Manoj Construction Co. Vs. Commissioner of Cus. and C. Ex. - Court Judgment

Excerpt:
custom - no notice of proceedings to the appellant before the tribunal - held in these circumstances order to be set aside and tribunal to hear the case the case afresh - karnataka value added tax act, 2003.[k.a. no. 32/2004]. section 1: [ s.b. sinha & h.s. bedi, jj] concept & scope held, charges paid towards evolution of prototype conceptual design, on which service tax is leviable, cannot be taxed under value added tax act. payments of service tax as also the vat are mutually exclusive. therefore, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract. in the instant case the appellant is an advertising agency. it provides for advertisement services. it creates original concept and design advertising material for their clients and design brochures, annual reports etc. the orders received by it to provide such services is party specific and issue specific be it for issuance of a brochure or a year book or for any other purpose., the advertisement material is sold. it would be incorrect to hold that in the sale of the advertisement material, the background activity such as conceptualisation is no doubt an idea but creation of advertisement is a comprehensive activity leading to creation of goods in question. and therefore the entire sale value of printed material including those relating to concept charges, system charges etc. would be liable to sales tax. it it is so held the central govt. would be deprived of obtaining any tax whatsoever under the finance act, 1994, it is possible to arrive at a conclusion that no tax at all would be payable as the tax has been held to bean indivisible one. a distinction must be borne in mind between an indivisible contract and a composite contract. if in a contract, an element to provide service is contained, the purport and object for which the constitution had to be amended and clause 29a had to be inserted in article 366, must be kept in mind. a transaction of present nature was not contemplated. a legal fiction is created by reason of the said provision. such a legal fiction, as is well known, should be applied only to the extent for which it was enacted. it, although must be given its full effect but the same would not mean that it should be applied beyond a point which was not contemplated by the legislature or which would lead to an anomaly or absurdity. in a case where the application of a parliamentary and a legislative act comes up for consideration; endeavours shall be made to see that provisions of both the acts are made applicable. it is, therefore, difficult to hold that in a case of this nature, sales tax would be payable on the value of the entire contract; irrespective of the element of service provided. order1. the order of the tribunal, which is the subject matter of this appeal, was passed ex-parte, in the absence of the appellant. 2. it is the contention of the appellant that it had no notice of the proceedings before the tribunal. the learned attorney general fairly states that, in the circumstances and having regard to what has been stated by the appellant in the additional affidavit dated 18th november, 2000, it is appropriate that the order under challenge should be set aside and the matter restored to the file of the tribunal to be heard and decided afresh. 3. the appeal is allowed. the order under challenge is set aside on the ground of lack of notice. the appeal is restored to the file of the tribunal, new delhi to be heard and decided afresh. the parties shall appear before the president of the tribunal on 22nd april, 2002 at 11.00 a.m. to take from her a date for the hearing of the appeal. 4. no order as to costs.

Judgment:
ORDER

1. The order of the Tribunal, which is the subject matter of this appeal, was passed ex-parte, in the absence of the appellant.

2. It is the contention of the appellant that it had no notice of the proceedings before the Tribunal. The learned Attorney General fairly states that, in the circumstances and having regard to what has been stated by the appellant in the additional affidavit dated 18th November, 2000, it is appropriate that the order under challenge should be set aside and the matter restored to the file of the Tribunal to be heard and decided afresh.

3. The appeal is allowed. The order under challenge is set aside on the ground of lack of notice. The appeal is restored to the file of the Tribunal, New Delhi to be heard and decided afresh. The parties shall appear before the President of the Tribunal on 22nd April, 2002 at 11.00 a.m. to take from her a date for the hearing of the appeal. 4. No order as to costs.