The Supreme Court has issued notices to 23 states and three UTs on a petition by Tata Motors seeking quashing of the Central Sales Tax Appellate Authority's decision asking it to pay Central Sales Tax to the tune of around Rs 14 crore on sale of bus chassis to the Andhra Pradesh government.
The Supreme Court has issued notices to 23 states and three UTs on a petition by Tata Motors seeking quashing of the Central Sales Tax Appellate Authority's decision asking it to pay Central Sales Tax to the tune of around Rs 14 crore on sale of bus chassis to the Andhra Pradesh government.
A Bench headed by Justice SH Kapadia while refusing to stay the impugned judgement issued notices on Monday to the Central Sales Tax Appellate Authority, 23 states and three Union Territories.
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While the Appellate Authority, which has been constituted to resolve conflicting findings relating to supply of similar goods attracting local sales tax or CST, had held that such sales constituted sales in the course of inter-state trade.
It had asked Tata Motors to pay CST without any further directions for refund or adjustment of the local taxes paid to Andhra Pradesh on such sales. However, the Authority had partly allowed the company's plea to remand the matter back to the Commercial Taxes Tribunal, Jharkhand, for examining the transactions made to other states.
According to the assessee, it was fit case for grant of stay of recovery of CST in order to avoid double taxation as local sales tax had already been paid in respect of all supplies to various states, which was almost equal to the CST demanded.
The assessee sought the apex court's intervention in deciding whether the Authority had made an error in contradicting itself by first accepting that Tata Motors didn't manufacture tailor-made goods for its customers and later held that sales effected by the company's Vijaywada sales office were customised goods when it was an admitted fact that the company manufactured only standard goods.
According to the petition filed by Karanjawala & Co, while the authority had upheld the claim of the Jharkhand government (the originating state) that CST was leviable on chassis delivered to the Andhra Pradesh State Road Transport Corporation, it did not direct the other state to repay to the originating state the alleged sales tax collected on these transactions.
The assessing authority had disallowed Tata's claim of stock transfers in respect of the disputed turnover of more than Rs 87.54 crore for 1995-96 on the ground that the movement of chassis from Jamshedpur was in fulfillment of the contract of sale entered between regional sales offices (RSOs) and the institutional buyers who placed orders to RSOs.
The department had found that out of 15,526 chassis sent to RSOs, 1,976 were sold to institutional buyers directly and the remaining were sold to other dealers and individuals.
As Tata had failed to furnish sales statements relating to some of the RSOs, the tax authorities had resorted to best judgement assessment by subjecting 15 per cent of the stock-transfers to CST assessment by treating them as direct inter-state sales affected from Jamshedpur.
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