Page 63 - GSTL_14th May 2020_Vol 36_Part 2

2020 ] COMMERCIAL TAXES OFFICER v. BOMBAY MACHINERY STORE 165
That judgment is under appeal before us. Before we deal with this judgment, we
shall briefly refer to the other appeals which have been heard together.
3. In Civil Appeal No. 2220 of 2011, incidences of sale relate to different
dates between 24th March, 1994 and 30th January, 1995.
4. Civil Appeal No. 10000 of 2017 and Civil Appeal No. 10001 of 2017
relate to another assessee, Unicolour Chemicals Company. That firm purchased
chemical and colour from a Gujarat based company, and the goods reached the
godown of the carrier transport company on 12th May, 2000. They were sold to a
firm in Jaipur in two tranches, after 55 days and 80 days from the date of arrival.
The monetary value of these goods was Rs. 1,27,592. In Civil Appeal No. 10001 of
2017, revenue’s case is that survey of the business place of the same firm revealed
that :-
“the stock of taxable good colour chemical of price Rs. 4,72,653/- has been
found less and on doubt on the nature of sale showing in the Section 6(2) of
the Central Sales Tax Act and seeing the possibility of tax evasion the rec-
ord found in the survey of the business firm has been seized.”
(quoted from the order annexed to the paper book)
These goods had reached the godown of the transport company on 25th July,
2001. These were brought against bilty and the documents were transferred to
the same firm on 4th September, 2001. There was thus delay of 41 days. The tax
fixation authorities directed application of the State Act treating the transactions
to be local sales. This order was sustained by the Deputy Commissioner (Ap-
peals) and the order of the Tax Board also went against Unicolour. The High
Court, following the judgment in the case of Bombay Machinery Store (which we
are treating as the lead case in this judgment), quashed the orders of the statutory
authorities in both the appeals and also invalidated the two circulars.
5. The two circulars issued by the Commissioner, Commercial Taxes
Department, Rajasthan have been quoted in the impugned judgment in the case
of Bombay Machinery Store. Henceforth, wherever we refer to the expression
judgment under appeal, we shall imply that judgment only, unless we specifical-
ly refer to any of the three other decisions under appeal. These circulars read :-
“S. No. 1115B : CCT Circular F. 11(3)/CST/Tax/CCT/1997/1563, dated
16-9-1997
As you are aware of the fact that to avoid multiple taxation of goods sold
by transfer of documents of title to the goods in their single movement from
one State to another, provisions for exemption of such transaction are em-
bodied in Section 6(2), CST Act, 1956. It appears that application of this
provision has been made more or less mechanical by the assessing authori-
ties in as much as on furnishing form E-I/E-II and C forms without looking
into the material facts regarding single inter-State movement of such goods,
benefits are conferred to such dealers. If the movement of the goods from
one State to another terminates, the subsequent sales will be treated as
intra-State sales and benefit of the above sub-section (2) of Section 6 will not
be available in such cases. It is found that trade is often claiming large ex-
emptions under this provision, particularly in respect of paper, dyes and
chemicals, etc. It is, therefore, directed that all the assessing authorities
should specifically examine the nature of transactions before granting bene-
fit under the said section.
It may be argued that in view of the Explanation I to Section 3 of the CST
Act, 1956, inter-State movement of goods continues until the consignee ob-
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