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TMI Blog1995 (11) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... re-sale charges. Hence the Deputy Commissioner, while exercising the suo motu powers under section 32 of the Tamil Nadu General Sales Tax Act brought to tax in the assessment year 1975-76 the charges for transporting, handling and dressing amounting to Rs. 7,97,422.80. Similarly, for the assessment year 1976-77 the Deputy Commissioner brought to tax the charges for transporting, handling and dressing amounting to Rs. 6,93,303.36. 2. The Deputy Commissioner (Commercial Taxes) found the following charges have been incurred by the assessee prior to the delivery of granite stones to the exporters and the same has been exempted from the turnover wrongly by the assessing officer: 1975-76 1976-77 Rs. Rs. Polishing charges 749 3,609.45 Dressing charges 4,30,689 ... Handling charges 40,665 ... Transport charges 3,25,320 6,41,713.34 (Handling transport). According to the Deputy Commissioner, the agreements entered into between the assessee and the exporter were not produced for scrutiny. The Deputy Commissioner pointed out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, and therefore the same are chargeable to tax. Accordingly, the Tribunal upheld the Deputy Commissioner's order in revising the order made by the assessing officer. 4.. Before the Tribunal exemption was claimed with regard to penultimate sales made to exporters as per the provisions of section 5(3) of the Central Sales Tax Act. The Tribunal held that for the assessment year 1975-76 the sales made by the assessee to the exporters do not qualify for exemption under section 5(1) of the Central Sales Tax Act, since the exemption under section 5(3) of the Central Sales Tax Act was introduced only from April 1, 1976. In so far as the assessment year 1976-77 is concerned, the Tribunal held that the sales turnover is not eligible for exemption under section 5(3) of the Central Sales Tax Act. 5.. Before us, the learned counsel appearing for the assessee submitted that the Tribunal was not correct in confirming the order passed by the Deputy Commissioner in taxing the turnovers at Rs. 7,97,422.80 for the assessment year 1975-76 and a turnover of Rs. 6,93,303.36 for the assessment year 1976-77 representing handling, transporting, dressing charges, etc., collected prior to the delivery o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties in the letters exchanged or order forms as in the invoices. Therefore, we have got to gather from the attendant circumstances as to the nature of the expenditure incurred by way of handling, dressing and transport, etc. The purchase orders of M/s. Galaxy Enterprises and Mass International are available in the paper book. There has been specific mention of the terms and conditions in respect of transport, handling and dressing charges. It is clearly indicated that these operations on the black granites have to be carried out before delivery. The conditions and specifications are: 1.. Transport: To be delivered at Madras-Rs. 400 extra per cubic metre towards transport charges as per our discussions. 2.. Handling: Rs. 50 as fixed for per cubic metre for loading/unloading. 3.. Dressing: After our inspection, the blocks should be separated and dressed as per specifications be marked as per instructions Rs. 530 per cubic metre extra. It was also indicated that the black granite stones should not have cracks, patches or defects and payments would be made against delivery. These terms and conditions of purchase orders would go to show that the charges agreed towards transport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immediately after delivery shows that the goods would be delivered to the satisfaction of the exporters and if there is any defect, the goods are liable to be rejected by the exporter. It was pointed out that at the time of placing orders, the goods are not in existence. After the orders, the blocks are identified and separated. Then the blocks are polished and dressed under the supervision of the exporters. Hence the Tribunal came to the conclusion that the goods involved are future goods or unascertained goods. In fact, in the present case, the sale itself takes place only on delivery. Therefore, all charges collected by the assessee towards handling and transport constitute pre-sale charges and would be taxable as sales turnover in view of section 2(h) of the Central Sales Tax Act. It was found from the records that the assessee had included freight and handling charges along with the sale consideration as one lump sum amount. 10.. The Supreme Court in Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979] 43 STC 13 held that when the dealer transporting the goods from his factory or his place of business and selling them at a price, which is arrived after taking into accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption for the assessment year 1976-77, subject to the conditions imposed. The conditions are enumerated in the decisions reported in [1980] 46 STC 164 (SC) (Consolidated Coffee Ltd. v. Coffee Board) and [1985] 58 STC 338 (Commissioner of Sales Tax v. Veekey Footwear and Leather Industries). They are as under: 1.. There must have been a pre-existing agreement or order to sell the specific goods to a foreign buyer. 2.. The penultimate sales must have taken place after the said agreement with the foreign buyer was entered into. 3.. Sales effected should be for the purpose of complying with the said pre-existing agreement. According to the department, in order to claim exemption with regard to penultimate sale under section 5(3) of the Central Sales Tax Act, the assessee should file form "H". This certificate should be filed contemporaneously so as to ascertain that the goods sold have been actually exported. According to the learned counsel appearing for the assessee, the assessee has produced documents to show that the exporter has contract to export granites to Japan. In pursuance of the agreement between the assessee and the exporter, granites were sold to the exporter and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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