2021 (2) TMI 802 - HC - VAT and Sales Tax

Benefit of Section 5(3) of the Central Sales Tax Act, 1956 - Non-fulfilment of export obligation - case of the State is that the respective dealers would not be entitled to the benefit of Section 5(3) of the Act because what were exported, were not those goods, which were purchased - HELD THAT - The Tribunal considered the entire factual matrix, took note of the documents, which were filed, which established that the coffee seeds were purchased and what was exported was instant coffee. The Tribunal had to consider as to whether the goods purchased by the exporter were actually exported as such or as a different commodity - After taking note of all the features as well as documents, the Tribunal held that the dealers were entitled to exemption under Section 5(3) of the Act, as the coffee seeds supplied by the dealers were roasted, ground, extracted and spray dried, which did not alter the character of the goods supplied by the dealers. In the instant case, the transaction between the dealers and the exporter and the transaction between the exporter and the foreign buyer are inextricably connected and this has been clearly brought out by the Tribunal after examining the documents, which were placed by the dealers before it. Therefore, in terms of the decision of the Hon'ble Supreme Court in the case of STATE OF KARNATAKA VERSUS AZAD COACH BUILDERS PVT. LTD. AND ANOTHER 2010 (9) TMI 879 - SUPREME COURT , the 'same goods' theory would have no application to the case on hand. There are no error committed by the Tribunal warranting interference with the common impugned order - petition dismissed.

Summary

Issues:
Challenge to order of Tamil Nadu Sales Tax Appellate Tribunal regarding entitlement to benefit under Section 5(3) of the Central Sales Tax Act, 1956.

Analysis:
The writ petitions were filed by the State challenging the order of the Tamil Nadu Sales Tax Appellate Tribunal. The main issue was whether the dealers were entitled to the benefit of Section 5(3) of the Central Sales Tax Act, 1956. Section 5(3) deals with the sale or purchase of goods in the course of import or export, stating that the last sale preceding the export shall be deemed in the course of export if it complies with the export agreement or order. The State argued that the goods exported were not the same as those purchased, as coffee seeds were purchased while instant coffee was exported. The State contended that the character of the goods had changed due to processing.

The Tribunal considered the factual matrix and documents, concluding that the dealers were entitled to exemption under Section 5(3) as the character of the goods supplied had not changed significantly. The State relied on a decision of the High Court regarding a similar issue but the Tribunal's decision was upheld. The High Court emphasized the importance of establishing a link between the sale or purchase and the export of goods, as highlighted in previous judgments. The Court noted that the 'same goods' theory cannot be used to widen the scope of Section 5(3) and that the connection between transactions must be inextricable, not remote.

The Court referred to previous cases where goods purchased were processed before export, emphasizing that as long as the identity of the goods is not lost, they can still be considered 'those goods.' The Tribunal's decision was found to be in line with legal principles, and no errors were identified warranting interference. Therefore, the writ petitions were dismissed, and no costs were awarded.