1. Inter-state sale of vehicles — Tax paid to one state treating transaction as stock transfer — Dispute over transfer of tax to the state where it was due. (Para 1 , 3 )
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2022 Supreme(SC) 950
SUPREME COURT OF INDIA
M.R. SHAH, KRISHNA MURARI, JJ.
Tata Motors Limited - Appellant
Versus
Central Sales Tax Appellate Authority & Others - Respondents
Civil Appeal No. 6450 of 2012
Decided on : 21-09-2022
Advocates:
Advocate Appeared:
For the Appellant : Mr. Amar Dave, Ms. Nandini Gore, Adv., Ms. Neha Khandelwal, Adv., Ms. Manvi Rastogi, Adv., M/S. Karanjawala & Co., AOR
For the Respondent: Mr. Nishe Rajan Shonker, Adv., Mrs. Anu K. Joy, Adv., Mr. Alim Anvar, Adv., Mr. Abraham C. Mathews, Adv., Mrs. Anil Katiyar, AOR, Ms. Pragya Baghel, Adv., Mr. Jayant Mohan, AOR, Mr. Abhay Pratap Singh, AOR, Mr. K.S. Kulkarni, Sr. Adv., Mr. S. Dhanjay Reddy, Adv., Mr. Hitesh Kumar Sharma, Adv., Mr. T.Veera Reddy, Adv., Mr. T.N. Rama Rao, Adv., M/s. S. Sandhya Rao, Adv., Ms. C. K. Sucharita, AOR, Mr. Milind Kumar, AOR, Ms. Deepanwita Priyanka, AOR, Mr. Nishe Rajen Shonker, AOR, M/S. Corporate Law Group, AOR, Mr. V. N. Raghupathy, AOR, Mr. Kamal Mohan Gupta, AOR, Mr. M. Yogesh Kanna, AOR, Mr. T. S. Sabarish, AOR, Mr. Aaditya Aniruddha Pande, AOR, Mr. B. K. Satija, Mr. Pukhramban Ramesh Kumar,
Mr. Karun Sharma, Adv., Ms. Anupam Ngangom, Adv., Mr. Wahengbam Immanuel Meitie, Adv., Mr. Bhakti Vardhan Singh, AOR, Mr. Gopal Singh, AOR, Mr. Ashok Kumar Singh, AOR, Mr. Aravindh S., AOR, Mr. Abbas. B, Adv., Mr. G.S. Makker, AOR, Mr. Mahfooz A. Nazki, AOR, Mr. Polanki Gowtham, Adv., Mr. Shaik Mohamad Haneef, Adv., Mr. T. Vijaya Chowdary, Adv., Mr. K.V. Girish Chowdary, Adv., Ms. Rajeswari Mukherjee, Adv.
Advocate Appeared:
For the Appellant : Mr. Amar Dave, Ms. Nandini Gore, Adv., Ms. Neha Khandelwal, Adv., Ms. Manvi Rastogi, Adv., M/S. Karanjawala & Co., AOR
For the Respondent: Mr. Nishe Rajan Shonker, Adv., Mrs. Anu K. Joy, Adv., Mr. Alim Anvar, Adv., Mr. Abraham C. Mathews, Adv., Mrs. Anil Katiyar, AOR, Ms. Pragya Baghel, Adv., Mr. Jayant Mohan, AOR, Mr. Abhay Pratap Singh, AOR, Mr. K.S. Kulkarni, Sr. Adv., Mr. S. Dhanjay Reddy, Adv., Mr. Hitesh Kumar Sharma, Adv., Mr. T.Veera Reddy, Adv., Mr. T.N. Rama Rao, Adv., M/s. S. Sandhya Rao, Adv., Ms. C. K. Sucharita, AOR, Mr. Milind Kumar, AOR, Ms. Deepanwita Priyanka, AOR, Mr. Nishe Rajen Shonker, AOR, M/S. Corporate Law Group, AOR, Mr. V. N. Raghupathy, AOR, Mr. Kamal Mohan Gupta, AOR, Mr. M. Yogesh Kanna, AOR, Mr. T. S. Sabarish, AOR, Mr. Aaditya Aniruddha Pande, AOR, Mr. B. K. Satija, Mr. Pukhramban Ramesh Kumar,
Mr. Karun Sharma, Adv., Ms. Anupam Ngangom, Adv., Mr. Wahengbam Immanuel Meitie, Adv., Mr. Bhakti Vardhan Singh, AOR, Mr. Gopal Singh, AOR, Mr. Ashok Kumar Singh, AOR, Mr. Aravindh S., AOR, Mr. Abbas. B, Adv., Mr. G.S. Makker, AOR, Mr. Mahfooz A. Nazki, AOR, Mr. Polanki Gowtham, Adv., Mr. Shaik Mohamad Haneef, Adv., Mr. T. Vijaya Chowdary, Adv., Mr. K.V. Girish Chowdary, Adv., Ms. Rajeswari Mukherjee, Adv.
