TaxTMI 
TaxTMI 
2016 (12) TMI 65
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.... to Sales Tax, Entry Tax, Value Added Tax and Central Sales Tax. The list of writ petitions, nature of tax and period of assessment are as under: S.No. Case No. Nature of Tax Period of assessment 1 W.P.NO.3336/09 Sales Tax 10.02.06 to 31.03.06 2 W.P.No.3337/09 Entry Tax 10.02.06 to 23.07.06 3 W.P.No.3339/09 Entry Tax 10.02.06 to 23.07.06 4 W.P.No.3340/09 VAT 01/04/06 to 23.07.06 5 W.P.No.1586/10 CST 24.07.06 to 31.03.07 6 W.P.No.1587/10 VAT 24.07.06 to 31.03.07 7 W.P.No.1588/10 Entry Tax 24.07.06 to 31.03.07 8 W.P.No.13385/10 VAT 01.04.07 to 31.03.08 9 W.P.No.13386/10 CST 01.04.07 to 31.03.08 10 W.P.No.13387/10 Entry Tax 01.04.07 to 31.03.08 11 W.P.No.8476/12 Entry Tax 01.04.09 to 31.03.10 12 W.P.No.8477/12 CST 01.04.09 to 31.03.10 13 W.P.No.8478/12 VAT 01.04.09 to 31.03.10 14 W.P.No.589/14 CST 01.04.10 to 31.03.11 15 W.P.No.594/14 VAT 01.04.10 to 31.03.11 16 W.P.No.6810/14 VAT 01.04.11 to 31.03.12 17 W.P.No.1116/15 CST 01.04.12 to 31.03.13 18 W.P.No.1119/15 VA....
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....nment Mint (Hyderabad), India Government Mint (Noida), Currency Note Press (Nashik), Bank Note Press (Dewas), India Security Press 9Nashik) and Security Printing Press which were earlier functioning under the Ministry of Finance, Govt. of India. SPMCIL is a company incorporated under the provisions of the Companies Act, 1956 with its headquarter at Jawahar Vyapar Bhawan, 16th Floor, Janapath, New Delhi. SPMCIL and the Govt. of India is engaged in the manufacture of security papers, minting of papers, printing currency and bank notes, non judicial stamp paper, postage stamp, travel documents etc. to meet the requirement of Reserve Bank of India for currency notes, coins, for State Government non-judicial stamp papers, for postal department stationery, stamps etc, for the Ministry of External Affairs, passport, VISA, stickers and other travel documents. All the aforesaid nine units (four security press, one security paper mill and four India Govt. Mints) including the petitioner were functioning under the Ministry of Finance, Govt. of India till 09.02.2006. Thereafter on a Union Cabinet decision dated 2.09.2005 by which the Government of India has decided to corporatise the functions....
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....ter rejection of the representation the Commercial Tax Department started proceeding for assessment of the tax and demand orders were issued. Petitioner again approached this court by way of W.P.No.2772/07 challenging the legality and validity of the demand notice. Vide order dated 31.5.2007 the Single Bench of this Court has granted interim protection. Later on the writ petition was admitted and directed the parties to consider the issue in a joint meeting between the Principal Secretary, Commercial Tax Department and the senior functionaries of the Ministry of Finance, Govt. of India. According to the petitioner the meeting was held but the issue could not be settled amicably. The Govt. of M.P maintained its view that the petitioner is a dealer engaged in the business of printing of notes and is liable to pay the taxes applicable in the State of Madhya Pradesh. During the pendency of that petition the final order of assessment was passed which has been challenged in the present writ petition by the petitioner. Instead of filing appeal under section 46 of the VAT Act, 2002 petitioner has filed these writ petitions raising the questions of law as mentioned above. In these writ peti....
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.... an indirect tax which has been settled by the Apex Court in various cases, hence prayed for dismissal of the writ petition. 6. Shri P.M.Choudhary, learned counsel for the petitioner vehemently argued that function of the petitioner remained the same despite its corporatization after 31.01.2006. The petitioner being government company performing the same sovereign function of the Govt. of India. The government has retained prime function regarding policy formulation, design, security feature of currency and coin, administration, control and issue relating to counterfeiting etc. He further argued that the definition of dealer under section 2 (i) of the VAT Act, 2002 means any person who carries the business of buying, selling, supplying or distribution of goods directly or otherwise must carry the business of buying or selling or supplying goods. Petitioner company is not engaged in any business activity as defined under section 2 (c) and currency cannot be termed as goods, therefore, none of these three definitions bring the petitioner within the purview of the Act, therefore, petitioner is not liable to pay taxes to the respondent/department. In support of his contention petiti....
