedings by check-post officialsBonafide dispute about interpretation of taxability of

commodityExercise of powers at check-post should have a reasonable nexus with the attempt of evasion of taxPapers
were transported from Ludhiana to Delhi. Goods were intercepted by the check-post officials who started penalty
proceedings on the ground of mis-classification of goods by the assessee as ‘Paper’ under 1% category instead of “card
board” under 4% category as claimed by the check-post officials. The assessee produced all the requisite documents
showing full disclosure of facts about commodity without any concealment. The AA himself upheld the stand of the
assessee, before and evenafter detention of goods, by accepting goods as “duplex paper” under 1% CST categoryHeld
that bonafide contention against taxability raised by the assessee with fill disclosure of goods in the bill etc. was tenable
and cannot be equated to attempt at evasion of tax.. Therefore initiation of penalty proceedings by the check-post
officials on the ground of evasion of tax by resorting to different classification of commodity was held to be without
jurisdictionS.51, Punjab Vat Act, 2005, Art.226 of Constitution of IndiaMakin Paper Mills v. State of Punjab and Ors. (P&H)
….. 257
Exemption“Certified and truthfully labelled seeds”Appellant after purchasing chillies, paddy and sun-flower from
unregistered dealers, sold those goods as “certified and truthfully labelled seeds” and claimed exemption under notfn
G.O.Ms. No 604 dated 9.4.1981 issued by A.P.Govt which was declined on the ground that the assessee should establish
and prove that the seeds in question are certified seeds as well as truthfully labelled seeds.Though no such condition
was there in the notfn of the Govt. still the assessee should justify its claim for exemptionMatter remanded to Tribunal
to examine the factual aspect of claimShakthi Seeds Pvt. Ltd. v. Dy. Commissioner (CT) (SC)
…. 17

Exemption/concession & Exigibility to taxInterpretation adopted in a classification dispute (exigibility to tax as per
language of a taxing Statute) need not be same as interpretation of exemption notfnPadinjarekara Agencies Limited v.
State of Kerala (SC) ….. 167

Exemption notfnClarificatory notfn to take effect from the date of original notfnNotfn No. 169/98/ID dated
24.11.1998 issued under Kerala GST Act, 1963Secretary to Government & Ors v. Peekay Re-Rolling Mills (P) Ltd.
(SC) …. 233

Exemption notfnUnder Art. 162, Constitution of India, the State Govt. had authority to withdraw the tax exemption
on account of acute power shortage in the State and withdrawal applies across the board to all units which became
power intensive unitsNotfn dated 26/27.11.1993 issued under Kerala GST Act, 1963Secretary to Government & Ors v.
Peekay Re-Rolling Mills (P) Ltd. (SC) …. 233

Indivisible contract versus composite contractA composite contract may consists of different elements attracting
varied nature of levy as contradistinguished from an indivisible contractImagic Creative Pvt. Ltd. v. Commissioner of
Commercial Taxes & Ors. (SC)

…. 29

Input Tax Credit (ITC)Low Sulpher Heavy Stock (LSHS) and Liquefied Petroleum Gas (LPG) are neither “Fuels”
specified under rule 20(2)(b), A.P. VAT Rules, 2005 nor “Petroleum Products” listed in Schedule VI to A.P. VAT Act,
2005 and as such ITC will be allowed to the assessee u/s 13, A.P. VAT Act, 2005 on LSHS & LPG purchased locally from
public sector companiesAGI Glaspac v. Assistant Commissioner (CT)-IV, Hyderabad (AP)

….. 255
Interpretation of EntriesKerala VAT Act, 2003Mosquito repellantsKerala VAT Act is aligned with Custom Tariff
which in turn is aligned with HSN and consequently each product is required to be seen in the context of HSN code
While setting aside the judgement of High Court, the matter remitted to High Court for fresh consideration
inaccordance with law. Advance clarificatory order dated 7.4.2006 of the Commissioner, will apply for the period
7.4.2006 onwardsReckitt Benckiser (India) Ltd. v. Commissioner, Commercial Taxes & Ors. (SC)
…. 218

Interpretation of EntriesWhere a statute merely provides for different rates of tax, application of the principles of
strict interpretation may not be appropriatePonds India Ltd. (Merged with H.L. Ltd.) v. Commissioner of Trade Tax,
Lucknow (SC) ….. 239

