2010 (1) TMI 947 - HC - VAT and Sales Tax

Whether Tribunal was justified in law in holding that the transactions were not sales in the course of export within the ambit of section 5 of the Central Sales Tax Act, 1956 - sale was for export and not in the course of export, there is no material to show that the goods were cleared at custom station except that the goods were delivered to the foreigners at Airport, case did not involve sale at shop but sale or transfer or dispatch involved export of the goods to identifiable foreign destination as per record, decision in favour of the Revenue Whether Tribunal was justified in law in confirming the penalty levied under section 36(2)(c) Explanation (1) of the Bombay Sales Tax Act, 1959 Held that - none of the authorities under the Act have recorded detailed reasons for levying penalty under the said section 36(2) (c), assessee is relying on the interpretation of the provisions which involved complexity of principles of interpretation, penalty under section 36(2)(c) cannot be sustained, Tribunal was therefore not justified in law in confirming the penalty levied under section 36(2)(c) Explanation (1) of the BST Act, decision in favour of the assessee and against the Revenue

Summary

Issues Involved:
1. Whether the transactions were sales in the course of export within the ambit of section 5 of the Central Sales Tax Act, 1956.
2. Whether the penalty levied under section 36(2)(c) Explanation (1) of the Bombay Sales Tax Act, 1959 was justified.

Issue-wise Detailed Analysis:

1. Whether the transactions were sales in the course of export within the ambit of section 5 of the Central Sales Tax Act, 1956:

The applicant, a dealer registered under the BST Act, contended that their sales transactions, which involved delivery of goods to foreign buyers at the airport, should be considered as sales in the course of export and thus exempt from sales tax under section 5 of the CST Act. The Sales Tax Officer, however, assessed these transactions as local sales, leading to the applicant's appeal.

The Tribunal upheld the assessment, determining that the transactions did not qualify as sales in the course of export. The applicant argued that the goods were delivered at the airport for export, the sale price was received in foreign currency, and the goods crossed customs frontiers, thus meeting the criteria for sales in the course of export. The applicant relied on several judgments, including The State of Travancore-Cochin v. The Bombay Company Ltd. Alleppey and Abdulgafar A. Nadiadwala v. Asst. C.I.T., to support their position.

The respondent, however, argued that the transactions were sales for export rather than in the course of export, as the sales were completed in India with delivery before customs clearance. They emphasized that the sale was concluded when payment was received and goods were delivered, regardless of subsequent export.

The court referred to various judgments, including Burmah-Shell Oil Storage and Distributing Co. of India Ltd. v. Commercial Tax Officer and State of Kerala v. Cochin Coal Company Ltd., which clarified that for a sale to be in the course of export, it must occasion the export and be an integral part of it. The court concluded that the applicant's sales were completed at the shop counter, with delivery before customs clearance, and thus did not qualify as sales in the course of export. The court held that the sales were for export but not in the course of export, affirming the Tribunal's decision.

2. Whether the penalty levied under section 36(2)(c) Explanation (1) of the Bombay Sales Tax Act, 1959 was justified:

The Tribunal had also confirmed the penalty levied under section 36(2)(c) Explanation (1) of the BST Act. The applicant contended that there was no concealment or furnishing of inaccurate particulars, as the issue involved complex legal interpretation.

The court noted that none of the authorities had provided detailed reasons for the penalty. The court emphasized that the applicant's reliance on legal interpretations and the complexity of the issue did not constitute concealment or furnishing of inaccurate particulars. The court concluded that the penalty could not be sustained, as the applicant had not concealed any transaction details or knowingly furnished inaccurate particulars. Thus, the Tribunal was not justified in confirming the penalty.

Judgment Summary:

The court answered the first question in the affirmative, upholding the Tribunal's decision that the transactions were not sales in the course of export. The second question was answered in the negative, ruling in favor of the applicant and against the Revenue, thereby nullifying the penalty under section 36(2)(c) Explanation (1) of the BST Act. The reference was disposed of accordingly.