9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 4 - HC - VAT and Sales TaxLiability of tax - movement of capital goods from the petitioner s unit in CSEZ to the 6th respondent s unit at Udaipur Rajasthan - whether the theory of lease from CSEZ to 100% EOU at Udaipur Rajasthan is made out by the petitioner? - HELD THAT - The application refers to the transfer of machines to the 6th respondent unit definitely all details are not stated. At best it could be said that the correspondence taken up with the competent authorities under the Customs Act are bereft of details however the permission by accepting the request for transfer was granted on 24.05.2004. The 6th respondent is stated to be a 100% EOU. Invoices dated 15.06.2004 followed the permission dated 24.05.2004. The invoices are raised in favour of the 6th respondent. The alleged lease under which the capital goods are moved from Cochin from Udaipur for the limited verification we can undertake we are convinced to hold that the plea of lease arrangement under which capital goods are transferred from Cochin to Udaipur is not convincing and acceptable. Whether the EXIM policy 2002-07 permits inter-unit transfer? - HELD THAT - On perusal of Ext.P7-permission and Ext.P9-Bill of Entry and by adopting the analogy or Spares Corporation case and in the peculiar circumstances of the case it can be opined that these documents would not determine the character and incidence of tax under the CST Act 1956. The exigibility or otherwise is under Section 3 and 5 of the CST Act 1956. Movement of goods is in the course of import or not? - HELD THAT - It is relevant to point out that the movement of capital goods from Cochin to Udaipur could not be under both the arrangements viz. firstly lease in favour of the 6th respondent secondly transfer of goods in the course of import. The writ petitioner though has inconsistent pleas still we would like to examine whether from the documents now placed before the authorities and this Court the movement of goods could be treated as in the course of import. Claim of the petitioner for exemption from payment of sales tax - HELD THAT - The record discloses that the capital goods were kept in a bonded warehouse and moved out of the bonded warehouse of SEZ State of Kerala to Udaipur in Rajasthan. The 6th respondent transferee is not located or established in SEZ but 100% EOU. The movement of goods from one SEZ to another SEZ may have different connotations and in the case on hand since the movement is to a 100% EOU all the inferences available in the transfer of goods from one SEZ to another SEZ are not attracted. Pursuant to the permission granted in Ext.P7 bill of entry is raised invoices are booked and goods transported pursuant to the permission granted by the Development Commissioner. The invoices raised describe 6th respondent as a consignee. The 6th respondent is not asserting his status in the transfer or movement of goods. To us from the documents relied on by the petitioner the subject movement is an inter-state transfer and attracts Central Sales Tax - the case of the petitioner for exemption from payment of central sales tax on the ground that movement of goods is in the course of import is also unsustainable and accordingly rejected. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Tax liability on the movement of capital goods from a unit in the Cochin Special Economic Zone (CSEZ) to a unit in Udaipur, Rajasthan. 2. Applicability of exemption from Central Sales Tax (CST) for inter-unit transfer under the EXIM Policy. 3. Interpretation of the Special Economic Zones Act, 2005 regarding the movement of goods. 4. Determination of whether the movement of goods constitutes an inter-State sale or a sale in the course of import. Detailed Analysis: 1. Tax Liability on Movement of Capital Goods: The petitioner, a company registered under the Companies Act 1956, engaged in the manufacture and export of PVC Free Foam Sheets, imported capital goods duty-free under a Bond agreement and kept them in a bonded warehouse within the CSEZ. The petitioner transferred these goods to the 6th respondent's unit in Udaipur, Rajasthan, under a lease agreement. The goods were detained by Sales Tax authorities, and the petitioner contended that the movement of goods from SEZ to a 100% Export Oriented Unit (EOU) should not be treated as an inter-State sale for CST purposes. The court noted that the goods did not cross the customs frontiers of India and therefore, the CST demanded was illegal. 2. Applicability of Exemption from CST for Inter-Unit Transfer: The Assistant Commissioner (Law) argued that the petitioner's unit in SEZ is not entitled to exemption in case of inter-State sale, as the capital goods intercepted were sold to the 6th respondent, making it an inter-State sale exigible under the CST Act. The petitioner contended that the inter-unit transfer was permitted under the EXIM Policy, and the goods were moved with the necessary permissions from the Development Commissioner and Customs Authorities. The court examined the EXIM Policy and the Customs Act provisions, concluding that the permissions granted under these laws do not exempt the petitioner from CST if the transaction is otherwise exigible. 3. Interpretation of the Special Economic Zones Act, 2005: The court noted that Sections 51 and 53 of the Special Economic Zones Act, 2005, have an overriding effect on other laws and deem SEZs as territories outside the customs territory of India. However, the 6th respondent was not located in an SEZ but was a 100% EOU. The court found that the movement of goods from CSEZ to the 6th respondent did not fall under the provisions of the SEZ Act, 2005, and hence, the findings of the lower court on this issue were unsustainable. 4. Determination of Inter-State Sale or Sale in the Course of Import: The petitioner argued that the movement of goods was in the course of import and should be exempt from CST. The court referred to the judgments in Nirmal Kumar Parsan and Ind Rubber Traders cases, which laid down the tests for determining inter-State sales and sales in the course of import. The court found that the movement of goods from Cochin to Udaipur was an inter-State transfer, as evidenced by the invoices and Bills of Entry. The court concluded that the petitioner's claim for exemption from CST on the ground of movement in the course of import was unsustainable. Conclusion: The court allowed the appeal, setting aside the judgment under appeal, and held that the movement of capital goods from CSEZ to the 6th respondent in Udaipur was an inter-State sale exigible to CST. The permissions granted under the EXIM Policy and Customs Act did not exempt the petitioner from CST liability. The findings of the lower court regarding the applicability of the SEZ Act, 2005, and the nature of the transaction were found to be incorrect. The appeal was allowed with no order as to costs.
|
