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TMI Blog1986 (3) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... chase turnover and the tax assessed was duly paid. The assessing authority, after issue of notice of reopening, passed orders of reassessment under section 19 of the Act on 24th January, 1975, bringing to tax the purchase turnover of petroleum products exported to countries outside India omitted to be included in the original orders of assessment. The appellate authority confirmed the orders of reassessment. The assessee appealed against these orders of the appellate authority to the Tribunal as T.A. Nos. 1190 and 1191 of 1975. 3.. For the year 1972-73 also the assessing authority had brought to tax the purchase turnover of petroleum products despatched to depots outside the State. The assessee had no dispute about the exigibility to tax on the purchase turnover. It had, however, disputed the taxability of the turnover relating to asphalt exported to countries outside India. There was also dispute relating to the rate of tax on the turnover of naphtha sold by the assessee to the F.A.C.T. and also about the taxability of the purchase turnover of petrol consumed for own use. The assessing authority overruling the objections of the assessee brought to tax not merely the purchase tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1190 of 1975, T.R.C. No. 17 of 1986 is against T.A. No. 1191 of 1976, T.R.C. No. 19 of 1986 is against T.A. No. 1093 of 1976, T.R.C. No. 18 of 1986 is against T.A. No. 396 of 1978 and T.R.C. No. 20 of 1986 is against T.A. No. 1094 of 1978. 6.. The Tribunal by a common order dated 10th July, 1985, held that the purchase turnover of petroleum products sold by the Cochin Refineries to the assessee is not exigible to tax under section 5A of the Act for the reason of the exclusion of tax on sales of petroleum products by one oil company to another as contained in Schedule I of the Act. In the view that it took relating to the exigibility to tax of the purchase turnover, the Tribunal held it unnecessary to consider whether the purchase turnover relating to petroleum products exported by the assessee to countries outside India is exigible to purchase tax. The Tribunal found that asphalt is a commodity exempted from taxation as per notification issued by the Government and the sales turnover relating to the same is not exigible to tax. It is also found that the purchase turnover of petrol used for own consumption by the assessee is not liable to tax for the reason that such use of pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The tax payable under section 5A is on the purchase turnover at the rates mentioned in section 5. The rates and the points at which tax under section 5 is to be levied are as provided for in Schedules I and II of the Act and at a flat rate at every point in respect of goods not specified in either of the Schedules. Section 9 of the Act exempts the sale or purchase of the goods mentioned in the Schedule III from liability to tax under the Act. Section 10 empowers the Government in the public interest by notification in the Gazette to make exemptions or reduction in rate of tax payable under the Act. Items 57A to 57G in Schedule I of the Act as it stood at the relevant period relate to petroleum products. The schedule gives the rate of taxation of these items and the point at which tax is leviable under section 5 of the Act. The relevant entry in column 3 of the Schedule is extracted below: "At the point of sale in the State by any oil company liable to tax under section 5, except where the sale is by any oil company to another oil company". An explanation to the above entry reads as follows: "For the purposes of serial numbers 57A, 57B, 57C, 57D, 57E, 57F and 57G, 'oil compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax, there is also no need to mention any other point of taxation as the section itself imposes the tax at the purchase point. What is exempted as per the entry in column 3 of the First Schedule quoted above is the taxation at the point of sale where the sale is by one oil company to another. In considering the question of liability to tax under section 5A, there is no question of any tax at the point of sale, the liability is at the purchase point and the tax is on the purchase turnover in respect of goods falling under categories (a), (b) or (c) mentioned therein. The exemption of sale from one oil company to another from taxation cannot, therefore, apply to the levy of tax on the purchase turnover under section 5A of the Act. Construing section 5A of the Act Subramonian Poti, J., as he then was, stated at page 554 in Malabar Fruit Products Co. v. Sales Tax Officer [1972] 30 STC 537 (Ker.). "Though normally a sale by a registered dealer or by a dealer attracts tax, there may be circumstances under which the seller may not be liable as, for example, when his turnover is below the specified minimum. In such cases the 'goods' are liable to be taxed, but the sales take