Interpretation of entries in ScheduleBullion and SpecieCommon parlance

test is to be applied while interpreting entries in Schedules. The word “Bullion”
in the popular sense means gold or silver in mass, in bars, plates etc., in
uncoined form and the word “Specie” means coined form of gold or silver or
other metalOrient Traders v. Commercial Tax Officer, Tirupati
(SC) …..
134
Interpretation of entries in ScheduleWhen two views are possible, one which favours the assessee should be adopted.
When there is a conflict between the two entries, one leading to an opinion that it comes within the purview of the tariff
entry and another the residuary entry, the former should be preferredMauri Yeast India Pvt. Ltd. and another v. State
of U.P. and another (SC) …. 190

Interpretation of exemption notificationclear and unambiguous intention of the legislatureLiteral construction

Units undertaking expansion/diversificationExemption from sales tax is granted on the turnover in excess of base
production by notfn dated 27.7.1991 issued under UP Trade Tax Act, 1948Held that the turnover of the entire
assessment year is to be worked out and if it exceeds the base year production then the unit is entitled for exemption.
Monthly filing of returns and payment of tax would be subject to adjustment at the time of finalisation of assessment
Commissioner of Trade Tax, U.P. v. Malviya Chemical and Pharmaceutical Pvt. Ltd. (SC)
…. 8

Interpretation of Exemption notfnStrict interpretationPonds India Ltd. (Merged with H.L. Ltd.) v. Commissioner of
Trade Tax, Lucknow (SC) ….. 239

Interpretation of Exemption rulesStrict interpretationAmendment in Eligibility CertificateCertificate was granted

for the manufacture of monochrome monitors and black and white TV sets. The assessee requested for addition of
colour monitors in the eligibility certificateAfter setting aside the order of Tribunal & the High Court, which directed
the department to add ‘color monitors’ in the eligibility certificate by liberal interpretation of rule the matter remitted
to the High Court for fresh consideration under rule 28A, Haryana GST Rules, 197, wherein the words used are “for
manufacture of the same product”State of Haryana v. Samtel India Ltd (SC)
….. 165

Interpretation of notfnDifference between Hindi & English versionIn case any difference is found between notfns in
English and Hindi, the Hindi version of the notfn will prevail since official language of the State of U.P. is Hindi
Commissioner of Trade Tax, U.P. v. Associated Distributors Ltd. (SC) ….
213

Legislative Competence of StateLevy of Professional Tax on different branches by treating each branch as a separate
personThe State Legislature is competent to define the term ‘person’ for the purpose of each of its enactment
differently from the definition of the same term in S.3(42), General Clauses Act, 1897. Accordingly S.2(j) and
Explanation I to first Schedule of Andhra Pradesh Tax on Profession, Trade, Callings and Employment Act, 1987
defining the person to include every branch of a Firm, Company, Corporation or other Corporate body, any Society,
club or Association is valid and Profession Tax can be levied per S.2(b) on each assessee, viz., on each branch subject to
the restrictions provided for under Art. 276(2), of the Constitution of IndiaKarnataka Bank Ltd. v. State of A.P.
(SC) …. 97

Levy of interestInterest is leviable for delay in payment of tax leviable/payable and in that situation, the payment is
not dependent upon passing of any order by the AAS.58, RST Act, 1994Hindustan Zinc Ltd. v.. Commercial Taxes
Officer, Special Circle, Udaipur (RAJ)
….. 179
[Corresponding related provisions in Raj. VAT Act, 2003:S.55]

Levy of penaltyMens reaWhen no discretion is conferred upon the adjudicating authority to levy or not to levy
penalty, the principle of mens rea will be held to be imperative to levy penalty. In cases where discretion is conferred
upon the adjudicating authority, the principle of mens rea may not be held to be so having regard to the purport &
object thereofIn the present case the assessee purchased scrap & sold 9.47% of scrap at a concessional rate of tax
instead of utilizing it in manufacturing process as per undertaking given by the assessee to the AA. Neither any proof
was submitted in regard to its inability to use in the mfg. process nor the AA was informed for such a derivation. In
view of these facts mens rea on the part of the assessee was held to be evident and appeal of the assessee is dismissed
S.4B, U.P. Trade Tax Act, 1948Bharjatiya Steel Industries v. Commissioner, Sales Tax, U.P. (SC) ….. 113

Levy of tax on packing materialSingle transfer for one sale priceTaxability There should be transfer of property in
packing material for consideration referable to the transfer of property in packing material. Different items of
expenses, which makes the sale price of the commodity as one single unit, cannot be splitted for the purpose of
taxability of packing materialS.5(1), RST Act, 1954Commercial Taxes Officer, Special Circle, Alwar v. Tele Tubes
Electronics Limited (RAJ) …. 67

