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TMI Blog2005 (1) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... only in respect of transactions of sales and purchase within the State and that it does not apply to sale of goods in the course of export outside India? 2.. The respondent/assessee-firm was registered as a dealer under the provisions of the Punjab General Sales Tax Act, 1948 (hereinafter referred to as "the Punjab Act") (as applicable to the State of Haryana) and also under the Central Sales Tax Act, 1956 (hereinafter referred to as "the Central Act"). The assessee-firm was engaged in the manufacture and sale of shoes. 3.. In the year 1971-72, the assessee-firm while filing its return under the Punjab Act claimed a deduction of Rs. 50,01,618.10. The aforesaid deduction was claimed under section 5(2)(a)(v) being export sales. The assessee-firm claimed that it had entered into a contract on January 25, 1971 with the State Trading Corporation for the supply of shoes manufactured by it. The State Trading Corporation had earlier entered into a contract dated November 23, 1970 with Rezno Export. The assessee-firm entered into a contract dated January 25, 1971 to fulfil the aforesaid contractual obligations of the State Trading Corporation. Accordingly, the assessee-firm sold shoes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance have also gone through the record of the case. 7.. Shri Jaswant Singh, the learned counsel appearing for the Revenue, has primarily canvassed the reasoning adopted by the Deputy Excise and Taxation Commissioner, Ambala, in his order dated September 23, 1977. On that basis, it has been argued by the learned counsel that the assessee could not have claimed deduction under rule 29(v) of the Rules, as the aforesaid sales could not be termed to be the export sales, inasmuch as the export in question has taken place by the State Trading Corporation for meeting its obligations with Rezno Export. Accordingly, it has been contended that the supply of goods by the assessee-firm was distinct and separate from the transactions of export which had actually been executed by the State Trading Corporation. To support the aforesaid contention, the learned counsel has vehemently relied upon the law laid down by the apex Court in Mod. Serajuddin's case [1975] 36 STC 136. Additionally it has been argued by the learned counsel for the Revenue that rule 29(v) of the Rules was to be read in conjunction with the provisions of section 5 of the Central Act and since the provisions of the aforesaid r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Sales Tax Act, 1956: "5. When is a sale or purchase of goods said to take place in the course of import or export. (1) A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. (2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India." Section 5 of the Punjab General Sales Tax Act, 1948: "5. Rate of tax. (1) Subject to the provisions of this Act, there shall be levied on the taxable turnover of a dealer a tax at such rates, not exceeding (eight paise) in a rupee as the State Government may by notification direct: Provided that a tax at such rate, not exceeding (twelve paise) in a rupee, as may be so notified, may be levied on the sale of goods as specified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be exported out of the territory of India whether by one transaction or by a series of transactions' and since this rule had been in force with effect from April 1, 1949 therefore Haryana had already provided for exemption of tax in regard to a much broader sphere of activity connected with exports than has been provided for in the Central Act by the addition of subsection (3) to section 5. He has pointed out that whereas new section 5(3) of the Central Sales Tax Act effective from April 1, 1976 exempt from tax merely goods involved in the last two transactions in the course of export, rule 29(v) of the 1949 Rules on the other hand exempts not merely goods involved in the last two transactions but the entire series of transactions connected with export and with effect from April 1, 1949. Therefore, he argued, the appellant's transaction during 1971-72 pertaining to goods of the value of 49.97 lacs, even if considered merely as an inter-State sale to the S.T.C. would be exempt from tax if it is proved that the goods so supplied to S.T.C. by the appellant were ultimately exported out of the territory of India. 17.. The appellant's counsel also pointed out that the Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27 must be interpreted to refer to these transactions only which in terms of the latter rule were 'in the course of export out of the territory of India' as defined by the Supreme Court in Serajuddin's case [1975] 36 STC 136. He argued that if rule 29(v) was thus read in the light of rule 27 of the 1949 Rules as also in harmony with section 5(1) as interpreted by the Supreme Court then there could be no question of any meaning being assigned to this rule which was contrary to the interpretation given by the Supreme Court in Serajuddin's case [1975] 36 STC 136. 19.. The District Attorney also pointed out that in any case article 251 of the Constitution made it clear that in such spheres where both the Parliament and State Legislature had the power to enact laws any law made by the State Legislature shall be inoperative to the extent that it was repugnant to the Central legislation. Therefore, he argued that even if the words 'series of transactions' used in rule 29(v) of the 1949 Rules were interpreted to mean a series of consecutive sales this rule would in view of article 251 of the Constitution of India be inoperative since it was repugnant to section 5(1) of the Central Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in rule 27 of the 1949 Rules. As a matter of fact it is clear from the Supreme Court judgment in the Serajuddin's case [1975] 36 STC 136, that to a considerable extent it has based its restrictive interpretation on the words 'occasions such export' which are mentioned only in section 5(1) of the Central Act and do not find any place in rule 27 of the State's 1949 Rules. Thus it appears to me that the intention of the State Government always was to give a more liberal tax exemption with regard to goods designed to be exported out of the territory of India than the Central Government had intended. Rule 27 of the 1949 Rules is certainly more liberal than section 5(1) of the Central Act and I find rule 29(v) even more liberal. 22.. Further I find no grounds in support of the District Attorney's view that rule 29(v) is not an independent self-contained rule but is sub-servient to rule 27 because if that were so, then each of the subrules of rule 29 would be subservient to one or the other preceding rule. But this is not so. For instance, deductions from gross turnover mentioned in sub-rules (iv), (vii) and (ix) of rule 29 are not mentioned anywhere else either in the Act or in the Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Authority that the sale or purchase of goods actually took place outside the State of Punjab or in the course of inter-State trade or commerce or export out of or import into the territory of India as the case may be. Similarly the language of rule 29 also shows that a mode of calculation had been provided for computing the taxable turnover of a dealer and while providing the aforesaid mode certain deductions have been permitted to a registered dealer. One of the deductions which is permissible is the value of sale of goods proved to be exported out of the territory of India, whether by one transaction or by a series of transactions. Thus, if the Rules provide for additional deductions for computing the taxable turnover of an assessee, then the aforesaid Rules cannot be treated to be repugnant to the Punjab Act or the Central Act. Such a repugnancy could have been claimed by a dealer if the Punjab Act or the Central Act had provided for some reliefs which were restricted by the Rules. 13.. Although we have noticed that the Tribunal had itself held that the judgment in Mod. Serajuddin's case [1975] 36 STC 136 (SC), was not materially distinguishable from the facts and cir ..... 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