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....y falling within the definition of photographic service. (vi) In the case of State of Haryana vs. Government of India Photolitho Press reported in (2003) 2 STJ 206 has considered the activities of Photolitho Press owned by the Govt. of India engaged in supply of forms, registered and other printed materials to various departments of the Central Govt. and not to any private person, hence its activity was not treated to be trade as there was no sale of material to the Govt. of India. (vii) In the case of State of Andhra Pradesh vs. A.P. Housing Board reported in 70 STC 203 (AP) the High Court of Andhra Pradesh has considered the definition of business dealer in the context of sale by Housing Board of unused application forms, iron scrap etc. and treated as not dealer because the Andhra Pradesh Housing Board was a Corporation statutorily established by the State Government. The Housing Board was not treated as dealer as well as its activities are not treated as business. Shri Choudhary submits that the main activities of the Board is not treated as dealer and business, hence selling of scrap material has also not been treated as business. He submits that in the prese....
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.... The material which is not marketable is not goods. In the present case also the currency is not marketable, hence it cannot be termed as goods (xiii) In the case of Collector of Central Excise, Baroda v. Ambalal Sarabhai Enterprises (P) Ltd. Reported in 1989 77 STC 190 again the Supreme Court has considered the definition of goods for the purpose of levy of duty. The Supreme Court has held that the good must be marketable and marketed and burden of proof is on the department to establish that the goods ordinarily come to the market to be bought and sold. (xiv) In the case of Vikas Sales Corporation and another vs. Commissioner of Commercial Taxes and another reported in 1996 (102) STC 106 again the Supreme Court has considered the definition of goods means that constitute anything to be goods and it must have value of their own and are transferable openly in the market. (xv) In the case of Bharat Sanchar Nigam Ltd. And others vs. Union of India and others reported in (2006) 145 STC 91 the Supreme Court has considered whether sim card comes under the definition of goods. The electromagnetic waves are neither abstracted nor consumed. they are not delivered....
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....ency notes until they are notified by the Reserve Bank of India under section 22 of the R.B.I Act and before that the petitioner is indulged in printing and selling of goods to the R.B.I, therefore, in all respect is dealer and after notification dated 10.02.2006 the petitioner is not liable to get exemption as enjoyed prior to 10.02.2006. He has further submitted that the petitioners are not entitled for the protection under Article 285 of the Constitution of India as the same is applicable to direct taxes only whereas VAT and Entry Taxes are indirect taxes for which Govt. of M.P is exclusively entitled to recover the same. He has placed reliance over the definition of direct taxes as referred in Black's Law Dictionary, Eighth Edition that a tax that is imposed on property, as distinguished from a tax on a right or privilege. A direct tax is presumed to be borne by the person upon whom it is assessed, and no "passed on" to some other person. In support of his contention he has placed reliance over the judgment of the Supreme Court in the case of Karya Palak Engineer, CPWD, Bikaner vs. Rajasthan Taxation Board, Ajmer and others reported in (2004) 7 SCC 195 where the Supreme Cou....
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....y and an obligation to account to the government for its financial performance. Prior to 2006 when these units were run by the Ministry of Finance, Govt. of India were not subjected to any liability of payment of Entry Tax by the Commercial Tax Department of M.P. One of the units i.e. Security Paper Mill, Hoshangabad approached this Court challenging the demand notice. Division Bench of Court in the case of Union of India and another vs. State of M.P and others (supra) has considered the scope of Article 285 of the Constitution of India and the nature of activities of the unit and held that the security paper mill is not engaged in any business activity of selling papers of currency notes to any individual, the same are being used by other government presses for printing of currency notes of various denominations. There is no element of sale involved in the activities of the Union as papers of currency notes so manufactured are passed on to its other presses, not sold to public after printing of notes and have got no commercial value. Petitioner is discharging the sovereign function of the Union, therefore, entitled for protection under Article 285 of the Constitution of India and ....
