1981 (12) TMI 157 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of the Assistant Commissioner of Commercial Taxes.
2. Entitlement to exemption under Section 5(1) of the Central Sales Tax Act.
3. Maintainability of the writ petition under Article 226 of the Constitution.
4. Privity of contract between the assessee-petitioner and the foreign buyer.
5. Application of the Supreme Court decision in Mod. Serajuddin v. State of Orissa.
6. Burden of proof in taxation cases.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assistant Commissioner of Commercial Taxes:
The petitioner argued that the Assistant Commissioner acted without jurisdiction by denying the exemption under Section 5(1) of the Act. The court noted that the petitioner had made a prima facie case of lack of jurisdiction, asserting that the officer acted in disregard of specific legal provisions. Therefore, the court found that the officer's actions were subject to judicial review under Article 226.

2. Entitlement to Exemption under Section 5(1) of the Central Sales Tax Act:
The petitioner claimed exemption for the turnover related to the export of spark plugs to the U.S.S.R. The court examined the agreements and documents presented, including the bill of lading, invoices, and letters of credit. It concluded that the petitioner was the actual exporter, as the documents indicated that the petitioner directly shipped the goods and received payments from the foreign buyer. The court found no evidence of an intervening sale to the P.E.C., thus granting the petitioner the exemption under Section 5(1).

3. Maintainability of the Writ Petition under Article 226 of the Constitution:
The respondent raised a preliminary objection regarding the maintainability of the writ petition, arguing that the petitioner bypassed procedural remedies available under the Karnataka Sales Tax Act. The court noted that exceptional cases allow for direct intervention under Article 226, especially when an authority acts in excess of its jurisdiction. Given the petition's long pendency and the prima facie case of jurisdictional overreach, the court dismissed the preliminary objection.

4. Privity of Contract between the Assessee-Petitioner and the Foreign Buyer:
The respondent argued that there was no privity of contract between the petitioner and the foreign buyer, asserting that the P.E.C. was the real exporter. However, the court found that the petitioner was directly involved in the export process, including negotiating terms and receiving payments. The court concluded that the petitioner had a direct contractual relationship with the foreign buyer, thus supporting the exemption claim.

5. Application of the Supreme Court Decision in Mod. Serajuddin v. State of Orissa:
The respondent relied on the Supreme Court's decision in Mod. Serajuddin to deny the exemption. The court distinguished the present case from Serajuddin, noting that there was no evidence of a second sale within India. The court emphasized that the facts of each case must be considered individually, and in this case, the petitioner was the direct exporter, unlike in Serajuddin where the S.T.C. was the exporter.

6. Burden of Proof in Taxation Cases:
The court reiterated that the burden of proof in taxation lies with the revenue authorities. The respondent failed to provide evidence of a sale between the petitioner and the P.E.C. The court emphasized that taxation requires concrete proof, and assumptions without evidence cannot justify tax levies. Consequently, the court found that the petitioner was entitled to the exemption.

Conclusion:
The court allowed the petition, quashing the order denying the exemption and discharging the bank guarantee furnished by the petitioner. The court concluded that the petitioner was the actual exporter and entitled to the exemption under Section 5(1) of the Central Sales Tax Act. The court also addressed procedural and jurisdictional issues, emphasizing the importance of concrete evidence in taxation cases. No order as to costs was made.

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