1980 (12) TMI 167 - HC - VAT and Sales Tax

Issues Involved:
1. Taxability of sales to the State Trading Corporation under the Tamil Nadu General Sales Tax Act and the Central Sales Tax Act.
2. Determination of whether sales were in the course of export.
3. Power of revision by the Board of Revenue.
4. Limitation period for assessment.

Issue-wise Detailed Analysis:

1. Taxability of Sales to the State Trading Corporation:
For the assessment year 1970-71, the assessee, a manufacturer of textile and other machinery, was initially granted exemption on the turnover of Rs. 46,41,305 for export sales to the State Trading Corporation. However, upon reexamination, it was determined that there were two independent sales: one by the assessee to the State Trading Corporation and another by the State Trading Corporation to the foreign buyer. The assessing authority revised the assessment, bringing the amount to tax under the Tamil Nadu General Sales Tax Act. Similar revisions were made for other assessment years under both the Central Sales Tax Act and the State Act, treating the sales to the State Trading Corporation as local sales rather than sales in the course of export. The Appellate Assistant Commissioner and the Tribunal confirmed these assessments, leading to the revision petitions.

2. Determination of Whether Sales Were in the Course of Export:
The crux of the assessee's contention was that the sales were in the course of export and thus exempt. However, the State argued that the sales to the State Trading Corporation were separate from the export to the foreign customer. Section 5(1) of the Central Sales Tax Act specifies that a sale is in the course of export if it either occasions such export or is effected by a transfer of documents of title to the goods after they have crossed the customs frontiers of India. The Court referred to precedents like Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer, Special Circle, Ernakulam, which emphasized that a sale in the course of export requires an integrated series of activities from the agreement of sale with a foreign buyer to the delivery of the goods for transport out of the country. The Court concluded that there was no privity of contract between the assessee and the foreign customer, and the sale to the State Trading Corporation was a local sale, not an export sale.

3. Power of Revision by the Board of Revenue:
The issue of the Board of Revenue's power to revise the assessments was raised in T.C.(R) Nos. 1300 to 1302 of 1977 and 1393 of 1977. This point was already settled by previous decisions of the Court in Yercaud Coffee Curing Works Ltd. v. State of Tamil Nadu and Surya Fertilisers and Chemicals v. State of Tamil Nadu, which upheld the Board's power of revision. Following these precedents, the Court held that the exercise of the power of revision in the present cases could not be questioned.

4. Limitation Period for Assessment:
The question of limitation was addressed in T.C.(R) Nos. 1300 to 1302 of 1977. This issue had been previously dealt with in K. Lakshmanaswami Chettiar and Sons v. State of Tamil Nadu, where it was held that the assessment was not time-barred. The Court followed this judgment and concluded that the assessments in the present cases were within the permissible time limits.

Conclusion:
The appeal and revision petitions were dismissed, affirming the taxability of sales to the State Trading Corporation as local sales and not in the course of export. The Court upheld the power of revision by the Board of Revenue and ruled that the assessments were not time-barred. There was no order as to costs.

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