28. Profession Tax Act – Revision application before the Tribunal u/s 14 — Power to condone the delay —There is no provision to condone the delay if the application is not filed in time therefore revision application dismissed, as not maintainable

The appellant filed Revision Application against the revision order passed by the Dy. Commissioner of Sales Tax u/s. 14 of the Maharashtra Profession Tax on Professions, Traders, Calling and Employment Acts, 1975.

The applicant filed the First Appeal before the Asstt. Commissioner of Sales Tax against the order of assessment. The said appeal was dismissed, because appellant failed to attend before the appellate authority. The applicant then filed the revision application u/s. 14 of the Profession Tax Act before the Dy. Commissioner of Sales Tax. The said revision application is also dismissed on the ground that, the applicant has not paid any part of payment and also not submitted any necessary record in support of the ground of the appeal. The said revision order is served on the applicant on 29-12-2005 and the applicant has filed this Revision Application on 5-5-2006.

Since the said petition was not within 60 days from the date of receipt of the revision order the applicant has filed the Miscellaneous Application for condonation of delay.

The appellant submitted reasons why and how the delay has occurred and prayed to condone the delay. Revenue objected to condone the delay because reasons given for late filing of application are vague.

After hearing both the sides, and after referring to the sec. 14(3) Hon'ble Tribunal found that, the applicant was required to file the Revision Application within 60 days from the date of receipt of the order against which the Revision Application is filed u/s. 14 of Profession Tax Act. Sub-section 3 of section 14 of the Profession Tax Act; say that no revision shall be entertained under sub- section (1) or (2) after the expiry of 60 days from the date of receipt of the order. There is no provision for condoning delay if the application is not filed within the prescribed time. Under section 13 of the Profession Tax Act, if the appeal is not filed within 60 days from the date of receipt of the demand notice or receipt of the order, the appellate authority may admit appeal after the expiry of the above period if he is satisfied that there was sufficient cause for delay. Such provision is not present in sub-section 3 of section 14 of the Profession Tax Act. Hence appeal was dismissed as not maintainable. [Globe Engineering Corporation Misc. Application No. 130 of 2006 in Revision Application No. 33 of 2006 decided on 27-6-2006. Judgment of 2nd Bench by Shri D. H, Sali, Member of MSTT.
Shri M. S. Jadhav Sales Tax Practitioner appeared for the appellant.]

29. Condonation of Delay – Delay in filing Second Appeal was condoned because for the fault of employee of assessee, he should not be made to suffer. Cost awarded

In Second Appeal filed against the appeal order passed by the Dy. Commissioner, appellant filed on application to condone the delay, because the Second Appeal was submitted late. The reason advanced to condone the delay was that the accountant of assessee misplaced and mixed up the order with other papers. He lost sight of the matter. The S.T.O. reminded him for payment of tax as per order passed in appeal, and then since order was misplaced he made an application for certified copy of order, and filed appeal as soon as he received certified copy of order.

The Departmental representative opposed to condone the delay because; according to them the appellant was aware of the decision in appeal because appeal is decided after proper hearing.

Hon’ble Tribunal after perusal of record and affidavit filed by employee of appellant accepted the prayer that, that he should not be made to suffer on account fault of his employee subject to payment of Rs. 500/-.

[M/s Mehta Pharmaceutical Industries Misc. Application Nos. 211 & 212 of 2006 in S.A. Nos. 1039 & 1040 of 2006 decided on 31-8-2006. Judgment by Shri. S.N. Ranade member of Second Bench. Shri P.V. Surte Advocate appeared for appellant]

30. Condonation of delay- The delay in Second Appeal was condoned because appellant should not suffer for the mistake of Advocate or STP, cost awarded

The appellant came before the Tribunal in Second Appeal, against the order passed in appeal by the first appellate authority confirming the order of assessment for the period 1998-99.

The Second Appeal was filed late. In prayer to condone the delay, appellant submitted that order passed by the first appellate authority was forwarded to his Sales Tax Practitioner for filing further appeal, who failed to take any action. When this fact came to his knowledge he approached the present Advocate, and Second Appeal is filed

It is observed from the affidavit filed before the Tribunal by the Sales Tax Practitioner, that he was consultant for appellant for last 15 years. He who filed 14 appeals before the Assistant Commissioner of Sales Tax. He could not attend appeal proceeding because of his personal problems and therefore appeals were dismissed for non attendance. Though he received instruction for filing Second Appeal, he could not file the same due to his personal and domestic problems.

