2021 (4) TMI 192 - HC - VAT and Sales Tax

Levy of sales tax on turnover - High seas sale - exemption claimed by the dealer on high sea sales disallowed on the ground that there was interpolation of the name of the customer in the copies of the Bills of Entry which were filed before the Sales Tax Authorities - HELD THAT - The fact remains that the Tribunal touched upon the finding rendered by the First Appellate Authority. Admittedly the Bill of Entry is not the document of title and even assuming that there are certain interpolations or corrections in the Bill of Entry the question would be as to what is the effect of such corrections. This issue was considered by the Hon ble Division Bench of this Court in the case of STATE OF TAMIL NADU VERSUS KAWARLAL AND CO. 2011 (9) TMI 519 - MADRAS HIGH COURT where it was held that Bill of Lading is the document of title and admittedly it carried the name of the ultimate buyer and that there was no denial of the fact that the Assessee had transferred the goods before it crossed the Customs Station Tribunal was correct in granting relief. The Tribunal committed a serious error in reversing the well considered order passed by the First Appellate Authority by touching upon the factual findings which were recorded by the First Appellate Authority - there are no hesitation to hold that the common impugned order passed by the Tribunal calls for interference. Petition allowed.

Summary

Issues:
- Disallowance of exemption claimed on high sea sales
- Interpretation of documents of title under the CST Act, 1956
- Conflict between findings of the First Appellate Authority and the Tribunal

Disallowance of Exemption Claimed on High Sea Sales:
The writ petitions involved registered dealers challenging an assessment order disallowing exemption claimed on high sea sales. The dealer, M/s.Plastic Sales Corporation, reported a total turnover in their monthly return under the Central Sales Tax Act, 1956. The Assessing Officer disallowed the exemption due to alleged interpolation of the customer's name in the Bills of Entry. The First Appellate Authority found in favor of the dealer, emphasizing that the goods were sold on high sea sale basis with proper documentation. The Tribunal, however, reversed this decision, leading to the State filing an appeal.

Interpretation of Documents of Title under the CST Act, 1956:
The dispute centered on the interpretation of documents of title under the CST Act, 1956. The First Appellate Authority considered Bills of Lading as documents of title, verifying the high sea sales transactions. The Tribunal's decision was challenged based on the argument that the Bill of Lading endorsed in favor of high seas buyers before crossing customs station fulfilled the requirements of Section 5(2) of the CST Act. The legal position was supported by previous judgments and the definition of "importer" under the Customs Act.

Conflict Between Findings of the First Appellate Authority and the Tribunal:
The High Court analyzed conflicting views between the First Appellate Authority and the Tribunal. The Court referred to the case of State of Tamil Nadu Vs. Kawarlal & Co., emphasizing the importance of Bills of Lading as documents of title in high sea sales. The Court also distinguished the case from a Supreme Court decision, M/s.Vellanki Frame Works Vs. CTO, Visakapatnam, highlighting the factual distinctions. Ultimately, the High Court set aside the Tribunal's decision, reinstating the orders of the First Appellate Authority. The judgment emphasized the importance of factual findings and legal interpretations in resolving the dispute.