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1972 (1) TMI 84 - HC - VAT and Sales Tax
Issues:
Interpretation of sales of iron ores as exports exempt from sales tax under article 286(1)(b) of the Constitution. Analysis: The case involved the interpretation of whether sales of iron ores were in the course of export, thus exempt from sales tax. The assessee, a firm dealing in iron ore, argued that the sales were in the course of export and not liable for taxation under the Bihar Sales Tax Act or the Central Sales Tax Act. The assessing officer, Appellate Assistant Commissioner, and Deputy Commissioner of Sales Tax disagreed, holding the sales were in inter-State trade and taxable. The State Commercial Taxes Tribunal later ruled that certain sales were exempt from tax, while others were taxable. The Tribunal based its decision on the terms of the contract, specifically focusing on the loading of goods by the seller, payment conditions, and buyer's option to reject goods. The Tribunal's decision was challenged, with the department arguing that the title in the goods passed to the buyer before crossing customs frontiers. However, the court rejected this argument, emphasizing that title passed only after crossing customs frontiers, aligning with the definition of export under the Central Sales Tax Act. Citing the case of Mohan Lal Moti Lal v. Assessing Authority, the court highlighted that determining whether a sale is in the course of export is a factual inquiry based on each case's unique circumstances. The court upheld the Tribunal's interpretation of the contract terms, stating that even if multiple interpretations were possible, the one favoring the assessee should prevail. In conclusion, the court affirmed the Tribunal's decision that the sales of iron ores on f.a.s. price basis were exports exempt from sales tax. The court emphasized that the construction of the contract terms supported the assessee's position, leading to a favorable judgment. The court ruled in favor of the assessee, granting them costs and answering the reference in the affirmative.
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