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2010 (8) TMI 824 - HC - VAT and Sales TaxWhether, on the facts and in the circumstances of the case and on the basis of the evidence placed on record the Tribunal was justified in coming to the conclusion that the impugned sale was not a sale covered by section 3(a) of the Central Sales Tax Act, 1956? Held that - The movement of metal strips/bars from Mumbai (State of Maharashtra) to Vapi/Silvasa (State of Gujarat) was in pursuance of and incidental to the contract of sale between the applicant (seller) and M/s. Mody Sons Pvt. Ltd. (purchaser). We therefore hold that the Tribunal was not justified in holding that the sale in question was not inter-State sale, falling under section 3(a) of the CST Act. Under the circumstances we answer the question set out in paragraph 2 of this judgment in the affirmative, i.e., in favour of the applicant and against the Revenue.
Issues Involved:
1. Whether the impugned sale was covered by section 3(a) of the Central Sales Tax Act, 1956. 2. Whether the Tribunal was justified in treating the sales as local sales and not inter-State sales. Issue-wise Detailed Analysis: 1. Whether the impugned sale was covered by section 3(a) of the Central Sales Tax Act, 1956: The primary legal question was whether the sale of goods by the applicant to M/s. Mody Sons Pvt. Ltd. qualified as an inter-State sale under section 3(a) of the CST Act, which states that a sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale occasions the movement of goods from one State to another. The applicant argued that the goods were transported from Mumbai to Vapi and Silvasa, thus qualifying as inter-State sales. The evidence presented included bills indicating the dispatch "from Bombay to Vapi," vehicle registration numbers provided by the buyer, and the fact that the purchasers claimed MODVAT from the Excise Department in Vapi. 2. Whether the Tribunal was justified in treating the sales as local sales and not inter-State sales: The Tribunal had concluded that the sales were local because the delivery of goods was given in Maharashtra, and there was no movement of goods from Mumbai to Vapi as a result of the sale/contract. This resulted in additional tax demands and penalties under the BST Act. The applicant contested this, citing the decision in Commissioner of Sales Tax, Maharashtra State, Bombay v. Nivea Time [1998] 108 STC 6, which held that the decisive factor is whether the sale occasions the movement of goods from one State to another, regardless of where the property in the goods passes. Submissions: The applicant's advocate emphasized that the sale occasioned the movement of goods from Mumbai to Vapi, supported by documentary evidence and C forms produced. Conversely, the Revenue argued that there was no contractual obligation for the goods to be dispatched to Vapi/Silvasa, and thus, the sales did not qualify as inter-State sales. Conclusion: The court reviewed the precedents, including Oil India Ltd. v. Superintendent of Taxes [1975] 35 STC 445 (SC) and English Electric Company of India Ltd. v. Deputy Commercial Tax Officer [1976] 38 STC 475 (SC), which established that what is decisive is whether the sale occasions the movement of goods from one State to another. The court found that the movement of goods from Mumbai to Vapi/Silvasa was in pursuance of and incidental to the contract of sale, thus qualifying as inter-State sales under section 3(a) of the CST Act. Consequently, the Tribunal's decision was deemed erroneous, and the question was answered in favor of the applicant and against the Revenue. The reference was disposed of with no order as to costs.
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