2000 (8) TMI 1090 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Nature of sales transactions (inter-State vs. intra-State)
2. Applicability of Central Sales Tax Act, 1956
3. Refund of penalty and interest on delayed refund

Issue-Wise Detailed Analysis:

1. Nature of Sales Transactions (Inter-State vs. Intra-State):
The core issue revolves around whether the sales transactions conducted by the opposite party, who sold goods to purchasers outside the State of Orissa, qualify as inter-State sales or intra-State sales. The opposite party contended that the sales were completed within Orissa, and they were not responsible for the movement of goods outside the State. The Assistant Commissioner of Sales Tax, Ganjam Range, Berhampur, found that the sales were effected in Berhampur, Orissa, and there was no agreement indicating that the goods were to be moved outside the State. The purchasers, being from outside Orissa, arranged for the transport of goods on their own. Consequently, it was held that these transactions were intra-State sales, and the assessment of tax was annulled.

2. Applicability of Central Sales Tax Act, 1956:
The Tribunal, upon appeal by the State of Orissa, upheld the Assistant Commissioner's findings, asserting that the transactions were not inter-State sales as per Section 3 of the Central Sales Tax Act, 1956. According to Section 3, a sale is considered inter-State if it occasions the movement of goods from one State to another or involves the transfer of documents of title during the movement. The Tribunal emphasized that there was no evidence of an agreement (express or implied) necessitating the movement of goods from Orissa to another State. The Supreme Court's precedents, including Bengal Immunity Company Limited v. State of Bihar and Balabhagas Hulaschand v. State of Orissa, were cited to reinforce that the movement of goods must be integral to the contract of sale for it to be deemed inter-State. Since the movement of goods in this case was not under the sale contract but due to the purchasers' actions, the transactions were classified as intra-State sales.

3. Refund of Penalty and Interest on Delayed Refund:
In a separate application, the applicant sought a refund of Rs. 2 lakhs, which was due after a penalty order was set aside in revision. The applicant also requested interest at 24% per annum for the delayed refund. The State Representative informed that the refund payment order was issued and communicated to the applicant, and the cheque was ready. However, the Tribunal noted that there is no provision in the law to grant interest on delayed refunds of penalty amounts not associated with assessment. The Tribunal referred to a previous judgment (Hindustan Copper Ltd. v. Assistant Commissioner of Commercial Taxes) where interest was awarded on delayed tax refunds but clarified that this did not extend to penalty refunds. The application was disposed of with a direction for the respondent-authorities to provide relevant communications and information about the refund payment voucher promptly.

Conclusion:
The High Court concluded that the sales transactions in question were intra-State sales, as the movement of goods was not an integral part of the sale contract. The Tribunal's decision to dismiss the State's appeal and uphold the Assistant Commissioner's order was affirmed. Additionally, the application for interest on the delayed refund of the penalty amount was dismissed, as there was no legal provision supporting such interest. The respondent-authorities were directed to expedite the communication regarding the refund payment voucher.