Case Title: Tata Motors Limited v. Central Sales Tax Appellate Authority & Others
The amount of central sales tax submitted by Tata Motors with regard to the sale of buses to the Andhra Pradesh State Road Transport Corporation must be transferred from Andhra Pradesh to Jharkhand, according to a Supreme Court order (APSRTC).
The amount of central sales tax paid by Tata Motors with regard to the transaction should be sent to Jharkhand right away after verification, according to the division bench of Justices M.R. Shah and Krishna Murari. Tata Motors' central sales tax due on sales made through RSO, Vijayawada of cars and buses to APSRTC, which were determined to constitute interstate sales, was ordered to be adjusted by the State of Jharkhand.
The court ruled that before Section 22(1B) was added to the Central Sales Tax Act of 1956, there was no provision under which the Appellate Authority could have given instructions for a refund of the tax that the state had collected but was not owed to the state, or alternatively, for the state to transfer the refundable amount to the state to which central sales tax is due. However, the Finance Act of 2010 also included Section 22(1B). According to Section 22(1B), the authority may order a state to either return tax it has collected that is not due or transfer the refundable amount to the state that is owed central sales tax.
The Appellant, Tata Motors, engaged in business with RSO, Vijayawada, and sold buses to APSRTC. Since it was considered to be an interstate transaction, the Appellate Authority did not issue a follow-up ruling requiring that the amount of tax paid on the transaction be subtracted from the tax owed to Jharkhand.
The State of Jharkhand was entitled to receive central sales tax from Tata Motors Limited. However, by characterising the sale as a stock transfer, the appellant paid the transaction's tax to the State of Andhra Pradesh even though Andhra Pradesh was not liable for it. As a result, the Court decided that the central sales tax that the State of Andhra Pradesh had recovered needed to be transferred to the State of Jharkhand and adjusted to the amount of tax that needed to be paid to the State of Jharkhand.
The court ruled that the State of Andhra Pradesh cannot keep the amount of central sales tax that the appellant paid on the sale of cars and buses to APSRTC that was carried out through RSO, Vijayawada.