2018 (3) TMI 157 - HC - VAT and Sales Tax

Inter-state sales - sandalwood - Form-C - challenge to levy of Tamil Nadu value added tax - Held that - identical issue decided in the case of Surya Vinayaka Industries Limited and Others Versus District Forest Officer, Salem Division, Salem and Another 2012 (11) TMI 1054 - MADRAS HIGH COURT , where it was held that Merely because, the petitioner transported the goods outside the State will not bring the transaction within the ambit of the inter state sale - petition dismissed - decided against petitioner.

Summary

Issues:
1. Quashing of orders directing payment of sales tax on sandalwood purchase.
2. Interpretation of inter-state trade under the Central Sales Tax Act.
3. Legal link between auction sale in Tamil Nadu and movement of goods to Karnataka.

Issue 1: Quashing of Sales Tax Orders
The petitioners sought to quash the orders directing payment of 12% sales tax on sandalwood purchase and requested collection of tax at 4% for inter-state trade under the Central Sales Tax Act. The court dismissed similar Writ Petitions previously, emphasizing that movement of goods to another state does not exclude the sale from being considered within the state. The court held that the demand for value-added tax under the TNVAT Act was justified, rejecting the claim of inter-state sale. The court emphasized that the sale was effected within Tamil Nadu, falling under the TNVAT Act, and the petitioners failed to establish a case for relief sought.

Issue 2: Interpretation of Inter-state Trade
The court referred to a Division Bench decision in Karnataka Soaps and Detergents Ltd. v. District Forest Officer, Sathyamangalam, which highlighted that the auction sale of sandalwood in Tamil Nadu did not imply a legal link for goods movement to Karnataka. The court held that the movement of goods was voluntary and not a legal obligation, distinguishing it from an inter-state sale. The court rejected the plea that it was an inter-state sale, stating that the movement of goods was independent of the auction sale, and hence, the challenge to levy Tamil Nadu value-added tax failed.

Issue 3: Legal Link between Auction Sale and Goods Movement
The court discussed the lack of a legal link between the auction sale in Tamil Nadu and the movement of goods to Karnataka. It emphasized that the movement was voluntary and not under any legal obligation, reinforcing the rejection of the contention that it was an inter-state sale. The court upheld the decision of the Division Bench, stating that the sale turnover would determine whether it was a local or inter-state sale, and in this case, the auction conducted within Tamil Nadu made the transaction local, despite goods being transported outside the state.

In conclusion, the court dismissed the Writ Petitions, emphasizing the lack of legal basis for considering the transactions as inter-state sales and upholding the levy of Tamil Nadu value-added tax. The court's decision was based on the interpretation of relevant laws and the absence of a legal link between the auction sale and goods movement to another state.