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TMI Blog1986 (3) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... ses cannot be held to be in the course of export within the meaning of section 5(3) of the Central Sales Tax Act. The Tribunal mainly relying on the decision of the Andhra Pradesh High Court in Singh Trading Company v. Commercial Tax Officer, Srikakulam [1979] 44 STC 1 has held that the cashew kernels exported cannot be held to be a commodity different from the raw cashew purchased and hence the purchase has to be held to be in the course of export within the meaning of section 5(3) of the Act. Accordingly the Tribunal directed modification of the orders of assessment in all these cases deleting the purchase turnover of raw cashew-nuts as not exigible to tax under the Kerala General Sales Tax Act. 4.. As per article 286(1) of the Constitution no law of a State shall impose, or authorise the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place (a) outside the State; or (b) in the course of the import of the goods into or export of the goods out of, the territory of India. Subsection (3) of section 5 of the Central Sales Tax Act (74 of 1956) inserted by section 3 of the Central Act 103 of 1976 is extracted below: "(3) Notwithstanding anythi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Madras, and III. Imports from Africa. As regards Group I, the High Court finds that 'the purchases of raw nuts whether African or Indian are all made with the object of exporting their kernels' though there were some negligible sales in the local market of what are called 'factory rejects'. The High Court further finds that the bulk of the kernels were in fact exported by the respondents themselves, a small quantity being sold by the respondents to other exporters who also subsequently exported the same. Thus, on the whole, the respondents could be said to have purchased the raw nuts for the purpose of exporting the kernels and to have actually exported them. But, it will be seen, the purchases are not covered by the exemption on the construction we have placed on clause (1)(b), even if the difference between the raw materials purchased and the manufactured goods (kernels) exported is to be ignored. It may, however, be mentioned here that the High Court has found that the raw cashew-nuts and the kernels manufactured out of them by various processes, partly mechanical and partly manual, are not commercially the same commodity. This finding, which is not seriously disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relying on the decision in State of Travancore-Cochin v. Shanmugha Vilas Cashew-nut Factory [1953] 4 STC 205 (SC) the Supreme Court observed that it was not correct to say that the process of tanning brings about no change in the raw hides and skins and that both types of bides and skins constitute the same goods. 6.. A Division Bench of the Andhra Pradesh High Court in the decision in Singh Trading Company v. Commercial Tax Officer, Srikakulam [1979] 44 STC 1 has purported to distinguish the decision of the Supreme Court in the Shanmugha Vilas Cashew-nut Factory's case [1953] 4 STC 205 (SC) on the ground that the question whether raw cashew-nuts purchased are the same commodity as cashew kernels exported did not directly arise for decision and that the observations are based on the finding of the High Court the correctness of which was not challenged before the Supreme Court. The Andhra Pradesh High Court on a consideration of the question held that cashew kernel is not a commodity different from raw cashew-nut. The majority opinion expressed by Patanjali Sastri, C.J., in the Shanmugha Vilas Cashew-nut Factory's case [1953] 4 STC 205 (SC) and the reference to the said decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the two articles were commercially different did not directly fall for consideration before the Supreme Court. It would be wholly improper for us to ignore the observations of the Supreme Court that cashew-nuts and kernels were commercially different articles. It also appears that the pertinent observations of Das, J., where an independent consideration was made as to whether cashew-nuts and kernels were different articles of commerce were not considered by the Division Bench of the Andhra Pradesh High Court." Following the decisions of the Supreme Court in Shanmugha Vilas Cashewnut Factory's case [1953] 4 STC 205 (SC), Anwarkhan Mehboob Co.'s case [1960] 11 STC 698 (SC) and Hajee Abdul Shukoor Co.'s case [1964] 15 STC 719 (SC), the Madras High Court held: "We are of the considered view that the cashew kernel and cashew-nut are different articles of commerce is not now open to debate." 7.. A Division Bench of the Karnataka High Court has also expressly dissented from the decision of the Andhra Pradesh High Court, in Peirceleslie India Ltd. v. State of Karnataka [1985] 59 STC 302 (Kar) and has held that cashewnuts and its kernel are commercially different commodities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and commercial background of article 286(1)(b) was rejected by the Supreme Court in the Shanmugha Vilas Cashew-nut Factory's case [1953] 4 STC 205 (SC). It is observed at page 215: "It is true, as pointed out in the previous decision, that the export-import trade is important to our national economy, but it is no less true that the Statepower of taxation is essential for carrying on its administration, and it must be as much the constitutional purpose to protect the one as not unduly to curtail the other. The question really is, how far did the constitution-makers want to go in protecting the foreign trade by restricting the power of taxing sales or purchases of goods which they conferred on the States under entry 54 of List II. The problem before them was one of balancing and reconciling the rival claims of foreign trade in the interests of our national economy and of the State's power of taxation in the interests of the expanding social welfare needs of the people committed to its charge, and we have their solution as expressed in the terms of clause (1)(b). It is for the court to interpret the true meaning and scope of those terms without assuming that the one constitutiona ..... X X X X Extracts X X X X X X X X Extracts X X X X
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