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Whether on balance payment of Rs.
3888563/- made after 1-5-1998 for TKH purchase tax can be levied, when
incidence of sale in question has taken place prior to 1-5-1998.
Held : No.
Whether on import of Technical Knowhow (T.K.H.) purchase
tax u/s. 13 can be levied.
Held : No.
The appellant is engaged in the activity of manufacturing
aluminium piston for oil engines, tractors and auto part. The appellant
entered into agreement with M/s. Izumi Industries Ltd. of Tokyo, Japan for
T.K.H. on 5-7-1997. In the year 1998-99 balance purchase price of Rs.
3888563/- for TKH is paid on which assessing authority levied purchase tax
u/s. 13.
The appellant submitted that, since the goods in question
are covered under entry C-I-26 which was inserted from 1-5-1998, and contract
was executed on 5-3-1997, therefore, there was no incidence of tax in this
year.
The Tribunal agreed with the submission of the appellant
and observed that there was absolutely no doubt that incidence of sale in
question had taken place prior to 1-5-1998 because not only the contract is
executed on 5-3-1997 but the documentation of technical know how had been
delivered prior to 1-5-1998. Only last installment was paid in the year
1998-99. The agreement providing consulting, engineering services, training,
advise was incidental to the main contract of furnishing technical know how by
way of documentation and in any case the said contract is not divisible.
The appellant also defended the levy on the ground that
purchase of TKH was in the course of import and not a local purchase. The
appellant placed his reliance on decision of Supreme Court in the case of 20th
Century Finance Corp. Ltd. (119 STC 182) and section 19(d) of Electronic
Commerce Act, 1988 because contract in question has been executed through
electronic media.
After referring to the decision of Supreme Court in the
case of 20th Century Finance Corporation Ltd. (119 STC 182), Bharat Sanchar
Nigam Ltd. & Another (145 STC 91), State of Andhra Pradesh vs. Rashtriya Ispat
Nigam Ltd. (2003) 3 SCC 214 and Agarwal Brothers vs. State of Haryana &
Another (113 STC 317), Tribunal observed that goods must be available at
the time of transfer, must be deliverable and delivered at the same stage. The
situs of sale would be the place where the contract in respect thereof is
executed if goods to be transferred are available and deliverable. The
contract is mainly consisting of documentation of technical know how and as
the documentation has been furnished through electronic media, the contract
can be said to be executed at Tokyo, Japan being the said electronic record is
deemed to be dispatched from the said place of business of the originator. We
therefore accept that intangible goods in question are purchased by the
appellant in the course of import and it is not a local purchase.
(M/s. Memon Piston Ltd. S. A. No. 1038 of 2003 decided on
29-4-2006. The judgment was delivered by Shri G. D. Parekh president MSTT
First Bench. Shri S. D. Herlekar S.T.P. appeared for the appellant).
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Whether sale/purchase of Technical know
how?
Held : Not a sale/purchase
The appellant was engaged in the business of manufactures
and sale of pan masala and gutkha. While assessing for the period 1999-2000,
assessing authority noticed that appellant paid sum of Rs. 9657225/- to Shri
Sanjay D. Ghodavat. Karta of HUF by way of royalty @ 1.5% as per clause (3) of
the agreement dt. 15-4-1998. The assessing authority treated the said payment
not as royalty, but purchases of Technical Know How from a person, and levied
purchase tax u/s. 13.
In First Appeal before the Dy. Commissioner of Sales Tax
(Appeals), Kolhapur the order of assessment is confirmed.
Before the Tribunal appellant submitted that the amount in
question was paid for allowing the appellant to use the brand name "STAR 555"
which was owned by the said HUF, which had granted the licence to make use of
the formula and manufacture the gutkha.
Appellant did not purchase anything from Shri Sanjay D.
Ghodawat HUF, nor HUF sold any beneficial rights to the appellant. After
referring to the clauses of agreement Tribunal came to the conclusion that HUF
has allowed the appellant to use the formula. There is no absolute transfer,
ownership is remained with HUF While coming to this conclusion, Tribunal
observed that in order to constitute a sale, it is necessary that there should
be an 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 in the goods unless all these elements are present, there can be no
sale. Thus, if merely little to the goods but not as a result of any contract
between the parties, express or implied, there is no sale.
(M/s. Ghodawat Pan Masala Products (I) Ltd. S. A. No. 658
of 2004 decided on 7-4-2006. The judgment is delivered by Shri G. D. Parekh
President MSTT, First Bench. Shri P.V. Surte, Advocate appeared for the
appellant)
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Whether term ‘last return’ in sec. 33(4A)
means "annual return’ or monthly return for the last month of the particular
assessment period.
Held annual return is last return
The appellant was assessed for the period 1999-2000 u/s
33(4) by order dt. 3-3-2005 with an extra demand of Rs. 742057. The appellant
defended the order on the ground that the impugned assessment being barred by
limitation u/s. 33(4A) All returns for this period are filed within six months
from the end of the year. Therefore as per section 33(4A), the assessment
ought to have passed within statutory time limit of three years; i.e., by
31-3-2003. No assessment order can be passed in such circumstances after
31-3-2003.
After considering the statutory provision of section
33(4A), and decision of Tribunal in the case of M/s. DGP Windsor (India) Ltd.
S.A. Nos. 295 and 495 of 2003. dt 31-3-2004, Tribunal came to conclusion that
the term "last return" appearing in the said provisions of sec. 33(4A) will be
the "annual return" and not monthly return for the last month of the
assessment period Therefore if an assesee has filed all the returns including
the annual return for an assessment period before the due date for filing of
the annual return, then the assessment for the particular assessment period
has statutorily to be completed before expiry of three years from the end of
assessment period. If it is not completed, then the assessment would be time
barred and the return filed by the assesee for the particular period will have
to be accepted by the department as correct and complete. Orders passed by the
lower authorities were set aside.
(M/s. Pan Music and Magazines Ltd. SA No. 258 of 2006
decided on 27-4-2006 Shri G.G. Kochrekar, Member of Third Bench delivered the
judgment. Shri Mahesh Agashe, Advocate appeared for the appellant).
