Supreme Court Annual Digest 2022- TAX

Central Excise Act, 1944; Section 11B - Central Excise Rules, 2002 ; Rule 18 - While making claim for rebate of duty under Rule 18 of the Central Excise Rules, 2002, the period of limitation prescribed under Section 11B of the Central Excise Act, 1944 shall have to be applied and applicable. (Para 15) Sansera Engineering Ltd. v. Deputy Commissioner, Large Tax Payer Unit, Bengaluru, 2022 LiveLaw (SC) 997

Central Excise Act, 1944; Section 173L - For the purpose of considering the value for refund under Section 173­L what is required to be considered is the value of the returned goods - "value" means the market value of the excisable goods and not the ex­duty value thereof. Therefore, the submission on behalf of the assessee that the returned goods may be treated as a raw material and therefore the "value" of the raw material can be considered for the purpose of "value" while determining the refund under Section 173­L cannot be accepted. (Para 5) Peacock Industries Ltd. v. Union of India, 2022 LiveLaw (SC) 740 : AIR 2022 SC 4132

Central Excise and Customs Commissionerates Inspector (Central Excise, Preventive Officer and Examiner) Group ‘B’ Posts Recruitment Rules 2016 - The absence of a provision for filling up a post in the Commissionerate by absorption of persons belonging to the cadre of another Commissionerate clearly indicates that the cadre is treated as a posting unit and there is no occasion to absorb a person from outside the cadre who holds a similar or comparable post. (Para 32) S.K. Nausad Rahman v. Union of India, 2022 LiveLaw (SC) 266 : AIR 2022 SC 1494

Central Excise Rules, 1944 - Commissioner of Customs and Central Excise could not have invoked the powers under Rule 173Q(2) of the Central Excise Rules, 1944 on 26.03.2007 and 29.03.2007 for confiscation of land, buildings etc., when on such date, the said Rule 173Q(2) was not in the Statute books, having been omitted by a notification dated 12.05.2000. (Para 47) Punjab National Bank v. Union of India, 2022 LiveLaw (SC) 208 : AIR 2022 SC 1475 : (2022) 7 SCC 260

Central Excise Tariff Act, 1988 - Modified Vapour Absorption Chiller Machines cannot be categorized as a Heat Pump to avail concessional tariff benefits - The end use of MVAC is to produce Chilled Water. The use of heat as one of the sources in the airconditioning system would not take away the primary or basic function of the MVAC, which is to cool and not heat water - Definition of a product given in the HSN should be given due weightage in the classification of a product for the purpose of levying excise duty. Thermax Ltd v. Commissioner of Central Excise, Pune-1, 2022 LiveLaw (SC) 881 : AIR 2022 SC 5067

Central Goods and Services Tax Act, 2017; Section 174(2)(c) - Whether the Union of India can be directed to adhere to the representation as made by it in the Office Memorandum dated 7th January 2003 even after the enactment of the CGST Act ? - Proviso to Section 174(2)(c) provides therein that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded - If the contention is accepted, it will amount to enforcing a representation made in the said O.M. of 2003 and 2003 Notification contrary to the legislative incorporation in the proviso to Section 174(2)(c) of the CGST Act. Hero Motocorp Ltd. v. Union of India, 2022 LiveLaw (SC) 852 : AIR 2022 SC 5572

Central Goods and Services Tax Act, 2017; Section 56 - In terms of the principal part of Section 56 of the CGST Act, the interest would be awarded at the rate of 6 per cent. The award of interest at 9 per cent would be attracted only if the matter was covered by the proviso to the said Section 56 - Wherever a statute specifies or regulates the interest, the interest will be payable in terms of the provisions of the statute - Wherever a statute, on the other hand, is silent about the rate of interest and there is no express bar for payment of interest, any delay in paying the compensation or the amounts due, would attract award of interest at a reasonable rate on equitable grounds. (Para 18-19) Union of India v. Willowood Chemicals, 2022 LiveLaw (SC) 398 : AIR 2022 SC 3009 : (2022) 9 SCC 341

