1996 (4) TMI 523 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the sales in question were inter-State sales or intra-State sales.
2. Whether the assessee is liable to Central Sales Tax under section 8(2A) of the Central Sales Tax Act.

Detailed Analysis:

1. Whether the Sales in Question Were Inter-State Sales or Intra-State Sales:
The primary issue was whether the sales of hard coke by the assessee, who operated within Bihar, to purchasers from outside Bihar were inter-State sales under the Central Sales Tax Act (C.S.T Act) or intra-State sales under the Bihar Sales Tax Act (State Act). The facts established that the sales were made at the assessee's business premises in Bihar, payments were made in cash, and the goods were transported by the purchasers' trucks with permits in Form XXVIII-B.

The court examined several precedents, including:
- State of Bihar v. Tata Engineering and Locomotive Co. Ltd. (A.I.R 1971 S.C 477): The Supreme Court held that sales were inter-State when the contract necessitated the movement of goods from one State to another.
- Co-operative Sugar (Chittur) Ltd. v. State of Tamil Nadu (A.I.R 1994 S.C 1456): It was held that the movement of goods was an incident of the sale, making it an inter-State sale.
- Balabhagas Hulaschand v. State of Orissa (37 STC 207): This case clarified that if the purchaser moves the goods post-purchase, it does not constitute an inter-State sale.

The court concluded that the mere issuance of Form XXVIII-B, which is a requirement under the State Act for anti-evasion purposes, did not convert an intra-State sale into an inter-State sale. The sales were completed within Bihar, and the subsequent transportation by the purchasers did not make the sales inter-State. Therefore, the sales in question were intra-State sales.

2. Liability to Central Sales Tax Under Section 8(2A) of the C.S.T Act:
The second issue was whether the assessee was exempt from Central Sales Tax under section 8(2A) of the C.S.T Act. The Tribunal had held that the sales were inter-State but exempt under section 8(2A) due to notifications from the Bihar Government exempting sales by newly set up Small Scale Industrial Units.

The court referred to:
- Commissioner of Sales Tax, Jammu & Kashmir v. Pine Chemical Ltd. (96 STC 365-SC): The Supreme Court held that exemption under section 8(2A) applies only if the goods are exempt "generally" under the State law.
- Hindustan Paper Corporation Ltd. v. State of Kerala (89 STC 473-SC): Reaffirmed that exemptions must be general and not conditional to apply under section 8(2A).

The court found that the exemptions provided by the Bihar Government were not "general" as they were subject to specific conditions and, therefore, did not meet the criteria under section 8(2A). Consequently, the assessee was liable to pay Central Sales Tax.

Conclusion:
1. The sales in question were intra-State sales, not inter-State sales.
2. The assessee was liable to pay Central Sales Tax as the provisions of section 8(2A) of the C.S.T Act did not apply due to the lack of a general exemption under the State law.

Costs:
There was no order as to costs.