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2022 (10) TMI 91 - HC - VAT and Sales TaxExemption under Section 5(3) of the Central Sales Tax Act 1956 - sale made to the merchant exporter - specific case of the petitioner is that the impugned order passed by the Appellate Tribunal is erroneous inasmuch as it has not considered the fact that M.G. Plain Kraft Paper supplied by the petitioner to the merchant exporter which was converted as Parcel Leaf did not undergo any change. HELD THAT - The Law on the subject is settled in terms of the decision of the Hon ble Supreme Court in STATE OF KARNATAKA VERSUS AZAD COACH BUILDERS PVT. LTD. AND ANOTHER 2010 (9) TMI 879 - SUPREME COURT which has been also followed by this court in three decisions referred supra. Further on perusing the records particularly the commercial invoice raised by the petitioner on the merchant exporter and the purchase order of the foreign buyer from Kualalampur Malaysia on the merchant exporter and the commercial invoice raised by the merchant exporter on the foreign buyer indicate that what has been sold by the petitioner is not what has been exported by the petitioner. What the merchant exporter has exported is Poly coated with LDPE Kraft Paper in Parcel Leaf size. There is no value addition in the price declared in the commercial invoice of the merchant exporter. On the other hand what has been exported by the merchant exporter is much below the cost on which the petitioner has sold - That apart Form H which has been filed by the petitioner also indicates that it was valid up to 31.03.1998 and was re-validated up to 31.03.2001. The commercial invoice of the petitioner is dated 28.01.2002 which comes in the next Assessment Year. The writ petition is dismissed.
Issues:
1. Exemption under Section 5(3) of the Central Sales Tax Act, 1956 on a sale made to a merchant exporter. 2. Review of assessment under Section 16(1) of the TNGST Act, 1951 r/w Section 9(2) of the CST Act, 1956. 3. Disallowance of exemption claimed by the petitioner. 4. Interpretation of the commercial identity of the product sold and exported. 5. Validity of Form 'H' for the transaction in question. Analysis: 1. The petitioner claimed exemption under Section 5(3) of the Central Sales Tax Act, 1956 for a sale to a merchant exporter. The Tribunal allowed the Commercial Tax Department's appeal against the petitioner's claim. The petitioner argued that the goods sold were exported by the merchant exporter based on Form 'H' issued. The Court examined the commercial invoice and found discrepancies in the goods sold and exported, leading to the dismissal of the petitioner's claim for exemption. 2. The petitioner's assessment was reviewed under Section 16(1) of the TNGST Act, 1951 r/w Section 9(2) of the CST Act, 1956. The original authority revised the assessment disallowing the exemption claimed by the petitioner. The Appellate Commissioner initially allowed the petitioner's appeal, which was later reversed by the Tribunal. The Court upheld the Tribunal's decision based on the mismatch between the goods sold and exported. 3. The Court considered the petitioner's argument that there was no change in the goods supplied to the merchant exporter and those exported. However, upon examining the commercial invoices and Form 'H', it was evident that the product sold by the petitioner differed from what was exported by the merchant exporter. This discrepancy led to the rejection of the petitioner's claim for exemption. 4. The Court referred to precedents and legal provisions to determine the commercial identity of the product sold and exported. It was established that the goods sold by the petitioner did not match the goods exported by the merchant exporter, leading to the denial of the petitioner's exemption claim under Section 5(3) of the Central Sales Tax Act, 1956. 5. The validity of Form 'H' for the transaction in question was crucial in determining the eligibility for exemption claimed by the petitioner. The Court noted that the Form 'H' validity did not align with the transaction period, further supporting the decision to dismiss the petitioner's claim for exemption. The mismatch in goods sold and exported, along with the Form 'H' discrepancy, led to the dismissal of the writ petition.
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