Central Sales Tax Act 1956 - Court directed the state of Andhra Pradesh to transfer to Jharkhand the amount of central sales tax deposited by Tata Motors with respect to the sale of buses to the Andhra Pradesh State Road Transport Corporation (APSRTC) -transaction in question, namely, sales effected through RSO, Vijayawada with respect to vehicles/buses sold to APSRTC, the sale/s is/are found to be in the nature of inter-state sale/s. In that view of the matter, the appellant – Tata Motors Limited was liable to pay central sales tax to the State of Jharkhand. However, treating the sale as stock transfer, the appellant/its representative had paid the tax on the aforesaid transaction to the State of Andhra Pradesh which is not leviable by the State of Andhra Pradesh. Therefore, the amount of central sales tax recovered by the State of Andhra Pradesh is required to be transferred to the State of Jharkhand and the same is required to be adjusted towards the amount of tax to be paid to the State of Jharkhand. Tata Motors Ltd. v. Central Sales Tax Appellate Authority, 2022 LiveLaw (SC) 847

Central Sales Tax Act 1956 - Prior to insertion of Section 22(1B) to the Central Sales Tax Act, 1956, there was no provision by which the Appellate Authority could have issued directions for refund of the tax collected by the State which has been held by the Appellate Authority to be not due to that State, or alternatively, direct that State to transfer the refundable amount to the State to which central sales tax is due on the same transaction. However, by the Finance Act, 2010, Section 22(1B) has been inserted to Act 1956 providing for refund-in line with Section 22(1B) of the Act 1956, the State of Andhra Pradesh is directed to transfer to the State of Jharkhand the amount of central sales tax deposited by the appellant with the State of Andhra Pradesh with respect to transaction in question. Tata Motors Ltd. v. Central Sales Tax Appellate Authority, 2022 LiveLaw (SC) 847

CETSTAT judgments overruled - Some judgments relied upon by the assessee and the CESTAT have limited precedential value - the Apex Court had merely affirmed the ruling of CESTAT in these judgements without providing independent reasoning - Overruled Volkswagen India Pvt. Ltd. v. CCE, Pune-I; Computer Sciences Corporation India Pvt. Ltd. v. Commissioner of Service Tax; SRF Ltd. v. Commissioner and Commissioner of Central Excise v. Coca Cola India Pvt. Ltd. [Para 59] C.C. C.E. & S.T. Bangalore (Adjudication) Etc. v. M/s. Northern Operating Systems Pvt. Ltd., 2022 LiveLaw (SC) 526 : AIR 2022 SC 2450

Constitution of India, 1950 - Levy of Excise Duty - Appeal against High Court order which set aside demand notice issued to pay excise duty on the weak spirit, which was more than 2% allowable wastage - Dismissed - Wastage generated has been found to be unfit and unsafe for potable purpose - the State has power to levy excise duty only in respect of the alcoholic liquor for human consumption. State of Orissa v. Utkal Distilleries Ltd; 2022 LiveLaw (SC) 240 : (2022) 5 SCC 326

Constitution of India, 1950 - Levy of Excise Duty - State Legislature has no authority to levy duty or tax on alcohol, which is not for human consumption as that could be levied only by the Centre - State only empowered to levy excise duty on alcoholic liquor for human consumption. State of Orissa v. Utkal Distilleries Ltd; 2022 LiveLaw (SC) 240 : (2022) 5 SCC 326

Constitution of India, 1950; Article 226 - Appeal against Bombay HC judgments dismissing writ petitions reopening of the assessment/re-assessment proceedings under Section 148 of the Income Tax Act - Allowed - Orders are bereft of reasoning as diverse grounds were urged/raised by the parties which ought to have been examined by the High Court in the first place and a clear finding was required to be recorded upon analysing the relevant documents - Remanded. Vishal Ashwin Patel v. Assistant Commissioner, 2022 LiveLaw (SC) 322 : 2022 (5) SCALE 392