IMPORTANT POINT
Inter-state sale – Amount of tax paid by mistake has to be adjusted in concerned State.
Headnote:
Central Sales Tax Act, 1956 – Section 22(1B) – Inter-state sale/s – Adjustment of amount of tax paid – Appellant-Tata Motors Limited was liable to pay central sales tax to State of Jharkhand – However, treating the sale as stock transfer, appellant/its representative had paid tax on the transaction to State of Andhra Pradesh which is not leviable by State of Andhra Pradesh – Amount of central sales tax recovered by State of Andhra Pradesh is required to be transferred to State of Jharkhand and same is required to be adjusted towards amount of tax to be paid to State of Jharkhand – In line with Section 22(1B) of Act 1956, State of Andhra Pradesh directed to transfer to State of Jharkhand amount of central sales tax deposited by appellant with State of Andhra Pradesh with respect to transaction in question, however, subject to appellant submitting proof of amount of central sales tax already paid on transaction in question – Appellate Authority has not committed any error in not issuing any direction which now is permissible under Section 22(1B) of Act 1956.. (Paras 3, 4 and 5)
Facts of the case:
Original appellant – Tata Motors Limited has preferred the present appeal against impugned order dated 29.06.2009 passed by Central Sales Tax Appellate Authority, New Delhi in Appeal No. 330/CST/2008, by which, though the transaction/sales of buses effected through RSO, Vijayawada sold to Andhra Pradesh State Road Transport Corporation were found to be in nature of inter-state, no further consequential order has been passed by the Appellate Authority directing to adjust the amount of tax paid on the aforesaid transaction against tax to be paid to the State of Jharkhand.
Findings of Court:
Transaction is for period prior to insertion of Section 22(1B) to the Act 1956 and impugned order has been passed by the Appellate Authority pre-insertion of Section 22(1B) to the Act 1956. Therefore, as such, it cannot be said that Appellate Authority has committed any error in not issuing any direction which now is permissible under Section 22(1B) of the Act 1956.
Result : Appeal disposed of with directions.
Legal Category Hierarchy
Table of Contents
2. Appellant sought direction to adjust tax paid to one state against liability in another state following a finding that the transaction was an inter-state sale. (Para 1 )
3. The Appellate Authority lacked power to direct tax transfers prior to the insertion of Section 22(1B) of the Central Sales Tax Act, 1956. (Para 4 )
4. A state cannot retain central sales tax not due to it; such amounts must be transferred to the state to which the tax is legally due. (Para 5 )
5. Direction to transfer tax paid to one state to another state upon verification and adjust it against the appellant's tax liability. (Para 5 , 6 )
6. Does the Appellate Authority have the power to direct the refund or transfer of tax collected by a state?
Yes, under Section 22(1B) of the Central Sales Tax Act, 1956, the Authority may direct a state to refund tax not due to it or transfer the amount to the state where the tax is due. (Para 4 )
7. Is the Appellate Authority's failure to direct a tax transfer valid if the order was passed before the insertion of Section 22(1B)?
