1995 (12) TMI 351 - HC - VAT and Sales Tax

Summary

Issues:
- Assessment of sales turnover for packaging materials sold to exporters
- Eligibility for exemption under section 5(3) of the Central Sales Tax Act
- Interpretation of contract for export and application of statutory compliance

Analysis:
1. The case involved the assessment of sales turnover of packaging materials sold to dealers outside the State who exported goods after packing with materials supplied by the dealers. The assessing officer disallowed exemption for sales to exporters, leading to the assessment of Rs. 10,33,137. The Appellate Assistant Commissioner granted concessional tax rate on a portion of the turnover, and the Appellate Tribunal upheld this decision.

2. The main contention was whether the sales turnover of Rs. 7,21,337 for polythene bags and jute bags was eligible for exemption under section 5(3) of the Central Sales Tax Act. The assessee argued that the goods were exported with all formalities, including filing Form H, and the rejection of exemption was unjustified. The assessee maintained that the contract with foreign buyers included the supply of packing materials, qualifying for exemption.

3. The Additional Government Pleader argued that based on a previous court decision, the sale of packing materials could not be exempted under section 5(3) of the Act. It was contended that there was no specific contract for the export of the packing materials, only for the main goods. The authorities had correctly denied the exemption for the sale transaction of polythene bags.

4. The Court analyzed the facts and found that the assessee had supplied packing materials to exporters who shipped goods packed in containers provided by the assessee. The bill of lading confirmed the export of goods along with the packing materials. The Court distinguished a previous case where packing goods were not part of the export contract, unlike in the present scenario.

5. Relying on precedents and statutory provisions, the Court concluded that the polythene bags were indeed exported as part of the contract between the exporter and foreign buyers. The identity of the goods, both the main product and the packing materials, was established, making the assessee eligible for exemption under section 5(3) of the Act. The Tribunal's decision denying the exemption was overturned, and the appeal was allowed with costs.