2021 (2) TMI 976 - HC - VAT and Sales Tax

Levy of tax - Inter-state sale - applicability of benefit of section 6(2)(b) of the Central Sales Tax Act - Section 3(a) of CST Act - HELD THAT - In the assessee's own case, an identical issue was considered by the Hon'ble Division Bench of this Court in the decision reported in TRACTORS FARM EQUIPMENTS LTD. VERSUS STATE OF TAMIL NADU AND ANOTHER 1998 (6) TMI 559 - MADRAS HIGH COURT which went in favour of the petitioner - assessee holding that the sale was an inter-state sale under Section 3(a) of the Act. Following the said decision, the show cause notices issued to the assessee in respect of other years were also set aside. When the said judgment was placed before the Tribunal, the Tribunal, in paragraph 18 of the impugned order, noted the decision and held that the said decision would squarely applicable to the assessee's case for the assessment year under consideration also. However, the Tribunal committed an error in not correctly noting the ultimate relief for the assessment year 1980-81. In fact, in the last sentence of the said judgment, it was held that the order of the Tribunal levying tax on second inter-state sale effected by the assessee could not be sustained and was therefore set aside. Had the Tribunal noted this last sentence, the relief that should have been granted to the assessee was to allow the appeal and not to dismiss the same. This would be sufficient to interfere with the impugned order. The Department was bound by the decision of the Hon'ble Division Bench of this Court in the assessee's own case namely TRACTORS FARM EQUIPMENTS LTD. VERSUS STATE OF TAMIL NADU AND ANOTHER 1998 (6) TMI 559 - MADRAS HIGH COURT . Hence, we have no hesitation to hold that the impugned order passed by the Tribunal is incorrect. The second respondent is directed to grant exemption to the petitioner assessee under Section 6(2)(b) of the Central Sales Tax Act on the turnover for the assessment year under consideration - Petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to order passed by first respondent in Tribunal Appeal No.114 of 1994 dated 22.12.2003. Interpretation of inter-state sale under Section 3(a) and 3(b) of the Act. Correctness of Tribunal's decision. Application of past judgments to current case. Relief granted by Tribunal. Suo motu revision by Joint Commissioner. Refund of excess tax paid. Department's obligation to follow Division Bench's decision.

Interpretation of Inter-State Sale under Section 3(a) and 3(b):
The High Court analyzed the case in light of Section 3(a) and 3(b) of the Act. Referring to a previous judgment, the court highlighted the importance of delivery instructions in determining the movement of goods in an inter-state sale. The court emphasized that the movement of goods from one state to another was crucial in establishing an inter-state sale under Section 3(a). The court differentiated between transfer of documents of title and actual physical delivery of goods, stating that the property in goods passed when goods were delivered to the carrier. The judgment also discussed the concept of f.o.b. sales and the timing of transfer of title to goods.

Application of Past Judgments and Tribunal's Decision:
The court referred to a previous decision in the assessee's own case, where a similar issue was considered favorably for the petitioner. The court noted that the Tribunal erred in not correctly applying the relief granted in the previous judgment to the current assessment year. By analyzing the facts and legal principles, the court found that the Tribunal's decision was incorrect and set it aside.

Suo Motu Revision and Refund of Excess Tax Paid:
The court discussed a proposed suo motu revision by the Joint Commissioner, which was later dropped after the assessee succeeded in their appeal. The assessee sought a refund for excess tax paid, which was granted by the Principal Commissioner and Commissioner of Commercial Taxes. The court highlighted the Department's obligation to follow the Division Bench's decision in the assessee's case, emphasizing that the impugned order by the Tribunal was incorrect.

Conclusion:
In conclusion, the High Court allowed the writ petition, setting aside the impugned order and directing the second respondent to grant exemption to the petitioner-assessee under Section 6(2)(b) of the Central Sales Tax Act for the assessment year under consideration. The court emphasized the importance of following legal precedents and ensuring correct application of relief in similar cases.