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....n, who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment or for commission, remuneration or other valuable consideration and includes - (i) a local authority, a company, an undivided Hindu family or any society (including a co-operative society), club, firm or association which carries on such business; (ii) a society (including a cooperative society), club, firm or association which buys goods from, or sells, supplies or distributes goods to its members; (iii) a commission agent, broker, a del-credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of the principal; (iv) any person who transfers the right to use any goods including leasing thereof for any purpose, (whether or not for a specified period) in the course of business to any other person; Explanation I - Every person who acts as an agent of a non- resident dealer, that is as an agent on behalf of a dealer residing outside the State and buys, sells, supplies or distribu....
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....t by instalments ; (iv) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (v) a supply, by way of or as part of any service or in any other manner whatsoever, of goods being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration; (vi) a transfer of the right to use any goods including leasing thereof for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and purchase of those goods by the person to whom such transfer, delivery or supply is made, but does not include a mortgage, hypothecation, charge or pledge; Explanation - (a) Notwithstanding anything contained in the Sale of Goods Act, 1930 (III of 1930), where a sale or purchase of goods takes place in pursuance of a contract of sale, such sale or purchase shall b....
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....ich all kinds of movable property excluding stocks, shares, securities or government stamps including all material articles which are agreed to be served before the sale or under the contract of sale. Any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise whether for cash or for deferred payment would be a dealer as defined under section 2(i). By virtue of Explanation II the Central or a State Government or any of their departments or offices which whether or not in the course of business, buy, sell, supply or distribute goods, directly or otherwise, for cash or for deferred payment, commission, remuneration or for other valuable consideration shall be deemed to be a dealer for the purpose of this Act. If dealer deals in a good for the purpose of sale and manufacture constitute a business which is defined under section 2(d) and according to which any trade commerce, manufacture or any adventure or concern in the nature of trade, commerce or manufacture is carried on with a motive to make gain or profit or such trade would be a business. Any transaction of sale or purchase of goods in connection with or incidental or ancilla....
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.... the Government of India, Reserve Bank of India or for any other country or Government outside India as approved by the Government of India. (b) To carry on the business of designing and minting of coins, medallions, seals, tokens, commemorative coins, coins having numismatic value for the Government of India or for the Government of any other country or for such entities as approved by the Government of India. (c) To carry on the business of manufacturing/production/printing/ designing of postal stamps, postal stationery and other related material/documents; judicial and nonjudicial stamps; cheques, demand drafts and security papers/documents for Banks, Financial Institutions, Postal Authorities and like bodies and other agencies; ink and other related material; smelting of god, silver and other precious metals to be used in the minting of coins; and such other documents as may be required by the Central and/or State Governments, Public Sector Undertakings, municipal and local bodies, Financial Institutions, any other governmental/non-Governmental agency or authority or entity in/outside India approved by the Board and/or Government of India. (d) To carr....
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....less a contrary intention appears, apply to all currency notes of the Government of India issued either by the Central Government or by the Bank in like manner as if such currency notes were bank notes, and reference in this Act to bank notes shall be construed accordingly. (2) On and from the date on which this Chapter comes into force the Central Government shall not issue any currency notes. 23. Issue Department.--(1) The issue of bank notes shall be conducted by the Bank in an Issue Department which shall be separated and kept wholly distinct from the Banking Department, and the assets of the Issue Department shall not be subject to any liability other than the liabilities of the Issue Department as hereinafter defined in section 34. (2) The Issue Department shall not issue bank notes to the Banking Department or to any other person except in exchange for other bank notes or for such coin, bullion or securities as are permitted by this Act to form part of the Reserve. 26. Legal tender character of notes.-- (1) Subject to the provisions of sub section (2), every bank note shall be legal tender at any place in India in payment, or on a....
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.... message of Sai Baba and its main activity does not amount to business, therefore, the incidental activities or distribution of literature cannot be termed as business but in the present case the main activity of Bank Note Press is held to be a business, therefore, the selling of other articles like ink, machines, scraps are also termed as business, hence petitioner cannot get the benefit of the aforesaid judgment. (iv) Heavy reliance has been placed by the petitioner over the seven judges judgment of the Supreme Court in the case of Vishnu Agencies (Pvt.) Ltd. vs. Commercial Tax officer and Dhanyalakshmi Rice Mills vs. Commercial Tax Officer (supra) on the point of sale of goods and involvement of volition in the definition of sale but in this case petitioner is engaged in sale of goods which are available to the consumers at fair prices. Some times they are required to provide as essential commodity like cement, cotton, coal or iron. They are required to supply the commodity to the dealers and in such a situation it was argued that the dealer who is asked to supply limited quantity to a particular permit holder has no option but to supply the limited quantity at the cont....
