Goods And Service Tax India

Orissa Value Added Tax Act, 2004 allows the dealer to claim input tax credit on the following purchases:

a) goods purchased for resale

b) goods purchased for use in works contract

c) goods purchased for use in processing or manufacture of goods, where such purchases directly go into composition of the finished goods, and

d) consumables purchased, where such consumables are directly used in such manufacture or processing.

In Reliance Industries Ltd v Asst Commissioner of Sales Tax and Others, the Orissa High Court decided the following questions:

In Ponds India Ltd (Merged with HL Ltd) v. Commissioner of Trade Tax, Lucknow , the Supreme Court answered the question, whether petroleum jelly is a “drug” or a “cosmetic”

The tax authorities have been assessing petroleum jelly as a drug (and not as a cosmetic) for a long time. This product is produced under a drug manufacturing licence under the Drugs and Cosmetics Act, 1940. The report of the Chemical Examiner also supported the contention of the appellant that petroleum jelly is a drug.

Therefore, Supreme Court held that white petroleum jelly is a drug and not a cosmetic.

Gauhati High Court has decided in Magus Construction Pvt Ltd and another vs Union of India and others that construction of buildings on own account and subsequent sale thereof to customers does not attract service tax. Service tax on works contract is leviable only where there is a contract between the contractor and the customer and the contractor provides service to the customer.

In this case the contractor entered into an agreement for sale of flats and received the consideration in instalments. The High Court held that the contractor did not provide any service to the buyers and hence service tax was not attracted.