Levy of VAT-Advertising AgencyCharges collected towards the services for evolution of prototype conceptual design,
on which service tax has been paid is not liable to VAT. Service Tax & VAT are mutually exclusive and leviable to their
respective parameters as envisaged in a composite contract as distungnished from an indivisible contractArt
366(29A), 246, Constitution of IndiaImagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes & Ors. (SC)
…. 29

Levy vis-a-vis CollectionLevy & collection of tax are not synonymous. Levy of tax is a constitutional concept and
means charging or imposing of tax, whereas collection of tax is a statutory concept. Tax levied is collected subsequently
Art. 265 of Constitution of India Peekay Re-rolling Mills (P) Ltd. v. The Assistant Commissioner & Anr. (SC)
…. 222

Packing materialImplied SaleSale of packing material, viz., bottles of IMFL (liquor) is not taxable, in the absence of
its separate sale being proved by the RevenueCommercial Taxes Officer v. Baramati Grape Industries Ltd.
(Raj) ….. 264

[Corresponding provisions in the Raj. VAT Act, 2003:–S.2(35)]

Penalty u/s 78(5), RST Act, 1994:

Inadvertent mistake in writing the word “tax paid” on invoicesInter-State taxable sales duly recorded in the books of
account of assessee & tax liability was assessed by AAPenalty levied u/s.78(5) was set asideBadri Lal Kedar Lal
Agrawal v. Assistant Commercial Taxes Officer (RAJ) ….
38

[Corresponding related provisions in Raj. VAT Act, 2003:S.76(5).]

Movement of goods with blank/incomplete supportive forms prescribed u/rule 53, RST Rules, 1995Penalty u/s 78(5)
has been prescribed for contravention of statutory obligation u/s 78(2) regarding goods transported and proceedings u/s
78(5) are neither criminal nor quasi criminal in nature. As such mens rea or guilty intention is not an essential condition
for imposing penalty where movement of goods were carried with blank declaration forms 18/18A/18C or material
particulars like description of goods were not filled in. S.78(5) provided penalty for loss of revenue to the State and its
object is not to punish offenders for committing economic offenceCase remanded to the appellate authority to decide
the appeals after giving opportunity of hearing to the assesseeACTO, Flying Squad, Ajmer v. Anandeshwar Textiles Pvt.
Ltd., Kishangarh (RAJ) …. 74

Movement of goods without accompanying supportive documents/forms and/or false/forged documents/declaration

Such cases will be decided in the light of judgement of Supreme Court in the case of D.P.MetalsIn case of false/forged
documents/declaration, mens rea will be presumed and opportunity will be given to the assessee to rebut it. In case of
movement of goods without accompanying supportive documents/forms, penalty is leviable for non compliance of
S.78(2)(a)Case remanded to the appellate authority to decide the appeals after giving opportunity of hearing to the
assesseeACTO, Flying Squad, Ajmer v. Anandeshwar Textiles Pvt. Ltd., Kishangarh (RAJ)
…. 74

Corresponding related provisions in Raj. VAT Act, 2003:S.76(2), 76(5).

Corresponding related provisions in Raj. VAT Rules, 2006:R.53, 54.

Transportation of Tobacco ProductsSince Luxury Tax Act itself has been declared ultra vires, the levy of penalty u/s
78(5), RST Act is out of question for alleged evasion of Luxuries TaxAssistant Commercial Taxes Officer v. Vijaivergiya
& Company, Phulera, District Jaipur (RAJ)
…. 49

[Corresponding related provisions in Raj. VAT Act, 2003:76(5).]

Where the goods were not accompanied by documents required u/s 78(2)(a) and/or fabricated/forged documents or
non production of documents or production of documents after checkingSuch cases are covered by the judgement of
Hon’ble Supreme Court in D.P.Metals’ caseCases remanded to the appellate authorityACTO, F/S., Sriganganagar v.
Dev Trading CoACTO, F/S., Sriganganagar v. Dev Trading Co. (RAJ) …. 40

Where the goods were exempted/not notified and accordingly forms 18A/18C were not required to be accompanied
and where the goods were accompanied by other documents required per S.78(2)(a), RST Act, 1994Such cases
remanded to the appellate authority to objectively consider that in cases of exempted/not notified goods, the
requirement of form 18A/18C was not there and where other documents per S.78(2)(a) were there, penalty will not
be imposed. Otherwise the matter will be decided as per guidelines of D.P.Metals’ caseACTO, F/S., Sriganganagar v.
Dev Trading Co. (RAJ) …. 40

Where the goods were not accompanied by forms 18A/18C or the forms were blank/incomplete with or without the
deficiencies of papers required u/s 78(2)(a)Such cases are covered by the judgement of Hon’ble Supreme Court in
Guljug Industries’ caseCases remanded to the appellate authorityACTO, F/S., Sriganganagar v. Dev Trading Co.
(RAJ) …. 40

[Corresponding related provisions in Raj. VAT Act, 2003:S.76(2), 76(5).]

