1978 (10) TMI 136 - HC - VAT and Sales Tax

Summary

Issues:
- Disputed turnover in two appeals arising from a common order of the Board of Revenue regarding liability to sales tax on turnovers of export sales.
- Contention that turnovers were exempt as they were export sales and not liable to sales tax.
- Dispute over whether local exporting houses acted as agents of the appellants or conducted sales on their behalf.
- Revision of orders by the Board of Revenue after rejecting appellants' contentions.
- Interpretation of the nature of sales transactions between the appellants and the local exporting houses.
- Applicability of previous court decisions regarding sales to agents and sales for export.
- Challenge to the Board of Revenue's conclusions and the dismissal of appeals under section 37 of the Tamil Nadu General Sales Tax Act.

Analysis:
The judgment by the High Court of Madras involved two appeals stemming from a common order of the Board of Revenue concerning the disputed turnovers in the context of sales tax liability on export sales. The appellants argued that the turnovers in question were exempt from sales tax as they pertained to export sales. However, the Board of Revenue revised the orders of the Appellate Assistant Commissioner, adding the disputed turnovers after determining that the local exporting houses were not acting as agents of the appellants. The court noted that the correspondence and transactions between the local exporters and foreign buyers did not establish agency relationships, leading to the conclusion that the sales were subject to sales tax. The court referenced a previous decision where it was held that if the contract was entered into by the agent on their own right and not as an agent of the assessees, it would be deemed a sale by the assessees to the agent, not a direct export sale. Consequently, the court upheld the Board of Revenue's conclusions, dismissing the appeals under the Tamil Nadu General Sales Tax Act.

In a related case, the High Court addressed similar issues concerning sales in the course of export. The court highlighted the distinction between sales to an agent and sales through an agent, emphasizing that if the assessees were the actual exporters and others were acting as agents, the assessees would be deemed the exporters. However, if the agent entered into contracts independently, the sales would be considered as sales to a local agent for export. The court criticized the Tribunal's failure to differentiate between these scenarios and lack of consideration of a relevant Supreme Court decision. Consequently, the court allowed the tax revision cases, setting aside the Tribunal's order and remanding the matter for reevaluation in light of the Supreme Court decision. The court emphasized the need for a detailed analysis of each transaction to determine the party responsible for the export sale, either the assessees or the agent, before concluding on the tax liability for sales in the course of export.