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2010 (2) TMI 1094 - HC - VAT and Sales TaxWhether the lease agreement and purchase order were integrally connected with the movement of goods and ultimate delivery of the goods to the lessee at whose address the goods are consigned by ex State supplier, and was it an integral transfer under section 3(a) of the Central Sales Tax Act, as held in the case of I.T.C. Classic Finance and Services v. Commissioner of Commercial Taxes [1995 (3) TMI 445 - ANDHRA PRADESH HIGH COURT], and accepted by the apex court in 20th Century Finance Corpn. Ltd. v. State of Maharashtra [2000 (5) TMI 980 - SUPREME COURT OF INDIA] ? Whether the Commercial Tax Tribunal has erred in law in relying the minority view given in the aforesaid 20th Century Finance Corpn. Ltd. case [supra] and not following the majority view given by the apex court on the point that the tax was leviable only under Central sales tax treating it as interState transaction? Held that:- The transaction under reference being an inter-State sale, there was no question of levy of sales tax thereon by the State Government under the Trade Tax Act, 1948, in view of the express mandate of article 286(1) of the Constitution of India. And also, in view of the legal position declared by the Supreme Court in 20th Century Finance Corpn. Ltd. [2000] 119 STC 182; [2000] 6 SCC 12, wherein, the vires of section 3F of the Trade Tax Act, 1948 were conditionally upheld by the apex court by expressly recording that the sales tax liability under the aforesaid provision, would not extend to "outside sales", and in respect of "inter-State sales". The ingredients of section 3 of the Central Sales Tax Act, 1956 must be deemed to have been satisfied by the deemed sales, contemplated through the lease agreements executed between the TCIL and the ONGC/BHEL. This determination has lead to the further conclusion, that the same constitute inter-State sales. The Central Government alone is however competent to levy sales tax on interState sales. That being so, the imposition of sales tax at the hands of the State of Uttar Pradesh on the revision petitioner, would be in clear conflict with the provisions of article 286(1) of the Constitution of India, as also the law declared by the apex court in 20th Century Finance Corpn. Ltd. [supra], specially while interpreting section 3F of the Trade Tax Act, 1948, inasmuch as, the vires of the aforesaid provision (under which tax has been levied in this case) has been upheld subject to the condition that the sales tax is not levied on an "outside sale" or an "inter-State sale". The observations recorded by the minority in 20th Century Finance Corporation Ltd.'s case [supra] cannot be taken into consideration for deciding the present case. Since, admittedly, the authorities under the Trade Tax Act, 1948 have based their conclusions on the minority view (recorded in paragraphs 94 to 96 of the judgment) whereas the majority view is to the contrary, we are satisfied that submission advanced by the learned counsel for the revision petitioner also deserves to be accepted.
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