Southern India Regional Council of
The Institute of Chartered Accountants Of India
(Setup by an Act of Parliament)

Professional Updates- September 2017

 

Telengana VAT

CA Satish Saraf Hyderabad satish. satish.saraf@icai.org

Supreme Court

  • K. Naveen Kumar – AC 10242/17 dt 10.7.17 – relaxation of contempt issue - We make it clear that in the event of the appellant taking steps in terms of what is noted above, it will be open to the High Court to pass appropriate orders, de hors the stand already taken in the impugned order. In order to enable this order to be worked out, the arrest, as ordered by the High Court, will be deferred for a period of one month.
  • Common Cause V UOI 394 ITR 220 - Entries in loose papers/sheets are irrelevant and inadmissible as evidence. Such loose papers are not “books of account” and entries therein are not sufficient to charge a person with liability. Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is incumbent upon the person relying upon those entries to prove that they are in accordance with facts. Finding of Settlement Commission disregarding such evidence as inadmissible and unreliable. The materials in question were not good enough to constitute offences to direct the registration of a first information report and investigation therein. (CBI Vs V.C. Shukla (1998) 3 SCC 410 (SC) followed.


Allahabad HC
  • Commissioner Vs S/S. Krishna Collector - SALES/TRADE TAX REVISION No. – 31/17 dt 21.3.17 102 VST 179 - It is not the case here that Form-F was ever applied and was not issued. The observation made in Para-5 cannot be construed as an expression of opinion by the Apex Court by whittling down the provisions of Section 6-A of the Act. Once a statutory presumption is drawn regarding sale in the absence of Form-F, and the assessee has not been able to put forth any material, which may have been responsible for non-submission of FormF, the first appellate authority and the tribunal were not justified in interfering with the order of assessing authority, holding the assessee liable to payment of tax. The question of law framed for consideration is answered, accordingly.
  • Target Centre SALES/TRADE TAX REVISION No 244/15 dt 27.3.17 102 VST 297 - In the absence of a definition in the Act, 'arms' as a taxing entry would have to be construed as is ordinarily understood in common parlance. It is the meaning assigned to term in popular sense which must prevail. Merely because air gun can cause injury would not be sufficient to conclude that it be treated an item covered by entry 'arms and ammunition'. Subsequent division benches of two High Courts have not agreed with the view taken in M/s Agarwal Brothers, Faizabad (supra). It would, therefore, be appropriate to refer following questions to a Larger Bench
STAT

Fresh & Honest Café TA 258/2012 dt 16.2.17 - Beverages like Tea and Coffee are no doubt consumed on a large scale in today’s world and may even aid in increasing the efficiency of a person who consumes such drink. However, by no stretch of imagination, consumption of tea / coffee can be construed as for the purposes of operation or maintenance of a SEZ unit.


Advance Ruling

Isitva Steels A.R.Com/11/2017 dt 30.6.17 (AR 12/17) - Module Mounting Structure is not covered under either under Schedule – I or Schedule – IV of the TVAT Act. Therefore, it falls under Schedule – V of the said Act attracting a Tax of 14.5%.

Professional Updates- August 2017

Telengana VAT

CA Satish Saraf Hyderabad satish.saraf@icai.org

High Court
Aditya Rice Industries 8762/17 and batch dt 23.3.17 (101 VST 286) - Assessing Officer shall take into account the mitigating factors, as indicated above and levy a penalty that will be proportionate to whatever the petitioners have done. In other words, the Assessing Officer shall show lenience in the matter of imposition of penalty.

STAT

1. Lakhmi Gayathri Industries (2017) 30 TTR 234 TVATAT - Appellant failed to pay tax due on the basis of return submitted by him on the last day of the month in which it is due. Therefore, that the orders of the assessing authority are in accordance with the law and levy of penalty @ 10% for non-payment of tax in time, no point to intervene.

2. Infres Methodex Limited 30 TTR 238 Only issue is whether the appellant is entitled to claim exemption towards sales returns when it was not reflected in the audit statement certified by the Chartered Accountant. The appellant had made claim in the CST Return fled but it was omitted to be reflected in the audit statements. This is obviously a mistake therefore we consider it expedient in the interest of justice to remit to the assessing officer to verify the claim of the sale returns and allow the same if found to be in order

3. Sanghi Polymers 30 TTR 240 - The responsibility of the appellant to pursue case position and on to know the latest position, but appellant kept quiet for nearly 5 months and now contending that the opportunity of hearing was not given. Here, the revisional authority has not committed any error and followed the procedure properly and the fault lies on the appellant in the aspect

Advance Ruling
Berakah Engineering A.R.Com/30/2016 dt 23.6.17 (AR 11/17) - clarified that the ‘Ladles’ are covered under Sub-entry 25 of Entry 102 of Schedule-IV of TVAT Act, 2005, attracting tax @ 5%.

