States Cannot Levy Local VAT On Inter-State Sales Even If Sale Is Deemed To Occur Within The State: Supreme Court

The Supreme Court on Friday held that a state cannot impose its own Value-Added Tax (VAT) on a transaction that qualifies as an inter-state sale merely because the Central Sales Tax Act deems the sale to have taken place within that state for the limited purpose of identifying which state may collect tax. A bench of Justice J.K. Maheshwari and Justice Atul S Chandurkar held that where the statutory provision defining an inter-state sale conflicts with the provision determining the deemed...

Rajasthan VAT Act Permits Search Of Residential Premises In Tax Evasion Cases: Rajasthan High Court

The Rajasthan High Court has recently held that the Rajasthan Value Added Tax Act does not prohibit searches at residential premises, provided the statutory requirements for search and seizure are strictly fulfilled. A Division Bench of Justice Arun Monga and Justice Sunil Beniwal referring to Section 75 of the Rajasthan Value Added Tax Act, 2003 observed, “Thus, the statute does not prohibit search of residential premises as such; however, the exercise of such power is conditioned upon strict...

CENVAT Credit Allowed On Pollution-Control Infrastructure As Modernisation: CESTAT Ahmedabad

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 4 May held that CENVAT Credit on civil construction and works contract services used for establishing effluent treatment infrastructure in an existing factory is admissible, since compliance with pollution-control norms is a statutory obligation and an integral part of the manufacturing process. Judicial Member Dr. Ajaya Krishna Vishvesha held that settled law clearly recognises services availed for...

Jharkhand HC Slams Tax Dept, Warns Commissioner Of Personal Liability Over ₹6.71 Crore VAT Refund Delay

The Jharkhand High Court has come down heavily on the State tax department for sitting over a VAT refund of Rs.6.71 crore for years, holding that excuses such as vacant posts and officers being on election duty are “neither legal nor satisfactory.”A Division Bench of Chief Justice M. S. Sonak and Justice Rajesh Shankar directed the Commissioner, Commercial Taxes Department, to ensure that the refund is paid with 6% annual interest by May 5, 2026, warning that any delay beyond the deadline would...

Supreme Court Refuses To Interfere With Ruling In Tata Steel Case, Upholds Entry Tax On H.R. Sheets

The Supreme Court of India on Monday declined to interfere with a ruling of the Allahabad High Court that hot rolled (H.R.) coils and H.R. sheets are not the same commodity, and that tax exemption available to coils cannot be claimed for sheets, thereby restoring entry tax and penalty against Tata Steel Processing and Distribution Ltd.A Bench of Justices Sanjay Kumar and Vipul M. Pancholi found no ground to interfere with the order of the Allahabad high court and dismissed the special leave...

Supreme Court Restores VAT Appeal, Holds No Fresh Pre-Deposit Needed Where Earlier Deposit Meets 12.5% Requirement

The Supreme Court has held that the appeal filed by Telangana State Cooperative Marketing Federation Limited against a reassessment order could not be rejected for non-payment of statutory pre-deposit, as the amount already deposited by it in the earlier round of litigation exceeded the 12.5% requirement under the Telangana Value Added Tax Act. A Bench of Justice Manoj Misra and Justice Ujjal Bhuyan restored the Federation's VAT appeal before the appellate authority, holding that the statutory...

Delhi High Court Rejects Buyers' Denial Of Supply After VAT Credit Claim

The Delhi High Court has upheld a commercial court decree directing recovery of Rs. 8.89 lakh in a dispute over supply of chemical goods, holding that the purchasers' conduct in availing VAT input credit made their plea that the transactions were fictitious untenable. A Division Bench of Justices Prathiba M. Singh and Madhu Jain said, “The claim of VAT input credit necessarilyproceeds on the premise that the purchasing dealer recognizes the transaction as a genuine purchase from the supplier....

Earthen Roofing Tiles By Khadi Board-Recognised Unit Qualify For VAT Exemption: Kerala High Court

The Kerala High Court on 12 March held that earthen roofing tiles manufactured by a unit recognised and financed by the Kerala Khadi and Village Industries Board are eligible for tax exemption as “pottery” under the KVAT Act. A Division Bench comprising Justices Devan Ramachandran and Basant Balaji set aside tax demands raised against Annamanada Kalimon Vyavasaya Sahakarana Sangham Ltd., a cooperative society engaged in manufacturing clay products in Thrissur. The Bench observed: “We allow...

Refund Cannot Be Adjusted Against Settled Dues Under 2023 Settlement Act: Bombay High Court

The Bombay High Court on Thursday, 12 March, held that once a taxpayer opts for settlement under the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Act, 2023 (Settlement Act), the State cannot adjust a refund from another assessment year against the settled dues. A Division Bench of Justice G. S. Kulkarni and Justice Aarti Sathe, while allowing a petition filed by President Trade and Exim Corporation, observed that the Settlement Act is a self-contained code, and its...

Rajasthan High Court Refuses to Quash VAT Proceedings Against JK Lakshmi Cement Over Diesel Supplied To Contractors

The Rajasthan High Court has recently refused to quash proceedings initiated against JK Lakshmi Cement Limited over alleged VAT liability arising from diesel supplied to transport and mining contractors, holding that the company must respond to the tax authorities and raise its objections during the ongoing assessment inquiry.The dispute arose after the Commercial Taxes Department conducted a survey and investigation into the operations of the cement manufacturer.According to the department, the...

Additional VAT Surcharge Valid Over Concessional Tax: Punjab & Haryana High Court

The Punjab and Haryana High Court, on 27 February, held that an additional VAT surcharge under Section 7A can be levied over and above the concessional tax payable under Section 7 on sales of declared goods made to registered dealers.A Division Bench comprising Justice Lisa Gill and Justice Parmod Goyal was dealing with a batch of appeals filed by Jyoti Strips Pvt. Ltd. challenging assessment and appellate orders passed under the Haryana Value Added Tax Act, 2003.The Bench held: "The...

Rooh Afza Is Fruit Drink, Not Residuary Goods; Supreme Court Applies 4% VAT Under Uttar Pradesh VAT Act

The Supreme Court on Wednesday held that “Sharbat Rooh Afza” manufactured by Hamdard (Wakf) Laboratories is classifiable as a “fruit drink / processed fruit product” under Entry 103 of Schedule II Part A of the Uttar Pradesh Value Added Tax Act, 2008, and not under the residuary entry taxable at 12.5%. A Bench of Justice B.V. Nagarathna and Justice R. Mahadevan allowed the appeals and set aside the Allahabad High Court's judgments dated July 2, 2018 and August 3, 2022, which had upheld taxing...