1973 (8) TMI 147 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the sales of ferro-silicon by the sellers to the buyers were in the course of export and thus exempt from sales tax.
2. The interpretation of the agreement between the sellers and the buyers regarding the export of ferro-silicon.
3. The applicability of the Supreme Court's ruling in the Coffee Board case to the present case.

Detailed Analysis:

Issue 1: Whether the sales of ferro-silicon by the sellers to the buyers were in the course of export and thus exempt from sales tax.
The sellers contended that their sales to the buyers were in the course of export, thereby exempting the turnover from sales tax. However, the Assistant Commissioner of Commercial Taxes, the Deputy Commissioner of Commercial Taxes, and the Appellate Tribunal rejected this contention. The Tribunal held that the sales could not be treated as in the course of export, even though they were for the purpose of export. The Tribunal emphasized that the title to the goods passed to the buyers at Bhadravati, and there was no direct link between the sellers and the foreign buyers. The Tribunal concluded that the sales were independent of the export process and did not occasion the export.

Issue 2: The interpretation of the agreement between the sellers and the buyers regarding the export of ferro-silicon.
The agreement dated 13th August 1964, and its addendum dated 7th April 1965, stipulated that the sales were intended for export and that no sales tax would be collected from the buyers. The sellers argued that these terms indicated that the sales were in the course of export. However, the Tribunal and the High Court found that merely labeling the sales as intended for export did not suffice to qualify them as sales in the course of export under the law. The High Court noted that the ultimate object of the agreement was to promote export, but this did not make the sales inextricably bound up with the export process.

Issue 3: The applicability of the Supreme Court's ruling in the Coffee Board case to the present case.
The Tribunal and the High Court relied on the principles laid down in the Coffee Board case, where the Supreme Court held that for a sale to be in the course of export, it must either take place when the goods are already in the process of being exported or must occasion the export. The High Court observed that in the Coffee Board case, the compulsion to export was more stringent than in the present case. In the current case, there was no prohibition against selling ferro-silicon in the home market, and the agreement allowed for penalties but not seizure of goods if not exported. The High Court concluded that the facts in the present case were not distinguishable from those in the Coffee Board case and that the sales were not in the course of export.

Conclusion:
The High Court upheld the Tribunal's decision, concluding that the sales of ferro-silicon by the sellers to the buyers were not in the course of export. The sales were independent transactions between the sellers and the buyers, with the buyers acting as intermediaries who later exported the goods. The High Court emphasized that the exemption for sales in the course of export must be strictly construed and that the conditions for such exemption were not met in this case. The revision petitions were dismissed with costs.