Constitution of India, 1950; Articles 243X and 243Y - Whether any proposal for change or modification in the methodology adopted for levy of property tax ought to have been initiated through the Finance Commission alone? If the Legislature itself has taken into account certain prevailing situation, which according to the Legislature is causing some prejudice to the financial health and condition of the municipalities and, therefore, the method of imposition of property tax ought to be changed, it cannot then be said that the matter must necessarily and ought to have emanated from the Finance Commission or that in the absence of such recommendations by the Finance Commission, no steps could have been taken by the Legislature. (Para 25-27) Municipal Corporation of Greater Mumbai v. Property Owners Association, 2022 LiveLaw (SC) 927

Constitution of India, 1950; Entry 34,62 List II & Entry 40 of List I of Seventh Schedule - ‘Lotteries’ is a species of gambling activity and hence within the ambit of ‘betting and gambling’ as appearing in Entry 34 List II - It is only lotteries organised by the Government of India or the Government of State in terms of Entry 40 of List I which are excluded from Entry 34 of List II - If lotteries are conducted by private parties or by instrumentalities or agencies authorized, by Government of India or the Government of State, it would come within the scope and ambit of Entry 34 of List II - The State Legislatures have the power to tax lotteries under Entry 62 of List II. (Para 124) State of Karnataka v. State of Meghalaya, 2022 LiveLaw (SC) 309 : 2022 (5) SCALE 262

Doctrine of promissory estoppel - In taxing matters, the doctrine of promissory estoppel as such is not applicable and the Revenue can take a position different from its earlier stand in a case with established distinguishing features. (Para 20.3) State of Gujarat v. ArcelorMittal Nippon Steel, 2022 LiveLaw (SC) 79 : (2022) 6 SCC 459

Entry Tax Act, 1999 (Orissa) - Industrial Area Development Act, 1976 (U.P.) - Entry Tax Act, 2007 (U.P.) - Inclusion of industrial townships within the definition of the local area - Constitutional Validity upheld - The object of the levy, i.e., entry tax, is the regulation of entry of goods in a regular area for consumption, i.e., manufacture, use or sale. There is no dispute that entry of goods into an industrial area or estate is for their use for manufacturing or for processing or for the purposes of their delivery as their ultimate point of destination, i.e. for the purpose of their "consumption, use or sale" within that area. It could even be that the goods enter within the industrial area or estate, as the ultimate point of destination for their use. In any case, the levy would be attracted because the incidence is the entry into the local area. (Para 48) OCL India Ltd. v. State of Orissa, 2022 LiveLaw (SC) 911 : AIR 2022 SC 5609

Finance Act 1994 - Service Tax - Secondment Agreement - Indian company employing services on employees seconded from overseas group companies can be said to be service recepient of manpower supply- Liable for service tax-The assessee was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service, or a taxable service, for the two different periods in question (in relation to which show cause notices were issued). (Para 61) C.C. C.E. & S.T., Bangalore (Adjudication) Etc. v. M/s. Northern Operating Systems Pvt. Ltd., 2022 LiveLaw (SC) 526 : AIR 2022 SC 2450

Finance Act 1994; Section 65B (44) - Definition of "service" - does not include activities listed as "deemed" sale under Article 366(29A) of Constitution (Para 36) Commissioner of Service Tax New Delhi v. Quick Heal Technologies Ltd, 2022 LiveLaw (SC) 660 : AIR 2022 SC 3660

Finance Act, 1992 - Service Tax - Mega Exemption Notification no.25 of 2012–ST - Clause 5A - Services by a specified organisation in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India, under bilateral arrangement - specified organisations - Kumaon Mandal Vikas Nigam Limited, a Government of Uttarakhand Undertaking; or ‘Committee’ or ‘State Committee’ as defined in section 2 of the Haj Committee Act, 2002 - Haj Group Organizers not specified organisation - not eligible for exemption [Para 46, 47, 50, 52] All India Haj Umrah Tour Organizer Association Mumbai v. Union of India, 2022 LiveLaw (SC) 632

