1991 (2) TMI 370 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment and tax on packing materials used for export of banians.
2. Interpretation of exemption provisions under the Tamil Nadu General Sales Tax Act and Central Sales Tax Act.
3. Determining if packing materials sold for export are part of the goods exported.
4. Application of provisions of the Finance Act, 1964 to the case.
5. Whether the last sale of goods was in the course of export under the Central Sales Tax Act.

Analysis:
1. The Court addressed the issue of assessment and tax on packing materials used for exporting banians. The assessees succeeded before the Tamil Nadu Sales Tax Appellate Tribunal in establishing that sales of Polythene bags to export merchants for packing banians were not taxable. The State challenged this decision through petitions.

2. The Court examined the provisions of the Tamil Nadu General Sales Tax Act and the Central Sales Tax Act to determine the scope of exemption for goods exported. The State argued that the exemption should only apply to goods directly exported and not to other commodities sold to export merchants. The Court analyzed the relevant sections and provisos to interpret the limitation on exemption.

3. The Court deliberated on whether the packing materials sold for export were integral to the goods exported. The Tribunal found that the Polythene bags sold were part of the commodity exported, which in this case were tax-exempt banians. The Court considered if the sale of packing materials fell under the definition of goods sold in the course of export under the Central Sales Tax Act.

4. The Court referred to provisions of the Finance Act, 1964, which were interpreted in a previous case. The judgment highlighted conditions for claiming deductions related to the export of goods. The Court cited a case where the export of Polythene bags was considered eligible for allowances under the Finance Act.

5. The Court analyzed the last sale of goods preceding the export to determine if it fell within the ambit of sales in the course of export under the Central Sales Tax Act. It was established that the sale of Polythene bags for packing banians, which were part of the exported goods, was considered a sale in the course of export. The Court upheld the Tribunal's decision, stating that the packing materials were sold in the course of export by the purchasers from the assessees.

In conclusion, the Court dismissed the petitions, affirming the Tribunal's decision that the Polythene bags sold for packing banians for export were not subject to tax.