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2017 Supreme(P&H) 1385
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
S.J. VAZIFDAR, ANUPINDER SINGH GREWAL, JJ.
M/s WS Retail Services Private Limited – Petitioner
Versus
Union of India and others – Respondents
Civil Writ Petition No.18339 of 2015 (O&M)
Decided On : 14-07-2017
For the Petitioner:Mr. Tarun Gulati, Advocate and Mr. Sandeep Goyal, Advocate
For the Respondent:Ms. Sudeepti Sharma, Additional Advocate General, Punjab
Headnote:
CST ACT - SUBJECT - INTER-STATE SALE - ACT SECTION LIST - 3, 4, 9 - SUMMARY - The court held that the sale of goods which occasions the movement of goods from one state to another is a sale in the course of inter-state trade. It is not necessary for the contract of sale to expressly state or provide for the movement of the goods from one state to the other. It can be implied from the contract itself. Nor is it necessary that the sale must precede the movement in order that the sale may be deemed to have occasioned such movement.
Fact of the Case:
The petitioner, WS Retail Services Private Limited, is a registered taxable person under the Punjab Value Added Tax Act, 2005 (PVAT Act). The petitioner provides logistic support to Flipkart Internet Private Limited, an online marketing place. The customers purchased goods identified by them from various sellers including the petitioner. In respect of the transactions between the customers and the other sellers i.e. the sellers other than the petitioner, the petitioner undertakes transportation and logistic support for such sellers under its brand name “ekart”. Such goods are despatched for various customers and are subject to CST in the hands of the sellers in the States from where such despatches take place. In respect of these transactions, the petitioner only acts as a service provider and has no other rights in respect of the goods.
Finding of the Court:
The court held that the impugned assessment order and the demand notices issued pursuant thereto are quashed and set-aside. The matter is remanded to the ETO for passing a fresh assessment order in accordance with law.
Issues: Whether the sale of goods which occasions the movement of goods from one state to another is a sale in the course of inter-state trade.
Ratio Decidendi: The court held that the sale of goods which occasions the movement of goods from one state to another is a sale in the course of inter-state trade. It is not necessary for the contract of sale to expressly state or provide for the movement of the goods from one state to the other. It can be implied from the contract itself. Nor is it necessary that the sale must precede the movement in order that the sale may be deemed to have occasioned such movement.
Final Decision: The impugned assessment order and the demand notices issued pursuant thereto are quashed and set-aside. The matter is remanded to the ETO for passing a fresh assessment order in accordance with law.
S.J. VAZIFDAR, J.
1. Respondent Nos.2 and 3 are the State of Punjab and the State of Karnataka. Respondent Nos.4 and 5 are the Excise & Taxation Commissioner and the Excise and Taxation Officer cum-Assessing Authority (ETO).
2. The petitioner seeks a writ of certiorari to quash two show cause notices dated 16.10.2014 and 05.06.2015, an assessment order dated 03.08.2015 and a demand notice dated 18.08.2015. The petitioner also seeks a writ of mandamus directing respondent No.3-State of Karnataka to refund the Central Sales Tax (CST) collected from the petitioner. The impugned order dated 03.08.2015 is an assessment order made by respondent No.5 (ETO) for the accounting year 2012-13 under section 29(2) of the Punjab Value Added Tax Act, 2005 (PVAT Act) as it stood at the relevant time. The impugned order dated 18.08.2015 is a tax demand notice directing the petitioner to pay a sum of Rs.55,21,230/- pursuant to the assessment order. The assessment order assessed the balance tax due at Rs.1,30,84,500/-. Interest under section 32 of the PVAT Act was levied and penalty under sections 56 and 60 of the PVAT Act was imposed.
An assessment was also made under the Central Sales Tax Act, 1956 (CST Act) at Rs.15,73,000/-. Interest and penalty were also levied and imposed.
3. We would normally have relegated the petitioner to the alternate remedy of filing an appeal. We have, however, entertained this writ petition for two reasons. Firstly, there has been an exponential growth in online trading. The indication is that online trading will increase. There are certain questions of law which have been dealt with in several judgments of the Supreme Court and of certain High Courts concerning the legal issues that arise in these cases. These have neither been noticed nor considered in the impugned orders. They relate, at least to a large extent, to the jurisdiction of the officers concerned initiating the proceedings under the PVAT Act. The Kerala and the Madras High Courts have dealt not only with a similar case but with the petitioner’s case regarding other transactions. In the facts and circumstances of this case, it is desirable that there is clarity on the issues of law.
4. We have refrained from expressing any views on merits of each transaction for there are far too many of them. This judgment deals with the legal issues leaving it to the assessing authority to pass a fresh assessment order in accordance with this judgment.
5. The facts, so far as the questions we intend dealing with are concerned, are as follows:
The petitioner carries on business of selling goods through an online portal www.flipkart.com to customers for their personal use. The petitioner also provides logistic services to various parties which also carry on the business of selling goods through the said online portal. The goods sold and transported by the petitioner to parties in the State of Punjab were subject to CST in the State from where the goods were despatched. The goods were brought to Punjab from other States. The petitioner’s warehouses are located outside the State of Punjab. They are located in the States of Karnataka, Tamil Nadu, Maharashtra, Haryana, Uttar Pradesh, Delhi and West Bengal. The petitioner had paid the CST in respect of such goods. As the petitioner did not undertake any sale transaction in the State of Punjab, it did not have a taxable turnover for the purpose of assessment under the PVAT Act and, therefore, filed ‘nil’ returns for the Assessment Year 2012-13 on quarterly basis in Form VAT-15. Based on these returns, the annual statements, as required under Rule 40 in Form VAT-20, were also filed.
6. The State of Punjab enacted the Punjab Value Added Tax Act, 2005. It provides for the levy and collection of Value Added Tax (VAT) and turnover tax on the sale and purchase of goods and for the matters connected therewith and incidental th
