2008 (9) TMI 901 - HC - VAT and Sales Tax

Summary

Issues:
1. Scope of rule 29(v) of the Punjab General Sales Tax Rules, 1949 regarding intra-State sales and sales of goods in the course of export outside India.
2. Interpretation of section 5(1) of the Central Sales Tax Act, 1956 for allowing deductions from the gross turnover of the dealer in respect of goods exported out of India.
3. Claiming exemption on export of goods out of India through an intermediary and not directly to foreign buyers.

Analysis:

1. The reference made under section 42 of the Haryana General Sales Tax Act, 1973 raised questions regarding the scope of rule 29(v) of the Punjab General Sales Tax Rules, 1949 in relation to intra-State sales and sales of goods in the course of export outside India. The key issue was whether the rule applied only to intra-State sales or also encompassed sales of goods for export. The assessee claimed deduction under the Central Sales Tax Act, 1956 for exporting bone meal out of India through intermediaries in Bombay, which was not a direct contract with the foreign buyer.

2. The assessing authority disallowed the claim, stating that the sales were for export and not in the course of export. However, the Tribunal ruled in favor of the assessee, leading to a conflict in the orders for different years. The judgment of the High Court highlighted previous decisions that emphasized the liberal approach of the State law in allowing deductions for goods exported out of India, whether directly by the dealer or through intermediaries. The court referred to earlier judgments that supported deductions for goods exported out of India, even if not done through direct contracts with foreign buyers.

3. The High Court relied on its previous judgments and held that the questions referred must be answered against the Revenue and in favor of the assessee. The court emphasized the State law's liberal interpretation, allowing deductions for goods exported out of India through intermediaries. As a result, the reference was disposed of in favor of the assessee based on the established legal principles and precedents set by earlier court decisions.