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2016 (6) TMI 654 - HC - VAT and Sales TaxSales Tax / VAT liability in Odisha - inter-State sale or local sale - The report says that 176 numbers of cars have been procured from its branch office at Mumbai and sold to consumers at Odisha - According to the petitioner, no sale of such cars takes place in Cuttack because a customer desirous of purchasing Padmini car from the Mumbai under direct billing system, gives a letter of authorization in favour of the branch office situated at Mumbai to receive and to appoint a Transporter to drive down the vehicle from Mumbai to the destination mentioned in the letter of authorisation. Held that - this is an incident of contract where the vehicle is being booked from the Cuttack office of the petitioner by the customers directly to its branch offfice at Mumbai and the Mumbai office after procuring the same, sends the vehicle to the Cuttack office where the customer takes delivery of the same. When the vehicle is sent from one State to another State, being an incident of contract, it is truely an inter-State sale. The facts and circumstances of the above case are very much applicable to the facts and circumstances of the present case and accordingly we are not refrained from observing that the transaction in the present case is inter-State sale. - Decided in favor of assessee.
Issues Involved:
1. Whether the sale by the petitioner is an inter-State sale under the Central Sales Tax Act, 1956 or an intra-State sale under the Odisha Sales Tax Act, 1947. Issue-wise Detailed Analysis: Issue 1: Whether the sale by the petitioner is an inter-State sale under the Central Sales Tax Act, 1956 or an intra-State sale under the Odisha Sales Tax Act, 1947. Facts: The petitioner, an authorized dealer of cars produced by M/s. Premier Automobiles Ltd., Mumbai, operates branches in Cuttack, Bhubaneswar, and Mumbai. The Cuttack branch sold Hero Honda motorcycles and car components but did not sell Premier cars, for which it did not pay state tax. The Sales Tax Officer (STO) alleged that 176 cars were procured from the Mumbai branch and sold in Odisha, classifying the sales as intra-State transactions. The petitioner argued that the transactions were inter-State sales under section 3(a) of the Central Sales Tax Act, 1956, as the cars were sold directly from Mumbai to customers in Odisha. First Appellate Authority: The Assistant Commissioner of Sales Tax (ACST) found that the sales were inter-State transactions, as the vehicles were purchased by the Mumbai branch and delivered to customers in Odisha. The ACST directed the deletion of Rs. 3,99,05,248.81 from the gross turnover and re-assessment of tax. Second Appellate Authority: The Odisha Sales Tax Tribunal reversed the ACST's decision, classifying the transactions as intra-State sales based on the Supreme Court's decision in Balabhagas Hulschand v. State of Orissa. The Tribunal held that the sales should be included in the gross turnover for tax assessment. Petitioner's Argument: The petitioner contended that the Tribunal's decision was erroneous and arbitrary. The transactions were inter-State sales, as the cars were purchased and invoiced by the Mumbai branch and then transported to Odisha. The petitioner relied on decisions in State of Orissa v. Rolta Motors Ltd., Sahney Steel and Press Works Ltd. v. Commercial Tax Officer, and English Electronic Company of India v. Dy. Commercial Tax Officer, which supported the classification of such transactions as inter-State sales. Revenue's Argument: The Revenue argued that the Tribunal correctly classified the transactions as intra-State sales, as the petitioner acted as an agent for Premier Automobiles Ltd., Mumbai. The Revenue cited the Supreme Court's decision in Balabhagas Hulschand to support its position. High Court's Analysis: The High Court reviewed the facts and legal precedents. It noted that the petitioner's Mumbai branch purchased the cars from the manufacturer and sent them to the Cuttack branch for delivery to customers. The Court found that the transactions were inter-State sales under section 3(a) of the Central Sales Tax Act, 1956, as the movement of goods was an incident of the contract. The Court distinguished the present case from the illustrations in Balabhagas Hulschand, finding that the transactions were covered by the principles laid down in English Electronic Company of India and Sahney Steel and Press Works Ltd. Conclusion: The High Court held that the transactions were inter-State sales, setting aside the Tribunal's decision and restoring the ACST's order. The Court concluded that the Tribunal's decision was illegal and against the principles established by the Supreme Court and other precedents. Final Judgment: The order dated 28.12.2010 passed by the Odisha Sales Tax Tribunal in S.A. No. 114 of 1999-2000 was set aside, and the order dated 30.1.1999 passed by the Assistant Commissioner of Sales Tax, Cuttack-I Range, Cuttack, was restored.
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