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Issue: Whether entry of title deeds
(Railway receipts) into the local area would attract the liability of Entry
Tax?
Held : No
Appeal No. : L.P.A. No. 289 of 1997
Court: Madhya Pradesh High Court, Jabalpur
Composition of Bench: Dipak Misra and U.C. Maheshwari, JJ.
Facts of the case
The dealer was a registered dealer at Bilaspur which was a
part of the State of Madhya Pradesh before the State was reorganized. He had
his place of business at the railway area which was not a local area as
defined under the Madhya Pradesh Entry Tax Act, 1976.
The dealer received the bilties (Railway receipts) for the
goods at his place of business which was then endorsed in favour of dealers of
Rajnandgaon, Raipur, Dhamtari and Raigarh.
The buying dealers caused entry of the goods in their
respective areas and also paid entry tax.
The department contended that the selling dealer was liable
to pay the Entry Tax as it had caused the entry of the goods in the local
areas of the buying dealers and hence was liable.
The assessing officer expressed the view that the goods
were received outside the local area and was sold from there; hence Entry Tax
was not applicable.
Aggrieved the petitioner preferred a revision, which was
rejected by the Additional Commissioner.
In appeal single judge held that mere entry of title deeds
in the local area would not be within the ambit of Entry Tax Act.
Aggrieved Letters Patent Appeal was filed questioning the
correctness of the order of the single judge.
Contention of the parties
The department contended that there is a transfer of
articles through title deeds within the local area and hence would attract
imposition of Entry Tax.
The dealer contended that mere physical entry of goods
would not attract Entry Tax; the same can be levied when goods enter for
consumption, use or sale in the local area. It relied the decision of Supreme
Court in the case of TELCO.
Court’s observations
The court did not find any error in the judgment delivered
by single judge. High Court held that the Entry Tax Act was a complete
enactment in itself and the court is not required to travel beyond it to get
any other kind of meaning.
Related cases referred and its observations
Tata Engineering & Locomotive Company Limited vs. Municipal
Corporation of the City of Thane [1992] 86 STC 363, held for imposing
octroi, the taxable event is the entry of goods which are meant to reach an
ultimate user or consumer in the area and mere physical entry into the octroi
limits would not attract levy of octroi
Citation: Commissioner of Sales Tax, M.P. and Ors. vs.
Cigarette Agencies, 144 STC 494
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Issue: Can outlets of retail agents for
sale of online lottery tickets be regarded as additional place of business of
the company (whose lottery is being sold by the retail agent)
Held : No
No. : M.F.A. No. 106 of 2004, W.P. (C) Nos. 29154, 29161,
29166, 29280, 30068, 30217, 31186, 31202 of 2004 and W.A. No. 1893 of 2004
Court: Kerala High Court, Ernakulam
Composition of Bench: K.S. Radhakrishnan and M.N. Krishnan, JJ.
Facts of the case
Retail agents are appointed by the company for sale of
online lottery tickets for and on their behalf.
Whether such retail agents are "dealer" u/s. 2 (viii) of
the Kerala General Sales Tax Act, 1963 and liable for registration?
The department contended that such retail agents were
liable for registration and proposed to tax as per the provisions of the law.
The company along with the retail agents contended the
issue before the High Court by filing a writ petition. Single Judge of the
Court disposed of the Writ with direction to the Commissioner to pass orders
under sec. 59-A of the Act for clarifying the issues raised by the company
along with the retail agents.
Commissioner on investigation concluded that there existed
a relationship of principal and agent between the company and retailers; hence
the agents were dealers under the Act.
Aggrieved the company filed M.F.A. and retailers filed
writs.
Contention of the petitioners
In online lottery system there is a centrally located
server which is connected to terminals all over and it controls the entire
system. The terminals have absolutely no control over the printing of tickets
but merely act as a printer on command. Sale therefore is under the control of
central server and the payment is collected by the retail agents of the
company manning the terminals; therefore the retailers are not selling any
goods.
There existed relationship of master and servant between
the principal and the retailer, therefore the retailer cannot be treated as
commission agent.