Finance Act, 1992 - Service Tax - Mega Exemption Notification no.25 of 2012–ST - Clause 5(b) - Services by a person by way of conduct of any religious ceremony - It only exempts service provided by way of conduct of any religious ceremony - The service rendered by HGOs to Haj pilgrims is to facilitate them to reach at the destination to perform rituals/religious ceremonies. No religious ceremony is performed or conducted by the HGOs. [Para 51, 52] All India Haj Umrah Tour Organizer Association Mumbai v. Union of India, 2022 LiveLaw (SC) 632

Finance Act, 1994; Section 65(44) - excludes from the sweep of service tax "a provision of service by an employee to the employer in the course of or in relation to his employment." - while the control (over performance of the seconded employees' work) and the right to ask them to return, if their functioning is not as is desired, is with the assessee, the fact remains that their overseas employer in relation to its business, deploys them to the assessee, on secondment. Secondly, the overseas employer- for whatever reason, pays them their salaries - their terms of employment, even during the secondment, are in accord with the policy of the overseas company, who is their employer - upon the end of the period of secondment, they return to their original places, to await deployment or extension of secondment. [Para 45 & 57] C.C. C.E. & S.T., Bangalore (Adjudication) Etc. v. M/s. Northern Operating Systems Pvt. Ltd., 2022 LiveLaw (SC) 526 : AIR 2022 SC 2450

General Sales Tax Act, 1963 (Kerala) - The surcharge on sales tax levied by the said Act is nothing but an increase of the basic sales tax levied under Section 5(1) of the KGST Act, as such the surcharge is nothing but a sales tax- A surcharge on a tax is nothing but the enhancement of the tax. (Para 14.4) Kerala State Beverages Manufacturing & Marketing Corporation Ltd. v. Assistant Commissioner of Income Tax Circle 1(1), 2022 LiveLaw (SC) 4 : AIR 2022 SC 309 : (2022) 4 SCC 240

Gift Tax Act, 1958 - Valuation of shares for the purpose of gift tax must take into consideration the limitations and restrictions. Deputy Commissioner of Gift Tax v. BPL Ltd., 2022 LiveLaw (SC) 848

Goods and Service Tax - Document Identification Number (DIN) System - Union of India / GST Council to issue advisory / instructions / recommendations to the respective States regarding implementation of the system of electronic (digital) generation of a DIN in the indirect tax administration - States to consider to implement the system for electronic (digital) generation of a DIN for all communications sent by the State Tax Officers to taxpayers and other concerned persons so as to bring in transparency and accountability in the indirect tax administration at the earliest - It would be in the larger public interest and enhance good governance. (Para 6-7) Pradeep Goyal v. Union of India, 2022 LiveLaw (SC) 654

Goods and Services Tax - Non-extension of e-way bill would not automatically amount to evasion of tax, especially when the non-delivery of goods within the validity period of the e-way bill was due to external factors, like, traffic blockage. Asst. Commissioner v. Satyam Shivam Papers, 2022 LiveLaw (SC) 87

Goods and Services Tax - Private Haj tour operators not entitled to claim GST exemption available for conducting religious ceremony - Haj Group Organizers are not performing any religious ceremony - HGOs can't claim parity with Haj Committee, which is a specified organization eligible for GST exemption for services in relation to pilgrimage. All India Haj Umrah Tour Organizer Association Mumbai v. Union of India, 2022 LiveLaw (SC) 632

Goods and Services Tax - Supreme Court allows 2 months additional window from September 1, 2022 to October 31, 2022 to claim transitional credit - Directions issued. Union of India v. Filco Trade Centre Pvt. Ltd., 2022 LiveLaw (SC) 628

Goods and Services Tax (GST) - The recommendations of the GST council are not binding on the Union and the State Governments. The Parliament intended that the recommendations of the GST Council will have persuasive value. Both the Parliament and the State Legislatures can equally legislate on matters of Goods and Service Tax. Union of India v. Mohit Minerals, 2022 LiveLaw (SC) 500 : 2022 (8) SCALE 552

