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2022 (1) TMI 1117 - HC - VAT and Sales TaxClassification of supply - sale or stock transfer - movement of goods from Bangalore to Navi Mumbai - only the party actually exporting the goods alone can be said to affect sale in the course of export occasioning such export or not? - levy of central sales tax - goods even if it is conclusively proved by documentary evidence that the goods have been exported proved by reason of failure to furnish F Forms - filing of F Form is mandatory when the goods are not supplied by a dealer to his place of business or his agent or principal or not - proper examination not conducted by the authorities - HELD THAT - It is pertinent to note that the Tribunal has held that there must be a single sale to attract Section 5(1), but it is not the case of the department that the goods have moved from the branch office in Karnataka to Head Office at Mumbai as a result of sale. On the other hand, it is construed as stock transfer. The test to be applied is whether the contract of the foreign buyers with the Head Office occasioned the movement of the goods from Bangalore branch office. This inextricable link has not been properly examined by the authorities. However, learned Additional Government Advocate argued that it is revenue neutral. This argument would not take the dispute to logical conclusion. The matter requires to be re-examined by the Tribunal in the light of the judgments referred to above vis- -vis the documents produced before this Court. If the Excise pass has any inextricable link with the export, certainly the transaction would come within the purview of Section 5(1) of CST Act - the movement of goods occasions such export. These aspects require to be verified by the Tribunal considering the material evidence placed on record by the assessee. The Revision Petition is allowed in part and part matter on remand.
Issues Involved:
1. Classification of the movement of goods from Bangalore to Navi Mumbai as 'sale in the course of export' or 'stock transfer'. 2. Determination of whether only the party actually exporting the goods can be said to affect sale in the course of export. 3. Liability of central sales tax on goods conclusively proved to be exported but without furnishing 'F Forms'. 4. Requirement of filing 'F Form' when goods are not supplied by a dealer to his place of business or his agent or principal. Issue-wise Detailed Analysis: 1. Classification of Movement of Goods: The petitioner/assessee, a manufacturer and dealer of consumer goods, challenged the re-assessment by the Assistant Commissioner of Commercial Taxes, which disallowed the exemption claimed under Section 5(1) of the CST Act, treating the movement of goods from Bangalore to Navi Mumbai as stock transfer and not as a sale in the course of export. The Tribunal upheld this view, stating that the petitioner failed to prove that the goods transferred were specifically for export. The High Court emphasized the need to establish an inextricable link between the movement of goods and the export contract, citing precedents like the State of Karnataka vs. Azad Coach Builders Private Limited and another, and the ruling in State of Haryana vs. Nipha Exports Pvt. Ltd., which confirmed that such a link is necessary for the transaction to be considered a sale in the course of export. 2. Exporting Party and Sale in the Course of Export: The Tribunal's stance was that only the party actually exporting the goods could affect the sale in the course of export. The High Court, however, referred to the judgment in Nipha Exports Pvt. Ltd., which clarified that the movement of goods from a branch office to the head office for export could still be considered as taking place in the course of export, provided there is no sale between the branch and head office. The High Court directed the Tribunal to re-examine whether the contract with foreign buyers occasioned the movement of goods from Bangalore to Mumbai. 3. Central Sales Tax and Documentary Evidence: The Tribunal dismissed the appeals due to the absence of 'F Forms,' which are necessary for proving stock transfers under Section 6-A of the CST Act. The High Court noted that the Tribunal failed to address the applicability of Section 5(1) of the CST Act properly and emphasized that the presence of an inextricable link between the movement of goods and export should be the determining factor. The High Court directed the Tribunal to re-evaluate the evidence, including the Excise pass, to ascertain if the movement of goods was indeed in the course of export. 4. Requirement of Filing 'F Form': The Tribunal held that filing 'F Forms' is mandatory to substantiate stock transfers. The High Court reiterated that the primary test is whether the movement of goods was occasioned by the export contract. The High Court instructed the Tribunal to reconsider the matter, taking into account the documents provided by the petitioner, to determine if the movement of goods from Bangalore to Mumbai was part of the export process. Conclusion: The High Court allowed the revision petition in part, setting aside the Tribunal's judgment and remanding the matter for re-examination. The Tribunal was directed to consider the observations made by the High Court and the additional documents provided by the petitioner to determine the applicability of Section 5(1) of the CST Act. The parties were instructed to appear before the Tribunal on a specified date without waiting for further notice.
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