2022 (9) TMI 1000 - SC - VAT and Sales Tax

Adjustment of amount of tax paid on inter-state sale transaction, against the tax to be paid to the State of Jharkhand - HELD THAT - The appellant Tata Motors Limited was liable to pay central sales tax to the State of Jharkhand. However, treating the sale as stock transfer, the appellant/its representative had paid the tax on the aforesaid transaction to the State of Andhra Pradesh which is not leviable by the State of Andhra Pradesh. Therefore, the amount of central sales tax recovered by the State of Andhra Pradesh is required to be transferred to the State of Jharkhand and the same is required to be adjusted towards the amount of tax to be paid to the State of Jharkhand. In the present case the transaction is for the period prior to insertion of Section 22(1B) to the Act 1956 and the impugned order has been passed by the Appellate Authority pre-insertion of Section 22(1B) to the Act 1956. Therefore, as such, it cannot be said that the Appellate Authority has committed any error in not issuing any direction which now is permissible under Section 22(1B) of the Act 1956. However, at the same time, the State of Andhra Pradesh cannot retain the amount of central sales tax paid by the appellant on the transaction of sale effected through RSO, Vijayawada with respect to vehicles/buses sold to APSRTC. Therefore, in line with Section 22(1B) of the Act 1956, the State of Andhra Pradesh is directed to transfer to the State of Jharkhand the amount of central sales tax deposited by the appellant with the State of Andhra Pradesh with respect to transaction in question, however, subject to the appellant submitting the proof of the amount of central sales tax already paid on the transaction in question, namely, sales effected through RSO, Vijayawada with respect to vehicles/buses sold to APSRTC treating the same as stock transfer sale. Appeal disposed off.

Summary

Issues:
1. Adjustment of tax paid on inter-state sales of buses.
2. Applicability of Section 22(1B) of the Central Sales Tax Act, 1956.
3. Direction for transfer of central sales tax amount between states.

Analysis:

1. The appellant challenged the order of the Central Sales Tax Appellate Authority regarding the inter-state sales of buses to APSRTC. The Appellate Authority did not direct the adjustment of tax paid on the transaction against the tax due to the State of Jharkhand. The appellant contended that the sales were inter-state and tax should be adjusted accordingly.

2. The Court acknowledged that the sales were indeed inter-state transactions and that Tata Motors Limited was liable to pay central sales tax to the State of Jharkhand. However, the tax was mistakenly paid to the State of Andhra Pradesh, treating the sales as stock transfers. The Court highlighted the absence of provisions pre-insertion of Section 22(1B) in the Central Sales Tax Act, 1956, for the Appellate Authority to issue directions for tax refund or transfer between states.

3. Despite the absence of Section 22(1B) at the time of the impugned order, the Court directed the State of Andhra Pradesh to transfer the central sales tax amount to the State of Jharkhand. This transfer was subject to the appellant providing proof of tax payment and verification by the authorities. The State of Jharkhand was instructed to adjust this amount against the central sales tax liability of the appellant on the inter-state sales within three months from the judgment date.

In conclusion, the appeal was disposed of with the direction for the transfer of the central sales tax amount from the State of Andhra Pradesh to the State of Jharkhand, emphasizing the correct treatment of inter-state sales transactions and tax liabilities.