2008 (2) TMI 849 - HC - VAT and Sales Tax

Whether the movement of the vehicle was an incident of sale/purchase or not? - Held that - Here in the case on hand as find that the movement of the vehicle was certainly an incident of the sale/purchase and only thereafter it was taken out of the State of Karnataka. Thus the two conditions which have been made mandatory by the Supreme Court to constitute inter-State sale having been fulfilled it would constitute an inter-State sale. It does not lie in the mouth of the petitioner that even if ultimately the vehicle is taken out of the State of Karnataka the same would not fall in the category of inter-State sale. In view of the aforesaid crystal-clear finding recorded by the Tribunal there was no case made out for interference much less in this revision petition. Revision petition is dismissed in limine.

Summary

Issues:
Assessment of Central sales tax on inter-State sales by the assessee under the Karnataka Sales Tax Act, 1957 for the assessment years 1999-2000 and 2000-01.

Analysis:
The revision was filed by the assessee against the order of the Karnataka Appellate Tribunal, which confirmed the levy of Central sales tax on inter-State sales of vehicles for the assessment years 1999-2000 and 2000-01. The assessee, an authorized dealer of Toyota light motor vehicles, was accused of disguising inter-State sales as local sales to evade taxes. The authorities rejected the assessee's objections and confirmed the levy of Central sales tax, leading to appeals and subsequent dismissal by the first appellate authority and the Karnataka Appellate Tribunal.

The court observed that while the sale took place in Bangalore, various factors indicated that the vehicles were intended to be taken out of the State of Karnataka. The court referred to the Supreme Court's judgment in the case of Commissioner of Sales Tax, U.P., Lucknow v. Suresh Chand Jain, emphasizing the conditions for a sale to be considered inter-State trade: a sale of goods and the transport of those goods from one State to another. The court noted that the movement of the vehicles out of Karnataka was an incident of the sale/purchase, fulfilling the conditions set by the Supreme Court for an inter-State sale.

The court rejected the assessee's argument that there was an interruption between the sale and the vehicle reaching its final destination, citing the case of Co-operative Sugars (Chittur) Ltd. v. State of Tamil Nadu, which emphasized that as long as the movement of goods is an incident of the sale/purchase, it constitutes an inter-State sale/purchase. The court concluded that the sale in question met the criteria for an inter-State sale, as determined by the lower authorities and upheld by the Tribunal, leading to the dismissal of the revision petition.

In light of the clear findings and valid reasons provided by the authorities below, the court found no grounds for interference in the revision petition, ultimately dismissing it. The government advocate was permitted to file a memo of appearance within four weeks.