1981 (8) TMI 209 - HC - VAT and Sales Tax

Summary

Issues involved:
The issue involved in this case is whether the exemption claimed by the assessee in regard to the turnover of prawns purchased for the purpose of sale occasioning export of such prawns out of India has to be allowed.

Judgment Details:

1. The revision by the Deputy Commissioner of Sales Tax (Law) against the order of the Kerala Sales Tax Appellate Tribunal was regarding the exemption claimed by the assessee in relation to the turnover of prawns purchased for export. Section 5(1) of the Central Sales Tax Act specifies the conditions under which a sale or purchase of goods shall be deemed to take place in the course of export. Sub-section (3) of the section provides that the last sale or purchase of goods preceding the sale occasioning the export shall also be deemed to be in the course of such export if it was for the purpose of complying with the agreement or order for export.

2. The prawns purchased by the assessee were processed and packed for sale by export outside India. Although these purchases did not directly occasion the export of goods, they preceded the sale that did. Therefore, section 5(3) applied to render the sales as in the course of export and outside the scope of taxation by the State law.

3. The sales tax authorities sought to tax the purchases by arguing that the goods purchased were not the same as those exported due to the processing they underwent. However, the Sales Tax Appellate Tribunal held that commercially, the prawns purchased and the prawns exported after processing were one and the same commodity. Citing a Supreme Court decision, it was established that even after processing, if the commodity retains its original identity, it is not considered a new article and the original commodity is not consumed in the manufacture of another.

4. The Supreme Court's decision in a similar case involving pineapple slices clarified that the nature and extent of processing may vary, but if the commodity retains its original identity after processing, it is not considered a new article. The Tribunal correctly held that commercially, the prawns purchased and exported after processing were the same commodity, and there was no need for interference. The revision was dismissed, and the application for leave to appeal to the Supreme Court was declined as no substantial question of law of general importance arose in the case.