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2014 (9) TMI 140 - HC - VAT and Sales TaxLevy of tax under section 3(a) read with section 6 of the Central Sales Tax Act, 1956 - movement of goods from one State to another - assessee contended that the goods which were moved from Bangalore to Delhi are not the finished product and are in the nature of components or parts of the goods and therefore, the CST Act is not attracted. - Held that:- the essence of an interState sale or purchase is the movement of goods from one State to another. If the movement of goods from one State to another is a result of a covenant or an incident of the contract of sale, then the sale is an interState sale, no matter in which State the property in the goods passes. It is not necessary that the sale must precede the inter-State movement in order that the sale may be deemed to have occasioned such movement. It is also not necessary for a sale to be deemed to have taken place in the course of inter-State trade or commerce, that the covenant regarding interState movement must be specified in the contract itself. It would be enough if the movement was in pursuance of or incidental to the contract of sale. Therefore only when sale or purchase of goods occasions movement of goods from one State to another, the liability to pay tax under the Act is attracted. If the goods are manufactured and transported to another State merely because before delivery of the goods in terms of the contract some additional fixture were embedded to that manufactured goods, it would not nullify the effect of the goods being transported after it is being manufactured from one State to another. The effect of an inter-State sale is not effaced by such additions to manufactured product. This court in its revisional jurisdiction cannot interfere with the finding of fact recorded by the appellate authority based on legal evidence. Therefore the contention that what is transported from Bangalore to Delhi was only a part of the rolling stock and it was not a finished product has no substance. In a contract of this nature, what is to be seen is, what is the dominant nature. If the contract is looked into from that angle, it is very clear that after importing material from Korea, after getting locomotive part from Kolkata, Chennai and Coimbatore, at BEML, these rail coaches were assembled, fabricated, manufactured, tested and only after they found road worthy, they were despatched from Bangalore to Delhi on rails. Therefore the goods agreed to be sold under the contract of sale were moved from Bangalore to Delhi in terms of the agreement of sale and sold at Delhi. Therefore all the ingredients which have to be satisfied to attract the liability of tax under section 6 are fulfilled in this case. Agreement of sale occasioned movement of goods from Bangalore to Delhi the tax to be levied is on the value of the goods. After it reaches its destination at Delhi, if there are any value additions, that cannot be the subject-matter of levy of tax under the Act by the State of Karnataka under section 9 of the Act. It was further contended that as at the point of actual sale, the Government of India had not granted exemption from payment of customs duty and excise, all of them have added to the value of the goods. Therefore, the tax levied under section 9 is on the total value. Once Government of India granted exemption from payment of customs duty and excise duty, corresponding value of the goods is to be reduced and tax leviable under section 6 is to be confined only to that net value of the goods which were manufactured at Bangalore and transported to Delhi. If it is so it is open to the assessee to approach the authorities by furnishing the particulars which are relevant and if the authorities are satisfied firstly that there was value addition at Delhi and the cost of the goods includes customs duty as well as excise duty which is exempted, certainly, they would work the liability of tax payable under section 6 in accordance with law. That would meet the ends of justice - Decided against assessee.
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