TN to Kerala Transfers Deemed Inter-State Sales, Not Branch Transfers: CESTAT Confirms CST Liability as D7 Records Reveal Pre-Arranged Orders for Sales

A ruling from CESTAT confirmed that transfers from Tamil Nadu to Kerala qualify as deemed inter-state sales, not branch transfers, thereby attracting Central Sales Tax (CST) liability. The case arose due to discrepancies in the treatment of goods transferred between states by a business. The tribunal concluded that the transactions in question were indeed inter-state sales and not merely internal transfers between branches. This ruling reinforces the requirement for businesses to correctly categorize transactions, as incorrect classification can result in tax liabilities and penalties. It also highlights the ongoing need for businesses to be vigilant about the tax treatment of their cross-state transactions.