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....on is purely one of service. There is no transfer of right to use the goods at all. (ix) In the case of Sunrise Associates (supra) the Supreme Court has considered lottery tickets as not a good because lottery ticket has no value in itself and it is a mere piece of paper. It represents a chance or a right to win a prize, hence excluded from the definition of goods. On purchasing of the lottery ticket the purchaser has a right to win the prize, therefore, it is actionable claim. There is no such element in the matter of currency, hence cannot be compared with lottery. (x) At the end of the argument Shri Choudhary has placed heavy reliance over the latest judgment of the Supreme Court in the case of Sodexo SVC India Private Ltd. Vs. State of Maharashtra and others (supra) where Sodesh Meal Vouchers were not treated as goods. In this case appellant/company was engaged in the business of providing pre-printed meal vouchers to its customers who transfers the same to other employees who is called users and they use them from affiliates. The issue came for consideration whether these vouchers can be treated as goods for the purpose of levy of octroi or local body tax. Th....
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....14 Sales Turnover 4408.38 3797.62 Revenue from Operations 4509.45 3897.53 Less:Rate Difference of Earlier Years 1162.04 -- Add: Provisions Written Back 455.93 5.3 Adjusted Revenue from Operations 3803.34 3902.83 Add: Other Income 108.14 134.18 Less:Expenditure 4187.79 3700.49 Profit/(Loss) Before Extraordinary Items & Taxation 276.31 336.52 Less:Prior Period Items/Extraordinary Items(Net) 5.46 10.20 Profit/(Loss) after Extraordinary Items (Net) 281.77 346.72 Less: Tax Expense Provision for Current Tax - 164.21 Provision for Deferred Tax 70.3 34.20 Taxes of Earlier Year - 2.08 Profit/(Loss) After Taxation 352.07 214.63 Proposed Dividend & Tax - 50.22 Transferred to General Reserve - 21.46 Balance transferred to P&L A/c - 142.9 (from the official website of SPMCIL) 17. The Bank Note Press, Dewas has produced 2582 pieces of bank notes in the year 2014- 15 and sold to RBI. That the petitioner has also manufactured 524.88 MT. Inks during this financial year. The company is maintaining books of accounts....
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....l website of SPMCIL) 18. Except the present petitioner I.e BNP, Dewas all other units are paying VAT, CST and Entry Tax despite being government company. That the petitioner has also been subjected to payment of tax on sale of scrap, paper ink, discarted packing material, machinery, spares. Shri Choudhary argued that since the petitioner is not engaged in the business of buying and selling, therefore, the sale of unserviceable material, scrap etc. would not be a transaction in connection with or incidental or ancillary to such trade or business hence is also not sale. As per the definition of business sale of the unserviceable goods, discarded goods, scrap or waste material, sale or purchase of goods also comes under the category of business. This issue came up for consideration before the Supreme Court in the case of the District Controller of Stores, Northern Railway, Jodhpur vs. The Assistant Commercial Taxation Officer and another reported in (1976) 1 SCC 660. In this case the Apex Court has considered the definition of 'business' under the Rajasthan Sales Tax Act, 1954 which is para-materia to the definition of business in VAT Act, 2002 and held that sale of unservi....
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....s; and (ii) an educational institution, where such sale, supply or distribution is made to its students. 4.The contention of the appellant was that it was not carrying on the business of buying and selling and therefore the sales of unserviceable material and scrap iron etc. would not be a transaction in connection with or incidental or ancillary to "such" trade, commerce, manufacture, adventure or concern. 5. We think that the activity of the appellant in the selling of unserviceable material and scrap iron etc. would be "business" within clause (i) of the definition of the word "business" introduced by the amending Act. The word 'business' according to clause (i) of that definition would include any trade, commerce, or manufacture of any adventure or concern in the nature of trade, commerce or manufacture whether or not it is carried on with a motive to make gain or profit. So even if it be assumed that the activity involved in selling unservideable material and scrap iron etc. would not amount to carrying on business in the normal connotation of that term, it would be 'business' within clause (i) of that sub-clause as introduced by the ....