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Supreme Court Rules: How a Tax Exemption for Local Manufacturers Failed the Constitutional Test

19Nov

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Rules: How a Tax Exemption for Local Manufacturers Failed the Constitutional Test

This Supreme Court judgment struck down a Rajasthan VAT exemption notification for violating Article 304(a) of the Constitution. The Court held that granting a tax exemption exclusively to locally manufactured asbestos goods, without a valid justification discernible from the notification itself, constituted discriminatory protectionism against imported goods and was not a permissible differentiation. Facts Of The Case: The appellants, manufacturers of asbestos cement products with manufacturing units outside Rajasthan but sales depots within the state, challenged a Rajasthan Government notification dated 09.03.2007. This notification granted an exemption from Value Added Tax on the sale of asbestos cement sheets and bricks manufactured within Rajasthan, provided they contained 25% or mo...

Supreme Court Relief for Companies: Tax Exemption for Vehicles Confined to Plant Premises

The Supreme Court ruled that motor vehicle tax under the Andhra Pradesh Act is leviable only if a vehicle is used or kept for use in a "public place." It held that restricted industrial premises, inaccessible to the public, do not constitute a public place. Consequently, vehicles operating exclusively within such enclosed areas are not liable for the tax, and a rule creating a presumption of 'use' must be read in harmony with this charging section. Facts Of The Case: The appellant, M/s Tarachand Logistic Solutions Limited, was awarded a contract to operate within the enclosed central dispatch yard of the Visakhapatnam Steel Plant (RINL). Pursuant to this, it deployed 36 registered motor vehicles which, from April 1, 2021, were confined solely to operating inside this restricted premises,...

Supreme Court Rules Stem Cell Banking is Healthcare Service, Exempt from Tax

The Supreme Court held that stem cell banking services qualify as "Healthcare Services" under Notification No. 25/2012-ST, exempting them from service tax. The Court ruled that the extended limitation period under Section 73 of the Finance Act, 1994, was unwarranted as there was no suppression or intent to evade tax. The subsequent Notification No. 4/2014-ST, though prospective, was deemed clarificatory. Penalties were set aside due to the appellant's bona fide belief and lack of deliberate contravention. The impugned order was quashed, and the refund of the deposited amount was ordered Facts Of The Case: The appellant, M/s. Stemcyte India Therapeutics Pvt. Ltd., engaged in the collection, processing, and storage of umbilical cord blood stem cells, claimed exemption from service tax unde...