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Issue: Is reassessment permissible on mere change of
opinion?
Held : No
Appellant filed writ petition challenging the validity of
reassessment proceedings. The appellant company is carrying on the business of
manufacture and sale of C.I. castings, M.S. castings, parts and accessories of
animal driven vehicles. As per the notification issued under UP Trade Tax Act,
animal drawn carts, their parts and accessories, attachment etc. have been
exempted from payment of tax. During the assessment proceedings, in response
to the show cause notice issued a detailed reply was filed along with the
expert report of the Chartered Engineers that the goods in question are parts
of animal driven vehicles and not the part of truck or tractor trolley as
alleged in the show cause notice. Further circular issued by Commissioner
clarifies that the benefit of exemption could not be denied even if the goods
in question are used in other vehicles. All these points were considered in
the A.O. and then the assessment order was passed. However, reassessment
notice were issued on appellant on the ground that the goods in question
manufactured by appellant were inspected by Central Excise Department from IIT,
Kanpur which had found that goods in question manufactured by appellant are
not part of animal driven vehicles but of tractor trolleys and accordingly
appellants are not entitled for benefit of notification issued. Said
reassessment notices were challenged in the writ filed before the High Court.
While dealing with writ, it was observed by the court that
"it is a well settled principle of law that where a question has been examined
in detail in the original assessment proceedings and thereafter the assessment
order was passed, the assessment cannot be reopened on a mere change of
opinion" and accordingly it was held that the reassessment notices issued were
illegal and were quashed.
[Ratan Industries (P) Ltd. vs. Addl. Commissioner Trade Tax
and Another (148 STC 111) (Allahabad High Court)]
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Issue: Can stapling or crimpling of polythene bags be
considered as ‘sealed container’?
Held : No
Under the Karnataka Act, eggs and meat including flesh of
poultry, except when sold in ‘sealed containers’, were exempted from payment
of tax. The appellant were dealers in poultry farming, sold dressed chicken in
polythene bags which were closed either by stapling or by crimping and
fastening. Stapling and crimping was done only to facilitate easy carrying and
to ensure that the dressed chicken did not slip out of the polythene bag. It
was held by the authority for Clarification and Advance Ruling that the sale
of dressed chicken in polythene bags closed by either stapling or crimping was
considered as sale of ‘dressed chicken’ in sealed container and is liable to
tax. High Court affirmed the decision of authority of Advance Ruling.
Appellant, being aggrieved by the order of High Court filed an appeal before
the Supreme Court.
While dealing with the appeal, the Supreme Court observed
that ‘undoing cannot amount to breaking when a staple is applied, the wire can
be removed by straightening the two bent ends without breaking the wire or
tearing the paper. Hence we cannot agree that undoing the fastening amounts to
breaking the fastening. If the view of the Karnataka Court is accepted then
logically it has to be accepted that every container will be sealed container
if it is closed in any manner. Such a view obviously cannot be countenanced’.
The court followed the decision of the Supreme Court in case of CST, U.P.
vs. G.G. Industries (21 STC 63) and Delhi High Court decision in case of
CST, Delhi vs. Popcorn (49 STC 36). Accordingly Supreme Court allowed
the appeal and judgment of Karnataka High Court was set aside.
[Balkrishna Hatcheries vs. Clarification & Advance Ruling
Authority (148 STC 137)(SC)]
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Issue: Does photocopying amounts to deemed sale and liable
to tax?
Held : Yes, under WCT Act.
The present sales tax reference is filed by the revenue out
of the decision of Maharashtra Sales Tax Tribunal in an appeal filed by the
respondent (i.e., M/s Hari & Co.) The Hon’ble Tribunal framed following
question of law.
"In the facts and circumstances of the case and on a true
and correct interpretation of section 2(1)(d) of the Maharashtra Sales Tax on
the Transfer of Property in goods involved in the execution of Works Contracts
(Re-enacted) Act, 1989 (hereinafter, ‘the Works Contracts Act’) was the
Tribunal justified in law in holding that the respondents are not to pay tax
under the said Works Contract Act on their transaction of taking out the Xerox
copies on a Xerox machine and that they are not a ‘dealer’ as defined under
section 21(1)(d) of the said Act?".