Court’s observations
Sale is effected at the retail outlet itself. Customers go
to retail outlets and purchase lottery tickets and they are not concerned with
the arrangement between the principal and the retail outlets; nor are they
concerned with the installation of terminals at the retail outlets with a
central server. So far as the customers are concerned, they purchase tickets
from the retail outlets after making payment. Method of accounting the receipt
of the price of the tickets or the source of the origin of the lottery tickets
is not the concern of the customer.
Contention that the retail outlets are additional place of
business was also turned down. The court observed that the place of business
is to be selected by the retailer and the retail agent has to carry out
advertisement and to attract customers. They have to pay rent of the premises
occupied by them and have to employ their own employees. Retailers are
separate entities with self governing rights and responsibilities; therefore
they cannot be regarded as branches or additional place of business of the
company.
Therefore no illegality in the clarifications given by the
Commissioner.
Related cases referred by petitioner
Lakshminarayan Ram Gopal and Son
Ltd. vs. Government of Hyderabad, AIR 1954 SC 364
Qamar Shaffi Tyabji vs. Commissioner, Excess Profits Tax
[1960] 39 ITR 611
Chandi Prasad Singh vs. State of U.P., AIR 1956 SC 149
H. Anraj vs. Government of Tamil Nadu, [1986] 61 STC
165(SC)
Related cases referred by the Court
Tata Consultancy Services vs. State of Andhra Pradesh
[2004] 137 STC 620 (SC)
State of A.P. vs. N.T.P.C. Ltd. [2002] 127 STC 280 (SC),
Constitution Bench
Citation: Pan India Network Infravest Pvt. Ltd. vs. State
of Kerala and Others; 144 STC 502
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Issue: Whether penalty for unauthorized
collection of sums under the C.S.T. Act as tax where none was payable as
surcharge for insurance, freight, etc. can be levied as per the provisions of
the local Act?
Held : Yes
No. : Sales Tax Revision No. 541 of 1992
Court: Allahabad High Court
Composition of Bench: Prakash Krishna, J.
Facts of the case
The dealer was registered under the U.P. Sales Tax Act,
1948 and the Central Sales Tax Act, 1956.
The dealer purchased goods from outside the State and sold
them to persons within the State against Form C by transfer of documents of
title without taking delivery of goods. On such transactions the dealer
collected 4% as surcharge towards reimbursement of miscellaneous expenses.
The assessing authority rejected the claim of reimbursement
of expenses at 4%. It was held to be unauthorized collection of taxes and
penalty as per the provisions of the U.P. Sales Tax Act was initiated.
The order of the assessing authority was confirmed latter
by the appellate authority.
Dissatisfied the dealer approached the Tribunal where the
penalty order was set aside.
Aggrieved the department moved the court for revision of
the Tribunal Order.
Contention of the parties
The defendant had relied apex court judgment in the case of
Mool Chand Shyam Lal before the Tribunal. The said matter was under the
Essential Commodities Act wherein the Court had held that any excess amount
collected by way of price was breach of Control Orders for which no penalty
could be levied under the U.P. Sales Tax Act. Therein what the assessee had
realized was price and not tax. The apex court observed "Realization of excess
amount is not impermissible but what is not permissible is realization of
excess amount as tax".
The department contended that the reliance placed on the
case stated above is misplaced.
Court’s observations
The mention of the form C and realization of amount at the
rate of 4% indicated that the amount was realized towards the Central Sales
Tax which was not attracted since the sales were against Form E1 and Form C.
further since delivery of the goods was not taken by the dealer the question
of freight, insurance charges, forwarding charges and their reimbursement did
not arise. The realization of alleged additional profit was unjustified.
The court further relied the judgments of the Bombay High
Court and Punjab and Haryana High Court where it has been held that after
insertion of sub-section 2A in section 9 of the Central Sales Tax Act penalty
for failure to pay the tax within time under the State Act can be levied in
respect of Central Sales. The penal provisions of provincial Sales Tax Act can
be imported in the Central Sales Tax Act.
Hence the order of the Tribunal was set aside and revision
was allowed.
Related cases referred
Mool Chand Shyam Lal [1988] 71 STC 226, SC
Commissioner of Sales Tax vs. Bombay Commercial Traders
[1978] 41 STC 215 (Bom)
Fairdeal Agencies vs. State of Haryana [1979] 44 STC 231
(P&H)
Citation: Commissioner of Sales Tax vs. Spintex Trading
Co., 144 STC 515
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Saffron whether falls under entry of
"Culinary & Flavouring Essences" or under "Ayurvedic Medicine in natural
form"?
