Supreme Court Directs Andhra Pradesh To Transfer To Jharkhand CST Collected From Tata Motors In Respect To Sale To APSRTC

The Supreme 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 Andhra Pradesh State Road Transport Corporation (APSRTC).

The division bench of Justice M.R. Shah and Justice Krishna Murari has 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 stated that prior to the addition of Section 22(1B) to the Central Sales Tax Act, 1956, there was no provision under which the Appellate Authority could have issued directions for a refund of the tax collected by the state that was not due to that state, or alternatively, direct that state to transfer the refundable amount to the state to which central sales tax is due.

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.

The appellant, Tata Motors, undertook transaction/sales of buses through RSO, Vijayawada, and sold 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.

Tata Motors Limited was liable to pay central sales tax to the State of Jharkhand. 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. Therefore, the Court held that the amount of central sales tax recovered by the State of Andhra Pradesh was required to be transferred to the State of Jharkhand and it was required to be adjusted towards the amount of tax to be paid to the State of Jharkhand.

The court held that the State of Andhra Pradesh cannot retain the amount of central sales tax paid by the appellant on the transaction of sale effected through RSO, Vijayawada, with respect to vehicles/buses sold to APSRTC.

Case Title: Tata Motors Limited Versus Central Sales Tax Appellate Authority & Others

Citation: 2022 LiveLaw (SC) 847

Counsel For Appellant: Advocates Amar Dave, Nandini Gore, Neha Khandelwal, Manvi Rastogi

Counsel For Respondent: Advocate Nishe Rajan Shonker

Headnotes -

Central Sales Tax Act 1956- Court 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 Andhra Pradesh State Road Transport Corporation (APSRTC)-transaction in question, namely, sales effected through RSO, Vijayawada with respect to vehicles/buses sold to APSRTC, the sale/s is/are found to be in the nature of inter-state sale/s. In that view of the matter, the appellant – Tata Motors Limited was liable to pay central sales tax to the State of Jharkhand. However, treating the sale as stock transfer, the appellant/its representative had paid the tax on the aforesaid transaction to the State of Andhra Pradesh which is not leviable by the State of Andhra Pradesh. Therefore, the amount of central sales tax recovered by the State of Andhra Pradesh is required to be transferred to the State of Jharkhand and the same is required to be adjusted towards the amount of tax to be paid to the State of Jharkhand.

Central Sales Tax Act 1956 - Prior to insertion of Section 22(1B) to the Central Sales Tax Act, 1956, there was no provision by which the Appellate Authority could have issued directions for refund of the tax collected by the State which has been held by the Appellate Authority to be not due to that State, or alternatively, direct that State to transfer the refundable amount to the State to which central sales tax is due on the same transaction. However, by the Finance Act, 2010, Section 22(1B) has been inserted to Act 1956 providing for refund-in line with Section 22(1B) of the Act 1956, the State of Andhra Pradesh is directed to transfer to the State of Jharkhand the amount of central sales tax deposited by the appellant with the State of Andhra Pradesh with respect to transaction in question

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