On behalf of respondent (M/s Hari & Co.) it was contended
that the transfer of property in paper is post execution event, which does not
take place during the course of execution of the job and therefore such a
transfer can be said to be an ‘incidental event’ consequent to the dominant
job of rendering service through the skilled operator. Decisions of Supreme
Court in case of Asst. Sales Tax Officer vs. B. C. Kame. (39 STC 237)(SC)
and Govt. of Andhra Pradesh vs. Guntur Tobaccos Ltd. (16 STC 240) (SC)
were relied by the respondent. Accordingly, it was prayed that the decision of
Tribunal is correct. Supreme Court decision in case of C.K. Jidheesh vs.
Union of India (144 STC 322) was also referred.
While dealing with the present reference, High Court relied
upon the decisions of ACC Ltd. vs. Commissioner of Customs (124 STC 59)(SC)
and CST vs. Matushree Textile Ltd. (132 STC 539) (BHC). The Court
relied on the observation made by the Supreme Court in case of ACC (124 STC
59) where it was observed that,
"… The Forty-sixth Amendment was made precisely with a view
to empower the State to bifurcate the contract and to levy sales tax on the
value of the material involved in the execution of the works contract,
notwithstanding that the value may represent a small percentage of the amount
paid for the execution of the works contract".
Applying the said rationale, the contentions of respondent
about the use of paper and ink being incidental or accessory to the execution
of the works contract cannot be sustained. The value of the goods transferred
is of no relevance. Once there is transfer of property, it shall deemed as a
sales transaction within the execution of a works contract. It was further
observed that even if the dominant intention of contract is the provision of
service, once there is transfer of property within it, that the property would
be liable to payment of Sales Tax. In the instant case the moment paper and
ink charged hard it will be construed as ‘sale’ within the works contract. In
view of above observation it was held that in case of photocopying as per as
paper and ink is concerned, which are passed on, which passing of property is
a deemed sale and tax is leviable on such paper and ink under the Works
Contract Act.
[CST, Mumbai vs. Hari & Co. (148 STC 92)(BHC)]
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Issue: Dealer paid penalty without protest. Does it forfeit
the right of dealer to question penalty?
Held: No
Amongst the other points in writ, one of the points was
about levy of penalty, which was paid by appellant without protest. It was
argued by the revenue that the appellant has paid the penalty without any
protest and without showing cause to the show cause notice issued to him and,
therefore, appellant is not entitled to get any relief in the writ. The Court
on said point observed that appellant might have paid the penalty immediately
that too without protest, obviously with an anxiety to get the goods released
immediately. It was further observed that merely because the appellant has
paid the amounts of penalty without protest, it cannot be said that he has
forfeited his right to question the validity of the show cause notice.
[Samrat Granites P. Ltd. vs. C.T.O. and Another (4 VST 106)
(Karnataka High Court)]
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Issue: Can petitioner of writ be heard on merits of
misstatement of facts?
Held : No
Petitioner has filed writ petitions for release of goods on
the ground that the goods were illegally detained. However, respondent
(Revenue) pointed out in writing about the misstatement and concealment of
facts by the petitioner with a view to mislead the Court. Further such
allegations made by the respondents were not rebutted by the petitioner. Based
on these facts it was observed & held that the jurisdiction of the High Courts
to issue directions, orders or writs including writs in the nature of habeas
corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement
of any of the rights conferred by the Part III of the Constitution and for any
other purpose is essentially an equitable jurisdiction and those petitioners
who do not come to the Court with clean hands are not entitled to be heard on
merits of their grievances. In the instant case, petitioners have not stated
the relevant facts property and for this reason it is sufficient to entail an
outright dismissal of writ petition without going into its merits. Court
further observed that even if the petitioners have a good case on merits, the
Court will be entitled to decline to go into the merits and dismiss their
petition because the conduct of the petitioner has been such as to mislead the
Court. Accordingly, on the facts and circumstances of the case Court refused
to entertain the petition in view of the contumacious conduct of petitioner.
Decision in case of Harbhajan Kaur vs. State of Punjab (PLJR 287)
followed. The Court also relied upon the decision in case of Jai Bhagwan
Jain vs. Haryana State Elec. Board (C.W.P No. 15448 of 1993) decided on 21st
Sept. 1994 (P & H High Court).
[Shiv Shanker Steel Industries vs. State of Punjab and
Another (148 STC 314) (P & H)]
