2008 (8) TMI 555 - SC - VAT and Sales Tax

Whether the purchases of the value of Rs. 1,92,67,236 made by the appellant were purchases in the course of export? Whether the said transactions stood covered by section 5(3) of the Central Sales Tax Act, 1956 and, consequently, not liable to tax under section 5A of the 1963 Act? Held that - Appeal allowed. It appears from the memo of appeal filed before the Appellate Tribunal that the appellant had produced trading accounts and details of purchases for the assessment year 1998-1999, list of domestic purchases supported by sale bills issued by registered dealers within and outside the State against form 18A, prior purchase orders of foreign buyers, copies of export invoices, bill of lading and other records. In such matters, it is the duty of the Assessing Officer to collate the facts and ascertain whether the purchased cashew kernels worth Rs. 1,92,67,236 were effected in the course of export. In this case, that factual foundation is missing. Therefore, the matter needs to be remitted to the Deputy Commissioner (Appeals)-I, Commercial Taxes, Ernakulam to consider the averments in the memo of appeal filed by the appellant herein and decide the matter afresh.

Summary

Issues:
Interpretation of section 5(3) of the Central Sales Tax Act, 1956 in the context of purchases made for export purposes.

Analysis:
The civil appeal before the Supreme Court involved a private limited company engaged in the business of exporting cashew kernels, challenging the assessment of tax liability on purchases made within the State of Kerala for export purposes during the assessment year 1998-99. The appellant claimed that the purchases, supported by declarations in form 18A, were covered under section 5(3) of the Central Sales Tax Act, 1956, and thus not liable to tax in Kerala. However, the assessing authorities, including the Deputy Commissioner (Appeals) and the Tribunal, rejected the appellant's claim, alleging purchases from unregistered dealers and assessing tax under section 5A of the Kerala General Sales Tax Act, 1963.

The Supreme Court noted the confusion surrounding the transactions involving exports and deemed export sales. The primary issue was whether the purchases made by the appellant were in the course of export, as required by section 5(3) of the 1956 Act. The Court emphasized that the crucial aspect of whether the purchases were for export had not been adequately addressed by the authorities below, necessitating a reevaluation of the facts and documents presented by the appellant.

The Court directed the matter to be remitted to the Deputy Commissioner (Appeals) for a fresh examination. The Deputy Commissioner was instructed to consider the appellant's submissions, review the relevant documents such as trading accounts, purchase details, export orders, and invoices, and determine whether the purchases worth Rs. 1,92,67,236 were indeed made in the course of exports. Additionally, the Deputy Commissioner was tasked with investigating the timeline of purchases, receipt of export orders, and the nature of export transactions, ensuring a comprehensive evaluation of the appellant's tax liability in line with the provisions of the Central Sales Tax Act.

In conclusion, the civil appeal was allowed, and the matter was remitted for a detailed reconsideration by the Deputy Commissioner (Appeals) to ascertain the factual foundation of the purchases and determine the applicability of tax provisions accurately. No costs were awarded in the judgment.