{"id":216658,"date":"2019-07-09T20:47:50","date_gmt":"2019-07-09T15:17:50","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=216658"},"modified":"2019-07-11T16:31:58","modified_gmt":"2019-07-11T11:01:58","slug":"sc-creation-of-new-state-not-a-ground-to-treat-sales-between-2-successor-states-as-intra-state-sales","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2019\/07\/09\/sc-creation-of-new-state-not-a-ground-to-treat-sales-between-2-successor-states-as-intra-state-sales\/","title":{"rendered":"SC| Creation of new state not a ground to treat sales between 2 successor states as intra-state sales"},"content":{"rendered":"<p style=\"text-align: justify;\"><strong>Supreme Court<\/strong>: Deciding an interesting question of law, the 3-judge bench of Ranjan Gogoi, CJ and SA Nazeer and Sanjiv Khanna, JJ has held that <span style=\"color: #ff0000;\"><em>the creation of a new State is an unforeseen event and could give rise to unusual situations, but this cannot be a ground and reason to treat inter-state sales between the two successor states as intra-state sales<\/em><\/span>.<\/p>\n<p style=\"text-align: justify;\">The Court was deciding the legal effect of bifurcation of the State of Madhya Pradesh into the successor State of Madhya Pradesh and the State of Chhattisgarh by the Madhya Pradesh Reorganisation Act, 2000 on exemption or benefit of deferment of sales tax granted under the Madhya Pradesh Commercial Tax Act, 1994. The question before the Court was:<\/p>\n<blockquote>\n<p style=\"text-align: justify;\">\u201cwhether the industrial unit in the reorganised State of Madhya Pradesh and under the new State of Chhattisgarh would continue to avail the benefit of such exemption or deferment even after the bifurcation in both the states, irrespective of the location of the industrial unit which would be in one of the two states.\u201d<\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">Holding that <em><span style=\"color: #ff0000;\">creation of the new political State must be given full legal effect<\/span>, <\/em>the Court overruled the contrary observations and ratio recorded in Paras 29 and 30 in <a href=\"http:\/\/scconline.com\/DocumentLink\/kC71Gd4I\"><em>Commissioner of Commercial Taxes, Ranchi v Swarn Rekha Cokes and Coals Pvt Ltd<\/em>, (2004) 6 SCC 689<\/a> wherein it was held,<\/p>\n<blockquote>\n<p style=\"text-align: justify;\">\u201cnotwithstanding the creation of the two states, exemption or deferment of tax notifications issued before the bifurcation would continue to apply in the new state and that for the purpose of sales tax, the two states were deemed to be one because of the legal fiction envisaged vide Sections 78 and 79 of the Reorganisation Act.\u201d<\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">Holding that disorderly and chaotic situation would erupt if the new state was to be created without any laws as on the date of its creation, the Court said that to overcome this interregnum and vacuum, the Reorganisation Act(s) uniformly contain provisions which create a legal fiction to the extent that the reorganisation of the State would not affect the applicability of laws to all the territories included within it before and even after the reorganisation.<\/p>\n<blockquote>\n<p style=\"text-align: justify;\">\u201cHowever, this is subject to another dictum\/rule that the existing laws as earlier applicable to the territories would be applicable to the new state until the new state provides for adaptation or modification of the law by way of repeal or amendment. The time period provided for such adaptations and modifications is generally two years from the appointed day, i.e. the day by which the Central Government in the Official Gazette provides for the creation of the two states by transfer of territories from one state to another.\u201d<\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">[State of Madhya Pradesh v. Lafarge Dealers Association, <a href=\"http:\/\/scconline.com\/DocumentLink\/07A8P6q2\"><b>2019 SCC OnLine SC 837<\/b><\/a>, decided on 09.07.2019]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court: Deciding an interesting question of law, the 3-judge bench of Ranjan Gogoi, CJ and SA Nazeer and Sanjiv Khanna, JJ <\/p>\n","protected":false},"author":121,"featured_media":154914,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,9],"tags":[36521,36523,36522,36520,36519],"class_list":["post-216658","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-supremecourt","tag-creation-of-new-states","tag-inter-state-sales","tag-intra-state-sales","tag-reorganistion","tag-sales"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - 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