DC Orders
Viceroy Hotels - RC.No:- R1/ 85/2016 dt 28.7.17 (DCO 372) – cocktail of different varieties of liquor considered to be different commodity and taxed at 14.5% as unclassified item


Professional Updates- July 2017

Telegana VAT Update

CA Satish Saraf Hyderabad satish.saraf@icai.org

High Court

  • 1. Sree Krishna Automotives – WP 29390 & 29411/016 dt 31.8.16 63 APSTJ 190 - In order to claim Input Tax Credit in respect of second hand motor vehicle, it is required to produce evidence before the assessing authority showing that the vehicle purchased by the dealer has been subject to VAT at the time of its initial registration under the Motor Vehicles Act, 1988 either within the erstwhile composite State of Andhra Pradesh or the State of Telangana
  • 2. Ajax Fiori Engineering 63 APSTJ 181 - Self-loading Mobile Concrete Mixer with HSN classification 84743110 producing cement concrete used in Civil Works is classifiable as Machinery falling under Clause 39 of item 102 of the Schedule – IV exigible to tax @ 5%.
  • 3. East Coast Distributors 30 TTR 181 - Sale of Glass Jars & Plastic Jars falls under the entry No: 90 and sub-entry 4 & 12 of the Schedule – IV and liable to tax @ 5%.
  • 4. Divya Shakthi Services WP 22918/13 dt 19.8.13 (57 APSTJ 115) - the facts would reveal demanding tax on non- existing transactions would amount to demanding tax without any authority of law and the same is contrary to Article 265.

STAT
  • 1. SREI International Finance – TA No.4/09 dt 2.5.17-lease agreements were concluded outside the State of Andhra Pradesh the same cannot be taxed under the APGST Act, 1957.
  • 2. Gammon India TA No. 150/2008 dt 9.10.2015 - failure to consider an issue validly raised in the grounds of appeal before an appellate authority is a valid ground for rectifying the same as was held in the cases of ITO vs ITAT 58 ITR 634 and Laxmi Electronic Corporation vs CIT 188 ITR 398.
  • 3. Transmission Corporation of AP – TA 898/08 and batch 17-4-17 - the facts prove that it received valuable consideration by way of making cash deduction from the amount payable to the repairers of transformers – not barter transaction
  • 4. Prasad Media Corporation – TA 12/09 and batch dt 20.4.17 - sale of food across the counters operated by the appellant, we are convinced that there was no service involved in the transaction. It was a mere sale of food taxable under Section 5 alone.
  • 5. Logical Solutions TA 608/11 dt 31.8.16 - There can only be one assessment order for a tax period and passing multiple assessment orders for the same tax period is contrary to law.
  • 6. Dekars Techno Engineering T.A. NO.347/2010 Dt:03-06-16 the supply and installation of fire alaram systems has to be treated as works contract exigible to tax U/Sec. 5F read with Rule 6(3) (ii)

Advance Ruling

3F Industries A.R.Com/8/2016 dt 21.6.17(AR 10/17) - ‘margarine & vegetable fat spread’ is covered under residuary Entry in Schedule-V attracting tax @ 14.5%.

Commissioner’s Circular

  • 1. CCT’s Ref No. A(1)/53/2017 dt 4.5.17 - assessing / revisional authorities are requested that the assessment proceedings under CST Act, 1956 shall not be postponed for non filing of Statutory Forms at the instance of the dealer without a sufficient reason. In all such cases all assessment shall be completed before the time limitation and the demand raised thereon shall be collected immediately.
  • 2. CCT’s Ref. No. CS(1)/18/2015, dt 9-5-17 - Post Registration Inspection Visit/ Advisory Visit - the time limit to upload the reports is reduced to “ 24 Hours” from date of completion of the visit

DC Orders

Pride Constructions - R.R.NoJ1/97/2015-16 dt 17.6.17 – DC Order 318 – Composition scheme – Service Tax subjected to VAT as part of amount received – Arguable case exists


