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Case Law Details

Case Name : I. T. I. Ltd Vs State of Kerala (Kerala High Court)
Appeal Number : ST.REV. No. 1 of 2017
Date of Judgement/Order : 27/05/2024
Related Assessment Year :

I. T. I. Ltd Vs State of Kerala (Kerala High Court)

In the legal case of I. T. I. Ltd versus the State of Kerala before the Kerala High Court, the issue centered around the eligibility of exemption for transit sales of goods purchased in 2001-02 but sold in 2002-03. The court reviewed the decision of the Tribunal, which concluded that the petitioner’s claim for exemption on transit sales was unsupported by the necessary documentation.

The Tribunal’s ruling was based on the requirement that sales in transit must be evidenced by statutory forms, specifically Form-E1 under the Central Sales Tax (Registration and Turnover) Rules. However, the petitioner had submitted E-Forms related to sales made in 2002-03 to support their claim for exemption, which was for the assessment year 2001-02. Consequently, the Tribunal determined that subsequent sales in 2002-03 could not be considered transit sales of goods purchased in 2001-02, as the transportation of the goods was completed in the earlier year.

The petitioner argued that copies of relevant E Forms accounted for in subsequent years could be produced for verification. However, the Court rejected this argument, emphasizing that the claim for exemption on transit sales must demonstrate that the sales occurred while the goods were in transit. Since the E1 Forms relied upon were accounted for in a subsequent year, they could only pertain to sales completed after the transportation of the goods, not while they were in transit.

Consequently, the Court upheld the Tribunal’s decision, ruling against the petitioner and in favor of the revenue. This decision was based on the failure of the petitioner to provide sufficient evidence to justify their claim for exemption on transit sales.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

In the above S.T. Revision the following questions of law have been raised:

“(i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in sustaining the denial of concessional rate of tax for the turnover of Rs.2,95,15,307/- received as per the supplementary bills, for concluded sale and supported by a valid ‘C’ Forms?

(ii) Did not the Appellate Tribunal err in law in failing to take note that for a single sale of equipment for an agreed price, the price is paid in two parts, the first part as per the provisional bills and the second payment in accordance with the purchase order?

(iii) Should not the Appellate Tribunal have accepted the appellant’s claim that in so far as the issue of ‘C’ Form was concerned, the ‘C’ Form is issued against every single sale and that the CST Act did not contemplate two ‘C’ Forms for a single sale?

(iv) Did not the Appellate Tribunal err in law in not considering the claim for in transit with regard to Rs.5,83,33,441/- which is supported by Form-E1 about which there was no dispute?. Is not the denial of exemption in respect of the above turnover arbitrary and illegal?

(v) Did not the Appellate Tribunal err in law and on facts, in not accepting the Paper Book filed on the ground that the same was filed at the time of hearing?

(vi) In the absence of a sale without ‘C’ Form, is the levy of CST on a part of the turnover at 10% is legal, valid and sustainable in law?

2. As regards question Nos.1, 2,3 and 6, we find that the issue has already been decided by a Division Bench of this Court, in respect of the same assessee for a subsequent assessment year, by answering the question of law raised against the assessee and in favour of the revenue. Accordingly, following the said judgment, the aforesaid questions are answered against the assessee and in favour of the revenue.

3. As regards question No.4 raised by the petitioner, we find that the Tribunal by the order impugned in this revision petition was called upon to consider the entitlement of the petitioner for the benefit of concessional rate of tax on sales in transit. The Tribunal found that as per the statutory provisions, the sales in transit had to be evidenced by statutory forms in Form-E1 under the Central Sales Tax (Registration and Turnover) Rules [‘CST (R&T) Rules’ for short] and in the instant case, in support of the claim for exemption on transit sales, the petitioner had produced E-Forms that pertained to sales effected in 2002-03, whereas, the claim for exemption for transit sales was in respect of the assessment year, 2001-02. The Tribunal therefore found that subsequent sales of goods effected in 2002­-03 could not be considered as transit sales of goods purchased in 2001-02, since the transportation of the said goods stood complete in all respects in 2001-02 itself.

4. Although the learned counsel for the petitioner points out that copies of the relevant E Forms that were accounted in the subsequent years are available with the petitioner and they can be produced before the authorities for verification, we fail to see how that would be of any assistance to the petitioner since it is trite that the claim for exemption in respect of transit sales must be justified by showing the sale as having occurred in transit. As already noticed, the petitioner cannot establish the aforesaid fact since the E1 Forms relied on by him have admittedly been accounted only in a subsequent year, which could only be after the transportation of the goods and not while the goods were in transit.

5. We therefore see no reason to interfere with the finding of the Appellate Tribunal on this issue and question No.4 raised by the petitioner in this Revision Petition is therefore answered against the assessee and in favour of the revenue. As regards question No.5, we are of the view that the same does not raise any substantial question of law and is merely an issue of fact. The same is therefore, not answered.

The S.T. Revision is thus dismissed, by answering the questions of law raised against the assessee and in favour of the revenue.

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