M/S. ANSHU IRON & ELECTRICALS Vs. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LIMITED & ANR.

JUDGEMENT

(1.) RULE , by consent returnable forthwith. With the consent of Counsel and at their request, the Petition is taken up for hearing and final disposal. The Petitioner is the proprietor of a concern which engages in the business of electrical items, including the purchase and sale of meter accessories, old meters, meter parts and other electrical goods. The Petitioner has a registration certificate issued under the Rajasthan VAT Act, 2003, dated 26 September 1988 issued with reference to the provisions of Sub -sections (1) and (3) of Section 8 of the Central Sales Tax Act, 1956 inter alia in regard to metal scrap, meter parts, electrical meters and other parts. The Second Respondent issued a notice on its web portal of an e -auction for scrap items lying at the store of the First Respondent at Pune. The e -auction was to take place on 19 January 2012. The Petitioner furnished a demand draft on 16 January 2012 in favour of the First Respondent being a bidder from the State of Rajasthan. Clause 7.8 of the terms and conditions governing the auction sale contain the following stipulation:

(2.) THE contention of the Petitioner is that restraining the benefit of a concessional rate of duty against the "C" Form to a purchaser situated outside the State of Maharashtra constitutes a violation of the freedom of inter -state trade and commerce and is, therefore, in breach of Article 301 of the Constitution. Moreover, it is urged that the effect of clause 7.8 is to breach the provisions of Section 8 of the Central Sales Tax Act, 1956 and effectively to restrict a bidder participating from outside the State of Maharashtra by stipulating that sales against "C" Form/CST will not be allowed. According to the Petitioner, the First Respondent is an instrumentality of the State and falls within the purview of Article 12 of the Constitution. The impugned condition in the tender is stated to be violative of the provisions of Article 14 of the Constitution.

(3.) UNDER Article 246(1) read with Entry 92A of the Union List to the Seventh Schedule of the Constitution, Parliament has exclusive legislative competence to impose taxes on the sale or purchase of goods, other than newspapers, where such sale or purchase takes place in the course of inter -State trade or commerce. In so far as the States are concerned, under Article 246(3) read with Entry 54 of the State List, State legislation can impose taxes on the sale or purchase of goods other than newspapers, subject to the provisions of Entry 92A of List I. Section 3 of the Central Sales Tax Act, 1956 stipulates that 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 the documents of title to the goods during their movement from one State to another. Under Section 4(1) it has been provided that subject to the provisions of Section 3, when a sale or purchase of goods is determined in accordance with sub -Section (2) to take place inside a State, such sale or purchase is deemed to have taken place outside all other States. Under Sub -section (2) of Section 4, a sale or purchase of goods shall be deemed to have taken place inside a State, if the goods are within the State -(a) in the case of specific or ascertained goods, at the time the contract of sale is made; and (b) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation. Under Section 6(1), every dealer is liable to pay tax under the Act on all sales of goods other than electrical energy effected by him in the course of inter -State trade or commerce during any year on and from the date so notified. Section 8 provides a reduced rate of Central Sales Tax on two types of inter -State sales, namely: (i) sales made to the Government of any goods; and (ii) sales to a registered dealer other than the Government of goods of a description specified in sub -section (3). Sales which do not fall within the description contained in Section 8(1) are subject to a higher rate as stipulated in sub -section (2). The specified goods to which Section 8(1) applies are specified in Section 8(3). Under Sub -section (4) of Section 8, a dealer who seeks to avail of the rate of tax provided by sub -section (1) must fulfill two conditions: (i) The selling dealer must furnish to the Assessing Officer a declaration filled in and signed by the registered dealer purchasing goods containing the prescribed particulars in a prescribed form obtained from the prescribed authority; and (ii) If the goods are sold to Government, a prescribed certificate has to be furnished by the selling dealer to his assessing authority. The "C" Form is prescribed for a registered dealer under the Rules framed under the Central Sales Tax Act, 1956. These forms are supplied by the appropriate authority under the Act to the registered purchasing dealer. If the "C" Form containing the relevant particulars is issued by the purchasing dealer to the selling dealer, the selling dealer would collect the tax from the purchasing dealer at the rate prescribed in Section 8(1) or else at the higher rate as prescribed by Section 8(2). The particulars which are referred to in the "C" Form are: the name of the issuing State, the office and date of issue, name of the purchasing dealer together with his registration certificate number, the validity of the registration and the particulars of goods purchased together with the bill for purchase. The selling dealer is required to produce the "C" Form in his assessment proceedings, if he wishes to pay tax at a lower rate as prescribed in Section 8(1). These principles are well established in view of the decision of the Supreme Court in State of Rajasthan v. Sarvottam Vegetables Products., 1 (1996) 8 SCC 639