aniket (Accountant) (561 Points)
29 May 2009Dear All,
My company delaing with one company which have so many branches all over india.
If my company delivered goods outside maharashtra but bill made on Head office situated within Maharashatra.
In above case which tax is applicable?
VAT or CST
please provide any reference or notice or circular regarding above subject.
Thanks in advance
Regards
Aniket Salvi
Jiwan singh
(service)
(393 Points)
Replied 30 May 2009
Please read carefully it taken from dateyvs.com
Meaning of ‘Inter State Sale’
Section 3 of CST Act defines Inter-State sale or purchase as follows : A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase (a) occasions the movement of goods from one State to another or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another. Thus, inter-state sale can be as per section 3(a) or section 3(b).
It has been held that these two modes are mutually exclusive. – Tata Iron and Steel Co. (TISCO) v. S R Sarkar - (1960) 11 STC 655 (SC) = AIR 1961 SC 65 = (1961) 1 SCR 379 - confirmed in UOI v. K G Khosla & Co. Ltd. - (1979) 43 STC 457 (SC) = (1979) 2 SCC 242 = AIR 1979 SC 1160 = (1979) 3 SCR 453, i.e. when a sale falls under section 3(a) it cannot fall under section 3(b) and CST can be levied only once. In Bharat Heavy Electricals v. UOI - AIR 1996 SC 1854 = (1996) 102 STC 373 (SC) = (1996) 4 SCC 230 = JT 1996(4) SC 427, it was held that whether a particular sale is inter-state or not has to be decided only with reference to section 3 of CST Act alone and no other section. Similarly, to decide question in which State the tax is leviable, only section 9(1) is relevant - no other provision is relevant.
Sale which ‘Occasions movement of goods’ - As per section 3(a), ‘Inter State sale’ takes place if the sale occasions movement of goods from one State to another. In CST v. Suresh Chand Jain - (1988) 70 STC 45 (SC), it was held that a sale can be said to be in the course of inter-state only if two conditions concur viz. (i) sale of goods and (ii) a transport of those goods from one State to another.
There are following essential ingredients of inter-State sale under this sub-section:
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Transaction must be a completed sale. |
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Location of buyer and seller is immaterial. Thus, even if buyer and seller are within the same State, sale will be inter-state, if sale occasions movement of goods from one State to another. e.g. the buyer may have construction site in another State and may ask seller to despatch goods directly to the site. Inter State sale by transfer of documents is also possible even when buyer and seller are in same State. |
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There should be an agreement to sale which contains a stipulation (express or implied) regarding movement of goods from one State to another. - Balabhgas Hulaschand v. State of Orissa (1976) 37 STC 207 (SC) = AIR 1976 SC 1016 = (1976) 2 SCC 44 = 1976 2 SCR 939. |
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It is immaterial whether a completed sale precedes the movement of goods or follows the movement of goods or takes place while the goods are in transit. What is important is that movement of goods and the sale must be inseparably connected - CST, UP v. Bakhtawar Lal Kailash Chand Arhti - (1992) 87 STC 196 = 1992 AIR SCW 2246 = AIR 1992 SC 1952 = JT 1992 (4) SC 388 (SC 3 member bench) [In Balabhgas Hulaschand v. State of Orissa (1976) 37 STC 207 (SC) = AIR 1976 SC 1016 = (1976) 2 SCC 44 = 1976 2 SCR 939, it was held that concluded sale should take place in a State which is different from the State from which goods move. However, now the later judgment (i.e. 1992 judgment) prevails]. |
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Even if goods move from one state to another in pursuance of agreement to sale and the sale is completed in the State in which goods are received, it will be an inter-State sale. - Balabhgas Hulaschand v. State of Orissa 1976 2 SCR 939 = (1976) 37 STC 207 (SC) = AIR 1976 SC 1016 = (1976) 2 SCC 44. [However, this would be so only if there is stipulation in the agreement regarding transfer of property in goods]. |
