2017 (5) TMI 1609 - HC - VAT and Sales Tax

Whether the purchase of horn meal and hoof meal and consequential export thereof is exempted from levy of tax in terms of Section 5(3) of the Central Sales Tax, 1956? Held that - The respondent dealer is an exporter of the said product. Furthermore, the specific case of the respondent is that the purchases were effected by them to honour the pre-existing agreement for the export of the product - The Appellate Assistant commissioner and the Tribunal were fully justified in holding that the respondent dealer is entitled for the benefit of exemption under Section 5(3) of the Act, apart from the fact that the Tribunal, on facts, has held that the bone meal and horn meal are Organic manures - Tax revision case dismissed.

Summary

Issues:
Challenging order of Tamil Nadu Sales Tax Appellate Tribunal on exemption of tax on purchase of horn meal and hoof meal for export under Section 5(3) of the Central Sales Tax Act, 1956.

Analysis:
The appeals were filed by the Revenue challenging the Tribunal's order assessing tax on the purchase of horn meal and hoof meal for export under Section 5(3) of the Act. The respondent claimed exemption as the goods were purchased for export and produced supporting documents. They relied on previous court decisions and argued that the products were organic manure. The Revenue contended that the products were not solely used as manure and thus did not qualify for exemption.

The Appellate Assistant Commissioner allowed the appeals, considering the purchases were for export. The Tribunal upheld this decision, stating that the purchases were made by exporters and were entitled to exemption. The Revenue challenged this order, arguing that the products were not manure and hence not exempt.

The High Court noted that the key issue was whether the intermediary process of adding chemicals changed the nature of the transaction. Referring to a Supreme Court decision, it was established that if the sale was for export and met certain criteria, it would qualify for exemption. The respondent was an exporter fulfilling the necessary parameters, justifying the exemption under Section 5(3) of the Act. The Tribunal's decision was upheld as valid, and no legal question arose for consideration in the case.

In conclusion, the High Court dismissed the Tax Revision Cases, affirming the Tribunal's order. No costs were awarded in this matter.