1980 (12) TMI 180 - HC - VAT and Sales Tax

Summary

Issues:
- Dispute over exemption claimed on turnover of sales of mango juice exported to U.S.S.R.
- Validity of inclusion of turnover in assessment by Board of Revenue.
- Determination of whether sales were local sales exigible to tax or export sales.

Analysis:
The case involved an appeal against the decision of the Board of Revenue regarding the assessment of an assessee for the year 1971-72 under the Tamil Nadu General Sales Tax Act. The assessee had claimed exemption on a turnover related to sales of mango juice exported to the U.S.S.R. Initially, the assessing authority allowed the exemption, but later, the assessment was reopened, and a significant sum was added to the assessment. The Appellate Assistant Commissioner accepted the assessee's plea and allowed the claim. However, the Board of Revenue, through suo motu revision proceedings, determined that the sales were local and not export sales, hence exigible to tax under the Act. The Board restored the sum to assessment, leading to the present appeal challenging the Board's decision.

The agreements between the State Trading Corporation, the assessee, and the foreign buyer in the U.S.S.R. were crucial in determining the nature of the sales. The State Trading Corporation acted as the seller in the transaction, and the agreements outlined the terms of sale, including pricing, delivery schedules, and payment mechanisms. The State Trading Corporation was the intermediary between the assessee and the foreign buyer, with the payment arrangements involving irrevocable commercial letters of credit. The Court analyzed the agreements and transactions to ascertain whether the sales were in the course of export or merely local sales.

The Court concluded that the sales were not in the course of export but were solely in favor of the State Trading Corporation. The invoices and bills of lading indicated that the transactions were with the State Trading Corporation, and the assessee had no direct contract with the foreign buyer. Drawing on a previous judgment, the Court held that similar transactions were not considered export sales. Therefore, the Court upheld the Board of Revenue's decision to tax the transactions as local sales. The appeal was dismissed, with no order as to costs, affirming the correctness of the Board's order in including the turnover in the assessment.