2016 (10) TMI 373 - HC - VAT and Sales Tax

High Court affirms stock transfer as inter-state sale, remits refund claim, clarifies review jurisdiction

Bhushan Power and Steel Limited Versus The State of Punjab and others

The High Court upheld the Appellate Authority's decision treating a stock transfer as an inter-state sale. However, the High Court remitted the matter ... Demand of tax - assessment by the Excise and Taxation Officer-cum-Designated Officer, Ludhiana-II under the Central Sales Tax Act, 1956 - the stock transfer to the tune of ₹ 11,54,54,462/- treated as interstate sale - business of manufacture and sale of iron and steel goods including galvanized steel pipes - material was transferred from the manufacturing unit of the petitioner located in the State of Punjab to its branch office at Patna and thereafter local sale was made in the State of Bihar - Held that: - a specific plea was raised by the petitioner before the Appellate Authority that the transaction, which has been held to be interstate sale from the State of Punjab and tax paid thereon, was treated to be local sale in the State of Bihar and tax was paid on the same, however, that aspect was not considered by the Appellate Authority with reference to the alternative claim made by the petitioner in terms of the provisions of Section 22 (1B) of the Act, regarding refund or transfer of the tax from the State of Bihar to the State of Punjab. As the Appellate Authority failed to exercise its jurisdiction on the plea raised by the petitioner, without even disturbing the findings recorded by the Appellate Authority regarding transaction being in the course of inter-state sale from the State of Punjab, the matter deserves to be remitted back to the Appellate Authority for dealing with the alternative prayer made by the petitioner - petition disposed off - matter remitted back to the Appellate Authority to consider and decide the leftout issue - date of hearing shall be fixed by the Appellate Authority with prior intimation to the parties concerned. Issues:Challenge to order by Central Sales Tax Appellate Authority regarding inter-state sale transaction; Jurisdiction of High Court to review Appellate Authority's orders; Alternative claim for refund or transfer of tax paid in State of Bihar under Section 22(1B) of the Act.Analysis:1. The petitioner, a company engaged in manufacturing and sale of iron and steel goods, challenged an order treating stock transfer as interstate sale by the Value Added Tax Tribunal. The Appellate Authority upheld this decision, rejecting the petitioner's claim of branch transfer. The petitioner sought refund or transfer of tax paid in Bihar under Section 22(1B) of the Act.2. The petitioner contended that the transaction was a branch transfer, not an inter-state sale, as goods were transferred to Bihar for local sale after being marked 'GOB'. The Tribunal and Appellate Authority considered it an inter-state sale. The petitioner relied on precedents for refund or transfer of tax under Section 22(1B).3. The Appellate Authority's failure to address the petitioner's alternative claim for refund or transfer of tax from Bihar to Punjab under Section 22(1B) was noted. The High Court, without disturbing the inter-state sale finding, remitted the matter back to the Appellate Authority to decide on the refund or transfer issue.4. The High Court cited relevant sections of the Act, emphasizing the Appellate Authority's power to issue directions for refund or transfer of tax in such cases. It highlighted the need for the Appellate Authority to consider the petitioner's claim under Section 22(1B) regarding the tax paid in Bihar.5. The judgment discussed the jurisdiction of the High Court to review Appellate Authority's orders, citing Supreme Court precedents. It clarified that challenges to such orders can be brought under Article 226 and/or 227 of the Constitution, to be heard by a Division Bench for expeditious resolution.6. Ultimately, the High Court disposed of the petition, remitting the matter back to the Appellate Authority for consideration of the petitioner's claim for refund or transfer of tax paid in Bihar. The Appellate Authority was directed to fix a hearing date and address the outstanding issue promptly.