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TMI Blog2001 (9) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... n of section 5(3) of the Central Sales Tax Act, 1956, the sale by the assessee to those buyers being the penultimate sale and such sale was in Tamil Nadu, nevertheless, as goods had been despatched to a destination outside the State, section 7-A(1)(c) of the Act was attracted as that despatch of the goods was not by way of inter-State sale but for export. The order of the assessing authority was confirmed in appeal and on further appeal to the Special Tribunal, the Tribunal held that the goods had in fact been sold by the assessee ex-godown at Ariyalur and that, the sale was the penultimate sale and was thus a sale in the course of export under section 5(3) of the Central Sales Tax Act, Judgment of the Special Tribunal printed at page 385 infra. 1956, hereinafter referred to as "the CST Act", and held that section 7-A(1)(c) had been properly applied. 3.. Mr. C. Natarajan, Senior Counsel, appearing for the assessee contended that the Tribunal and the Revenue authorities were in error taking the view that the sales in the course of export are incapable of being regarded as inter-State sales even when goods are despatched to destination outside the State prior to the actual exportat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State sales or export sales, observed that: " ..We are unable to conceive of a fourth category of sale, which could be neither a local sale nor an inter-State sale nor an export sale. Shri Gupta, on behalf of the State, contended that the goods might have been directly moved by the assessee to a port for shipment abroad in pursuance of an export contract entered into by the dealer who purchased from the assessee. Even in such a case if the transport of goods from the assessees' place of business to the port is in pursuance of the terms of the sale, the movement of the goods would be occasioned by the sale made by the assessee and would be an inter-State sale. If, on the other hand, the goods were sent to the port by the assessee subsequent to and independent of the sale made by him, then, for the purpose of that transport, the assessee would only be an agent of the purchaser and the movement of the goods in pursuance of the contract of sale entered into by the purchaser and would be one in the course of export within the meaning of section 5(1) of the Central Sales Tax Act, 1956. " 6.. Counsel also fairly brought to our notice the decision of the apex Court in the case of Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of subsection (3) of section 5 is a sale in the course of export of those goods out of the territory of India. 9.. The counsel submitted that the very introduction of the proviso in section 6 would show that but for the proviso, the penultimate sale when it was a sale which had occasioned to the movement of goods to a place outside the State, even if such movement was ultimately to terminate outside the country by reason of becoming part of a further export sale, would still be a sale in the course of inter-State trade or commerce. 10.. Though the question raised by counsel is indeed an interesting one, nevertheless, on the facts of the case before us, it is not necessary for us to deal with the question as to whether a penultimate sale falling under section 5(3) of the CST Act can also be regarded as an inter-State sale and consequently the penultimate sale would be out of the purview of section 7-A(1)(c) of the State Act. 11.. It is clear from the statement of facts found in the affidavit accompanying the petitioner before us, as also from the facts which the assessee had disclosed to the assessing authorities, that the contract between the assessee and its purchaser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer did not, even while holding that there was a local sale, held that such a local sale cannot be regarded as having taken the assessee out of the ambit of section 7-A of the Act only because of it being a sale in the course of export, but relied upon the factum of despatch to the destination outside the State. The assessee, it was submitted, had bona fide regarded the transaction as one which did not attract purchase tax. It was also submitted that the assessee had not withheld any material, that it had disclosed its entire turnover and in this background the authorities ought not to have proceeded to levy penalty in a mechanical way as was done by the assessing officer. The only reason given for the levy of penalty is that the assessee was found to be liable to pay purchase tax and that the assessee had not paid that tax. 15.. Counsel in this context relied upon the decision of a Bench of this Court in the case of State of Tamil Nadu v. Indian Silk Traders reported in [1994] 94 STC 157 wherein it was held, inter alia, that: " While the element of deliberateness, wilfulness or a blameworthy conduct on the part of the assessee may not be necessary for invoking section 12(5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of jaggery Rs. 28,615 had to be taxed at 5 per cent as there was no proof for the export sale, and also levied penalty at 150 per cent of the tax due under section 12(5)(iii) of the TNGST Act on the ground that the assessees wilfully suppressed the taxable turnover of chillies of Rs. 13,88,871 during the assessment year 1982-83. 