2005 (1) TMI 650 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Applicability of Rule 29(v) of the Punjab General Sales Tax Rules, 1949 for deductions on export sales.
2. Scope of Rule 29(v) in relation to inter-State sales and export sales outside India.
3. Repugnancy between Rule 29(v) of the Punjab General Sales Tax Rules, 1949, and Section 5 of the Central Sales Tax Act, 1956.
4. Interpretation of the term "series of transactions" under Rule 29(v).

Issue-Wise Detailed Analysis:

1. Applicability of Rule 29(v) of the Punjab General Sales Tax Rules, 1949 for Deductions on Export Sales:
The respondent/assessee-firm, engaged in the manufacture and sale of shoes, claimed a deduction of Rs. 50,01,618.10 under Rule 29(v) of the Punjab General Sales Tax Rules, 1949, asserting that the sales were export sales. The Assessing Authority initially allowed this deduction, but the Deputy Excise and Taxation Commissioner, using suo motu powers, revised this decision, disallowing the deduction based on the Supreme Court's interpretation in Mod. Serajuddin v. State of Orissa [1975] 36 STC 136. However, the Sales Tax Tribunal restored the Assessing Authority's order, asserting that the sales were indeed covered under Rule 29(v) due to the operation of rules 27 and 29.

2. Scope of Rule 29(v) in Relation to Inter-State Sales and Export Sales Outside India:
The Tribunal held that Rule 29(v) adequately covered export sales, allowing deductions for goods exported out of India, whether by one transaction or a series of transactions. The Tribunal emphasized that Rule 29(v) provided broader relief than Section 5(3) of the Central Sales Tax Act, which was enacted later. The Tribunal's interpretation was that Rule 29(v) was independent and provided for permissible deductions that were not restricted to inter-State sales.

3. Repugnancy Between Rule 29(v) of the Punjab General Sales Tax Rules, 1949, and Section 5 of the Central Sales Tax Act, 1956:
The Revenue argued that Rule 29(v) should be read in conjunction with Section 5 of the Central Act and that any repugnancy should favor the Central Act. However, the Tribunal and the High Court found that Rule 29(v) operated independently and provided additional deductions without being inconsistent with the Central Act. The High Court concluded that Rule 29(v) was not repugnant to the Central Act because it provided for additional relief rather than restricting any provisions.

4. Interpretation of the Term "Series of Transactions" under Rule 29(v):
The Tribunal interpreted "series of transactions" to mean that goods exported out of India, whether directly by the dealer or through intermediaries, were eligible for deduction. The High Court upheld this interpretation, noting that the language of Rule 29(v) explicitly allowed for deductions for goods exported by one transaction or a series of transactions. The High Court emphasized that the intention was to provide substantial relief for goods exported out of the territory of India, regardless of the number of transactions involved.

Conclusion:
The High Court upheld the Tribunal's decision, affirming that Rule 29(v) of the Punjab General Sales Tax Rules, 1949, provided for deductions on export sales, whether by one transaction or a series of transactions. The Court found no repugnancy between Rule 29(v) and Section 5 of the Central Sales Tax Act, 1956, and concluded that the deductions claimed by the assessee were in accordance with the Rules. The reference petition was disposed of in favor of the respondent/assessee.