Interstate sale jurisdiction limits restrain coercive tax recovery where goods moved to Mumbai High were not treated as intra-State supply.

An assessment treating movement of goods from Maharashtra to Mumbai High as a sale within the State was found prima facie legally unsound because Mumbai High was treated as not forming part of any State, making the foundational jurisdictional assumption invalid. The order further noted the constitutional bar under Article 286 against State taxation where the supply takes place outside the State. On that basis, the assessment was regarded as prima facie without jurisdiction, and interim protection was granted by directing that no coercive steps be taken against the petitioner on the strength of the impugned assessment order.

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Issues: Whether the assessment order was prima facie without jurisdiction because the movement of goods from Maharashtra to Mumbai High was treated as a sale within the State and whether coercive steps should be restrained.

Analysis: The order records that the basis adopted in the assessment was inconsistent with the earlier view that Mumbai High does not form part of any State and that movement of goods from Maharashtra to Mumbai High is not a movement from one State to another. On that reasoning, the foundational assumption for treating the transaction as a sale within Maharashtra was found to be legally unsound. The order also noted the prohibition under Article 286 of the Constitution of India against State taxation where the supply takes place outside the State.

Conclusion: The assessment was treated as prima facie without jurisdiction and interim protection was granted by directing that no coercive steps be taken against the petitioner on the basis of the impugned assessment order.

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