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2013 (8) TMI 53 - HC - VAT and Sales TaxLevy of CST or LST - local sales or interstate sale - It was mentioned in the tender document that the petitioner shall be liable to pay CST @ 4% against Form-C. - Held that - petitioner has purchase the wood from U.P. Forest Corporation at Sultanpur. Tender was invited in U.P. and payment was made in U.P. Thus, the sale was completed in U.P. After the sale, it is the option of the petitioner to take the goods outside the State against Form-C or use the same in U.P. - movement of goods should be as a result of an integral part of the contract of sale, that the goods should cross the border from one State to another; it is not enough that the buyer takes delivery of the goods from the seller for the purposes of dispatching them to another State, nor it is enough that the seller pursuant to the instructions of the buyer despatches the goods across the border to another State. The contract of sale must itself provide as an integral part of it that the goods shall be transported from one State to another - Following decision of M/s. K.G. Khosla & Co. (P) Ltd., Delhi vs. Deputy Commissioner, Commercial Taxes 1966 (1) TMI 54 - SUPREME COURT OF INDIA and Ballabh Gass Halashchand vs. State of Orissa 1975 (12) TMI 136 - SUPREME COURT OF INDIA - Decided against assessee.
Issues:
Challenge to circular dated 05.10.1993 and order dated 26.06.2012 regarding tax rate on sale of timber in interstate trade. Analysis: The petitioner, a public limited company, challenged a circular and an order related to the tax rate on the sale of timber in interstate trade. The petitioner participated in a tender by U.P. Forest Corporation for the purchase of Eucalyptus, intending to transport the wood to its factory in Orissa. The petitioner claimed that the tax rate should be 4% CST based on information provided to the Trade Tax Department. The Commissioner rejected the petitioner's claim, leading to the current writ petition. Legal Arguments: The petitioner's counsel argued that the circular directing the charge of State Trade Tax at 16% was against the Central Sales Tax Act, which deems a sale as interstate if it involves the movement of goods between states. The petitioner asserted that the movement of goods from Sultanpur to Orissa was due to the sale, justifying the 4% CST rate. The counsel cited various legal precedents to support the argument. Counter-Arguments: The Department's counsel defended the circular and highlighted a condition in the tender stating that the location of payment completion determined the tax rate. The Department contended that the sale was completed in U.P., allowing for a 16% tax rate as per the conditions. Judgment and Reasoning: After reviewing the facts, the Court found that the sale was completed in U.P. as per the Central Sales Tax Act. The Court emphasized that for a sale to be interstate, the contract must explicitly involve the movement of goods across states, following legal precedents. The Court noted that the petitioner could choose to move the goods out of the state or consume them within U.P. Based on these considerations, the Court upheld the 16% tax rate and dismissed the writ petition. Conclusion: The Court dismissed the petitioner's writ petition, affirming the tax rate determined by the Commissioner and the circular in question. The judgment was based on the legal principles governing interstate sales and the specific circumstances of the case, leading to the decision to uphold the 16% tax rate on the timber sale in interstate trade.
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