Yes, because prior to the insertion of Section 22(1B), there was no provision allowing the Appellate Authority to issue directions for the refund or transfer of tax collected by a state. (Para 4 )
8. Can a state retain central sales tax if the transaction is later determined to be an inter-state sale due to another state?
No, a state cannot retain central sales tax paid on a transaction that is not leviable by that state; such amounts must be transferred to the state to which the tax is due. (Para 3 , 5 )
JUDGMENT :
M.R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned order dated 29.06.2009 passed by the Central Sales Tax Appellate Authority, New Delhi (hereinafter referred to as the ‘Appellate Authority’) in Appeal No. 330/CST/2008, by which, though the transaction/sales of buses effected through RSO, Vijayawada sold to Andhra Pradesh State Road Transport Corporation (for short, ‘APSRTC’) were found to be in the nature of inter-state, no further consequential order has been passed by the Appellate Authority directing to adjust the amount of tax paid on the aforesaid transaction against the tax to be paid to the State of Jharkhand, the original appellant – Tata Motors Limited has preferred the present appeal.
2. We have heard Shri Amar Dave, learned counsel appearing on behalf of the appellant, Shri Mahfooz A. Nazki, learned counsel appearing on behalf of the State of Andhra Pradesh, Shri Arunabh Chowdhary, learned Senior Advocate appearing on behalf of the State of Jharkhand and Shri N. Venkataraman, learned Additional Solicitor General of India along with Shri Arijit Prasad, learned Senior Advocate appearing on behalf of the Union of India.
3. At the outset, it is required to be noted and it is not in dispute that with respect to transaction in question, namely, sales effected through RSO, Vijayawada with respect to vehicles/buses sold to APSRTC, the sale/s is/are found to be in the nature of inter-state sale/s. In that view of the matter, the appellant – Tata Motors Limited was liable to pay central sales tax to the State of Jharkhand. However, treating the sale as stock transfer, the appellant/its representative had paid the tax on the aforesaid transaction to the State of Andhra Pradesh which is not leviable by the State of Andhra Pradesh. Therefore, the amount of central sales tax recovered by the State of Andhra Pradesh is required to be transferred to the State of Jharkhand and the same is required to be adjusted towards the amount of tax to be paid to the State of Jharkhand.
4. At this stage, it is required to be noted that prior to insertion of Section 22(1B) to the Central Sales Tax Act, 1956 (hereinafter referred to as the ‘Act 1956’), there was no provision by which the Appellate Authority could have issued directions for refund of the tax collected by the State which has been held by the Appellate Authority to be not due to that State, or alternatively, direct that State to transfer the refundable amount to the State to which central sales tax is due on the same transaction. However, by the Finance Act, 2010, Section 22(1B) has been inserted to Act 1956, which reads as under:
“Section 22(1B) – The Authority may issue direction for refund of tax collected by a State which has been held by the Authority to be not due to that State, or alternatively, direct that State to transfer the refundable amount to the State to which central sales tax is due on the same transaction. Provided that the amount of tax directed to be refunded by a State shall not exceed the amount of central sales tax payable by the appellant on the same transaction.”
4.1 It is required to be noted that in the present case the transaction is for the period prior to insertion of Section 22(1B) to the Act 1956 and the impugned order has been passed by the Appellate Authority pre-insertion of Section 22(1B) to the Act 1956. Therefore, as such, it cannot be said that the Appellate Authority has committed any error in not issuing any direction which now is permissible under Section 22(1B) of the Act 1956.
5. However, at the same time, the State of Andhra Pradesh cannot retain the amount of central sales tax paid by the appellant on the transaction of sale effected through RSO, Vijayawada with respect to vehicles/buses sold to APSRTC. Therefore, in line with Section 22(1B) of the Act 1956, the State of Andhra Pradesh is directed to transfer to the State of Jharkhand the amount of central sales tax deposited by the appellant with the State of And
