By C. B. Thakar Advocate; G. G. Goyal, Janak Vaghani Chartered Accountants
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Central Sales Tax – Subsequent Sale By Transfer of Document of Title To Goods – Transporters Giving Delivery of Goods To Buyers As Per Instruction of Dealer – Not a Continuation of Inter-State Sale–S/s. 3(b) and 6(2) Of The Central Sales Tax Act, 1956.
FACTS
The assessee, a dealer in chemicals having office at Coimbatore, Tamil Nadu, had purchased liquid/gaseous chemicals from M/s. Cochin Refineries Limited Ernakulum, Kerala. The said goods were further sold to the dealers either in Coimbatore or to the dealers out side the state of Tamil Nadu and claimed exemption from payment of tax u/s. 6(2) of the CST Act, 1956 by producing the required E-1 and Form C. The assessing authority rejected the claim after noticing the fact that after taking delivery from the transporters, the assessee had issued from XX delivery notes to transport chemicals in same tankers to the end users within and outside the state of Tamil Nadu. The Tribunal allowed the claim and the department filed revision petition before the Madras High Court.
HELD
As per section 3(b) of the CST Act, 1956 all subsequent inter-State sales effeted by transfer of document of title to the goods also qualified to be inter-state sales. However, when there is a break in the movement and it comes to an end, the exemption u/s. 6(2) of the Act is no longer available to claim benefit of second inter-state sale. Such subsequent inter-state sale could be made between two dealers residing in the same street provided that there is a sale by transfer of document of title to the goods while they are in transit from one state to another. The burden of proof is on the assessee. The Court further held that in the present case, the journey of goods started from Cochin to Coimbatore and there was no obligation on the part of carrier to transport the goods further to any place beyond Coimbatore. Thus, the subsequent arrangement that the assessee had with the transporter to carry the goods to another place for a different person however did not make the movement a continuation of the original inter-state sale. Once the movement of goods terminated at Coimbatore, on the doctrine of constructive delivery, the authorities rightly rejected the assessee’s claim of exemption u/s. 6(2) of the CST Act. Accordingly, the High Court allowed revision petition filed by the department and set aside the judgment of the Tribunal.