While pleading to condone the delay, appellant relied on judgment reported in 114 STC 143 Commissioner, Trade Tax, U.P. Lucknow vs. Batra P.P. Caps Industry. Where in High court has observed that,

"In the matter of condoning delay liberal approach is called for. Ordinarily a litigant does not stand to benefit by lodging an appeal late. Refusing to condone can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for other side cannot claim to have vested right in injustice being because of a non-deliberate delay. There is no presumption that delay is occasioned deliberately or on account of culpable negligence or on account of mala fides. The judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so."

It was argued by the revenue that appellant cannot plead ignorance of law and same cannot be excuse to condone the delay.

Hon’ble Tribunal condoned the delay because it is observed that Tribunal has consistently taken a view that dealer should not suffer due to a mistake on the part of the Advocate or his STP. The appellant is directed to pay cost of Rs. 250/- within 10 days from the passing of this order.

[M/s Hotel Nityanand Misc Application Nos. 32 to 45 of 2006 in SA 236 to 249 of 2006. Judgment of 2nd Bench by Shri S. N. Ranade, Member MSTT. Shri N. V. Tapre, Advocate, appeared for the appellant]

31. Condonation of delay and service of order Service of order was not proper, therefore there is no question of delay

Second Appeal, against the order passed in appeal, was filed after limitation period, therefore late. In application to condone the delay, appellant argued that the disputed appeal order have been served on certain unauthorized person, who appears to be a lady by name Saraswati. Therefore appellant is not aware when appeal order was served

In these circumstances service of order was found defective. The departmental representative admitted the fact that appeal order was not served properly

Apparently there is no question of delay in filing the appeal, therefore appeal is admitted for hearing.

[M/s Swastik Diamonds Misc. Application No. 111 of 1996, in S.A. No. 1391 of 1994. decided on —————————Shri G.G. Kochrekar Member of 3rd Bench delivered the judgment, Shri B.C. Joshi, Advocate, appeared for the appellant]

32. a) Sale Price – Whether subsidy amount received from the Central Government is part of sale price Held : No

b) Sale of Nitric Acid during the period 1991-92 Form C not required as per notification issued u/s 8(5) of CST Act, 1956

1. The appellant, which is a public limited company, is engaged in the manufacture mainly of "Anhydrous Liquid Ammonia", which at the material time was covered by the Schedule entry 18A (b) of Part I of Schedule ’C appended to the Bombay Sales Tax Act, read with notification entry 276 (ii) u/s. 41. of BST Act, if sold to agriculturist for direct application as fertilisers and hence exempt from whole of tax, subject to certain conditions. If it is sold otherwise (than to agriculturist for direct application as fertilisers), then it was covered by the residuary Schedule entry C-II-102, and being a chemical the applicable tax-rate in respect thereof was 4% (under the notification entry 233 u/s. 41 of the Bombay Act) for the period up to 31-5-1992 and was 10% for the period from 1-6-1992 onward.

2. Tax levied on sale of Nitric Acid u/s 6(2) disallowed and taxed @10% being not supported by Form C. Similarly sales not supported with Form C were also taxed at higher rate. The levy was confirmed in First Appeal. In Second Appeal Tribunal observed that during this period rate of tax in respect of inter-State sale of un specified dyes and chemicals was reduced to 4% u/e 102 in Schedule C Part II. Submissions made by the appellant that, Nitric Acid which is a chemical and therefore production of C form is really not necessary in respect of these sales in view Government Notification issued u/s 8(5) of CST Act was accepted.

[Deepak Fertilisers & Petrochemicals Corporation Ltd. SA Nos. 1249 1250, 1715 and 1716 of 2000 decided on 11-8-2006. Jugement of 1st Bench by Shri G. G. Kochrekar Member MSTT, Shri A. B. Ghanekar, Sales Tax Practitioner appeared for the appellant]

33. Whether, receipts under agreement of ‘Technical Know How’ are goods, taxable u/e C-1 26 or are receipts for rendering certain technical and other services? Held predominant natures to render services rather than to part with technical know how

The appellant is engaged in the business of poultry farming and in the course of business, it produces commercial chicks. These chicks are sold to the commercial farmers and it is also engaged in providing technical know how service to the hatcheries as well as commercial farmer pursuant to certain arrangement.

