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More room for tax appeals

New Delhi, Oct. 21: The Union cabinet today approved a draft bill to amend the Central Sales Tax (CST) Act for setting up a Central Sales Tax Appellate Authority the orders of which will be binding on the state governments.

The cabinet gave its approval to the setting up of 10 new income-tax appellate tribunals. The state governments, however, have been expressing their reservations against the setting up of the CST appellate authority. It appears that they will have to swallow the bitter pill as it has been administered under the directions of the Supreme Court.

The decisions are aimed to clear the huge backlog of cases so that the funds, which are stuck in disputes, are made available for public use. Over 1.8 lakh cases are pending in the income-tax appellate tribunals alone.

Parliamentary affairs minister Sushma Swaraj said the decision to set up the Central Sales Tax Appellate Authority has been taken to comply with the directions of the Supreme Court.

On August 19, 2003, in the case of Indicarb Ltd, the Supreme Court had directed that in order to fine tune the Central Sales Tax Act, 1956, certain amendments should be carried out by the next hearing in six weeks’ time.

The apex court had desired that the amendment should ensure that the orders passed by the appellate authority should be binding on the concerned state governments and the respective assessing authorities of all states and Union territories will pass consequential orders or may issue such directions as are necessary to give effect to the orders of the CST Appellate Authority.

The Supreme Court had further directed that only such disputes which relate both to the inter-state sales (section 6 A) and stock transfers (section 9) will be transferred to the CST appellate authority for adjudication.

Cases involving more than one state government in a dispute will also be included and proceedings other than appeal, such as revision etc, will also be entertained by the authority.

The amendment also has to ensure that the imposition of double taxation on assessees is avoided.

CST is levied whenever sales of goods takes place in the course of inter-state trade or commerce. It is administered by the state governments and the entire revenue collected is retained by the concerned state governments. The movement of goods from one state to another occasioned not by way of but by reason of consignment or stock transfer is exempted from CST.

The distinction between a sale and stock transfer has often given rise to disputes. Since CST is collected by the states from where the goods originate, these disputes have arisen between states and also between a state and dealers. The issues relate to jurisdiction, incidence and quantum of tax.

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