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2012 (10) TMI 185 - HC - VAT and Sales TaxInter state sale or Intra state sale - Central Sales Tax Act, 1956? - requirement of agreement versus movement of goods - Held that - The Tribunal fell into error in assuming that to avail exemption under Section 3(a) of the Act, the Agreement has to expressly stipulate for inter-state movement of goods, and the fact that in performance of the Contract, the appellant would have to move the goods from other States to Delhi would not suffice. - in favour of assessee. Sale in the court of import - held that- to determine whether the sale was in the course of import, the Court has to see whether the movement of goods through was integrally connected with the contract for their supply. - Questions such passing of title, or whether the end user has a privity of contract with the supplier, or where the consideration flows from, are not determinative or decisive of the issue. - Section 5 does not prescribe any condition that before a sale could be said to have occasioned import, it is necessary that the sale should have preceded the import. - in favour of assessee.
Issues Involved:
1. Whether the sale transactions were in the course of inter-state trade, attracting the provisions of the Central Sales Tax Act, 1956. 2. Whether an inter-state trade is deemed to have taken place in the course of movement of goods into and inside the country. 3. Whether the sale made to the Delhi Metro Rail Corporation (DMRC) was in the course of import and consequently exempt from the Delhi VAT Act, 2004, especially Section 7(c) of the DVAT Act, read with Section 5(2) of the Central Sales Tax Act. Detailed Analysis: Issue 1: Inter-State Trade The appellant contended that the goods were manufactured outside Delhi and delivered to DMRC in Delhi, implying inter-state movement. The Tribunal held that no specific orders for supply were issued by DMRC and that privity of contract between DMRC and the appellant was necessary for inter-state movement. However, the court found that the contract envisaged inter-state movement of goods, as DMRC was aware that the goods were to be sourced from outside Delhi due to a ban on heavy industry in Delhi. The court cited several precedents, including Tata Iron and Steel Co. Ltd. v. S.R. Sarkar & Others, to conclude that the movement of goods was incidental to the contract and thus fell under Section 3(a) of the CST Act. Issue 2: Deemed Inter-State Trade The Tribunal's finding that the contract did not specifically stipulate inter-state movement of goods was deemed incorrect. The court emphasized that the intention of the contract, as gleaned from the document, indicated that inter-state sales were involved. The court referenced Oil India Ltd. v. The Superintendent of Taxes and Others, which held that a sale occasioning inter-state movement of goods is deemed inter-state trade, even if not explicitly stated in the contract. The court concluded that the inter-state movement was within the contemplation of the parties and necessary for the contract's fulfillment. Issue 3: Sale in the Course of Import The appellant argued that the sale to DMRC was in the course of import, exempting it from the Delhi VAT Act. The Tribunal rejected this, stating that the transactions were not inextricably linked and integrated. The court, however, found that various contract conditions, such as DMRC's approval of suppliers and pre-inspection requirements, indicated that the goods were custom-made for DMRC's project. The court referenced K.G. Khosla & Co vs Deputy Commissioner Of Commercial Taxes and Indure Ltd v Commercial Tax Officer, which held that sales occasioning import are exempt from local sales tax. The court concluded that the sale was in the course of import, as the goods were specifically meant for DMRC and could not be diverted for other purposes. Conclusion: The court answered all questions in favor of the appellant, concluding that the transactions were inter-state sales and in the course of import, exempt from the Delhi VAT Act. The appeals were allowed, with no order as to costs.
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