21. Forfeiture of Tax Reimbursement of tax paid to vendor while purchasing the goods, not collection of tax ….. forfeiture set-aside

The appellant was engaged in the business of manufacture and sale of automotive seats, which were mainly supplied to 1) TELCO and 2) Mahindra & Mahindra Ltd. While assessing the dealer for the year 1996-97 assessing authority disallowed the resale claim of dealer and forfeited sum of Rs. 8,20,382/- because according to assessing authority there is unauthorized collection of tax after issuing notice in Form 29.

Facts leading to this case were, in the year under assessment assessee made resale claim in respect of auto seats of Rs.90,24,211/- because corresponding purchases were effected from registered dealer. The said resale of Rs. 90,24,211/- include an amount of Rs. 8,20,382/- which is charged separately, and which was according to appellant was the reimbursement of tax paid to vendor.

In the order passed in First Appeal before the Dy. Commissioner of Sales Tax, he has observed that the appellant has shown the impugned amount separately in the "Tax Collection" column in the sale invoice whereby the buyer appears to have been given an understanding that the sales are liable to tax in the hands of appellant. The appellant pointed out to in this regard that sale invoice bear a rubber stamp to the effect of "reimbursement of taxes paid to vendor" and therefore the buyer knows that the amount shown in the "tax collection" column represents the amount of reimbursement of tax paid to the vendor and not the amount of tax required to be paid by the appellant to the Government.

In Second Appeal appellant prayed to i) allow resale of Rs. 90,24,211/- on the ground that the corresponding purchases were effected from dealer who hold valid registration certificate at the time of these transactions, and ii) forfeiture of tax may be set aside. Appellant relied on the Bombay High Court judgment in the case of M/s Mather and Platt Ltd. (53 STC 104)

Hon'ble Tribunal set aside the order passed in appeal forfeiting tax amount and remanded back to assessing authority to allow the resale after bill wise verification to ascertain the precise amount collected from TELCO and tax paid to buyer.

While allowing the appeal, observations and reasons given by the Dy. Commissioner to disallow the claim are totally rejected by the Tribunal saying that "the observation is not at all supported by the evidence, and is based merely on presumptions and surmises. Hon'ble Tribunal also said that, merely because the buyer becomes entitled to claim set-off with reference to the said amount, it will not necessarily mean that the amount charged by the appellant in his invoices is by way of tax and not by way of reimbursement of tax paid to the vendor.

[M/s Tata Johnson Controls Automotive Ltd. S.A. No. 1909 of 2004 decided on 6-6-2006. Member Shri G.G. Kochrekar of First Bench delivered the judgment. Advocate Shri P. V. Surte appeared for appellant.]

22. Whether machinery can be purchased to print "Newspaper" against Certificate A to be issued u/e A 88

Held : Yes.

The appellant, who was a printer and publisher of newspaper and magazine registered under BST Act, intended to purchase printing machinery for printing the newspapers. To avail the concession in tax rate, the appellant desired to issue a declaration in Form A, as per the Notification under entry A 88 u/s 41 against the said purchases. One of the conditions of the said notification is that, the claimant purchaser has to obtain necessary certificate from the Commissioner of Sales Tax. The application made by the appellant was rejected by the Dy. Commissioner only because machinery is going to be used to print newspaper.

In appeal before the Hon'ble Tribunal revenue was of opinion that newspapers being not goods as per section 2(13), machinery proposed to be purchased by the appellant not meant for use in manufacture of goods and hence not eligible to issue certificate in Form A, u/e A 88. On the other hand appellant submitted that it is due to the constitutional bar that the States are prohibited from levying any tax in respect of newspapers, and that is why they are excluded from the definition of goods for a restricted purpose of keeping the newspapers outside the purview of the tax net. That, however, does not mean that newspapers are not goods. Attention was drawn to the expression "unless the context otherwise require" with which section 2 of BST Act commences. Therefore, if the context is otherwise, it is not permissible to adhere to defined meaning of a term. Appellant relied on the judgment of Supreme Court in the case of M/s Printers (Mysore) Ltd. and Another (93 STC 95) and also on Indian Express Newspaper (Bom) Ltd. SA Nos. 1731 to 1734 of 1992 dt. 22-7-1994. In the case before Supreme Court the question was as to whether publisher of newspaper is entitled to effect purchases on ‘C’ form (at the concessional rate of 4%) for the purpose of use in the manufacture of newspapers. In the definition of the term "goods" in section 2(d) of the CST Act, 195 "newspaper" are specifically excluded from the scope of the expression. With this exclusion, the question for interpretation was whether the term "goods" appearing in the relevant provisions of section 8 of the CST Act should be given defined meaning of the term "goods" in section 2(d), so as to deprive the publisher of newspapers from availing the benefit of the concesional tax rate. On careful consideration of the relevant statutory provisions and earlier judicial pronouncements, the Supreme Court held that the expression goods occurring in the words "for use by him in manufacture or processing of goods for sale" in section 8(3)(b) of the CST Act does not exclude newspapers. Observations of Supreme Court in this regard are very important and they are "It should also be remembered that section 2 which defines certain expression occurring in the Act opens with the words "in this Act, unless the context otherwise requires". This shows that wherever the word "goods" occurs in the enactment, it is not mandatory that one should mechanically attribute to the said expression the meaning assigned to it in clause (d). Ordinarily, that is so. But where the context does not permit or where the context requires otherwise, the meaning assigned to it in the said definition need not be applied. If we keep the above consideration in mind, it could be evident that the expression "goods" occurring in the second half of section 8(3)(b) cannot be taken to exclude newspapers from its purview. The context does not permit it."

