2000 (2) TMI 808 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Tribunal was justified in holding the transactions as inter-State sales.
2. Whether the Tribunal was justified in holding the transactions as inter-State sales without movement of goods between states.
3. Whether the petitioner acted as an agent of M/s. Ashok Leyland and effected direct export sales without invoking the provisions of the Act.
4. Whether the Tribunal's order was valid and sustainable in law.

Summary:

Issue 1: Inter-State Sale Classification
The Tribunal classified the transactions as inter-State sales, arguing that the completed buses were exported directly to Sri Lanka without delivery to Ashok Leyland. The petitioner contended that the bus bodies and chassis were distinct commodities, and the export of the complete bus should not negate the exemption for the penultimate sale of bus bodies u/s 5(3) of the Central Sales Tax Act, 1956. The Tribunal upheld the assessing authority's decision, stating that the intention of the foreign buyer was to purchase a complete bus, and thus, the export was of a bus, not just the bus body.

Issue 2: Movement of Goods
The Tribunal maintained that there was no movement of goods from one state to another pursuant to a contract of sale, thus classifying the transactions as inter-State sales. The petitioner argued that the bus bodies could be dismantled and were separately specified by foreign buyers, maintaining their identity even after mounting on the chassis. The Tribunal, however, viewed the chassis and bus bodies as different commodities and upheld the order of the assessing authority.

Issue 3: Agency Relationship
The petitioner claimed to have acted as an agent of M/s. Ashok Leyland, effecting direct export sales without invoking the provisions of the Act. The Tribunal did not accept this argument, reasoning that the transactions were for the complete bus, not just the bus bodies, and thus, the exemption under section 5(3) was not applicable.

Issue 4: Validity of Tribunal's Order
The High Court examined the interpretation of "those goods" u/s 5(3) and whether there was an agreement or order for or in relation to the bus bodies built over the chassis. The Court referenced various precedents, including the Supreme Court's decision in Mod. Serajuddin v. State of Orissa and other cases, to conclude that the identity of the bus bodies was not lost after mounting on the chassis. The Court held that the sales by the petitioner to the exporters were in compliance with the agreement or order for export, and thus, the conditions of section 5(3) were fulfilled.

Conclusion:
The High Court allowed the petitions, ruling that the Tribunal was not justified in denying the exemption u/s 5(3) of the Central Sales Tax Act for the bus bodies supplied by the petitioner to the exporter. The Court emphasized a reasonable interpretation of section 5(3) to promote exports and not to deny the intended benefit due to technicalities.