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1975 (11) TMI 111 - SC - VAT and Sales TaxWhether the sales of manganese ore made by the petitioner-company to M.M.T.C. in execution of agreements annexures N O and P occasioned the export of the goods sold out of the territory of India? Held that - Appeal dismissed. It is quite clear in this case that the movement of the goods took place in pursuance of the contracts of sale which ultimately merged into actual sales and it was only thereafter that the tax was sought to be levied by the State of Madhya Pradesh. It was also not disputed that the tax has been levied only on such sales of the manganese ore despatched from the State of Madhya Pradesh which came from the mines situated in the State of Madhya Pradesh. Thus all the incidents of an inter-State sale are present in the instant case and the view taken by the High Court that the sales were covered by section 3(a) of the Central Sales Tax Act is absolutely correct and we fully endorse the same.
Issues Involved:
1. Sales in the course of export. 2. Outside sales. 3. Imposition of penalty for late filing of return. 4. Imposition of purchase tax. 5. Turnover not supported by C forms. 6. Total sales to Bhilai Steel Plant. Issue-wise Detailed Analysis: 1. Sales in the Course of Export: The petitioner-company claimed that sales totaling Rs. 1,46,10,853 were made in the course of export and should be exempt from taxation. The judgment addressed two categories of sales: - Sales under Agreements Q and R: These sales were made through the foreign company acting as the agent of the petitioner-company to B.I.S.C. (Ore) Ltd., London. The court held that these sales occasioned the export of goods and were consequently made in the course of export under section 5(1) of the Central Sales Tax Act. The Assistant Commissioner was in error in not exempting these sales from tax under article 286(1)(b) of the Constitution. - Sales under Agreements N, O, and P: These sales were made to M.M.T.C., another Government company, which then exported the goods. The court held that the sales to M.M.T.C. did not occasion the export of the goods, as the export was occasioned by the subsequent sale by M.M.T.C. to the foreign buyers. Therefore, these sales did not qualify for exemption as sales in the course of export. 2. Outside Sales: The petitioner argued that sales of manganese ore from its mines in Madhya Pradesh to outside purchasers were outside sales and not liable to be taxed in Madhya Pradesh as inter-State sales. The court analyzed the agreements and concluded that the sales were inter-State sales under section 3(a) of the Central Sales Tax Act, as the movement of the goods from Madhya Pradesh to another State was under a covenant of the contract of sale. The sales were taxable as inter-State sales in Madhya Pradesh under section 9 of the Act. 3. Imposition of Penalty for Late Filing of Return: The petitioner contended that the Assistant Commissioner acted illegally in imposing a penalty of Rs. 1,000 for late filing of return under the Central Sales Tax Act. The court held that the argument was concluded against the petitioner by two Division Bench decisions of the High Court, which were binding. However, the Supreme Court later quashed the penalty, citing the lack of provision for penalty under the Central Sales Tax Act itself. 4. Imposition of Purchase Tax: The petitioner challenged the imposition of purchase tax on a turnover of Rs. 748 under section 7(1) of the State Act, arguing that the proviso to that section grants an exemption up to Rs. 5,000. The court held that the petitioner did not prove that the aggregate of purchase prices of all goods purchased did not exceed Rs. 5,000. Therefore, the petitioner was not entitled to exemption under the proviso to section 7(1). 5. Turnover Not Supported by C Forms: The petitioner contended that the turnover of inter-State sales to the extent of Rs. 1,37,54,720 was not supported by C forms. The court noted that this argument raised a question of fact, which could be more conveniently raised in appeal and could not be properly decided in a writ petition. 6. Total Sales to Bhilai Steel Plant: The petitioner argued that the total sales to Bhilai Steel Plant taxed under the State Act aggregated to Rs. 7,15,316.15, as contended by the purchasers, and the Assistant Commissioner wrongly took the total amount of these sales to be Rs. 7,54,578.41. The court held that the Assistant Commissioner took the figure from the final bill of the petitioner-company, and the dispute could be more conveniently raised in appeal. Conclusion: The petition was partly allowed. The respondents were restrained from recovering sales tax on the sales covered by the agreements Q and R, and the Assistant Commissioner of Sales Tax was directed to amend the assessment order under the Central Sales Tax Act accordingly. In all other respects, the petition was dismissed. The Supreme Court affirmed the High Court's judgment with the modification that the penalty of Rs. 1,000 imposed by the Assistant Sales Tax Commissioner was quashed. The appeal was dismissed with no order as to costs.
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