1991 (8) TMI 321 - HC - VAT and Sales Tax

Issues Involved:
1. Interpretation of Section 5 of the Central Sales Tax Act, 1956.
2. Privity of contract in export and import sales.
3. Determination of tax liability on export sales.
4. Exclusion of certain charges from the taxable amount.
5. Validity of assessments and orders by the Appellate Tribunal and Board of Revenue.

Issue-wise Detailed Analysis:

1. Interpretation of Section 5 of the Central Sales Tax Act, 1956:
The court examined Section 5 of the Central Sales Tax Act, 1956, which defines when a sale or purchase of goods is considered to take place in the course of export or import. The section confines such sales or purchases to situations where the sale or purchase either occasions the export or import or is effected by a transfer of documents of title to the goods before or after the goods have crossed the customs frontiers of India. The term "customs frontiers" is understood to mean the boundaries of the territory, including the territorial waters of India.

2. Privity of Contract in Export and Import Sales:
The court discussed the necessity of privity of contract between the seller and the foreign buyer for a sale to be considered in the course of export. It referred to several Supreme Court cases, including State of Travancore-Cochin v. Shanmuga Vilas Cashew-nut Factory and Mod. Serajuddin v. State of Orissa, which emphasized that the sale must occasion the export and there must be an integral connection between the sale and the export. The court also noted that in cases where the seller acts as an agent for the foreign buyer or seller, privity of contract is essential.

3. Determination of Tax Liability on Export Sales:
The court analyzed the cases of Messrs. India Cements Limited, Hindustan Motors Limited, and ABMTM Private Limited to determine their tax liability on export sales. For India Cements Limited, the court found that there was no privity of contract with the foreign buyer, and the sales were not in the course of export. Similarly, for Hindustan Motors Limited, the court found no privity of contract with the foreign buyer, and the sales were not export sales. However, in the case of ABMTM Private Limited, the court remitted the case to the Board for a fresh examination of whether the import was for the Heavy Vehicles Factory at Avadi and whether the assessee acted as an agent.

4. Exclusion of Certain Charges from the Taxable Amount:
The court addressed the petitioners' contention that certain charges, such as packing charges, handling charges, f.o.b. expenses, despatch, and demurrage expenses, should be excluded from the taxable amount. The Tribunal had held that these charges were not excludible as they were part of the pre-sale charges. The court upheld the Tribunal's finding, stating that the petitioners had agreed to sell on an f.o.b. Madras basis.

5. Validity of Assessments and Orders by the Appellate Tribunal and Board of Revenue:
The court examined the validity of the assessments and orders passed by the Appellate Tribunal and the Board of Revenue. In the case of India Cements Limited, the court upheld the Tribunal's order, finding no privity of contract with the foreign buyer. For Hindustan Motors Limited, the court upheld the Tribunal's finding that the sales were not in the course of export. However, for ABMTM Private Limited, the court remitted the case to the Board for a fresh examination of the facts to determine the nature of the import and the role of the assessee as an agent.

Conclusion:
The court dismissed the tax cases of India Cements Limited and Hindustan Motors Limited, upholding the findings of the Tribunal and the Board of Revenue. However, the court allowed the tax case of ABMTM Private Limited, remitting it to the Board for a rehearing and fresh examination of the facts.

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