1994 (11) TMI 407 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of section 38(ii) of the Andhra Pradesh General Sales Tax Act, 1957 in relation to the turnover of the assessee.
- Application of sub-section (2) of section 5 of the Central Sales Tax Act, 1956 to determine if the transactions fall under the course of import of goods into the territory of India.

Analysis:
The High Court of Andhra Pradesh addressed a tax revision case concerning the assessment of the turnover of an assessee, who was a dealer in electronic goods, for the assessment year 1974-75. The assessee imported goods from the United States of America for Defence Research Laboratories, with some transactions directly handed over to the Laboratories and others routed through the Director of Supplies and Disposals. The assessing authority and appellate authority did not accept the plea that the transactions fell under sub-section (2) of section 5 of the Central Sales Tax Act, 1956. However, the Sales Tax Appellate Tribunal allowed the appeal, determining that the transactions indeed fell under the mentioned section.

The central issue in this revision was whether the turnover of the assessee in the transactions was exempted from tax under section 38(ii) of the State Act. Section 38 of the State Act provides exemptions for sales or purchases outside the state, in the course of import or export, or in the course of inter-State trade or commerce. The Court highlighted that if a sale or purchase occurs in the course of importing goods into or exporting goods out of India, the Act's provisions would not apply.

The Court emphasized sub-section (2) of section 5 of the Central Act, which presumes when a sale or purchase of goods is deemed to be in the course of import into India. It states that the sale or purchase is considered in the course of import if it occasions such import or if title documents are transferred before crossing customs frontiers. The crucial determination for the revision was whether the purchase of goods led to the import of goods into India, a factual inquiry. The Tribunal found that the transactions in question indeed occasioned the goods' movement into India due to the purchase. Consequently, the Court rejected the contention that the transactions did not fall under the purview of sub-section (2) of section 5 of the Central Act, leading to the dismissal of the revision with parties directed to bear their own costs.

In conclusion, the High Court dismissed the petition, upholding the Tribunal's finding that the transactions fell within the scope of sub-section (2) of section 5 of the Central Act, thereby affirming the exemption from tax under section 38(ii) of the State Act.