1995 (2) TMI 411 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether sales amounting to Rs. 72,81,754 through mediators were sales in the course of export out of India under section 5(1) of the Central Sales Tax Act, 1956, exempt from sales tax?
2. Whether for an export sale under section 5(1) of the Central Sales Tax Act, there should be only two parties, an Indian seller and a foreign buyer?

Analysis:

1. The case involved a public sector undertaking selling steel worth Rs. 72,81,754 through Indian Export houses, claiming exemption under section 5(1) of the Central Sales Tax Act, 1956. The assessing officer, first appellate authority, and the Board of Revenue (Appellate Tribunal) all ruled against the assessee. The Tribunal referred to a Supreme Court decision and concluded that the sale was not in the course of export, denying the exemption.

2. The Tribunal considered the agreement between the assessee and the Indian buyer, noting that the foreign buyer was not named in the agreement. The goods were to be exported by the Indian buyer after payment to the assessee. The Tribunal relied on a Supreme Court decision and held that the sale did not qualify for exemption under section 5(1) of the Act.

3. Section 5(1) of the Central Sales Tax Act, as applicable, states that a sale shall be deemed in the course of export if it occasions such export or is effected by transfer of documents after crossing customs frontiers. The Court referred to previous decisions and emphasized the need to consider both conditions of the second limb of section 5(1) for assessing export sales.

4. The Court highlighted previous cases involving the same assessee, where it was held that the sales did not qualify for exemption under the first limb of section 5(1) but required further examination under the second limb. It was emphasized that the authorities must consider both conditions of the second limb for determining exemption eligibility.

5. The Court concluded that the Board of Revenue erred in not considering whether the sales were effected by transfer of documents after crossing customs frontiers. The matter was remanded for a fresh decision, emphasizing the importance of analyzing both conditions of the second limb of section 5(1) for assessing exemption eligibility.

6. In the final decision, the Court held that the sales tax exemption depended on whether the sales were effected by transfer of documents after crossing customs frontiers. The Board of Revenue was directed to re-hear the appeal and make a fresh decision considering both conditions of the second limb of section 5(1).

7. The Court ordered the transmission of the decision to the Board of Revenue for further action and compliance.