TaxTMI 
TaxTMI 
2010 (12) TMI 1092
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....ion bearing No. FD.117.CSL.2001(1), dated July 26, 2001, the State Government reduced the rate of tax on the sale of hydraulic excavators and other earth moving equipment to two per cent if the sale was by a registered dealer to another registered dealer, subject to production of a declaration that the goods were being purchased by the registered dealer for its own use and resale. According to the petitioner, products of the petitioner-company being very expensive and most of the purchasers being finance companies, who would purchase the petitioner's products and in turn leased, hired or sold such products to the end-users under an agreement for lease or hire-purchase or hypothecation, as the case may be. The business place of the petitioner came to be inspected by the Commercial Tax Officer, who seized the documents and certain books of account. During the inspection of the same, in the presence of the representatives of the petitioner, it was found that the petitioner marketed its products through L & T Limited. L & T Limited received orders for purchase of hydraulic excavators equipment from various financiers by placing orders directly on the petitioner. Thereafter, the good....
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....ce company which actually placed the order which is outside the State as the consignee. The CTO after initiating the proceedings under section 28(6) of the KST Act read with section 9(2) of the CST Act issued a notice and eventually passed an order dated June 16, 2003 determining the total turnover under the CST Act of Rs. 15,99,80,720 and CST thereon at 10 per cent thereof, i.e., Rs. 1,59,98,072. After giving credit for the KST paid by the petitioner, viz., Rs. 31,99,614, the CTO determined the net tax liability at Rs. 1,27,98,548. Aggrieved by the said order, an appeal came to be filed and the appeal before the Commissioner of Commercial Taxes came to be disposed of on September 27, 2004 wherein it was observed that the revision petitioner had prevailed upon the finance companies to raise the documents showing the delivery of equipment in the State of Karnataka though final destination of the same was outside the State. With these observations, the said order came to be upheld. Aggrieved by the same, an appeal came to be preferred before the Karnataka Appellate Tribunal (for short, "the Tribunal"). The same came to be disposed of on April 27, 2006. The said order of the Tri....
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....tions between the finance company and the eventual buyer. Therefore, the order of the appellate authority is not justified. On perusal of the records, we note that out of total 41 disputed cases, 11 are through L & T Finance Ltd., 18 are through Ashok Leyland Finance Ltd., 4 are through Sri International Finance Company Ltd., and 1 is through ICICI Bank. However, all are local finance companies. The learned counsel for the revision petitioner relies on the following decisions: (i) In Commissioner of Sales Tax, U.P., Lucknow v. Suresh Chand Jain [1988] 70 STC 45 (SC), the assessees contention was that there was no inter-State sale of tendu leaves in question. According to the assessee, he did not know if the purchasers had taken these tendu leaves to places outside U.P., and even if they had so taken, the assessee was not responsible to pay the tax under the CST Act. In that case, the Tribunal concluded that the Forest Department gave in writing that transport permit did not relate to sale, but it was certified regarding the validity or veracity of tendu leaves from the forest. (ii) Further, he placed reliance upon a decision Bengal Immunity Company Limited v. State of B....
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....a place outside the State the onus was on the Department to establish that the sales made by the respondent were inter-State sales. There was no such evidence on record. The place of payment of price was not of much consequence in deciding the question whether a sale was an inter-State sale of those goods, as sold by the respondent, passed to the buyer immediately on the delivery of the goods to him at Hyderabad. Merely because the person who took delivery of the goods from the respondents happened to be an agent of some other person outside the State, the purchase of the goods made by him from the respondent would not make the respondent's transaction of sale one of inter-State sales. The file containing the details of 41 disputed cases are furnished to the court. The same was perused. So far as the facts in the present case are concerned, the material would reveal that the transporter who had taken the delivery of the equipment has transported the equipment to the legitimate customer residing in the State of Karnataka and delivered the goods. As the delivery of the equipment was directly related to hire purchase agreement between the financiers and the legitimate customer r....