Held : Covered by "Culinary & Flavouring Essences".
Court: Mumbai High Court
Composition of Bench: H.L. Gokhale & G.P. Devdhar, J.J.
Facts of the cases
Respondents are dealers in saffron. The respondent dealer
was registered dealer in the State of Maharashtra and was dealing in saffron
which was brought into the state from the State of Kashmir and had sold
saffron to M/s Puranchand & Sons, Kirana Merchants, Pune on 23rd Nov.,1990.
An application under section 52 of the BST Act seeking
Determination of Disputed Question as to whether the sale of saffron in the
State is exempt from the payment of sales tax was made on 1-12-1990.
Deputy Commissioner of Sales Tax to whom the said
application was assigned, heard the matter and held that "saffron" is covered
by scope of entry of "culinary and flavoring essences".
On appeal filed by the dealer against the said order of
determination, the Maharashtra Sales Tax Tribunal by its judgment set aside
the order of the Dy. Comm. of Sales Tax and held that saffron is an Ayurvedic
medicine in natural form covered by Notification entry 214 of the notification
issued u/s 41 of the BST Act liable to tax @4%.
Being aggrieved reference at the instants of the Revenue
(State of Maharashtra) was filed.
Contention of the respondent; i.e., dealer
Since before the adjudicating authority evidence was laid
by the Respondents (dealear) to establish that saffron was an Ayurvedic
medicine in natural form, where as no evidence was laid by the Revenue to
establish that saffron would fall under the entry of "Culinary and Flavouring
Essences" is not proper.
Reliance was placed on authoritative book called
"Indigenous Drugs of India", "Aushadh Dravya Gyankhand" and State Government
notification, being the enumeration by a "Committee for Standard an Genuine
Ayurvedic Hurbs Centre".
Common parlance theory was also emphasis. Reliance was also
made to the decision of the apex court in the case of VICCO Laboratories vs
Union of India (68:ELT A-47) .
Relying on the decision of the apex court in the case of
Kamala Ganapathy Subramanium vs Collector of Estate Duty reported in (253 ITR
692) it was submitted that in a reference it is not open to this court to
re-appreciate the evidence and therefore the decision of the Tribunal which is
based on COGNENT evidence adduced by the respondent (dealer) is liable to be
confirm.
Contention of the Appellant (Revenue)
Even before the issuance of Notification entry 214 saffron
was always considered to be an item of spice used in cooking as colouring and
flavouring material and therefore saffron could not be considered as Ayurvedic
medicine.
Saffron may have some medicinal property but that itself
would not make them Ayurvedic medicine.
As held by the Deputy Commissioner of Sales Tax
(Adjudicating Authority) there is basic distinction between the substances
which are medicine themselves and substances which have medicinal property.
Court’s observations and decision
Schedule entry C-II-13 which pertains to spices of all
kinds ……, C-II-78 "Culinary…..and notification entry 214 under section 41 of
the BST Act were examined.
Even though exemption entry 214 was in-existence from 25th
June, 1985 the respondent continued to pay tax on sale or purchase of saffron
at the rate prescribed under Entry C-II-30 and it is only on deletion of
saffron from Entry C-II-30 from entry C-II-30 w.e.f. 1-9-1990. The respondent
sought to contain that sale or purchase of saffron is covered under Entry 214
of notification issued u/s 54 of the BST Act.
Concurring with the views of the adjudicating authority
there is distinction between substances which are medicines themselves and the
substances which have medicinal properties.
Ratio as laid down in the case of Kirloskar Pneumatic
Co. Ltd. vs. State of Maharashtra (64 ATC 420) applied. It was held in
that case that for determining the classification of an article under the
schedules to the sales tax legislation one has to look the primary use of the
article in question in the absence of any evidence of trade or conman
parlance.
There is no material on record to show that saffron has
only therapeutical value.
Based on above observations it was observed that the
decision of the Tribunal in holding that saffron is an Ayurvedic medicine in
natural form even though it does not have any therapeutical value
is patently erroneous and cannot be sustained.
It was held that saffron is covered by Entry C-II-78.
Citation : "Commissioner of Sales Tax Mumbai vs Khosala
Kesharwala (145 STC 57).
