LOCAL SALE V. INTER-STATE SALE – Goods and Services Tax – GST – By: – Mr. M. GOVINDARAJAN – Dated:- 18-8-2017 – The sale may be effected within the State or in between two or more States. The local sale is nothing but the intra-State sales. When the sale is between two or more States the same is called as inter-State Sales. In general, sale where seller and buyer both are from same state is called as intra state sale for example seller of Kanpur (U.P.) sells goods to a dealer of Noida (U.P.) but when buyer and seller are in different States, it is Inter-state sales. For example a seller of Chennai (Tamil Nadu) sells goods to dealer based at Allahabad (U.P.) however location of seller and buyer is immaterial and both can be located in same State but goods should be moved from one State to another. Section 3 of Central Sales Tax Act, 1956 discusses when is a sale or purchase of goods said to take place in the course of inter-State trade or commerce. According to this section a sale shall
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hat a sale can be said to be in the course of inter-state only if two conditions concur viz. (i) sale of goods and (ii) a transport of those goods from one State to another. Thus transaction must be a completed sale. Location of buyer and seller is immaterial. Thus, even if buyer and seller are within the same State, sale will be inter-State, if sale occasions movement of goods from one State to another. E.g., the buyer may have construction site in another State and may ask seller to dispatch goods directly to the site. In Commissioner of Commercial Taxes, Hyderabad V. Desai Beedi Company – 2015 (3) TMI 786 – SUPREME COURT the Supreme Court held that in order to constitute an inter-state sale the movement of goods should be occasioned by the sale and that the same must be inextricably connected with the sale. The assessee was engaged in the manufacture of beedi and was having factory and head office in Maharashtra, with a registered branch office in Andhra Pradesh. The beedi leaves we
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the State of Andhra Pradesh to another State were not inextricably connected, but independent of each other and hence it was never an instance of interstate sale . The Madras High Court had an occasion to consider whether the sale of sandal wood in an auction effected in the State of Tamil Nadu and the movement of the goods to another State at the instance of the successful bidder, who was having the place of business in the latter State, would constitute an inter-state sale and whether the demand of payment of tax under the Tamil Nadu VAT Act was justified or not. The Madras High Court in Karnataka Soaps and Detergents Limited V. District Forest Officer, Sathyamangalam and others – 2005 (2) TMI 786 – MADRAS HIGH COURT held that the terms of the tender-cum-auction sale notification covered all the registered sandal wood contractors of Salem Division and that there was no differentiation as local buyer and interstate buyer . The terms of the notification were quite specific, making it o
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her establishment was situated in a Special Economic Zone. The request was turned down by the Authority, considering it as a local sale . She approached the High Court by filing a writ petition. The High Court granted liberty to the appellant to approach the Divisional Forest Officer, Marayoor, Idukki District by filing Form I under CST Act, seeking exemption. The application of the appellant was rejected by the Authority. Therefore she again approached the High Court. The High Court held the tender form stipulated that the successful bidder had to satisfy the entire due amount including the tax under KVAT Act. At no point of time the appellant stated that the offer was subject to exemption to pay any tax under KVAT Act or the goods were being purchased in the course of export through the unit in a SEZ situated in another State and that no tax under the local statute would be payable. The appellant participated in the tender without raising any objection. The terms of e-auction notifi
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Unit; goods imported into the territory of India till they cross the customs frontiers of India; or supplies made to a tourist referred to in section 15; Section 8(2) provides that subject to the provisions of Section 12, supply of services, where the location of the supplier and the place of supply of services are in the same State or same Union territory shall be treated as intra-State supply. The intra-State supply of services shall not include supply of services to or by a SEZ developer or a SEZ Unit. The explanation 1 to this section provides that where a person has- an establishment in India and any other establishment outside India; an establishment in a State or Union territory andany other establishment outside that State or Union territory; or an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons. Expla
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