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2018 (10) TMI 1148 - HC - VAT and Sales TaxLevy of Sales Tax - Central Sale or not - sandalwood purchase made by the petitioners in the course of inter state trade within the meaning of Section 3 of the Central Sales Tax Act - production of Form-C - Held that - The Division Bench in the case of KARNATAKA SOAPS AND DETERGENTS LTD. VERSUS DISTRICT FOREST OFFICER SATHYAMANGALAM AND OTHERS 2012 (11) TMI 1054 - MADRAS HIGH COURT on remand considered the matter afresh and held that the sale turnover will determine whether it is local or interstate sale and the auction conducted by the Forest Department being within the State of Tamil Nadu the transaction is local. 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.
Issues:
1. Interpretation of the term "sale within the State" under the TNVAT Act, 2006 2. Determining the nature of the transaction as local or interstate sale based on the sale turnover and auction location 3. Legal link between auction sale and movement of goods to another state Analysis: Issue 1: Interpretation of the term "sale within the State" under the TNVAT Act, 2006 The petitioners sought to challenge the order directing the payment of VAT on the sale value and to collect sales tax at 2% for sandalwood purchase made in the course of interstate trade. The Court emphasized that the movement of goods from one state to another at the buyer's instance does not exclude the transaction from being considered a sale within the state. The Court highlighted that the provisions of the Income Tax Act do not impact the liability to pay tax under the TNVAT Act, as these are distinct legislations operating in different spheres. The Court concluded that the petitioners failed to establish their case for relief under the law. Issue 2: Determining the nature of the transaction as local or interstate sale based on the sale turnover and auction location Referring to a previous Division Bench decision, the Court reiterated that the auction conducted by the Forest Department within the State of Tamil Nadu determines the nature of the transaction as local. The Court emphasized that the mere transportation of goods outside the state by the petitioner does not alter the local nature of the sale. The sale turnover was deemed crucial in determining whether the transaction qualifies as a local or interstate sale, with the auction location being a significant factor in this determination. Issue 3: Legal link between auction sale and movement of goods to another state The Court discussed the lack of a legal link between the auction sale in Tamil Nadu and the voluntary movement of goods to another state by the petitioner. It emphasized that the movement of goods was independent of the auction sale and not a legal obligation. Citing a previous case, the Court distinguished between the auction sale and the subsequent movement of goods, asserting that such movement was not an incidence of the auction sale. The Court rejected the contention that the movement of goods to another state established an interstate sale, emphasizing the voluntary nature of the transportation. In conclusion, the Court dismissed the writ petition based on the above analysis and the principles established in previous judgments.
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