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2022 (12) TMI 596 - HC - VAT and Sales TaxExemption from central sales tax (CST) - transit sale - Petitioner had effected sales by transfer of documents of title of the goods during their movement from one State to another - Section 6(2) of the CST Act. - Assessee also contended that under normal business transactions, bills are not raised immediately after the delivery of goods and as the normal business practice, bills are also generally raised after time gap of one to six months. HELD THAT - The learned tribunal has completely failed to appreciate the ratio of the Judgment of the Hon ble Apex Court rendered in the case of A G Projects 2008 (12) TMI 392 - SUPREME COURT and merely on the basis of an observation as contained in para-13 of the said judgment proceeded to reject the claim of Transit Sale of the petitioner. If the aforesaid transaction of Transit Sale is deemed to have been rejected, then the transaction would fall under the purview of Section 3(a) of the C.S.T. Act and since, admittedly, the entire tax in respect of the aforesaid sale falling under Section 3 (a) of the C.S.T. Act has been discharged by the petitioner to the respective State Governments, no further tax liability can be imposed by the State of Jharkhand upon the petitioner. At the cost of repetition, there is misinterpretation and misreading of the judgment delivered by the Hon ble Apex Court in the case of A G Projects (Supra). The learned tribunal has committed an error by wrongly appreciating that there was pre-determined or pre decided contract of sale between the petitioner and the dealer of the goods at the point of time prior to the sale of goods between the manufacturer of the goods from other inter-state and the dealer of the goods. Even otherwise, the law is now well settled that the tribunal was not supposed to decide an issue which was not the case of the revenue. Decided in favor of assessee.
Issues Involved:
1. Quashing of the order dated 19th May, 2016, passed by the Commercial Taxes Tribunal, Jharkhand, rejecting the revision application on the issue of 'Transit Sale'. 2. Quashing of the order dated 19.03.2015, passed by the Joint Commissioner of Commercial Taxes (Appeal), dismissing the appeal related to 'Transit Sale'. 3. Quashing of the Assessment Order dated 15.03.2014, levying tax on 'Transit Sale' transactions. Detailed Analysis: Issue 1: Quashing of the Tribunal's Order on 'Transit Sale' The petitioner sought to quash the order dated 19th May, 2016, by the Commercial Taxes Tribunal, which rejected their revision application regarding 'Transit Sale'. The petitioner argued that the Tribunal misinterpreted the judgment in A & G Projects & Technologies Ltd. vs. State of Karnataka, specifically paragraph 13, and failed to appreciate the proper legal distinction between sales under Section 3(a) and 3(b) of the CST Act. The Tribunal's decision was based on the observation that the petitioner had pre-existing contracts with Tata Steel Limited, which, according to the Tribunal, did not qualify for 'Transit Sale' exemption under Section 6(2) of the CST Act. Issue 2: Quashing of the JCCT (Appeal) Order The petitioner also sought to quash the order dated 19.03.2015, by the Joint Commissioner of Commercial Taxes (Appeal), which dismissed their appeal concerning 'Transit Sale'. The JCCT (Appeal) affirmed the Assessing Officer's decision to levy tax on 'Transit Sale' transactions, rejecting the petitioner's claim for exemption under Section 6(2) of the CST Act. The petitioner contended that the JCCT (Appeal) failed to consider the statutory forms (E-1, E-2, and C) and other documents provided as proof of 'Transit Sale' transactions. Issue 3: Quashing of the Assessment Order The petitioner sought to quash the Assessment Order dated 15.03.2014, passed by the Assistant Commissioner of Commercial Taxes, which levied tax on 'Transit Sale' transactions for the financial year 2010-11. The Assessing Officer rejected the 'Transit Sale' claim on the grounds that there was a significant delay (one to six months) between the transit sale and the raising of bills, and the lorry receipts did not specify the endorsement date. The petitioner argued that such delays are common in business practices and do not invalidate the 'Transit Sale' claim. Court's Analysis and Judgment: The Court reviewed the documents and arguments presented. It noted that the Tribunal failed to appreciate the correct interpretation of the A & G Projects judgment and misapplied its findings to the petitioner's case. The Court highlighted that the Tribunal's decision was based on an incorrect understanding that pre-existing contracts disqualified the transactions from being considered 'Transit Sales'. The Court referenced its previous judgment in M/s Tata Steel Limited vs. State of Jharkhand, which clarified that mere pre-existing agreements or instructions for direct delivery do not negate the nature of 'Transit Sales'. The Court emphasized that the incidence of tax is on the sale, not on the agreement to sell, and the correct interpretation of the law should focus on the actual transfer of title during transit. The Court concluded that the Tribunal, JCCT (Appeal), and the Assessing Officer misinterpreted the legal provisions and failed to consider the statutory forms and business practices adequately. Consequently, the Court quashed the orders dated 19th May, 2016, 19.03.2015, and 15.03.2014, to the extent they rejected the 'Transit Sale' claim and levied tax on such transactions. The Court directed the revenue to refund the tax amount already paid by the petitioner in accordance with the law. Conclusion: The writ application was allowed, and the contested orders were quashed. The Court reaffirmed the correct legal interpretation of 'Transit Sales' under Section 6(2) of the CST Act and directed the revenue to refund the tax amount to the petitioner.
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