This is in reference to recent Supreme Court ruling in the case of Commercial Taxes Officer Vs M/s Bombay Machinery Store whereby the apex court held below: –
‘There is no concept of constructive delivery either express or implied in section 3 of Central Sales Tax Act”. Hence, benefit cannot be denied under section 6(2) of the Central Sales Tax basis departmental circulars.’
Brief facts of the case
Relevant legal provisions
When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce
A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase-
(a) occasions the movement of goods from one State to another; or
(b) is effected by a transfer of documents of title to the goods during their movement from one State to another.
Explanation 1 – Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee.
(2) Notwithstanding anything contained in sub-section (1) or sub-section (1A), where a sale of any goods in the course of inter-State trade or commerce has either occasioned the movement of such goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subsequent sale during such movement effected by a transfer of documents of title to such goods, –
(a) to the Government, or
(b) to a registered dealer other than the Government, if the goods are of the description referred to in sub-section (3) of section 8, shall be exempt from tax under this Act:
Provided that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner and within the prescribed time or within such further time as that authority may, for sufficient cause, permit,-
a) a certificate duly filled and signed by the registered dealer from whom the goods were purchased
a. containing the prescribed particulars in a prescribed form obtained from the prescribed authority; and
b) if the subsequent sale is made –
i. to a registered dealer, a declaration referred to in clause (a) of sub-section (4) of section 8, or
ii. to the Government, not being a registered dealer, a certificate referred to in clause (b) of section (4) of section 8:
Question of Law before the Supreme Court
Whether as a condition of giving the benefit of Section 6(2) of the said Act, the tax authorities can impose a limit or time-frame within which delivery of the respective goods has to be taken from a carrier when the goods are delivered to a carrier for transmission in course of interstate sale ?
Case laws relied upon
1. Guljag Industries Limited vs. State of Rajasthan & Another reported in (2003) 129 STC 3 (Raj.)
2. Dass Gupta and Brothers vs. Commissioner of Sales Tax, Delhi Administration (1980) 45 STC 52 (Delhi)
3. CTO vs. Bhagwandas & Sons (1996 Tax World 107)