1998 (8) TMI 543 - HC - VAT and Sales Tax

Summary

Issues:
1. Claim for exemption under section 5(1) of the Central Sales Tax Act, 1956 for goods exported to Russian buyers.
2. Interpretation of the agreement between the applicant and M/s. United Breweries Limited.
3. Determination of whether the sale of goods was in the course of export out of the territory of India.
4. Examination of the roles of various parties involved in the export process.

Analysis:
1. The applicant claimed exemption under section 5(1) of the Central Sales Tax Act, 1956 for goods exported to Russian buyers. The assessing authority rejected the claim and imposed tax at 10%. The Deputy Commissioner (Appeals) and Sales Tax Tribunal also upheld the decision. The applicant filed a revision-application challenging the orders passed by the sales tax authorities.

2. The agreement between the applicant and M/s. United Breweries Limited authorized the latter to promote sales in foreign countries. The agreement specified that the property in the goods manufactured by the applicant would always remain with the applicant until transferred to foreign buyers. M/s. United Breweries Limited acted as an agent to secure export orders for the applicant, as evidenced by the agreement with the State Trading Corporation of India (STC).

3. The High Court analyzed the export process and concluded that the sale of goods by the applicant was in the course of export out of the territory of India. The bill of lading, invoice, and shipping documents identified the applicant as the exporter and the Russian buyer as the consignee. The duty drawback benefit accrued entirely to the applicant, and there was no endorsement on the bill of lading in favor of STC. The Court determined that the applicant was the principal exporting the goods to the foreign buyer, with STC and United Breweries Ltd. acting as agents to secure export orders.

4. The Court clarified the roles of the parties involved in the export process. It emphasized that the applicant was the principal exporter, while STC and United Breweries Ltd. acted as agents to secure export orders. The agreements with foreign buyers were integral parts of the export process initiated by the applicant. Based on these findings, the Court allowed the revision application, quashed the orders passed by the Sales Tax Tribunal and lower authorities, and ruled in favor of the applicant.