2023 (8) TMI 607 - HC - VAT and Sales Tax

Intra-State Transaction or Inter-State transaction? - entire turn over relating to the works contract is at all taxable under the TNGST Act, 1959 or not - goods have moved from Raipur State of Chhattisgarh to Madurai in the state of Tamil Nadu and the petitioner duly collected Form-D from Southern Railway - HELD THAT - It is an admitted position that the petitioner is based at Raipur, first address, and has undertaken the fabrication work there only. The second address, the railway yard, is one assumed by the respondents, where the onsite team of the petitioner has undertaken the task of readying the sleepers for fitment onto the tracks. The third address as confirmed by learned Government Advocate, the address of the sales tax consultant at Coimbatore. Upon completion of the contract, the petitioner has, through consultant, sought refund of the sales tax deducted at source upon payments remitted to it by the Railways. It was only then, when the sales tax department was required to refund the amount, that show cause notices came to be issued to the petitioner proposing to treat the transactions as domestic 'works contracts'. In the present case, the contract is between the assessee in Raipur and Southern Railways. It is not known where the contract was entered into by the parties. However, there is no dispute on the position that the goods forming the subject matter of the contract, have been fabricated in Raipur and thereafter brought to Tamil Nadu for installation - Explanation-3 to Section 2(n) of the Act would not stand attracted in such a case and the transaction would fall outside the ambit of domestic sale, assuming the character of interstate sale only. In fact, these very transactions have been the subject matter of assessments under the Central Sales Tax Act 1956 and CST assessment orders for the periods 2002-03 and 2003-04 have been placed on record by the petitioner at page Nos.263 and 269 of compilation dated 17.07.2023. The impugned orders of the Tribunal are set aside and questions of law are answered in favour of the petitioner to the effect that the transactions in question constitute interstate sales, not liable to tax under the provisions of the Tamil Nadu General Sales Tax Act, 1959 - Petition allowed.

Summary

Issues Involved:
The judgment involves challenges to an order passed by the Sales Tax Appellate Tribunal under the Tamil Nadu General Sales Tax Act for the periods 2002-03 and 2003-04.

Details of the Judgment:

Issue A:
The primary issue was whether the transaction between the petitioner and the Southern Railways constituted domestic or interstate sales. The Court examined the agreements and the movement of goods from Raipur to Tamil Nadu for installation.

Issue B:
Another issue raised was whether the Tribunal was correct in concluding that the petitioner failed to establish their case and confirming the order passed by the first Appellate authority without considering the submissions of the petitioner.

Issue C:
The question of whether the entire turnover relating to the works contract was taxable under the TNGST Act, 1959 was also considered. The Court analyzed the nature of the transaction and the relevant statutory provisions.

Issue D:
Lastly, the Court addressed whether the goods moved from Raipur to Madurai, and if the transaction could be considered as Inter-State Trade/Works contract under the Central Sales Tax Act, 1956. The Court reviewed the documents and correspondence between the parties to determine the tax liability.

The Court found that the transaction constituted interstate sales, not liable to tax under the provisions of the Tamil Nadu General Sales Tax Act, 1959. The orders of the Tribunal were set aside, and the petitioner was entitled to the tax deducted at source to be paid within twelve weeks from the date of the order.