Latest Judgement on sales tax and VAT by honorable Supreme court

Rahmat Beevi vs Assistant Commissioner-II, Commercial Taxes, Special Circle, Asramom, Kollam  [KERALA HIGH COURT, 30 Oct 2013]

T. V. l. Vitan Departmental Stores and Industries Limited, Chennai vs State of Tamil Nadu, represented by the Joint Commissioner (CT), Chennai East Division, Chennai [MADRAS HIGH COURT, 29 Oct 2013]

Chapala Mohanty W/o Dipak Kumar Mohanty vs Additional D.G. of Police-cum-I.G. of Prisons & DCS, Odisha  [ORISSA HIGH COURT, 10 Oct 2013]

(1) Tata Motors Finance Limited; (2) ICICI Bank Limited; (3) Family Credit Limited and another vs (1) Assistant Commissioner of Sales Tax, Central Section, Investigation Wing, Kolkata; (2) Joint Commissioner of Sales Tax, Central Section Wing and others; (3) Assistant Commissioner of Sales Tax Salt Lake Charge and others  [CALCUTTA HIGH COURT, 08 Oct 2013]

ACC Limited vs (1) State of Jharkhand; (2) Director of Industries, Department of Industries,Jharkhand, Ranchi; (3) Secretary, Department of Industries,Jharkhand, Ranchi; (4) Secretary, Commercial Taxes, Department of Revenues, Jharkhand, Ranchi  [JHARKHAND HIGH COURT, 01 Oct 2013]