Income Tax Act, 1961; Section 132 - Principles in exercising the writ jurisdiction in the matter of search and seizure under Section 132 restated. (Para 33) Principal Director of Income Tax (Investigation) v. Laljibhai KanjiBhai Mandalia, 2022 LiveLaw (SC) 592 : AIR 2022 SC 3304

Motor Vehicles Taxation Act, 1976; Section 4(7), 4(8), 15 - Kerala Motor Transport Workers' Welfare Fund Act, 1985; Section 8A - Constitutional validity upheld -There is nothing wrong in State Legislature making it compulsory to pay outstanding welfare fund contribution first before accepting the vehicle tax which had become due and payable - These provisions are in no way in conflict with Motor Vehicles Act, 1988 - The real intent and purpose behind these provisions is to restate the mandate stated in the 1988 Act that the vehicle cannot be used on road without a valid permit and payment of vehicle tax up to date. (Para 40) All Kerala Distributors Association v. State of Kerala, 2022 LiveLaw (SC) 639

Motor Vehicles Taxation Act, 1997 (U.P.) - Section 9 - The requirement under law is to first pay the tax in advance as provided under Section 9 and thereafter to use the vehicle - It is 'pay the tax and use' and not 'use and pay the tax'. (Para 9) Mahindra and Mahindra Financial Services Ltd. v. State of U.P., 2022 LiveLaw (SC) 198 : AIR 2022 SC 1197 : (2022) 5 SCC 525

Motor Vehicles Taxation Act, 1997 (U.P.) - Sections 2(g), 2(h), 4, 9, 10, 12, 13, 14 and 20A - A financier of a motor vehicle/transport vehicle in respect of which a hire -purchase or lease or hypothecation agreement has been entered, is liable to tax from the date of taking possession of the said vehicle under the said agreement. (Para 12) Mahindra and Mahindra Financial Services Ltd. v. State of U.P., 2022 LiveLaw (SC) 198 : AIR 2022 SC 1197 : (2022) 5 SCC 525

Motor Vehicles Taxation Act, 1997 (U.P.) - Sections 2(g), 2(h), 4, 9, 10, 12, 13, 14 and 20A - If, after the payment of tax, the vehicle is not used for a month or more, then such an owner may apply for refund under Section 12 of the Act, 1997 and has to comply with all the requirements for seeking the refund as mentioned in Section 12, and 26 on fulfilling and/or complying with all the conditions mentioned in Section 12(1), he may get the refund to the extent provided in sub -section (1) of Section 12, as even under Section 12(1), the owner / operator shall not be entitled to the full refund but shall be entitled to the refund of an amount equal to one -third of the rate of quarterly tax or one twelfth of the yearly tax, as the case may be, payable in respect of such vehicle for each thirty days of such period for which such tax has been paid. However, only in a case, which falls under sub -section (2) of Section 12 and subject to surrender of the necessary documents as mentioned in sub -section (2) of Section 12, the liability to pay the tax shall not arise, otherwise the liability to pay the tax by such owner/operator shall continue. (Para 12) Mahindra and Mahindra Financial Services Ltd. v. State of U.P., 2022 LiveLaw (SC) 198 : AIR 2022 SC 1197 : (2022) 5 SCC 525

Service Tax - Finance Act 1994 - Held that for the period pre-Finance Act, 2007, service tax was not leviable on the indivisible/composite works contracts. Total Environment Building Systems Pvt. Ltd. v. Deputy Commissioner of Commercial Taxes, 2022 LiveLaw (SC) 656

Service Tax - Finance Act 1994 - The contention of revenue to the effect that even prior to the 2007 amendment being made to the Finance Act, 1994 service tax on works contract was leviable is not correct. It was being levied on purely service contract and not on service element of works contract as there was no definition of a works contract till then. Hence, the amendment made to the Finance Act, 1994 by insertion of the definition of works contract as under clause (zzzza) is not clarificatory in nature. (Para 12) Total Environment Building Systems Pvt. Ltd. v. Deputy Commissioner of Commercial Taxes, 2022 LiveLaw (SC) 656