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There should be physical movement of goods from one State to another. Such movement must be inextricably connected with sale. - Balabhgas Hulaschand v. State of Orissa (1976) 37 STC 207 (SC) = AIR 1976 SC 1016 = (176) 2 SCC 44 = 1976 2 SCR 939 * State of Andhra Pradesh v. National Thermal Power Corporation (NTPC) 2002 AIR SCW 1956 = 127 STC 280 (SC 5 member bench). |
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The contract may not provide for movement of goods. It is enough if such movement is result of covenant of sale or is incidental to the contract. It is sufficient if the movement of goods is implicit in the sale.- UOI v. K G Khosla and Co. (P.) Ltd. - (1979) 43 STC 457 (SC) = AIR 1979 SC 1160 = (1979) 2 SCC 242 = (1979) 3 SCR 453. It is not necessary that covenant regarding inter-State movement must be specified in the contract itself. It is enough if the movement is in pursuance of and incidental to the contract of sale - English Electric Co. of India Ltd. v. Dy CTO - (1976) 38 STC 475 (SC) = AIR 1978 SC 19 = (1977) 1 SCR 631 - same view in Oil India Ltd. v. Superintendent of Taxes - (1975) 35 STC 445 (SC) = AIR 1975 SC 887 = (1975) 3 SCR 797 (SC). |
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It is immaterial in which State the property (i.e. ownership) of goods passes to the buyer. - Oil India Co. Ltd. v. Superintendent of Taxes (1975) 3 SCR 797 (SC) = AIR 1975 SC 887 = (1975) 35 STC 445 (SC) * English Electric Co. of India Ltd. v. Dy CTO - (1976) 38 STC 475 (SC) = (1977) 1 SCR 631 = AIR 1978 SC 19. Property may pass in either State – Tata Iron and Steel Co. (TISCO) v. S R Sarkar - (1960) 11 STC 655 (SC) = AIR 1961 SC 65 = (1961) 1 SCR 379. |
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Sale need not precede the inter-State movement. Sale can be either before the movement or after the movement. - Oil India Co. Ltd. v. Superintendent of Taxes (1975) 3 SCR 797 (SC) = AIR 1975 SC 887 = (1975) 35 STC 445 (SC). It is immaterial in which State the property in the goods is passed. It is not necessary that inter-State movement must precede the sale - ITC Classic Finance and Services v. CCT - (1995) 97 STC 330 (AP HC) * English Electric Co. of India Ltd. v. Dy CTO - (1976) 38 STC 475 (SC) = AIR 1978 SC 19 = (1977) 1 SCR 631 * ONGC v. State of Bihar - (1976) 38 STC 435 (SC) = AIR 1976 SC 2478 = (1977) 1 SCR 34. |
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Movement of goods should be incident of sale and should be necessitated by the contract of sale and this be inter-linked with the sale of goods - Kelvinator of India Ltd. v. State of Haryana (1973) 32 STC 629 (SC). The movement or despatch of goods from one State to another should be under a covenant or incident of contract of sale with the buyer – Tata Iron and Steel Co. (TISCO) v. S R Sarkar - (1960) 11 STC 655 (SC) = (1961) 1 SCR 379 = AIR 1961 SC 65. |
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Mode of transport is immaterial. It may be aircraft, rail, post, motor transport, angadia, ship or hand cart - State of Bombay v. United Motors – AIR 1953 SC 252 = (1953) 4 STC 133 (SC) |
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Even if buyer takes delivery from the seller, it can be inter-State sale if movement of goods to other State is a necessary part of transaction, e.g. if cement is issued within the State to a buyer but as per allotment order the buyer had to necessarily take the goods out of the State, it is an Inter-State Sale. - Mohanlal Hargovandas v. State of MP - (1955) 6 STC 687 (SC). |
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Situs of a sale or purchase is wholly irrelevant as regards its inter-state character - Bengal Immunity Co. Ltd. v State of Bihar AIR 1955 SC 661 = (1955) 2 SCR 603 = (1955) 6 STC 446 (SC). Situs of sale is immaterial. |
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Sale of machinery is inter-state even if it is erected and commissioned in another State. In Inter State sale, situs of sale is irrelevant. – State of Andhra Pradesh v. Usha Breco (2001) 121 STC 621 (AP HC DB). |
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Sale should conclude in different State. - State of Andhra Pradesh v. National Thermal Power Corporation (NTPC) 2002 AIR SCW 1956 = 127 STC 280 (SC 5 member bench). [Meaning that if sale concludes in the same State, subsequent movement will be on behalf of purchaser alone and will not be inter State sale]. |
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