Sale of Buses By Tata Motors To APSRTC In The Nature Of Inter-state: Supreme Court Directs Andhra Pradesh To Transfer CST To Jharkhand
The Supreme Court State of Andhra Pradesh cannot retain the amount of central sales tax paid by the Tata Motors on the transaction of sale effected through RSO, Vijayawada, with respect to vehicles/buses sold to Andhra Pradesh State Road Transport Corporation (APSRTC).
Facts
Tata Motors filed the appeal before the supreme court. The appellant undertook transaction/sales of buses through RSO, Vijayawada, and sold them to APSRTC. It was determined to be an inter-state transaction, and no consequential order was issued by the Appellate Authority directing that the amount of tax paid on the transaction be adjusted against the tax due to Jharkhand.
The State of Jharkhand was entitled to receive central sales tax from Tata Motors Limited. However, treating the sale as a stock transfer, the appellant had paid the tax on the transaction to the State of Andhra Pradesh, which was not leviable by Andhra Pradesh. As a result, the amount of central sales tax that the State of Andhra Pradesh had been able to recoup had to be transferred to the State of Jharkhand and adjusted to the amount of tax that had to be paid to the State of Jharkhand.
Role of Section 22(1B) to the Central Sales Tax Act
Before the addition of Section 22(1B) to the Central Sales Tax Act of1956, there was no provision that allowed the Appellate Authority to order a refund of the tax that the state had collected but was not owed to the state, or alternatively, to order the state to transfer the refundable amount to the state to which central sales tax is owed.
However, Section 22(1B) of the Finance Act of 2010 was added. Section 22(1B) empowers the authority to direct a refund of tax collected by a state that was not owed to that state, or to direct that state to transfer the refundable amount to the state to which central sales tax is owed.
However, the Finance Act of 2010 also included Section 22(1B). According to Section 22(1B), the authority may order a state to either refund tax that was improperly withheld from it or to transfer the refundable amount to the state that is owed central sales tax.
Court’s Observation
The bench of Justice M.R. Shah and Justice Krishna Murari observed that after due verification, the amount of central sales tax paid by Tata Motors with respect to the transaction be transferred to Jharkhand immediately on verification. The State of Jharkhand was directed to adjust it towards the central sales tax liability of Tata Motors on sales effected through RSO, Vijayawada with respect to vehicles/buses sold to APSRTC, which were found to be in the nature of inter-state sales.
The court has directed the state of Andhra Pradesh to transfer to Jharkhand the amount of central sales tax deposited by Tata Motors with respect to the sale of buses to the APSRTC.
Case Title: Tata Motors Limited Vs. Central Sales Tax Appellate Authority & Others
