2016 (7) TMI 587 - HC - VAT and Sales Tax

Nature of transaction - in the court of Import of goods or inter-state sale - The Goods,a consignment of beetle nuts, were brought against Form 31 - Held that - What is of significance is that the M/S. Rumpa Impex did not claim any exemption under Section 6(2). The purchase which was effected by the revisionist was tax paid. These facts were duly disclosed by it in its initial reply dated 29 November 2003 itself. If, M/S. Rumpa Impex had not claimed any exemption from tax by virtue of the provisions of Section 6(2) of the 1956 Act and the revisionist had in fact purchased the goods after paying the tax, no additional liability could have been foisted upon the revisionist. In view of the above, this Court is of the opinion that the Tribunal as well as the assessing authority have clearly erred in proceeding on the basis that the sale was one which would stand covered within the ambit of Section 6(2) of the 1956 Act. - Decided in favor of assessee

Summary

Issues:
Interpretation of Section 6(2) of the Central Sales Tax Act, 1956 regarding inter-State sales exemption.

Analysis:
The case involved a revisionist, a proprietorship firm registered under the U.P. Trade Tax Act, engaged in the purchase and sale of Beetle Nuts and Kirana. The primary issue was the import of a consignment of beetle nuts purchased by the revisionist from M/S. Rumpa Impex, Kanpur. The revisionist claimed that the beetle nuts were imported from Bangladesh under Form 31, with tax paid by M/S. Rumpa Impex. However, the assessing authority and the Tribunal treated the transaction as an inter-State sale under Section 6(2) of the Central Sales Tax Act, 1956.

The Court delved into the provisions of Section 6(2) of the Act, which exempts subsequent sales during the movement of goods from one State to another if certain conditions are met. The Court noted that the exemption would apply even if the dealers involved were in the same State, emphasizing that the key factor was whether the goods' movement occasioned the inter-State sale. Importantly, M/S. Rumpa Impex did not claim any exemption under Section 6(2), and the revisionist purchased the goods after paying the tax, as disclosed in their reply.

The Court held that since M/S. Rumpa Impex did not claim exemption and the revisionist paid the tax, no additional liability could be imposed on the revisionist. The Tribunal and assessing authority erred in treating the sale as covered by Section 6(2). The Court also noted that the particulars disclosed by the revisionist in their response were not considered by the authorities. It was emphasized that if verification of these particulars was required, the assessing authority could proceed accordingly with due notice to the revisionist.

Consequently, the Court allowed the revision, setting aside the orders of the Assessing Authority and the Tribunal. This judgment clarified the application of Section 6(2) of the Central Sales Tax Act, 1956 to inter-State sales, emphasizing the importance of dealer exemptions and tax payments in determining liabilities.