2021 (2) TMI 247 - HC - VAT and Sales Tax

Court affirms Tribunal decision on inter-state sale under CST Act, dismissing writ petitions.

The State of Tamil Nadu, The Deputy Commissioner (CT), Versus Tvl. Bharath Heavy Electricals Limited, The Secretary, The Tamilnadu Sales Tax Appellate Tribunal (Additional Branch), Coimbatore

The State of Tamil Nadu, The Deputy Commissioner (CT), Versus Tvl. Bharath Heavy Electricals Limited, The Secretary, The Tamilnadu Sales Tax Appellate ... Issues:Challenge to the common order passed by the Tribunal allowing appeals filed by the first respondent-assessee and setting aside assessments made under the CST Act by the Commercial Tax Officer, Podanur assessment circle.Analysis:1. The Tribunal considered the nature of the transaction between the first respondent-assessee and M/s.UEHL, focusing on the sub-contract terms and conditions. It found that the first respondent-assessee had a composite contract for manufacturing finished products to be supplied in various states. The Tribunal determined that the goods did not move from Tamil Nadu to the ultimate buyers in other states, thus not constituting an inter-state sale under Section 3(a) of the CST Act.2. The Tribunal analyzed the provisions of the Act and relevant case law, including Bharat Heavy Electrical Limited Vs. Union of India. It concluded that no sale or incidence of sales took place in Tamil Nadu as the title to the goods was not transferred to the ultimate buyers in other states. Additionally, the Tribunal held that the Assessing Officer lacked jurisdiction to assess the first respondent-assessee, further supporting its decision to allow the appeals.3. The High Court reviewed the Tribunal's decision in detail, emphasizing the conditions under Section 3 of the CST Act for a sale to qualify as inter-state trade or commerce. It examined whether the transaction fell under Clause (a) or (b) of Section 3 and agreed with the Tribunal's assessment that the transaction did not meet the criteria for an inter-state sale.4. The High Court upheld the Tribunal's findings, stating that the Tribunal correctly considered the nature of the contract and the non-transfer of goods' title to M/s.UEHL. It noted that the decision was based on factual findings and legal precedents, including the case of Bharat Heavy Electrical Limited, and found no grounds to interfere with the Tribunal's order under Article 226 of the Constitution of India.5. Consequently, the High Court dismissed the writ petitions, ruling in favor of the first respondent-assessee and affirming the Tribunal's decision. No costs were awarded in the matter.