1997 (9) TMI 560 - HC - VAT and Sales Tax

Summary

Issues:
- Whether the State of Tamil Nadu can levy Central sales tax on wire rods manufactured in the State of Tamil Nadu and sold to a buyer outside the State.
- Whether the State of Maharashtra's collection of Central sales tax on the same transaction prevents the State of Tamil Nadu from collecting the tax.

Analysis:
1. The State of Tamil Nadu sought to levy Central sales tax on wire rods manufactured in Tamil Nadu and sold outside the state. The assessee, a manufacturer from Maharashtra, argued that it had already paid Central sales tax to Maharashtra on the same transaction, thus exempting it from paying tax in Tamil Nadu.

2. The Tribunal accepted the assessee's argument based on the decision in Commissioner of Sales Tax v. Barium Chemicals Ltd. The Tribunal held that since tax was paid in Maharashtra, Tamil Nadu could not collect tax, even though Tamil Nadu was the appropriate state for levy and collection under the Central Sales Tax Act.

3. The High Court referred to the case of S. Mohamed Ibrahim Hadhee v. State of Madras, emphasizing that the appropriate state for levy and collection is where the goods have moved from pursuant to the sale. In this case, as the movement of goods started in Tamil Nadu, it was the correct state for levying Central sales tax.

4. The counsel for the assessee argued for the transfer of tax amounts collected by Maharashtra to Tamil Nadu, citing the Supreme Court case of Bharat Heavy Electricals Limited v. Union of India. The court clarified the observations in this case through the case of Ashok Leyland Ltd. v. Union of India, stating that a state cannot be compelled to reopen a concluded assessment if another state is not willing to submit to its jurisdiction.

5. The court held that the assessment order in Maharashtra had become final and could not be reopened. Referring to previous cases, the court emphasized that a refund of erroneously paid tax can only be granted through proper proceedings under the appropriate statute, not in a proceeding under a different state's act.

6. Ultimately, the High Court found the Tribunal's decision erroneous and set it aside, restoring the assessing officer's order. The revisions were allowed accordingly, and the petitions were allowed.