place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1971] 28 STC 227. With very great respect to the learned Judges we have to say that the decision has failed to give due weight to the words of the section 'goods, the sale or purchase of which is liable to tax under the Act, in circumstances in which no tax is payable under the Act'. Though the sale of the particular kind of goods are taxable, when the sale of the same goods is effected by a particular dealer, that particular sale by him may not be taxable. It is in those circumstances that section 5A would be attracted." The decision in Kandaswami's case [1971] 28 STC 227 (Mad.) referred to in the above passage was reversed by the Supreme Court in the decision reported in State of Tamil Nadu v. M.K. Kandaswami [1975] 36 STC 191 (SC). The Supreme Court construes the expression "goods, the sale or purchase of which is liable to tax under the Act" occurring in section 7-A of the Madras Act corresponding to section 5A of the Kerala Act as relating to the character and class of goods in relation to their exigibility, and a charge under the section is held to be independent of the char-e under section 3 of the Madras Act. Referring to the decision of this Court in Malabar Fruit Produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation under section 5A or the exigibility of the purchase turnover to tax in the hands of the purchasing dealer. We, therefore, hold that the purchase turnover of petroleum products is taxable at the hands of the assessee if any of the conditions in clauses (a), (b) or (c) of section 5A(1) is satisfied. 10.. The learned Senior Government Pleader Shri Karunakaran Nambiar submits that the despatch of petroleum products purchased by the assessee to its depots outside the State for the purpose of sale outside the State would squarely fall under clauses (b) and (c) of section 5A(1). The assessee had not questioned its liability to tax under section 5A(1) on the purchase turnover of the goods despatched to places outside the State. In fact, the assessee had all these years suffered the tax and had not appealed against the imposition of tax on such purchase turnover. The learned Government Pleader rightly points out that for the reason of the decision of the Tribunal that the purchase turnover in respect of all sales by the Cochin Refineries Ltd. to the assessee are totally exempt from taxation, the State stands the risk of losing large amounts of revenue running to several crores by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ete when the goods are ascertained and appropriated to the contract of sale by export by the seller even though the assent of the purchasing party is subsequent to such appropriation. Counsel relies on two decisions of the Madras High Court reported in Thangiah Nadar v. State of Tamil Nadu [1980] 46 STC 67 and Sankaralinga Nadar v. Commissioner for Commercial Taxes [1982] 49 STC 302 in support of this proposition. After quoting the relevant explanation to section 2(n) of the Madras Act defining the expression "sale" a Division Bench of the Madras High Court in Thangiah Nadar's case [1980] 46 STC 67 stated at page 70: "This explanation deals with two kinds of cases. The first category is of specific or ascertained goods which were within the State at the time the contract of sale was entered into. The contract of sale is the one which is relevant in the case of a dealer who is sought to be assessed. In the present case, the contract of sale would thus be the export sale. In such a case, if the specific or ascertained goods were within the State, at the time of the contract, then they would be deemed to be local sales. Even in the case of unascertained or future goods, if at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfied and therefore the transactions are not liable to be brought within the scope of section 7-A." In Thangiah Nadar's case [1980] 46 STC 67 (Mad.) it is stated at page 69 that there was no dispute that clauses (a) and (c) do not apply to the facts of that case. The only question that the Division Bench of the Madras High Court was concerned with in Thangiah Nadar's case [1980] 46 STC 67 was whether for the reason of the explanation to section 2(u) an export sale can be considered to be a sale within the meaning of clause (b) of section 7-A of the Madras Act. In the subsequent decision in Sankaralinga Nadar's case [1982] 49 STC 302 (Mad.) even though the Bench was concerned only with clause (b) of section 7-A(1), it went further and said that for the reason of exclusion of clause (b), the entire section 7-A is excluded. We find it difficult to agree with the conclusion of the Madras High Court that for the reason of the exclusion of clause (b), clauses (a) and (c) are also excluded. It is not necessary for us for the purpose of this case to consider whether the export sales concerned can be deemed to be sales inside the State within the meaning of the expression "sale" read alon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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