1994 (12) TMI 303 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the disputed turnover qualifies for exemption under section 38 of the Andhra Pradesh General Sales Tax Act, 1957, as "export sales".
2. Applicability of the definition of "export" under the Customs Act, 1962, to the State Act.
3. Validity of the sales tax authorities' assessment of the disputed turnover as "local sales".
4. Legality of coercive steps for tax recovery while tax revision cases are pending.

Issue-wise Detailed Analysis:

1. Exemption under Section 38 of the State Act:
The primary issue is whether the disputed turnover is exempt under section 38 of the Andhra Pradesh General Sales Tax Act, 1957. Section 38 stipulates that the Act shall not impose tax on sales or purchases that occur outside the state, in the course of import or export, or in inter-State trade or commerce. The court examined whether the sales in question were "export sales" under Section 5 of the Central Sales Tax Act, 1956, which requires that the sale must either occasion the export or be effected by a transfer of documents of title after the goods have crossed customs frontiers. The court concluded that the sales did not occasion the export of goods out of India, as the goods were sold and handed over to purchasers in Visakhapatnam, and merely taken out to high seas for use, which does not qualify as export.

2. Definition of "Export" under the Customs Act:
The learned counsel for the petitioner argued that the definition of "export" under the Customs Act, 1962, should apply. The Customs Act defines "export" as taking goods out of India to a place outside India. However, the court noted that neither the State Act nor the Central Sales Tax Act defines "export" by reference to the Customs Act. The court emphasized that the criteria under the Customs Act for clearance of warehoused goods for exportation do not determine whether a sale occasions export. Thus, the customs authorities' treatment of the sale as export does not bind the sales tax authorities.

3. Assessment as "Local Sales":
The court upheld the sales tax authorities' assessment of the disputed turnover as "local sales". The court reasoned that the sale was completed in Visakhapatnam, and the goods were delivered to the purchasers there. The mere movement of goods to high seas for utilization does not constitute export. The court referred to precedents, including Burmah Shell Oil Storage and Distributing Co. of India Ltd. v. Commercial Tax Officer and Fairmacs Trading Company v. State of Andhra Pradesh, which established that for a sale to be considered as export, the goods must move to a foreign destination as a direct result of the sale.

4. Coercive Steps for Tax Recovery:
The petitioner contended that coercive steps for tax recovery should not be taken while the tax revision cases are pending. The court dismissed this contention, stating that since the transactions were not deemed "export sales", the turnover is liable to tax. However, the court granted the petitioner three months to pay the balance of the tax, considering it appropriate under the circumstances.

Conclusion:
The court dismissed the tax revision cases and the writ petition, concluding that the disputed turnover does not qualify for exemption as "export sales" under section 38 of the State Act. The sales tax authorities' assessment of the turnover as "local sales" was upheld, and the court found no merit in the petitioner's argument regarding the applicability of the Customs Act definition of "export". The court also allowed the petitioner three months to pay the balance tax, denying the request to halt coercive recovery steps.