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TMI Blog2000 (4) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant informed the authorities in their letter dated April 5, 1999 that they are not liable to pay sales tax, in the letter dated April 13, 1999 the appellant was informed that there is no provision in the sale notice to avail exemption of the sales tax and they should make the payment of the balance sale amount first and other dues. On receipt of the said letter, the appellant filed W.P. No. 8343 of 1999 to quash the same with respect to the demand for sales tax and to direct the respondent to accept the form H filed by the appellant after the export is over without insisting for payment of sales tax and any surcharge thereon in respect of sandalwood sold to the appellant in the auction conducted by the second respondent in respect of 20 M.Ts. of sandalwood as confirmed by the second respondent's order dated March 17, 1999. 3.. The second respondent in the letter dated September 24, 1999 informed that as per the condition No. 12(ii) of this sale notice, penal interest at 18 per cent per annum on over due amount and as per the condition No. 15 of the sale notice, demurrage charges of Rs. 600 per M.T. per day for the sandalwood so kept in double lock beyond 60 days have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t) has submitted that the Forest Department was not having any sale for export, and the auction is in general, and so as per condition No. 27 of sale notice, the appellant should pay the sales tax. He has also submitted that on the date of confirmation of sale, the appellant was not even having valid licence to export goods so as to enable them to claim the benefits under section 5(3) of the Act. 9.. The learned Government Advocate for Taxes has also submitted that on the date of the sale, it was not established that the sale was for the purpose of export, and based on the earlier order obtained from foreign buyers. In the absence of any such materials on the date on which sale was completed, the appellant cannot come forward with the plea that they are entitled to the benefits under section 5(3) of the Act. He has further submitted that the export of sandalwood has been banned. Only under the notification, certain exemptions have been given, and so the case of the appellant cannot be accepted. 10.. In the auction held on February 25, 1999, the appellant participated and was the successful bidder with respect to 20 M.Ts. and 33 M.Ts. of sandalwood. The same had been confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are to be exported; and (b) it must be for the purpose of complying with such agreement or order and then only such sale is deemed to be a sale in the course of export. 13.. The apex Court had an occasion to deal with section 5(3) of the said Act in Consolidated Coffee Ltd. v. Coffee Board, Bangalore [1980] 46 STC 164; AIR 1980 SC 1468. While dealing with the nature of agreement, which can be relied on, for the purpose of export, to claim benefit under section 5(3) of the said Act, and the apex Court has held as follows: "13. It is true that the language employed in section 5(3) is a little ambiguous or equivocal and there is no indication in express terms whether the 'agreement' mentioned therein necessarily refers to the agreement with a foreign buyer or would include any binding or enforceable agreement to export with a local party and that is why the counsel on either side have heavily relied upon the Statement of Objects and Reasons appended to the relevant Bill to show what was the legal position under section 5(1) as interpreted by this Court in the Coffee Board's case [1970] 25 STC 528 (SC); [1970] 3 SCR 147; AIR 1971 SC 870 and Mod. Serajuddin's case [1975] 36 STC 136 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export in the concerned phrase means an indent from a foreign buyer, the preceding word 'agreement' in the phrase would take colour from the word 'order' and would on the principle of noscitur a sociis mean an agreement with a foreign buyer. In Maxwell on the Interpretation of Statutes (at page 289, 12th edition), the rule of noscitur a sociis is explained thus: 'where two or more words, which are susceptible of analogous meaning, are coupled together, they are understood to be used in their cognate sense. They take, as it were, their colour from each other, the meaning of the more general being restricted to a sense analogous to that of the less general'. Applying this rule of construction it becomes clear that 'the agreement' occurring in the phrase must mean the agreement with a foreign buyer and not the agreement with a local party containing a covenant to export. Secondly, and more importantly, the user of the definite article 'the' before the word 'agreement' is, in our view, very significant. Parliament has not said 'an agreement' or 'any agreement' for or in relation to such export and in the context the expression 'the agreement' would refer to that agreement which is imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department, though the learned Senior Counsel heavily relied on the same. 16.. The next objection raised by the learned Special Government Pleader is that as per the sale notice, the appellant has to pay the sales tax; otherwise he is not entitled to take delivery of goods, and other consequences would follow. This submission has been made on the basis that the appellant has accepted the terms and conditions and participated in the auction, and purchased the sandalwood. It is not in dispute that if the appellant satisfies the condition specified under section 5(3) of the said Act, he is entitled for the benefit given under the said provision. The contract cannot stand in the way of the appellant in getting the statutory benefit. No contract tends to circumvent the benefit given under the law. This view of ours is supported by the decision of the division Bench of the Allahabad High Court in U.P. State Electricity Board v. Lakshmi Devi Sehgal AIR 1977 All 499, wherein it has been held as follows: "No contract would be enforced which would be contrary to the general policy of the law. The consumer may have agreed to abide by the conditions subsequently altered or modified by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold to the buyer. As per the sale notice, the sale is completed only on confirmation. At this stage as per the decision of the apex Court, the authorities ought to have called for the documents so as to satisfy themselves regarding the claim of the appellant, under section 5(3) of the said Act. 18.. Here, it is relevant to mention that this problem arises every year and so the respondents should have taken appropriate steps to solve it by incorporating certain clauses in the sale notice. The Forest Department can also approach the Sales Tax Department to have a concrete guideline to find out whether the purchasers of sandalwood are entitled to any benefit under section 5(3) of the said Act. In the sale notice which is the subject-matter of these writ appeals, no such condition has been contemplated. In the absence of such condition, the appellant cannot be blamed for not producing the documents at the time of confirmation, when the property in the sandalwood passed on to the appellant. Only on demand of sales tax the appellant has started to claim the benefits under section 5(3) of the said Act. 19.. Though the respondents have taken a stand that the sandalwood is a banned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said Act. The appellant has nothing to do with the assessment proceedings. They cannot raise any objection before the Sales Tax Department. If at all, the Forest Department alone can raise any objection before the sales tax department. Even if the appellant is able to establish that he is entitled to the benefits under section 5(3) of the said Act, the appellant will not get the said benefits, if the forest department fails to prosecute the same by making effective objections regarding the same. So the reasonings given by the learned single Judge cannot be sustained and the order is set aside. 23.. It is relevant to mention here that the Forest Department is not making any serious step to solve the issue by providing proper guidelines though they are experiencing such difficulty year after year especially when the purchasers of sandalwood are claiming that they are purchasing the same in the course of export. 24.. Taking into consideration of the same, and also the facts of these cases, we issue the following directions to the respondents and the appellant: 1.. The appellant should keep alive the bank guarantee for another 6 months from today; accept the case of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X
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