2011 (2) TMI 1333 - HC - VAT and Sales Tax

Whether the sale was not an inter-State sale but was an intra-State sale and consequently, liable to payment of tax under the Tamil Nadu General Sales Tax Act? Held that - From the orders impugned in these writ petitions, we are not able to ascertain whether or not the transactions suffered tax under the Central Sales Tax Act or what is the date of bill raised pursuant to such transfer claimed to have been made by the petitioner in favour of such purchases in the State of Tamil Nadu. In order to ascertain the said fact, it has become imperative to remit the matter back to the assessing authority, so that, the petitioner as well as the respondent-Department can place necessary materials to enable the assessing authority to conclude whether the sales effected fall strictly under section 3(b) of the Central Sales Tax Act for the petitioner to claim relief under the said provision. Appeal allowed. The matters are remitted back to the third respondent to examine the above factors, namely, whether the sales effected suffered tax under the Central Sales Tax Act as well as the date of the bill raised by the petitioner with reference to such sales effected toy the petitioner

Summary

Issues:
Challenge to orders of Sales Tax Appellate Tribunal regarding assessment years 1991-92 and 1992-93.

Analysis:
The petitioner, having a cement factory in Andhra Pradesh, received a consignment at its Madras branch, which was claimed as an "inter-State sale" by certain Tamil Nadu parties. The assessing authority concluded it was an "intra-State sale" liable for tax under the Tamil Nadu General Sales Tax Act. The petitioner argued that the sale was an "inter-State sale" under section 3(b) of the Central Sales Tax Act, as the transfer of documents of title to the goods occurred during transit, allowing parties to take delivery before the purchase order date.

The government pleader contended that the sale was within the state, as it occurred after the goods reached the destination. The Commercial Tax Officer of Andhra Pradesh confirmed that the petitioner disclosed inter-State sales and paid taxes under the Central Sales Tax Act. However, the court noted that the counter-affidavit did not specify if the particular transaction in question suffered tax under the Central Sales Tax Act.

The court explained that for a sale to be deemed an "inter-State sale" under the Central Sales Tax Act, it must trigger the movement of goods from one state to another (section 3(a) or be effected by transferring documents of goods during transit (section 3(b). The court found that the endorsement on railway receipts before delivery to consignees could be considered a sale during transit under section 3(b). However, due to lack of clarity on tax payment and bill dates, the matter was remitted back to the assessing authority for further examination.

In conclusion, the writ petitions were allowed, the impugned orders were set aside, and the case was remitted to the assessing authority to determine if the sales suffered tax under the Central Sales Tax Act and the bill dates, allowing for fresh orders to be passed accordingly. No costs were awarded in this decision.