With this order passed by the Dy. Commissioner is set-aside, and directed to issue certificate.

[Bennett Coleman & Co. Ltd. Appeal No. 67 of 2005 decided on 13-9-2006 Judgment delivered by member of Third Bench Shri G. G. Kochrekar. Advocate Mrs. Sujata Rangnekar appeared for the appellant.]

23. Revision of assessment without any proper finding, notice reveals that there was neither a discrepancies nor impropriety ……….order set-aside

The appellant was engaged in the business of buying and selling Indian made foreign liquor covered under entry 22(1) of Schedule C-II. The appellant was assessed for the period 1996-97 by the Sr. Assistant Commissioner of Sales Tax. The order of assessment resulted into refund of Rs. 17,88,161/-.

The Dy. Commissioner of Sales revised the order of assessment and taxed the sales of Rs. 3,35,35,517/- @20%, he also taxed the sales of Rs.16,05,46,912/- under CST Act, and also imposed interest u/s 36(3)(b). Against this order appellant came in appeal before the Tribunal. In appeal appellant challenged the notice issued in Form 40, and highlighted the discrepancies in the notice. Order appealed says that "while scrutinizing the record underlying the assessment order certain discrepancies were noticed and in order to remove these improprieties notice in Form No. 40 is issued" Therefore appellant brought invited attention to the notice issued in Form 40 which says that "there is no record whether the condition prescribed in Entry A 16(b) of notification are fulfilled, before allowing the the sale as exempt". Therefore on careful reading of the notice reveals that there was neither a discrepancies nor a impropriety stated in the notice. Appellants relied on the order of assessment which is passed after verification of books of account and allowed the sale as exempt. It is nowhere in the order alleged in the order of assessment that conditions of the notification are not complied.

The plea of the appellant was that for allowing the claim no working is required. Assuming that working was required, it was for assessing officer to do it. If he did not keep the working on record, does not mean that the claim was not admissible or that two conditions were not fulfilled and yet the claim was allowed by assessing officer In allowing the claim, the appellant cannot say that what the assessing officer should write in the assessment order, which is not passed in the presence of the appellant but written afterwards.

The order under CST Act is revised because, the goods are restricted commodity and in order to justify the claim under section 6(2), the assessee could have produced the vital evidence i.e.,V12 the Import Register, Transport Permit, Stock Register etc. Instead of producing this evidence, appellant maintained that goods were never brought into the State of Maharashtra, in the absence of any evidence the order was revised, claim of u/s 6(2) was disallowed, accordingly, taxed the said sale @4% being supported with Form C. In this connection Regional Accountant of appellant filed an affidavit confirming that he attended assessment proceedings and tendered one box file containing declaration in Form C issued by the Distributors of the Company to whom goods were supplied from places outside the State of Maharashtra. In view of this affidavit Hon'ble Tribunal accepted the plea of appellant, because in assessment record tribunal found list of E-1, E-II. The said statement also gives E-1 form number as well as C form numbers. In view of this Tribunal found no hesitation to allow the claim and set-aside the revision order.

Consequential levies of interest u/s 36(3)(b) was also set-aside..

[M/s Herbertsons Ltd. Appeal No. 10 and 11 of 2006 decided on 17-7-2006. Judgment delivered by Shri R. B. Ahuja member of First Bench. Advocate Shri P. V. Surte appeared for the appellant.]