[Corresponding related provisions in Raj. VAT Rules, 2006:R.53, 54.]

Purchase PriceSugar MillsPurchase Tax is leviable on consideration for effecting the purchase. In the instant case, it
is the State Advised Price (SAP) which has been paid by the respondent to the sugarcane growers, and accordingly SAP
is liable to Purchase TaxS.6, Karnataka Sales Tax Act, 1957, S.4, Sale of Goods Act, 1930State of Karnataka and Ors
v. Sri Chamundeswari Sugar Ltd. (SC) …. 201

Rectification of mistakesMistakes apparent from the record are rectifiable. Decision on point of law/fact and/or failure to apply the law
to a set of facts which remains to be investigated and/or cases where review or revision of order is intended will fall outside the scope of
rectification of mistakesAssessment Order rectified based on Court decision to tax Aluminium powder as unclassified item. It is not a mistake
apparent from the record and it amounts to substitution of orderS.22, U.P. Trade Tax Act, 1948Deva Metal Powders Pvt. Ltd v. Commissioner,
Trade Tax, U.P. (SC) …. 4

[Corresponding related provisions in Raj. VAT Act, 2003:S.33]

Revisional jurisdiction of High CourtRevisional jurisdiction of High Court is limited to the “Question of law” which is
precisely required to be stated and formulated while exercising such jurisdictionMatter remitted to High Court to
decide the question of law, if anyS.11, Uttar Pradesh Trade Tax Act, 1948Rashtriya Audyogik Sansthan v.
Commissioner of Trade Tax (SC) …. 14

[Corresponding related provisions in Raj. VAT Act, 2003:S.84]

Revisional JurisdictionTime limit for invocationWhen no period of limitation has been prescribed in the statute for
invoking jurisdiction, the revisional authority must exercise its revisional jurisdiction within a reasonable period which
should ordinarily be three years having regard to the purport of Punjab GST Act, 1948. In any event , it should not
exceed five yearsS.21, Punjab GST Act, 1948State of Punjab and Others v. Bhatinda District Coop. Milk Producers Union Ltd.
(SC) …. 158

Corresponding related provisions in Raj. VAT Act, 2003:S.85.

Comments.Under S.85, Raj. VAT Act, 2003, for revisional jurisdiction the period of limitation has been prescribed as five years.

SaleDEPB LicenceAuction of Duty Entitlement Pass Book Licence by the petitioner from its Head Qrs. at
Bhubaneswar, Orissa. For the purpose of exports, Vishakapatnam port in Andhra Pradesh was used by them were they
are having mercantile office and DEPB licences were also registered at that portHeld that no sale could take place in
the State of A.P. The conclusion by the Tribunal that there was intra-State sale within the State of Orissa was set aside
for want of relevant material in this regard and it was not the subject matter of disputeNational Aluminium Co. Ltd. v.
The State of A.P. & Ors. (SC) …. 108

Comments from EditorIn this case intra-State of sale of DEPB licence was not the subject matter of dispute before the Tribunal/Court and further
there was no material to show the sale of DEPB licence. Earlier also the Supreme Court in the case of Sunrise Associate v. Govt. NCT of Delhi
(2006) 5 Vat Reporter 181 has not commented specifically about taxability of exim scrips/DEPB licences etc. which was not an issue before the
Hon’ble Court, we feel that these licences and scrips confer valuable right to import goods and as slips of paper or memoranda evidence the
entitlement and right to import goods of the category and value from outside the country into his country and are therefore goods, capable
themselves of being bought or sold in the market. They are not actionable claims. These licences and scrips are movable property and the premium
or the price received/paid on their sale/purchase is taxable under the VAT Act. Since the taxable event is the sale or transfer of the licences and
scrips by a document to be executed coupled with the handing over of the original licences and scrips, there can be no difficulty in fixing the situs
of the sale with the place of such sale or transfer. The sales to or purchases by the designated banks of these licences and scrips are also liable to
VAT.