3.. Aggrieved by the said order the assessees preferred appeals in A.P. No. 321 of 1984 and 353 of 1984 before the Appellate Assistant Commissioner, Tiruchirapalli against the levy of purchase tax at 5 per cent under section 7-A(1)(c) of the TNGST Act on the purchase value of the chillies and on the sale value of jaggery and also against the levy of penalty under section 12(5)(iii) for the wilful suppression of the turnover of chillies as stated above. The Appellate Assistant Commissioner dismissed both the appeals by confirming the findings of the assessing authority that the sale by the assessees to Allanasons (P) Ltd., Bombay (chillies) was not as a direct result of sale in the course of inter-State trade or commerce and thereby it became liable to tax under section 7-A(1)(c) of the TNGST Act especially the turnover of Rs. 13,88,871 had been the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ression, as the alleged suppression should be wilful. 6.. Considering all these aspects now the points for consideration are: (i) Whether the levy of purchase tax at five per cent under section 7-A of the TNGST Act on a turnover of Rs. 13,88,871 for chillies is sustainable, or the goods involved moved to a place outside the State as a direct result of inter-State sale. (ii) Whether the levy of tax at five per cent on a turnover of Rs. 28,615 for sale of jaggery is permissible. (iii) Whether the levy of penalty of Rs. 69,444 calculated at 100 per cent of the tax due (chillies) is sustainable. 7.. It is admitted fact that the assessee being the dealers in chillies and coriander purchased chillies locally from the agriculturists and marketing committee (non-dealers) and thereby the purchase turnover for the same is Rs. 13,88,871.15 and for the same admittedly the corresponding sale turnover is Rs. 15,83,190. It is undisputed fact that for the said sales turnover the assessees have issued sale bill No. 155 on May 29, 1982 to M/s. Allanasons (P) Limited, Bombay-37 which contained the following particulars. "To the value of 5,880 bags of dry chillies stalkless each weighing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the particulars mentioned in the sale bill as "excluding gunny bag" is in consonance with the fact of export of chillies by M/s. Allanasons (P) Limited, Bombay of the same chillies purchased from the dealer under the sale bill dated May 29, 1982. In addition even as per form "H" certificate the export was under agreement with or order of the foreign buyer in No. Ex 50086 dated May 12, 1982. So the mere fact of non-production of the said agreement of export as mentioned by lower authority would not stand in the way of our conclusion that it was in the course of export out of India, especially as the form "H" certificate issued by the Bombay authority concerned had been handed over by the exporter to the assessees. In other words the particulars in "H" form tallying with sale bill, bill of lading, etc, had not been disputed by the revenue, and thereby the non-production of the said agreement would not in any way dispel the fact that the sale of the dealer/assessee to M/s. Allanasons Exporter should be deemed to be in the course of export being penultimate sale, which took place for the purpose of complying with agreement for or in relation to the export by M/s. Allanas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods moved to Cochin port for shipment for export by Allanasons and it was moved not as a direct result of interState sale. So there is no inter-State sale by despatching goods to a place in the other State. 10-A. At this stage, it is pertinent to point out that in the Punjab Sales Tax Act the sale in the course of export has been also included, in order to entitle the dealer for exemption of purchase tax as in the case of inter-State sale as may be seen in section 4-B of the said Act as follows: "4-B Levy of purchase tax on certain goods.-Where a dealer who is liable to pay tax under this Act purchases any goods other than those specified in Schedule 'B' from any source and............ (i) to (iii).................... (iv) sends them outside the State other than by way of sale in the course of inter-State trade or commerce or in the course of export out of the territory of India." So the exemption for export sale under section 5(3) of the CST Act had not been included in section 7(A)(1)(c) of the TNGST Act. So such omission in section 7-A(1)(c) of the TNGST Act is deliberate. In addition while considering the legislative powers of the State in levying purchase tax at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at Ariyalur for export out of India through Cochin Port, by Allanasons, Bombay for the purpose of complying with the agreement or order in relation to such export. It is obvious that the goods never moved either as a consignment sale or as a direct result of inter-State sale as it was sent to clearing agent at Cochin port for shipment to ODESSA, USSR. To name it as an inter-State sale it is not as if Allanasons issued "C" forms and on the other hand form "H" certificate was issued to specify that the purchase of goods were in the course of the export, as the date of agreement or order for export from the foreign buyer (foreign) in ODESSA, was May 12, 1982. So it is obvious that the last purchase or sale within the State was for the purpose of complying with the agreement for or in relation to such export. 12.. There are three transactions in this case, viz., (1) The purchase of chillies by the assessees from the agriculturist and marketing committee that is from the non-dealers. (2) The sale by the assessees-dealer to the exporter Allanasons, Bombay for export which was the last purchase point in Tamil Nadu. (3) Export sale by M/s. Allanasons (P) Limited, Bombay to a forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or purchase tax under section 7-A(1) (parent section) of the TNGST Act. In all these decisions it has been held that under section 5(3) of the CST Act only the last sale or purchase preceding the export sale is deemed to be a sale in the course of export. Hence it is clear that the purchases made by the assessees from the non-dealers were not the immediate preceding purchase which occasioned the export eligible for exemption under section 5(3) of the CST Act. So the petitioners could not seek exemption from the levy of tax on their purchases made by them from the unregistered dealers which were transactions preceding the penultimate sale. In other words the petitioners could not claim any exemption from the levy of purchase tax under section 7-A(1) of the TNGST Act as the last sale in the State is not inter-State sale, but only a sale in the course of export covered under section 5(3) of the CST Act. Further as already stated above the exemption of levying purchase tax under section 7-A(1)(c) of the TNGST Act is not covering the sale in the course of export as enumerated under section 5(3) of the CST Act, though such exemption of levying purchase tax is provided in section 7(A)(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohar Co. v. State of Haryana reported in [1991] 80 STC 79 (SC). (3) State of Orissa v. Johrimal Gajanand reported in [1994] 95 STC 93 (SC) and on Onkarlal Nandlal v. State of Rajasthan reported in [1985] 60 STC 314 (SC). In Onkarlal Nandlal case [1985] 60 STC 314 (SC) three honourable Judges of Supreme Court while dealing with the expression "resale within the State" in form ST-17 to the Rajasthan Sales Tax Rules by applying section 4(2) inclusive of explanation in the CST Act had held that a sale which is in the course of inter-State sale cannot be taxed by State Legislature even if situs is within the State, because the State Legislature has no legislative competence to impose tax on the inter-State sale and that can be done only by the Parliament. Here factually in this case the second transaction is not a sale in the course of inter-State trade or commerce, but only in the course of export by virtue of section 5(3) of the CST Act and thereby this penultimate sale could not be taxed but the earlier sale or purchase and in this case, purchase of chillies from the agriculturist and non-dealers preceding to the penultimate sale is liable to purchase tax under section 7-A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 5(1) of the CST Act. Here, in this case it has been already held that the penultimate sale is in the course of export and further there is no question of finished product or undertaking involved in this case. So the facts of the cited cases are also not applicable in the facts of this case. 17.. So bearing all these facts in mind the principles laid down in the above referred decisions reported in (1) State of Karnataka v. B.S. Ashraf Co. [1997] 107 STC 571 (SC). (2) Sovereign Spices v. State of Kerala [1998] 110 STC 429 (Ker). (3) Jayalaxmi Industries v. Deputy Commissioner of Commercial Taxes (Assessments), Tumkur [1996] 103 STC 182 (Kar). (4) Mohammed Ishaq Sons v. Commissioner of Commercial Taxes in Karnataka [1992] 87 STC 36 (Kar). are applicable to the facts of this case-due to the fact that the penultimate sale is neither a consignment sale as held by the lower authorities nor direct result of inter-State sale as claimed by the petitioners but it is a sale in the course of export by virtue of section 5(3) of the CST Act. Section 7-A(1)(c) of the TNGST Act does not except in export sale. The findings of the lower authorities that the penultimate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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