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2023 (3) TMI 1004 - HC - VAT and Sales TaxInter unit transfer of goods would constitute a sale or not - Rejection of claim of the petitioner that the transfer of goods from one unit of the petitioner company to another unit does not constitute sale - whether independent registrations are obtained by the units and whether different business are carried out by different units of the same company to conclude that two different entities are in existence? HELD THAT:- It is found that mere independent registrations or the fact that different lines of business would not convert an inter unit transfer as constituting a ''sale''. Unless and until it is shown that there are two distinct legal entities involved in a transaction, levy of tax by treating it as a transaction of sale is wholly impermissible. It would be relevant to refer to the following judgment of the Andhra Pradesh High Court in KCP. LIMITED VERSUS STATE OF ANDHRA PRADESH [1992 (9) TMI 330 - ANDHRA PRADESH HIGH COURT] wherein it was held that mere registration certificate obtained by different branch or unit will not by itself result in different units becoming distinct and different legal entities capable of transferring properties/goods from one entity / person to another which is a sine qua non for a transaction to be treated as a sale attracting the charging provision. It is thus evident that unless and until there are two distinct entities, the question of sale may not arise. However, the Tribunal has not even addressed this issue and has misdirected itself in looking at the factum of independent registrations and independent lines of business to conclude that the alleged inter unit transfer would constitute sale. It is deemed appropriate to remand the matter back to the Tribunal for examining the question on the strength of the documents whether both Hi-Tech Carbon Unit and Cement Unit are different units of Indian Rayon and Industries Limited. If the answer is in the affirmative, then the question of levy of tax cannot be sustained. Writ petition disposed off.
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