The Supreme Court has instructed the Andhra Pradesh government to transfer the amount of central tax deposited by Tata Motors to Jharkhand.
The State of Jharkhand was directed to adjust the tax amount towards the central sales tax liability with respect to the vehicles/buses sold to APSRTC which were found to be in the nature of inter-state sales and were effected through RSO.
The court stated that before the addition of Section 22(1B) to the Central Sales Tax Act, 1956, there was no way in which under which an Appellate Authority could have issued directions for a refund of the tax collected by the state that was not due to that state.
It also could not, direct that state to transfer the refundable amount to the state to which central sales tax is due.
Since Section 22(1B) of the Finance Act of 2010 was added. It empowered the authorities 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, in this case was Tata Motors, which did transaction of buses through RSO, Vijayawada, and sold to APSRTC.
Although it was be an inter-state ttransaction, the Appellate authorities had issued no consequential order for directing that the amount of tax paid on the transaction be adjusted against the tax due to Jharkhand.
As the 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.
The Court held that the amount of central sales tax recovered by Andhra Pradesh Government had 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.