In the course of verification of books of account for the year 1999-2000, the assessing officer noticed that the appellant received ‘technical know how’ receipt for Rs. 10,76,03,231/- from M/s. Venkateshwara Research & Breeding Farm Limited. The assessing officer taxed the same being covered u/s C-1 26 @ 4%.. In First Appeal order of assessment was confirmed. In Second Appeal before the Tribunal appellant submitted that, he is only engaged in rendering certain technical and other service, which do not constitute "technical know how" within the meaning of Entry C-I-26. According to the appellant the said service do not constitute "goods" within the meaning thereof under the Act. In terms of the agreement through the letters of 1981 and 1985, the act of rendering service do not amount to any transfer or sale.

According to revenue this is nothing but ‘Technical know how’ developed/acquired by the appellant. When the appellant by entering into an agreement supplies to the hatcheries/ poultry farms, the said knowledge of achieving maximum LP ratio, it is nothing but transfer/sale of technical know. He contends that when by an agreement it is mutually agreed to supply the technical know-how, the way/ method/ step in which it is to be supplied depend on the nature of the technical know-how in given fact of the case. In the instant case, from the nature itself, it reveal that, it cannot be passed on in one stroke, or it cannot be transferred on a piece of paper in the form of information, to achieve the LP ratio, various steps are involved during the entire production process, right from the site selection to sale of one day old chicks. He pointed out the step involved as follows:–

1. Type of feed and nutrition – Advice.

2. Advice on feed formulation depending upon the local ingredients, seasoned and climatic conditions.

3. Advice on the suitability and level of different feed ingredients based on chemical analysis, mycrotorive testimation and neurobiology examination.

4. Advice on preservation of eggs & incubation thereof.

5. Trained technicians in sexing techniques.

6. Impart technical know-how to judge quality of chicks.

7. Advice on hatchery sanitation.

8. Presentation of project report for farmers.

9. Selection of site required for farms.

10. Advice to furnish design for construction of shed and selection of equipment.

11. Training farmers for poultry management.

12. Conducting studies and re-commends appropriate vaccines etc.

13. Advice on marketing.

In the instant case, by providing knowledge to the buyer, at every afore-said step, to excel in the production, management, marketing, hygiene etc., the appellants transfer a technical know- how.

It cannot be disputed that the agreement entered into is for imparting technical Know-how. Technical Know-how is an intellectual property. When an intellectual property is transferable, deliverable, it is goods. In support this argument revenue placed reliance on the Supreme Court judgment in the case of Tata Consultancy Service (137 STC 620) When such intangible goods are trans-ferred against remuneration/ valuable consideration, it is definitely a sale of goods.

Revenue also tried to explain how it is a sale and not lease transaction. According to him Technical Know-how is intangible goods. It is nothing but a ‘knowledge’ which get imparted to a buyer. Knowledge is such a kind of intangible property, when imparted to the buyer, the buyer permanently acquires it for its utilization lifetime. Other intangible goods wherein a lease agreement allows to acquire right in the goods for the stipulated period, agreed upon. On termination of an agreement, the rights get retained with the lessor, who is rightful owner of that right. Technical Know-how is such wherein, on transfer it is permanently acquired by the user/buyer.

According to appellant the question in the present case whether it is a sale of Technical know-how or it is mere rendering of services which are nor governed by the existing sale as defined in the Act. Providing knowledge at every stage there is no transfer of Technical knows-how. According to appellant, the services rendered by the appellant are like that of medical practitioner. Therefore appellant placed his reliance on principles laid down by the Supreme Court in the case of State of Madras vs. Gannon Dunkerley & Company (Madras) Limited (9 STC 353). Agreement between the parties for the purpose of transferring title to goods, which presupposes capacity to contract, that it must be supported by money consideration and that as a result of the transaction, property must actually pass in the goods.

"Goods" may be tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility (b) its capability of being bought and sold, and (c) its capability of being transmitted, transferred, delivered, stored and possessed. This is the correct approach to the question as to what are "goods" for the purpose of sales tax."

Appellant also brought attention to the decision of Delhi High Court in the case of M/s Simon Carves India Ltd. vs. Central Board of Direct Taxes (120 ITR 172) wherein court has observed that "What is technical know-how? Its plain meaning is the knowledge of how to do a thing. It is also observed that, the essence of the turnkey contract is that the know how of the contractor is used by the contractor for the execution of the contract, but know-how remains with the contractor because the contract is executed by the contractor itself. Unless the contractor parts with the know-how alone so that the said know-how is used by the other party for erection, installation of plant or manufacture of goods or materials no question arises of the contractor supplying the know-how to the other party. Comparing this observations for achieving maximum LP ratio in poultry farming

After referring to the decisions in the case of Bharat Sanchar Nigam Ltd. (145 STC 91), 20th Century Finance Corporation Ltd. (119 STC 182) and various other judgments and referring to the scope of services and mode of services rendered by the appellant to his client came to the conclusion that there is no sale of "Technical Know-How" because for complete sale, goods must be in existence, goods must be available and must be at deliverable stage.

