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News Indirect Tax-Sales Tax

  • Apr 13, 2023
  • Can't levy sales tax on SIM cards, recharges and value-added services: Supreme Court

    The Supreme Court on Tuesday held that sales tax cannot be levied on sim cards, recharge coupon vouchers, valueadded services like ring tone, wall paper and music downloads as they are not goods. Upholding an Andhra Pradesh High Court's 2011 ruling, a bench led by Justice Ravindra Bhatt said no sales tax can be imposed on sharing of infrastructure as the same does not fall under the category of goods, a stand taken by the HC.

    Disposing a batch of over 50 cases on the issue involving various telecom companies including Airtel, Tata, Idea, BSNL and Vodafone, SC rejected the Andhra Pradesh tax department's stand that any intellectual property put in any media would only get classified as 'goods' and never as services. The department contended that SIM card can store data of phone calls, contact numbers, games, music etc, and is capable of being bought and sold, thus has all the attributes of "goods", and can be subjected to sale tax.

  • Jul 11, 2019
  • SC clarifies sales tax implication after bifurcation of a state

    The Supreme Court has held that the inter-state sales between two successor states cannot be treated as intra-sales for the purpose of sales tax exemption granted to industries prior to bifurcation. Holding that creation of the new political state must be given full legal effect in the case, Madhya Pradesh v Lafarge Dealers Association, a bench comprising Chief Justice of Ranjan Gogoi and justices SA Nazeer and Sanjiv Khanna held that though the creation of a new state is an unforeseen event and could give rise to unusual situations, this cannot be a ground and reason to treat inter-state sales between the two successor states as intra-state sales.

  • Jan 02, 2016
  • Odisha to make sales tax on petro products flexible

    The Odisha government is going to put in place a mechanism to adjust the sales tax on petroleum products, keeping in view the international price of the crude oil.The state government has empowered the finance department to set up a committee to study crude oil prices and fix the sales tax accordingly, as and when required, with the approval of the chief minister.

  • Apr 23, 2014
  • CST to increase biz cost in Andhra and Telangana

    As Telangana becomes a separate state in June, sales and purchase transactions between dealers located in Andhra Pradesh and the new state would be subjected to Central Sales Tax (CST). Fearing an increase in their cost of doing business, industry has approached the state government to press the Centre to defer the levy of CST or reduce the rate on movement of goods within the two states.CST is a tax on inter-state movement of goods levied by the Centre but collected by the states. While states retain the proceeds from the tax, only the Centre has the power to increase or decrease the CST rate which is now two per cent.

  • Aug 10, 2013
  • Bengal gives 3-yr sales tax waiver on ATF at 2 airports

    The West Bengal government has decided to provide a three-year sales tax waiver on aviation turbine fuel (ATF) to airlines operating out of the coming Changi-promoted Andal airport near Durgapur, 160 km from here, and the one in Bagdogra, in Darjeeling district.
    With this, Bengal becomes the first state to bring down the contentious sales tax imposed on ATF to zero, something domestic airlines have been demanding for many years.
    Airlines say ATF fuel prices in India are 40 per cent higher than in countries such as Singapore. Jharkhand, Chhattisgarh and Maharashtra (except in Mumbai and Pune), have brought down sales tax on ATF to four per cent. West Bengal has a duty of 30 per cent on ATF.

  • Jul 12, 2012
  • State governments warn of action if denied CST dues

    State governments have threatened to increase taxes or levy fresh ones if the Centre fails to compensate them for the reduction in central sales tax, a move that could further delay the rollout of Goods and Services Tax and complicate the indirect tax regime. Bihar deputy chief minister Sushil Modi, who heads the panel of state finance ministers on GST, has urged the government to resolve the issue at the earliest. "In case states are not given compensation till GST is introduced, they will suffer substantial revenue losses and may be forced to adopt tax measures that may not be in the interest of tax reforms," Modi said in a letter to Manmohan Singh.

  • Jan 18, 2012
  • Ruling leaves Essar Oil facing Rs 6,300-cr sales tax liability

    Essar Oil is in effect facing a sales tax liability of about Rs 6,300 crore following an adverse Supreme Court order on Tuesday. The Supreme Court set aside the judgment of the Gujarat High Court by which Essar Oil was entitled to avail itself of Sales Tax Deferment Scheme – to pay sales tax to the State Government – in deferred instalments, the company informed the Bombay Stock Exchange. The company has availed itself of approximately Rs 6,300 crore of sales tax benefit as of December 2011, which was to be paid in deferred instalments.

    In its statement to the Stock Exchange, Essar said the company will provide further information in the matter after studying the judgment. According to observers, since it was a deferred payment scheme, now with this order, it remains to be seen whether Essar will have to pay immediately or later. Incidentally, the company has already paid Rs 300 crore of its sales tax liability to the State Government.

  • Oct 16, 2011
  • Applicability of sales tax to offshore supplies

    The matter of the applicability of direct and indirect taxes to supplies of goods and services from India to offshore installations, typically situated in the Exclusive Economic Zone (EEZ) i.e. within 200 nautical miles of the appropriate baseline, as per the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act 1976 (MZA for short), has been the subject of much litigation. This has been the case particularly with the State sales tax, especially the central sales tax. There have been many judgements on the point and several of them have been contradictory to each other. In a previous article on this subject, the decision pronounced by the Larger Bench of the Maharashtra Tribunal in the case of M/s Industrial Oxygen Company Limited (the appellants) Vs. State of Maharashtra [(2010) 44 M.T.J. 89] was discussed wherein the supply of helium gas from Mumbai port to ONGC at the Bombay High offshore oilfields, situated within the EEZ, was held to be an inter-State sale by relying heavily on the decision of the Supreme Court in the case of Aban Loyd Chiles Offshore Ltd Vs. Union of India (2008) 227 E.L.T. 24 (S.C.), wherein it had been held that the designated areas in the EEZ were deemed to be a part of the territory of India, for the purposes of the Customs Act.