SaleExplosives supplied by the petitioner to his contractor deducting its value from the bills of contractor, for use in
the mining area of the petitionerHeld that it was a sale under S.2(38)(ii), RST Act, 1994 since the goods were delivered
to the contractor for a consideration and it is immaterial that the contractor remained only a custodian of such material
& used them in the petitioner’s mining operation and there were restrictions on sale of explosives under the Explosive
Act, 1984Hindustan Zinc Ltd. v. Commercial Taxes Officer, Special Circle, Udaipur (RAJ)
….. 179

[Corresponding related provisions in Raj. VAT Act, 2003:S.2(35)]

SaleIllegal transaction of saleImpact on taxationEven where the transfer of property in goods is not permitted by
statutory or other Act, the transaction satisfying the ingredients of sale under S.2(38)(ii), RST Act, 1994, is taxable
Hindustan Zinc Ltd. v. Commercial Taxes Officer, Special Circle, Udaipur (RAJ)
….. 179

SaleLease rentTransfer of right to use GoodsFor the purpose of taxability, the place where the “right to use” is
transferred is to be determined with reference to the place where contract is executed. In case of oral contracts the situs
of transfer may be where goods are deliveredIn this case “Letter of intent”, produced after 12 years without any
explanation for extra-ordinary delay & not producing it by the assessee despite opportunity being given by AA, was
held to be made out to evade taxS.3F, U.P. Trade Tax Act, 1948Goa Carbon Ltd. v. Commissioner of Trade Tax (SC)
….. 123

Sale PriceAmortisation cost of moulds etc. given by the buyers to facilitate manufacture of Auto Components by the assessee as per
specification of buyer was held to be not includible in the sale price of Auto ComponentsS.3, 2(i), 2(h), U.P. Trade Tax Act, 1948Moriroku UT
India (P) Ltd. v. State of U.P. & Ors (SC) ….. 126
SaleSingle point taxSale of tax paid goods within the StateSubsequent sale is not liable to tax since there is one time
tax per S.4, RST Act, 1994Hindustan Zinc Ltd. v. Commercial Taxes Officer, Special Circle, Udaipur (RAJ)
….. 179

Sales tax and Excise dutyDifferenceThe taxable event in the case of excise law, is “manufacture” and excise duty is
leviable on ‘assessable value’ of manufactured goods per section 4, Central Excise Act, 1944 read with rule 6, Central
Excise valuation (Determination of Price of Excisable Goods), Rules, 2000. Excise duty is not concerned with the
ownership or sale of goods. In contrast, taxable event in the case of sales tax law is “sale”, actual or deemed and the
sales tax is leviable on ‘consideration’ for transfer of property in goods from seller to buyer. Deeming fictions and
notional additions of excise laws are totally irrelevant for sales tax purposesMoriroku UT India (P) Ltd. v. State of U.P.
& Ors (SC) ….. 126

Sales Tax Incentive/deferment schemesLavy of Purchase TaxNew Industrial Policy, 1996 of the State of Karnataka
specifies Sales Tax Exemption/deferral by the specified industries and the exemption notfn issued refers to the tax
leviable u/s 5, Karnataka Sales Tax Act, 1957 on the goods manufactured and sold by an industrial unitHeld that the
assessee is liable to pay purchase tax/turnover tax/cess u/s 6, 6-B and 6-D, KST Act, 1957 and the notfn issued is in no
way contrary to the Industrial Policy of the State GovtMalnad Areca Processing & Marketing Ltd v. Dy. Commissioner
of Commercial Taxes (Assessment) (SC)
…. 150

SurveyLevy of penaltyAt the time of physical checking, the actual weight of bags was not taken and therefore
proceedings initiated for discrepancy in stock was set aside by D.C.(Appeals) and Tax Board. The High Court did not
find any ground to interfere with the impugned orderC.T.O., A/E., Pali v. Ramdev Oil Mills (RAJ)
…. 69

SurveyLevy of tax, interest and penalty on the basis of doubtS.65, 77(3), RST Act, 1994Not in accordance with law
Tax cannot be levied on the basis of doubtfacts relating to purchase/sales are required to be proved beyond doubt
Commercial Taxes Officer, Chittorgarh v. Shivshankar Marble, Chanderia (TBSB)
…. 78

