Law: Sales Tax Act, 1990

Section: 2(33),(44),2(30)(22),45,36

(a) Sales Tax Act (VII of 1990)---S. 2(33) & (44)---Supply---Time of supply---Transaction of supply--­Ad hoc deposits/part payment, taxation of---If after coming into existence of the transaction of sale, any part payment is received by the supplier from the buyer, the supplier shall be liable to account for the part payment in the return of tax for that tax period and the sales tax shall be charged accordingly. (b) Sales Tax Act (VII of 1990)----- ----S. 2(33) & (44)---Supply---Time of supply---No transaction of supply---Ad hoc deposits or advances, taxation of---Validity---If no transaction of supply had taken place and the supplier received any advances or deposits from the buyers, such advances/deposits were not liable to the charge of sales tax---Contract of sale or agreement to sell having been executed with the stipulation of adjustment of full or part payment from the advances/deposits, the said adjustment in full or in part shall be deemed to be in pursuance of the transaction of supply and such amount shall immediately become liable to the imposition of sales tax. (c) Sales Tax Act (VII of 1990)----- ----Ss. 2(44), 36 & 45---Sales of Goods Act (III of 1930), S.4---Time of supply---Demand was raised for non-deposit of sales tax on advance payments against further supplies to be made as the same were not accounted for in the Monthly Sales Tax Return ---Assessee contended that tax under the sales tax law was leviable only on supplies, whereas in the present case no supply ever took place in respect of disputed advances--­Validity---Department had neither stated that any contract of sale or further supply of the goods existed between the assessee and the depositors, nor there was any evidence on record on the basis of which it could be inferred that the deposits with the assessee/appellants were in possession of the assessee/appellants as an outcome of a contract of sale or an agreement to sell---Treating such deposits as a sale within the framework of Sales Tax Act, 1990 and creating a sales tax liability was not legal in circumstances---Interpretation placed by the Department through the impugned letter/instruction show-cause notice and the…

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