2013 (6) TMI 576 - HC - VAT and Sales Tax

Form H - sale in the course of Export - Exemption on the purchases of raw hides from unregistered dealer - held that - the test to be applied is, whether there is an inseverable link between the local sale or purchase on export and if it is clear that the local sale or purchase between the parties is inextricably linked with the export of the goods, then a claim under section 5 (3) for exemption from State sales tax is justified, in which case, the same goods theory has no application. The applicant purchased raw goat skins from unregistered dealer and sold to the exporter. The authorities below have recorded the finding that the goods mentioned in the invoices, by which the goods have been sold, are different to the goods mentioned in the bill of ladding and Form H . It means that the goods, which had been exported, were different to the goods sold by the applicant. In Form H the foreign buyer s order number and date are not mentioned. Therefore, Form H filed was incomplete and inadmissible for the transaction in dispute. The copy of the order of the foreign buyer has not been produced before any of the authorities to show that the purchases by the exporter from the applicant was inextricably connected with the export and there existed a bond between the contract of sale and the actual export. Such link is missing in the present case. Therefore, in view of the law laid down by the apex Court, in the case of State of Karnataka v. Azad Coach Builders Pvt. Ltd. And another 2010 (9) TMI 879 - SUPREME COURT OF INDIA , the sale by the applicant to the exporter cannot be said to be in the course of export under Section 5(3) of the Central Sales Tax Act. The Tribunal has rightly held so. - Decided against the assessee.

Summary

Issues:
1. Exemption claim on purchases and sales under U.P. Trade Tax Act.
2. Rejection of exemption claim by assessing authority.
3. Appeals filed before Additional Commissioner Grade II.
4. Appeals filed before Tribunal by Commissioner of Trade Tax.
5. Revision filed against Tribunal's order.
6. Interpretation of Section 5(3) of the Central Sales Tax Act.
7. Application of principles from State of Karnataka v. Azad Coach Builders Pvt. Ltd. case.
8. Examination of inseverable link between local sale/purchase and export.

Analysis:
The revision before the High Court was based on an exemption claim under the U.P. Trade Tax Act for the assessment year 2004-05. The applicant had purchased raw hide and skins from an unregistered dealer, tanned them on a job work basis, and sold them to an alleged exporter, claiming exemption on both purchases and sales. However, the assessing authority rejected the claim, citing discrepancies in Form 'H' and bill of lading, and levied tax on purchases under Section 3-AAAA and on sales as inter-State sales under the Central Sales Tax Act.

The applicant then appealed before the Additional Commissioner Grade II, who allowed both appeals, setting aside the tax levy. Subsequently, the Commissioner of Trade Tax filed appeals before the Tribunal, which allowed one appeal under the Central Act but dismissed the appeal under the U.P. Trade Tax Act. This led to the applicant filing the present revision before the High Court.

The High Court considered the arguments presented, focusing on the interpretation of Section 5(3) of the Central Act in light of the principles established in the State of Karnataka v. Azad Coach Builders Pvt. Ltd. case. The Court emphasized the requirement of an inseverable link between local sale/purchase and export for a transaction to be considered in the course of export. It noted discrepancies in the goods mentioned in invoices, bill of lading, and Form 'H', highlighting the absence of a clear connection between the sales and actual export.

Based on the legal principles outlined by the apex Court, the High Court concluded that the applicant's sales to the exporter did not meet the criteria for being deemed as in the course of export under Section 5(3) of the Central Sales Tax Act. Therefore, the Tribunal's decision was upheld, and the revision was dismissed.

In summary, the High Court's judgment focused on the application of statutory provisions and legal principles to determine the eligibility for tax exemption on purchases and sales under the U.P. Trade Tax Act. The analysis centered on the interpretation of Section 5(3) of the Central Sales Tax Act and the requirements established by previous legal precedents, ultimately leading to the dismissal of the revision based on the lack of an inseverable link between the local transactions and export activities.