Service Tax - License to use software through End User License Agreement a "deemed sale" as per Article 366 (29A) (d) of the Constitution - Service tax not leviable merely because updates are given to the customer. Commissioner of Service Tax New Delhi v. Quick Heal Technologies Ltd, 2022 LiveLaw (SC) 660 : AIR 2022 SC 3660

Service Tax - Sale of software - whether service tax leviable - Once a lumpsum has been charged for the sale of CD (as in the case on hand) and sale tax has been paid thereon, the revenue thereafter cannot levy service tax on the entire sale consideration once again on the ground that the updates are being provided. We are of the view that the artificial segregation of the transaction, as in the case on hand, into two parts is not tenable in law. It is, in substance, one transaction of sale of software and once it is accepted that the software put in the CD is "goods", then there cannot be any separate service element in the transaction. We are saying so because even otherwise the user is put in possession and full control of the software. It amounts to "deemed sale" which would not attract service tax. (Para 55) Commissioner of Service Tax New Delhi v. Quick Heal Technologies Ltd, 2022 LiveLaw (SC) 660 : AIR 2022 SC 3660

Service Tax - Whether contract is for job work or for supply of manpower - Agreement has to be read as a composite whole - In this case, though ostensibly, the agreement contains a provision for payment on the basis of the rates mentioned in Schedule II, the agreement has to be read as a composite whole. On reading the agreement as a whole, it is apparent that the contract is pure and simple a contract for the provision of contract labour. An attempt has been made to camouflage the contract as a contract for job work to avail of the exemption from the payment of service tax. The judgment of the Tribunal does not, in the circumstances, suffer from any error of reasoning. (Para 17) Adiraj Manpower Services Pvt. Ltd. v. Commissioner of Central Excise Pune II, 2022 LiveLaw (SC) 190 : AIR 2022 SC 1426

Service Tax on Work Contracts - The judgment in Larsen and Toubro Ltd. (supra) has been correctly decided and does not call for a reconsideration insofar as the period prior to 1st June, 2007 is concerned. (Para 13) Total Environment Building Systems Pvt. Ltd. v. Deputy Commissioner of Commercial Taxes, 2022 LiveLaw (SC) 656

Tax on Paper Lotteries Act, 2005 (Kerala) - Tax on Lotteries Act, 2004 (Karnataka) - Constitutional Validity upheld - Karnataka and Kerala State Legislatures possessed legislative competence to enact such Acts. (Para 124) State of Karnataka v. State of Meghalaya, 2022 LiveLaw (SC) 309 : 2022 (5) SCALE 262

Value Added Tax Act, 2006 (Tamil Nadu) - Entry 44 of Part B of the Fourth Schedule - Hank Yarn - When the Entry in question specifically provides for exemption to the goods described as "Hank Yarn" without any ambiguity or qualification, its import cannot be restricted by describing it as being available only for the hank form of one raw material like cotton nor could it be restricted with reference to its user industry - Entry in question is clear, direct and unambiguous. (Para 11 -12) Authority for Clarification and Advance Ruling v. Aakavi Spinning Mills (P) Ltd., 2022 LiveLaw (SC) 191

Value Added Tax, 2002 (Maharashtra) - Central Sales Tax Act, 1956 - The Statute provide for the right of appeal against the assessment order passed by the Assessing Officer and against the order passed by the first appellate authority, an appeal/revision before the Tribunal - The High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India challenging the assessment order in view of the availability of statutory remedy under the Act - The question is not about the maintainability of the writ petition under Article 226 of the Constitution, but about the entertainability of the writ petition against the order of assessment by-passing the statutory remedy of appeal. (Para 6-8) State of Maharashtra v. Greatship (India) Ltd., 2022 LiveLaw (SC) 784 : AIR 2022 SC 4408