Professional Updates- June 2017

Telegana VAT Update

CA Satish Saraf Hyderabad satish.saraf@icai.org

High Court

  • 1. Kartikeya Industries WP 1835/16 DT 3.2.16 63 APSTJ 84 if such Advance Ruling is contrary to the law declared by the High court, the assessing authority is bound by the Judgment of the Jurisdictional High Court and not the Advance Ruling…. The mere fact that the order of the Tribunal was found inapplicable, does not absolve the assessing authority of his duty to examine the material placed before him by the dealer
  • 2. M. Papi Reddy 63 APSTJ 130 State Government would have preferential charge over the subject property for recovery of the tax arrears and the charge or mortgage in favour of the Bank created by the principal borrower is subject to the first charge statutorily created in favour of the State Government.
  • 3. Hindustan Petroleum 63 APSTJ 107 - Merely because certain elements of expenditure are involved on account of siding and shunting charges for placing the empty wagons at the filling or delivery point, the same would not form part of the freight charges.
Advance Ruling
  • 1. Naveen Kuamr Boorgu - A.R.Com/7/2017 dt 2.5.17 – (AR 7/17) - The appellant seeking clarification on ‘He would like to know out of the Landlord portion as per Development Agreement, sales of residential flats (flats sold during the construction and flats sold after the construction) are liable to tax under the provisions of the APVAT Act, 2005’ and it was held that, the activity of the land lord seeing that an apartment is constructed for a buyer of it on hand, is equal to the activity of a builder (contractor) constructing an apartment for an on hand buyer. While explaining his facts, the applicant specifically admitted that the land lord is selling his shared apartments when the construction is in progress. Hence, undoubtedly this activity of the land lord comes into the net of VAT.
  • 2. Electro Magnetic Devices, A.R.Com/66/2015 dt 29.4.17 (AR 8/17) - Dry transformers having a power handling capacity from 0.1VA to 1KVA fall under Schedule-IV to TVAT Act, 2005 and applicable rate of tax is 5% and dry transformers having capacity exceeding 1KVA doesn’t fall under Schedule-IV to TVAT Act, 2005 and the applicable rate of tax is 14.5%, as they fall under Schedule-V to TVAT Act, 2005…. there is no Entry with regard to Chocks & Coils in any of the Schedules under TVAT Act, 2005


Professional Updates- May 2017

Telegana VAT Update

CA Satish Saraf Hyderabad satish.saraf@icai.org

State Legislature adopted GST Bills

GOs issued

  • G.O. Ms 42 dt 3.3.17 – tax on totalisators and betting chargeable U/s 13 and 16 of Telangana Horseracing betting tax Regulation

High Court
Aditya Rice WP 8762/17 dt 23.3.17 - Considering the fact that the dealers have paid the tax at the place where the goods were threatened to be detained and also considering the fact that they have chosen to come up only after the issue of show cause notices for penalty, we are of the view that the Assessing Officer could be considerate, while considering the objections of the petitioners. This is a small reprieve that could be granted to the petitioners on account of their conduct. Hence, all the writ petitions are disposed of to the following effect:
  • 1) the prayer for refund of tax already paid is rejected;
  • 2) the petitioners shall submit their objections to the show cause notices within a period of 15 days from the date of receipt of a copy of this order;
  • 3) The Assessing Officer shall take into account the mitigating factors, as indicated above and levy a penalty that will be proportionate to whatever the petitioners have done. In other words, the Assessing Officer shall show lenience in the matter of imposition of penalty.

STAT
INDUS TOWERS TA 34/14 dt 13.03.17 We have carefully considered the submissions made and the material on record, and it appears that the assessing authority has not done proper homework of gathering evidence to substantiate his surmise that the entries represent sale of goods.


Professional Updates- April 2017

Telangana VAT

STAT

  1. 1. Regal Fitness TA 100/16 dt 11.1.17 articles and equipment for general physical exercise are covered under HSN code 9506 as part of sports equipment. ……. the impugned goods are sports goods taxableat 4%

  2. 2. Signum Fire Protection TA 291/11 and batch dt 17.1.17 - In the present case also we find that the goods are brought to the site and fixed by the appellant and not sold as chattel……Therefore, we are of the considered view that the impugned transactions are Works Contracts only and not sale.

  3. 3. Hyderabad Race Club TA 733-36 dt 18.1.17 - ‘cattle’ does not include horses and therefore oats that are fed to the horses would not come under the term ‘cattle feed”

  4. 4. S.S.V. Fab Industries TA 161/16 dt 20-1-17 – H forms can be filed before appellate authorities.

