Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2013 (12) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (12) TMI 1229 - HC - VAT and Sales TaxClassification of sale - Inter state sale or Intra state sale and purchase - Purchase of rubber effected from State Trading Corporation of India Ltd. - Sales disclosed as inter-State sales - Whether the transaction in question was an inter-State sale or a local sale, taxable at 5% at the hands of the assessee herein as a last purchaser - Held that - Being part of the very same establishment, the mere payment by the Units for any administrative convenience, per se, would determine the character of the transaction. On the other hand, a reading of the allotment order in the context of the application made by the assessee shows that it was a consolidated order in respect of all its Units. Contrary to the assertion of the assessee that the said order contemplated the movement from one State to another, one can only say that the assessee had made use of the particular delivery for the purpose of satisfying the requirement of its Units outside the State. The fact that STC issued a bill in the name of MRF Limited, Kottayam, or for that matter, a certificate had been issued by STC that MRF Limited, Kottayam and Goa had purchased natural rubber from STC, however, would not, in any manner, make the transaction an inter-State sales; that the authorities rightly came to the conclusion that the movement had nothing to do with the transaction of sale. The application of the delivered raw rubber to any particular Unit outside the State is a matter of choice and the discretion of the assessee and the seller, at no point of time, was involved in this. As is evident from the original allocation order, the price charged by STC for Chennai and Kottayam, Kerala are totally different. However, on the revised order, the price charged for RSS-3, now allotted to Kottayam, however, remained the same as for Chennai. As rightly contended by the learned Special Government Pleader, we can only construe the allocation order dated 16.08.1991 as carrying out the request of the assessee for delivery at Kottayam, which cannot be treated as the same as the assessee having originally entered it as RMA-5 - Kottayam. Thus the delivery instruction given cannot be construed as forming part of the sale transaction as indicated in the allocation order and as already noted in the preceding paragraph, on the request made, instead of making an endorsement in the letter itself, STC made necessary endorsement in the allocation order - Thus, the mere endorsement in the allocation order dated 16.08.1991 making the allocation of RSS-3 from Madras to Kottayam at the price at which it was originally quoted for Madras, hence, will not improve the case of the assessee for treating the transaction as an inter-State sale - Following decision of Commissioner of Sales Tax Vs. B.L.Kailash Chand Arhti 1992 (8) TMI 241 - SUPREME COURT OF INDIA - Decided against assessee.
Issues Involved:
1. Characterization of the transaction as inter-State sale or local sale. 2. Assessment of tax liability under the Tamil Nadu General Sales Tax Act vs. Central Sales Tax Act. 3. Validity of the allocation order and its implications on the transaction. 4. Applicability of previous Supreme Court rulings on inter-State sales. 5. Adjustment of tax already paid by the State Trading Corporation (STC) against the assessee's tax liability. Issue-wise Detailed Analysis: 1. Characterization of the Transaction as Inter-State Sale or Local Sale: The primary issue was whether the transactions involving the sale of natural rubber by the State Trading Corporation (STC) to the assessee constituted inter-State sales or local sales. The Assessing Officer concluded that the transactions were local sales taxable under the Tamil Nadu General Sales Tax Act, despite the assessee's argument that the goods moved from Chennai to Kottayam and Goa, thus qualifying as inter-State sales. The Tribunal agreed with the Assessing Officer, noting that the movement of goods was not an integral part of the sale contract but rather a post-sale activity initiated by the assessee. 2. Assessment of Tax Liability: The Tribunal confirmed that the transactions were local sales, and the assessee was liable to pay tax under the Tamil Nadu General Sales Tax Act. The Tribunal observed that the payment of 4% tax under the Central Sales Tax Act by STC did not alter the character of the transactions. The Tribunal emphasized that the responsibility of STC ceased once the goods were delivered ex-godown, and there was no obligation for STC to move the goods inter-State. 3. Validity of the Allocation Order: The Tribunal examined the allocation order and the remittance slips, which did not explicitly indicate an inter-State movement of goods. The Tribunal noted that the allocation order stipulated that the goods were to be used in the assessee's own unit and not sold or utilized by any other party or unit. The Tribunal found no evidence of a contract or agreement specifying that the goods were to be moved inter-State as part of the sale. 4. Applicability of Previous Supreme Court Rulings: The Tribunal referred to Supreme Court rulings, including [1992] 87 STC 196 (Commissioner of Sales Tax Vs. B.L.Kailash Chand Arhti (S.C.)) and [2007] 7 VST 214 (State of Orissa Vs. K.B.Saha & Sons Industries Pvt. Ltd.), to determine the nature of the transactions. The Tribunal concluded that the movement of goods must be an integral part of the sale contract to qualify as an inter-State sale. Since the movement of goods in this case was a post-sale activity initiated by the assessee, the transactions were deemed local sales. 5. Adjustment of Tax Already Paid: The Tribunal acknowledged that STC had collected 4% tax under the Central Sales Tax Act and remitted it to the State. The Tribunal directed that the 4% tax already paid by STC should be adjusted against the assessee's tax liability, and the assessee should only be liable for the differential tax of 1% under the Tamil Nadu General Sales Tax Act. This adjustment was in line with the decision reported in [1990] 77 STC 162 (Trichur Cotton Mills Limited Vs. State of Tamil Nadu). Conclusion: The Tribunal upheld the assessment orders, confirming that the transactions were local sales taxable under the Tamil Nadu General Sales Tax Act. The Tribunal directed the adjustment of the 4% tax already paid by STC against the assessee's tax liability, resulting in a differential tax liability of 1% for the assessee. The appeals filed by the assessee for the assessment years 1989-90 and 1991-92 were dismissed, and the connected miscellaneous petitions were also dismissed.
|