2019 (4) TMI 1632 - UTTARAKHAND HIGH COURT

Benefit of concessional rate of tax for purchase of raw material used in the manufacture and sale of “kathha”, and “cutch” - whether the sale, of khair wood to the petitioner, is in the course of inter-State trade or commerce from the place of business of the Corporation i.e. in the State of Uttarakhand, for it is only in the case of an inter-State sale would Section 8(4) of the CST Act require the petitioner to submit a declaration in Form-C to the Corporation, and for the Corporation in turn to submit the said declaration to the Trade Tax Department?

HELD THAT:- Among the conditions stipulated in the notification dated 26.12.2000, is that the sale must be in the course of inter-State trade or commerce. As the Notification dated 26.12.2000 provides for a concessional rate of tax, on fulfillment of the conditions prescribed therein, and such a notification must be strictly construed, it is only if the sale of goods is in the course of inter-State trade or commerce would the benefit of the said notification be available to the petitioner.

The field of taxation on the sale or purchase of goods, taking place in the course of inter-state trade or commerce, was excluded from the competence of the State Legislature. The situs of the sale or purchase was wholly immaterial as regards inter-state trade or commerce. In view of Section 3(a) of the CST Act, all that had to be ascertained was whether the sale or purchase occasioned the movement of goods from one State to another. If the transaction of sale satisfied this requirement, it was deemed to be a sale or purchase of goods in the course of inter-State trade or commerce and, by virtue of Articles 269 and 286 of the Constitution, was beyond the legislative competence of a State legislature to tax.

There is no integral link between the contract of sale and the movement of goods (Khair wood) from the State of Uttarakhand to the State of Uttar Pradesh. Sale of goods (i.e. Khair wood), in the present case, cannot therefore be said to be an inter-State sale falling within the ambit of Section 3(a) of the CST Act. The order under appeal, to the extent the learned Single Judge held it to be an inter- State sale falling within the ambit of Section 3(a) of the CST Act, must be and is, accordingly, set aside.

Doctrine of unjust enrichment - HELD THAT:- The very collection and/or retention of tax, without authority of law, entitles the person, from whom it is collected, to claim its refund - the doctrine of unjust enrichment has no application, in the facts and circumstances of the present case, as Khair wood purchased by the petitioner was not sold as they were, but were used as inputs for the manufacture of kattha.

The subject sale is an intra-State sale liable to tax under the Uttarakhand Sales Tax laws, and not under the CST Act, the question of refund of the arrears of tax, collected by the Corporation from the petitioner, does not arise.

Decided in favor of revenue.