Larsen and Toubro Limited and another vs State of Karnataka and another  [SUPREME COURT OF INDIA, 26 Sep 2013] (A) Sales Tax - Indirect Tax - Karnataka Sales Tax Act, 1957 - Constitution of India, 1950, art. 366(29-A)(b) - Development agreement - Works contract - Meaning and scope - Appellant developer entered into development agreement with landowner - Appellant entered into agreement of sale with prospective purchasers - Sale deeds were executed in favour of them - Respondent department served show-cause notice for assessment by relying upon SC decision in K. Raheja Development Corporation v. State of Karnataka, 2005 Indlaw SC 350 - Later, respondent passed provisional assessment order and sent demand notice - Appellant challenged demand before HC - HC dismissed challenge - Appellant filed appeal before SC - Two Judge bench referred matter to larger Bench - Hence, instant reference - Whether development agreement could be categorized as work contract - Held, where a contract comprised of both a works contract and a transfer of immovable property, such contract did not denude it of its character as works contract - Term 'works contract' in art. 366 (29- A)(b) of Constitution took within its fold all genre of works contract - Building contracts were species of works contract - A contract would involve both a contract of work and labor and a contract for sale - In such composite contract, distinction between contract for sale of goods and contract for work (or service) was virtually diminished - Thus, development agreement could be a work contract - Reference answered.(B) Sales Tax - Indirect Tax - Constitution - Karnataka Sales Tax Act, 1957 - Sale of Goods Act, 1930 - Constitution of India, 1950, art. 366(29-A)(b) - Constitution (Forty-Sixth Amendment) Act, 1982 - Development agreement - Taxability - Whether development agreement in question was liable to be taxed - Held, for sustaining levy of tax on goods deemed to have been sold in execution of a works contract, three conditions should be fulfilled: (i) there should be a works contract, (ii) goods should have been involved in execution of a works contract; and (iii) property in those goods should be transferred to a third party either as goods or in some other form - For the purposes of art. 366(29-A)(b) of Constitution, in a building contract or any contract to do construction, if developer received or was entitled to receive valuable consideration, the said three conditions should fully met - Even if dominant intention of contract was not to transfer property in goods and rather it was rendering of service or ultimate transaction was transfer of immovable property, then also it was open to States to levy sales tax on materials used in such contract if such contract otherwise had elements of works contract - Further, a transfer of property in goods u/art. 366 29-A(b) of Constitution was deemed to be a sale of goods involved in execution of a works contract by person making transfer and purchase of those goods by person to whom such transfer was made - Even in a single and indivisible works contract, by virtue of legal fiction introduced by art.366(29-A)(b) of Constitution, there was a deemed sale of goods in execution of works contract - Such a deemed sale had all incidents of sale of goods involved in execution of a works contract where contract was divisible into one for sale of goods and other for supply of labour and services - Single and indivisible contract, then by Forty-sixth Amendment had been brought on par with a contract containing two separate agreements and States had then power to levy sales tax on value of material in execution of works contract - Expression 'tax on the sale or purchase of goods' in Entry 54 in List II of Seventh Schedule when r/w definition cl. 29-A of art. 366 included a tax on transfer of property in goods whether as goods or in the form other than goods involved in execution of works contract - Art. 366(29-A)(b) served to bring transactions where essential ingredients of 'sale' defined in the 1930 Act were absent within the ambit of sale or purchase for the purposes of levy of sales tax - Taxing sale of goods element in a works contract u/art. 366(29-A)(b) r/w Entry 54 List II was permissible even after incorporation of goods provided tax was directed to value of goods and did not purport to tax transfer of immovable property - Value of goods which could constitute measure for levy of tax would be value of goods at the time of incorporation of goods in works even though property passed as between developer and flat purchaser after incorporation of goods - Hence, development agreement in instant case was a work contract and thereby liable to be taxed - Reference answered. (C) Sales Tax - Indirect Tax - Karnataka Sales Tax Act, 1957 - Constitution of India, 1950, art. 366(29-A)(b) - Dictum laid down in Raheja Development case - Degree of correctness - Whether view taken in Raheja Development case with reference to definition of 'works contract' in the Act was legally justified - Held, in art. 366(29-A)(b) of Constitution, term 'works contract' covered all genre of works contract and it was not limited to one specie of contract - In Raheja Development case, definition of 'works contract' in the Act was under consideration - That definition of 'works contract' was inclusive and referred to building contracts and diverse construction activities for monetary consideration - Thus view taken by two Judge Bench of SC in Raheja Development case was justifiable - However, activity of construction undertaken by developer would be works contract only from the stage developer entered into a contract with flat purchaser - Value addition made to goods transferred after agreement was entered into with flat purchaser could only be made chargeable to tax by State Govt. - Further, almost all States modified their laws in line with Raheja Development case and there was no justification for change in position settled - Thus, Raheja Development case laid down correct legal position and hence approved - Reference answered. (D) Sales Tax - VAT - Maharashtra Value Added Tax Act, 2002, s. 2(24) - Explanation (b)(ii) to s. 2(24) of the Act - Constitutionality - Whether explanation (b)(ii) to s. 2(24) of the Act, which was brought by amendment with effect from 20-6-2006, was Constitutionally valid - Held, amendment in explanation b(ii) to s. 2(24) was brought because of SC judgment in Raheja Development case - Raheja Development case laid down correct legal position - Thus, there was no merit in challenge to Constitutional validity to the provisions of explanation (b)(ii) to s. 2(24) of the Act, which were amended with effect from 20-6-2006 - HC took the view that provision under challenge was not in breach of any Constitutional boundaries - View of HC was agreed with and challenge to amendment to the provisions of explanation (b)(ii) to s. 2(24) of the Act was rejected - Reference answered. (E) Sales Tax - VAT - Maharashtra Value Added Tax Rules, 2005, r. 58(1A) - Constitutionality of r. 58(1A) of the Rules - Whether r. 58(1A) of the Rules, which was inserted by a notification dt. 1-6-2009 was Constitutionally valid - Held, taxing sale of goods element in a works contract was permissible even after incorporation of goods provided tax was directed to value of goods at the time of incorporation and did not purport to tax the transfer of immovable property - Mode of valuation of goods provided in r. 58(1A) should be read in the manner that meets this criteria - However, State Govt. should bring further clarity in r.58 (1-A) of the Rules - Thus, subject to this, validity of r. 58(1-A) of the Rules was sustained - Reference answered.