[M/s Venkateshwara Hatcheries Pvt Ltd. SA No. 1752 of 2004 decided on 5-8-2006. Judgment of 1st Bench delivered by Shri G. D. Parekh, President, MSTT. Shri P V. Surte Advocate appeared for the appellant]

34. Whether assessees is legally entitled to an interest u/s 43A of BST Act in respect of excess payment made in appeal by way of part payment

Held : Yes

The appellant was assessed for the F.Y. 1995-96 under the provision of the BST Act. This assessment result in an extra demand of Rs. 2,35,13,917/-. Being aggrieved on various grounds, the appellant filed an appeal against this order before the Dy. Commissioner of Sales Tax. This appeal was admitted on part payment of Rs. 30 lakh and was subsequently decided by appellate Dy. Commissioner. Dy Commissioner modified the assessment figures, as a result of which the extra demand got reduce from Rs. 2,35,13,917/- as per the assessment order to Rs. 13,97,842/- as per the first appeal order finally resulted in refund of Rs. 16,02,158/- After passing of the said appeal order dt. 9-6-2000, the appellant through his tax consultant’s letter dt. 25-9-2001 requested the appellate Dy. Commissioner to grant interest u/s. 43A in the context of the said refund of Rs. 16,02,158/- According to the appellant, the said refund was the result of the part payment made in the appeal on 9-7-1999. Therefore during the period from 9-7-1999 till 9-6-2000 (i.e. the date of passing First Appeal order), the said amount of Rs. 16,02,158/- remained idle with the Govt. and therefore, on this amount, the appellant ought to be given interest u/s. 43A for the period of 11 months @1% per months.

The appellate Dy. Commissioner however, rejected this prayer, by issuing a letter dt. 23-11-2001. According to Dy. Commissioner, the said prayer for interest u/s. 43A in the context of the excess payment made in the appeal is not allowable in the light of the Tribunal’s judgment in the case of M/s. Multiplus Corporation (S.A. No.1028 and 1029 of 1993 decided on 13-6-1997). It is against the said rejection letter appellant came appeal before the Tribunal.

The only question to be decided here is whether an assessee is legally entitled to an interest u/s. 43A of the BST Act in respect of the excess payment made by him by way of part payment in the appeal proceedings.

According to this provision, if as per an order passed under the BST Act in respect of any assessment period commencing on or after 1-4-1995, refund of any tax becomes due to the assessee, then, he is entitled to receive simple interest @12% per annum for the period commencing from the end of the assessment period till the date of passing of the order giving rise to the refund, or for the period of 18 months, whichever is less.

As per the explanation below the said section 43A, if the payment, due to which the refund has arisen, is made after the date prescribed for filing the last return for a particular assessment period, then the interest in context of such amount has to be calculated from the date of such payment.

In the present case, the appellant has admittedly become entitled to a refund of an amount around Rs. 16.02 lakhs and this refund has arisen from the appeal order dt. 9-6-2000. Though the appellant’s actual liability for the particular assessment period, was only Rs. 13,97,842/-, the Dy. Commissioner had directed the appellant to make payment of Rs. 30 lakhs as a condition for admission of the appeal. The payment in question was made by the appellant not voluntarily. In these circumstances, if the payment or part thereof has turned out to be a payment in excess of the legal liability, then there is absolutely no reason for not allowing interest thereon. After this observations Hon'ble Tribunal allowed the appeal saying that, there is no bar whatever in section 43A to allow interest on such excess payment made by way of part payment in the appeal proceeding. According to us, it is neither legal or nor logical to deny interest on such excess payment.

Tribunal’s judgment in the case of M/s. Multiplus Corpn. on which the Deputy Commissioner has relied while rejecting the appellant’s prayer for interest, is not at all applicable to the facts involved in the present case. The said case pertained to the period 1988-89 during which the particular provisions allowing interest on excess payment were not at all introduced.

[Jindal Drugs Ltd. SA No. 65 of 2002 decided on 31-8-2006. Judgment of 3rd Bench, Shri G. G. Kochrekar Member, Shri A. B. Ghanekar Sales Tax Practitioner, appeared for the appellant]