Taxable turnoverRaw material purchased by the assessee from exempted units is deductible from gross turnover since
exemption given to eligible units is only qua payability (i.e., the calculated tax gets appropriated towards the scheme
entitlement) and not in the matter of assessmentS.5(1-A), 5(2) Punjab GST Act, 1948, Rule 29(xii), Punjab GST Rules
1949, read with notfn dated 25.7.1990State of Punjab & Others v. Perfect Synthetics (SC) …. 153

Value Added TaxWorks contract executed through sub-contractorsTaxable eventSs. 2(28), 2(45), 4(7), 13(5), A.P.
VAT Act, 2005, Rule 17(1)(a), (c), (e), A.P. VAT Rules, 2005 and Art. 366(29A) (b), 14, Constitution of IndiaSub-
Contractor is only an agent of contractor and the property in goods passes directly from the sub-contractor to the
contractee. Therefore while excluding works contract through sub-contractor, there shall be only one taxable event of
sale recognized by legal fiction created under Art.366(29A) of Constitution of IndiaTo levy and collect tax from both
the subs-contractor and contractor by treating two taxable events of saleone from contractor to sub-contractor &
other from sub-contractor to contractee, would be violative of Art. 14 of the constitution of India. [The Hon’ble Court
did not declare any of the provisions of A.P. VAT Act as unconstitutional but declared that these provisions must be
understood as explained in the judgment. The court further declared that it is open for the State to frame appropriate
rules to collect tax either from the sub-contractor or from the contractor and not from both.]Larsen & Toubro Ltd. v.
State of A.P. and Others (AP)
…. 56

Corresponding related provisions in Raj. VAT Act, 2003:Ss. 2(35) (ii), 2(44), 4(1), 20(2).

Corresponding related provisions in Raj. VAT Rules, 2006:22(2)

Corresponding notfns issued under Raj.VAT Act, 2003:Notfns dated 11.8.2006 [S.Nos. V84, V85, V86].

Works ContractComposition of TaxS.17(7), Karnataka Sales Tax Act, 1957 introduced w.e.f. 1.4.2002 restricted the
benefit of composition of tax by excluding purchases or receiving of goods from outside the State for execution of works
contract within the StateHeld that branch transfers are covered by the expression ‘receiving of goods’ and the date of
entering of agreement for the execution of works contract is irrelevant since for exercising of option for composition of
tax, an application u/r 8-B(1), KST Rules, 1957, within the prescribed period from the date of commencement of each
year/business is required to be submitted to the AA for seeking permission for composition of tax payable. As such the
dealer executing works contract by branch transfer of goods from outside the State of Karnataka falls within the
purview of S.17(7) and is ineligible for composition benefit w.e.f. 1.4.2002 irrespective of the fact that the date of
entering of agreement for the execution of works contract is prior to 1.4.2002Indian Dairy Machinery Co. Ltd. v.
Assistant Commissioner of Commercial Taxes (SC) …. 53
Writ JurisdictionWrit Petition is maintainable where the authority has exercised power without jurisdiction
Art.226 of Constitution of IndiaMakin Paper Mills v. State of Punjab and Ors. (P&H)
….. 257

Words & Phrases:

Agriculture implements and toolsImplements are usually regarded as “tools” used by human beings with their
hands/legs/or driven by animal/powerU.P. State Agro Industrial Corpn. Ltd v.. Kisan Upbhokta Parishad (SC)
…. 1

Apparent from record“Apparent” means visible, capable of being seen, obvious, open to view, plain, evident,
appearing as real and true, conspicuous, manifestDeva Metal Powders Pvt. Ltd v. Commissioner, Trade Tax, U.P. (SC)
…. 4

“Having suffered tax” and “subjected to tax” elaboratedState of Punjab & Others v. Perfect Synthetics (SC)
…. 153

“Consumables”Explosives used in mining operation are not consumbles like water, electricity or fuelHindustan
Zinc Ltd. v. Commercial Taxes Officer, Special Circle, Udaipur (RAJ)
….. 179

In the manufacture or processing of goodsIt the goods are used for keeping the plant and machinery in a fit and
running condition, they are indirectly used “in the manufacture or processing of goods” C.T.O., Spl. Circle, Ajmer v. Shree
Cement Ltd., Beawar (RAJ) …. 70

‘Includes’The word ‘includes’ enlarges the meaning of the words or phrases occurring in the StatuteKarnataka
Bank Ltd. v. State of A.P. & Ors. (SC) …. 97

IncludesUse of the word “includes” makes the definition extensive and enlarges the words or phrases occurring in
the statutePonds India Ltd. (Merged with H.L. Ltd.) v. Commissioner of Trade Tax, Lucknow (SC)