Commercial Taxes Officer, Works Contract and Leasing Tax, Udaipur vs Jai Baba Construction Company, Udaipur  [RAJASTHAN HIGH COURT, 26 Sep 2013]

Nu-Tech Solvex vs State of Haryana and others  [PUNJAB AND HARYANA HIGH COURT, 18 Sep 2013]

(1) Vidarbha Winding Wires Limited, Nagpur; (2) Rohit S/o Motilal Agrawal; (3) Chandrapur Vidyut Conductors Private Limited; (4) Kailash Poly Industries Private Limited; (5) Manoj S/o Shankarlal Mantri vs (1) State of Maharashtra, through Secretary, Finance Department, Mantralaya, Bombay; (2) State of Maharashtra, through its Secretary, Department of Industries, Energy and Labour, Mantralaya, Bombay; (3) Commissioner of Sales Tax, Maharashtra State, Bombay; (4) Deputy Commissioner of Sales Tax, Nagpur Division, Sales Tax Office, Nagpur; (5) Development Corporation of Vidarbha Limited, through its Managing Director, Sitabuldi, Nagpur  [BOMBAY HIGH COURT, 17 Sep 2013]

Jain Heights and Structures Private Limited, represented by its Managing Director, Kishore Kumar, Bangalore vs (1) State of Karnataka, represented by its Finance Secretary, Vidhana Soudha, Bangalore; (2) Commissioner of Commercial Taxes, Bangalore; (3) Assistant Commissioner of Commercial Taxes, Bangalore  [KARNATAKA HIGH COURT, 13 Sep 2013]

Assistant Commercial Taxes Officer vs Parekh Enterprises  [SUPREME COURT OF INDIA, 13 Sep 2013]

Commissioner, Commercial Tax vs Hotel Agra Ashok  [ALLAHABAD HIGH COURT, 10 Sep 2013]

Reliance Infrastructure Limited and another vs Dy. Commissioner Sales Tax and another  [CALCUTTA HIGH COURT, 09 Sep 2013]

Gaurav Trading Company vs Assistant Commercial Tax Officer  [RAJASTHAN HIGH COURT, 04 Sep 2013]

ACTO (FS) Sriganagar vs Bunge India Private Limited  [RAJASTHAN HIGH COURT, 02 Sep 2013]

(1) Assistant Commissioner, Special Circle, Bikaner; (2) ACTO, Circle-A, Ward 4, Bikaner vs (1) Somani Mills, Bikaner; (2) Bikaner Woolen Mills Limited; (3) Gayatri Udhyog [RAJASTHAN HIGH COURT, 29 Aug 2013]

Assistant Commercial Taxes Officer, Ward-II, Sikar vs Bholaram Ramgopal, Laxmangarh  [RAJASTHAN HIGH COURT, 27 Aug 2013]

Assistant Commissioner, Anti Evasion, Commercial Taxes Department-III, Jaipur vs Rajasthan Textile Mills Pachpahar Road, Bhawani Mandi, Jhalawar  [RAJASTHAN HIGH COURT, 27 Aug 2013]

Assistant Commercial Taxes Officer, Ward-II, Bayana, Circle-B, Bharatpur vs Kamal Enterprises, Bayana, Bharatpur  [RAJASTHAN HIGH COURT, 26 Aug 2013]

State of Tamil Nadu Represented by the Deputy Commissioner (Commercial Taxes), Salem vs T. V. L. S. S. M. Processing Mills, Komarapalayam  [MADRAS HIGH COURT, 23 Aug 2013]

T. V. L. Periakaramalai Tea and Products Company Limited, Coimbatore vs State of Tamil Nadu Represented by the Commercial Tax Officer, Coimbatore  [MADRAS HIGH COURT, 23 Aug 2013]

T. V. L. Periakaramalai Tea and Products Company Limited, Coimbatore vs State of Tamil Nadu Represented by the Commercial Tax Officer, Coimbatore  [MADRAS HIGH COURT, 23 Aug 2013]

Assistant Commercial Taxes Officer, Ward II, Circle-B, Bhilwara vs Sarita Water Tank System, Subhash Nagar, Bhilwara  [RAJASTHAN HIGH COURT, 23 Aug 2013]

Deputy Commissioner (Appeals) and another vs Jagdish Prasad Soni  [RAJASTHAN HIGH COURT, 22 Aug 2013]

Venkataramana Food Specialities Limited, Chennai vs State of Tamil Nadu Represented by the Deputy Commissioner (CT) Now designated as Joint Commissioner (CT) Chennai (Central) Division, Chennai  [MADRAS HIGH COURT, 22 Aug 2013]