2019 (12) TMI 67 - SC - VAT and Sales Tax

Applicability of Section 5(3) of the Central Sales Tax Act, 1956 - Purchase and export of Coffee Beans - HELD THAT - The section 5(3) begins with a non-obstante clause in relation to sub-section (1) of section 5. Section 5(1) deals with a situation where the sale or purchase itself occasions such export. Obviously, what is relevant is sub-section (3) of section 5 because the export was subsequent to the purchase. Sub-section (3) of section 5 requires the assessee to produce the agreement or order for or in relation to such export. There is no material on record for us to determine the identity of the goods purchased and the goods that were exported. It is an admitted fact that the agreements under which the respondents have purchased goods from coffee growers and exports were made are not before us - The High Court appears to have decided the matter without taking into consideration the fact that agreement(s) was not before it. It is considered appropriate in the interests of justice to set aside the impugned judgment(s) and order(s) passed by the High Court and direct that the respondents shall be permitted to produce the agreement before the assessing authority at Karnataka - appeal allowed.

Summary

Issues:
1. Interpretation of Section 5(3) of the Central Sales Tax Act, 1956 regarding the sale and export of coffee beans.
2. Determination of whether the goods purchased and exported were the same.
3. Consideration of the requirement to produce the agreement for export under Section 5(3).

Analysis:

1. The judgment dealt with the interpretation of Section 5(3) of the Central Sales Tax Act, 1956, focusing on the sale and export of coffee beans. The section provides that the last sale or purchase preceding the export shall be deemed to be in the course of such export if it complies with the export agreement. The Court emphasized the significance of this provision in cases where the export follows the purchase, requiring the assessee to produce the export agreement.

2. The dispute revolved around whether the goods purchased and exported were the same. The respondents argued that they bought raw coffee beans, which were then exported after cleaning without undergoing any manufacturing process. On the other hand, the appellant contended that what was purchased was coffee beans, while the exported goods were cured coffee beans or coffee powder, suitable for consumption as a beverage. This distinction was crucial in determining the applicability of Section 5(3) and the tax implications.

3. The Court noted the absence of material to establish the identity of the purchased and exported goods, as the relevant agreements were not presented during the proceedings. Highlighting the oversight by the High Court in not considering this crucial factor, the Supreme Court set aside the previous judgments and directed the respondents to produce the export agreements before the assessing authority in Karnataka. The assessing officer was instructed to expedite the decision based on the agreements and in compliance with the law, ensuring a just resolution of the matter.

In conclusion, the Supreme Court allowed the appeals, emphasizing the necessity of presenting the export agreements to determine the applicability of Section 5(3) and the nature of the goods purchased and exported. By setting aside the previous judgments and facilitating the production of agreements, the Court aimed to ensure a fair and lawful resolution of the tax implications related to the sale and export of coffee beans.