  • Oct 05, 2010
  • RIL tax battle with UP holds up gas sale to NTPC, IOC

    Reliance Industries Ltd's legal battle over the Uttar Pradesh government's decision to impose 21 per cent value-added tax on gas is holding up supply to NTPC's two power plants and Indian Oil Corporation's Mathura refinery, despite a group of ministers making allocation to them. While IOC has now approached the Ministry of Petroleum and Natural Gas for permission to receive an equivalent quantity of gas at its Panipat refinery, NTPC is hoping to sign an agreement with RIL for the uncontracted quantity soon. RIL supplies 3.57 million standard cubic metres a day (mscmd) of gas to four fertiliser companies in the state — to Iffco for its Aonla and Phulpur units, Kribhco for Shahjahanpur, Indo Gulf Fertiliser for Jagdishpur and Tata Chemicals for Babrala. Senior officials said pending resolution of the tax dispute, being heard in the Lucknow bench of the Allahabad high court, RIL was seeking bank guarantees from existing customers for the tax incidence on the quantity sold since April 2009. When asked, an RIL spokesperson did not comment.

  • Sep 27, 2010
  • SC decision on sales tax on FCI's incidental charges soon

    The Supreme Court will soon decide whether sales tax is to be levied on the incidental charges like transportation, packaging and labour incurred by Food Corporation of India (FCI) on purchase of food grains for the state machinery including contingencies and emergencies like drought and floods. A Bench headed by Justice MK Sharma has posted the matter for for hearing on November 8. Challenging the Punjab and Haryana High Court’s judgment that upheld Punjab’s decision to levy sales tax on overhead expenses, FCI said it procures food grains both through levy as well as procurement from mandis and the buffer stock so created is utilised by the Centre in supplying food grains to the states, public distribution system, national rural employment programme, armed forces and to meet contingencies and emergencies like drought and floods.

  • Sep 22, 2010
  • Central sales tax likely to stay on most goods outside GST

    The Centre has partly agreed to states’ demand for continuing Central Sales Tax (CST) under the new Goods and Services Tax (GST). The states can continue to levy CST on goods that will be kept outside GST, such as petroleum, motor spirit, aviation turbine fuel, natural gas and alcohol. Though it is called Central Sales Tax, the tax collected under the CST Act is kept by the state from which the movement of goods commences.The Centre, however, is not willing to accept the demand of states to levy CST on inter-state movement of all goods in the new regime. A finance ministry official said this would not be possible because CST is an origin-based tax, whereas GST would be a destination-based tax. Moreover, the Centre will levy IGST on inter-state movement of goods and is constitutionally-barred from taxing the same activity twice.

  • Sep 16, 2010
  • Penalty only in case of false intention: SC to taxman

    IN A breather to the assessees, the Supreme Court has ruled that revenue department cannot impose penalty under provisions of the Central Sales Tax Act for furnishing incorrect representation without proving the intention (mens rea) for false representation. The penalty in tax matters is to levied strictly in accordance with the intention of the statutes, said the apex court over-ruling an Allahabad High Court order. “In our opinion, therefore, a finding of mens rea is a condition precedent for levying penalty under section 10(b) read with section 10A of the Act (Central Sales Tax Act, 1956)”, said a bench comprising justices D K Jain and H L Dattu.

  • Jan 19, 2009
  • Taxation of in-transit sales

    In a recent decision in A&G Projects & Technologies Ltd Vs State of Karnataka [(2008) VIL 40 SC], the Supreme Court has laid down certain important principles governing the taxation of inter-State sales of goods under the Central Sales Tax Act 1956 (The Act). The three key Sections 3, 6 & 9 of the Act, governing inter-state and in-transit sales, were analysed and interpreted in this decision. The appellants were engaged in the execution of works contracts in Karnataka and were registered under the Karnataka sales tax laws as also under the Act.

  • Jan 09, 2006
  • Karnataka tax plea rejected

    The Supreme Court ruled last week that any purchaser of assets of a concern sold by a state financial corporation would not be liable to pay sales tax arrears of the concern whose assets had been sold. This was declared in the State of Karnataka vs Shreyas Papers Pvt Ltd case.

  • Nov 18, 2005
  • A guide to sales tax on apartment buildings

    The decision of the Supreme Court in Gannon Dunkerleys case stating that the expression “Sale of goods as used in the Seventh Schedule of the Constitution has the same meaning as in the Sale of Goods Act. made the law commission in its 61st report to recommend to amend the Constitution of India. Accordingly the 46th amendment was passed in 1982.

  • Nov 07, 2005
  • Telecom"s Rs 10,000 cr problem

    Pertaining to the levying of sales tax in various states on telecom. In 1995, the Uttar Pradesh government said that the department of telecom (the telecom services of the DoT have now been separated into Bharat Sanchar Nigam Ltd) would have to pay sales tax on the revenues it got since, under the powers of the UP Sales Tax Act, this was also taxable. This was challenged by the DoT/BSNL on the grounds, largely, that since a service tax was being levied, the transaction was not liable to sales tax. While the Allahabad High Court agreed with DoT/BSNL, the state in turn challenged this in the Supreme Court, which ruled in its favour in February 2003.