  5. 5. Shri Roopchaya Colour Studio TA 44/16 dt 20.1.17 the work of developing, processing and printing of photographs out of either negative rolls or in the form of CDs. or data storage cards, there is an element of sale of certain goods which can be taxed under Section 4(7) of VAT Act.

  6. 6. IVRCL TA No. 835,847/08 dt 10.2.17- held that the contractor is exempt from payment of tax only if a sub contractor is a registered dealer following Yograj Constructions Ltd., in T.A.No.65, dt 5-8-16

  7. 7. Hanumantha Rao TA 944/08 dt 15.2.17 (following Kakatiya Cotton Pressing Industries, 50 APSTJ 157) revisional authority ought not to have exercised revision power second time


Advance Ruling

  1. 1. Perfect Distributor A.R.Com/8/2014 dt 23.2.17 (AR 3/17) - Cell Phones / Mobile Phones”, and hence are chargeable @ 5% w.e.f. 30-07-2016

  2. 2. Ipog Industrial Technologies - A.R.Com/15/2016 dt 15.3.17 (AR 5/17) “twin core miniature control cable” falls under Schedule V to the Act liable for the tax 14.5%.

  3. 3. Schwing Stetter A.R.Com/33/2016 dt 15.3.17 (AR 6/17)self-loading mobile concrete mixer is a machinery and liable to tax @ 5%


Commissioner’s Circulars

  1. 1. Ref. No: CS(1)/39/2013, Dt: 01-03-2017 - mandatory, in the State of Telangana use of online e-waybills with effect from 07-03-2017

  2. 2. No: AIII(1)/113/2013, dt: 07-03-2017 - The Commissioner exempted Oil Manufacturing Companies (OMC) from TDS, with each other and also exempted Public Sector Organizations on purchases made from OMC’s.


Professional Updates- March 2017



Telengana VAT

STAT

Infres Methodex – TA No.353/11 dt 10.04.13 57 APSTJ 186 – Composition Scheme U/s 4(7)(c) - hold that levy of VAT tax on Service Charges Collections, Education Cess and S&H, Education Cess by the lower authorities are not sustainable under law (APHC in T. Siddaiah Naidu & Co. -107STC478 - the tax should have been included as consideration and passed on to the purchaser, is not satisfied. That being so the market cess cannot be treated as part of turnover.)

Advance Ruling

  • 1. Salesforce.com India Private Limited A.R.Com/48/2016 dt 6.2.17 (AR 1/17) As sub-contractor is an agent to the principal contractor and by the theory of accretion, property in goods passes directly from the sub-contractor to the applicant, the transaction of works contract by a sub-contractor falls under Section 7(a) of the Act and eligible for claiming exemption
  • 2. Naulakha Refrigeration A.R.Com/37/2016 15.2.17 (AR 2/17) - Rate of tax on Nitrile Insulation Tubes (HS Code 400911000) and Nitrile Insulation sheets (400811290) of various sizes”

  • GOs issued
  • 1. G.O.Ms. No. 29 dt 1.2.17 – The Government of Telangana has amended the Schedule – VI of the Telangana Value Added Tax Act, 2005 and inserted entry No: 1H “Draught Beer produced and sold by micro-breweries” taxed at the first point of sale in the state @ 70%, with effect from 02-02-2017
  • 2. G.O.Ms No.31 dt.2.2.17 – Rule 18A & 18B and inserted Rule 18C of Telangana Value Added Tax Rules, 2005 and notified new TDS Certificates Form No: 501E & 501F, in case of Rule 18A & 18B are effective from 04-06-2015 and Rule 18C is effective from 09-05-16.

Punjab & Haryana HC
Maruti Suzuki India Ltd CEA 9/16 21.10.16 97 VST 209 - CENVAT Credit:- Excise duty– Service Tax- Input services-Manufacture of motor vehicles and parts- Mandap keeper and rent-a-cab services-cost of service included in assessable value of final product on which excise duty paid- Assessee entitled to credit-CENVAT Credit Rules, 2004

Madhya Pradesh HC
Supreme Industries Ltd WP 990/2008 dt 12-8-16 (2016) 29 STJ 385(MP) assessing authority while passing assessment order in terms of remand with specific direction, the assessing officer not kept in mind the directions contained in the order of remand. Therefore, the assessing orders were quashed and remanded further to pass afresh in the light of directions given in order of remand.