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TMI Blog2012 (11) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... By no stretch of imagination can it be said that such a surrender by an exporter of REP licences/exim scrips is in the course of trade or business. The premium paid by the Government to the exporters on the surrender of the REP licences/ exim scrips is only a solatium for the inability of the exporters to avail of the benefit of the incentives and in our view cannot be treated as price or valuable consideration. Therefore, the transaction of surrender of REP licences/exim scrips is not a "sale" within the meaning of section 2(1)(n) of the Act and also would not constitute "turnover" within the meaning of section 2(1)(s) of the Act. - Tax Revision Case Nos. 229, 252 of 1999 & Tax Revision Case Nos. 164 of 2003 - - - Dated:- 21-11-2012 - GODA RAGHURAM AND RAMACHANDRA RAO M.S. ,JJ. For the Appellant : Gaurav Garg Dhuriwala, DAG, Punjab, For the Respondents : K.L. Goyal, Senior Advocate with Sandeep Goyal The judgment of the court was delivered by M.S. RAMACHANDRA RAO J.- hese revisions are filed under section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957 and involve common question of law and hence they are being disposed of together. T.R.C. No. 229 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may note the background in which the said issue arises. The Central Government, prior to 1991 was issuing what is called the import and export policy, published in the form of brochure. The import policy in vogue provided for issuance of what were called replenishment licences (for short, REP licences ). Dealing with the same, the Supreme Court in Vikas Sales Corporation v. Commissioner of Commercial Taxes [1996] 102 STC 106 (SC), pointed out that the objective behind the licences was to provide to the registered exporters, the facility of importing the essential inputs required for the manufacture of the product exported, that the essential idea was to encourage exports and for that purpose import licences called REP licences were issued equal to the prescribed percentage of the value of exports, that these licences were made freely transferable, that it was provided that the transfer of such licences did not require any endorsement or permission from the licensing authority, that such transfer would be governed by the ordinary law and it only required a letter from the transferer recording and evidencing the transfer. On that basis, the transferee became the due and lawful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes had validly taxed the transfers of such REP licences/exim scrips. With effect from March 1, 1992, the very policy and system under which these REP licences/exim scrips were issued was discontinued. The Director General of Foreign Trade, under the Commerce Ministry vide their circular No. 11/93 dated May 5, 1993 announced that unutilized exim scrips could be surrendered and authorized Joint Director General of Foreign Trade to pay 20 per cent premium to the exporters. The Reserve Bank of India authorized the State Bank of India and its subsidiaries to pay the premium after following the procedure laid down in the circular. In respect of exporters whose applications for issue of exim scrips/REP licences were pending in respect of exports made prior to March 1, 1992, it was announced that they would be paid 20 per cent straight away in respect of issuing licences. The assessees in these three T.R. Cs. held REP licences/exim scrips which they had surrendered to the Government and received 20 per cent premium as provided in circular No. 11/93 dated May 5, 1993. The assessing authorities having noticed the said fact, took the view that the amounts received by the assessees towa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P licences which were cancelled, that the assessees were transacting only with the Government of India at all times, ought not to have held that the transaction amounted to sale of goods. It gave importance to the transferability of the REP licences/exim scrips and wrongly held that the assessees could sell them in the open market or utilize them for importing goods. Admittedly the policy and system under which the REP licences/ exim scrips were issued were discontinued with effect from March 1, 1992 and the unutilized REP licences/exim scrips could be surrendered to the Government of India by the assessees and they would be paid 20 per cent premium as per the circular No. 11/1993 dated May 5, 1993. After March 1, 1992, the holders of unutilized REP licences/exim scrips cannot deal with them in the open market or utilize them for importing goods as the very policy and scheme under which they were issued are discontinued. Therefore we are of the view that the said order dated April 6, 1999 in T.A. No. 101 of 1995 and batch of the Sales Tax Appellate Tribunal impugned in T.R.C. Nos. 229 of 1999 and 252 of 1999 is erroneous. On the other hand, the Appellate Tribunal in its order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of regulating foreign trade but not in the course of trade or business done by it within the meaning of this provision. (vii) . . . The provision made in this circular in paragraph 3(1)(b) that such premium is to be paid also in the case of pending appli cations filed prior to March 1, 1993 for issue of advance licences against which exports were made and export proceeds realized prior to March 1, 1993, if the concerned authority decides that the advance licence is issuable. Thus this scheme provides for payment of premium not only in the case of surrender of these licences but, also in cases where the exporter is found eligible for issue of licence in a pending application. In the case of pending applications there is no question of surrender or transfer of such licences or scrips because they are not yet issued but premium is to be paid if they are found as issuable. (viii) . . . Thus, the entire scheme suggests that the payment of premium is not intimately connected with the transfer of scrips and licences as such though surrender is considered as transfer, but the same is paid only to compensate the exporter who is unable to make use of the benefit of the incentive gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of section 2(1)(n) of the Andhra Pradesh General Sales Tax Act and therefore the same does not constitute turnover within the meaning of section 2(1)(s) of the Andhra Pradesh General Sales Tax Act on which tax can be levied under the Andhra Pradesh General Sales Tax Act. We are in complete agreement with the reasoning mentioned above. Admittedly, the policy and system under which REP licences/exim scrips were issued was discontinued with effect from March 1, 1992 and the Director-General of Foreign Trade issued the circular No. 11/93 dated May 5, 1993 announcing that unutilized exim scrips could be surrendered and authorized the Joint Director-General of Foreign Trade to pay 20 per cent premium to the exporters through State Bank of India and its subsidiaries. After the expiry of the period of validity, these REP licences/exim scrips became valueless and holders of such REP licences/exim scrips could neither import duty-free or sell them for value. Thus, they ceased to be items which could be freely traded in the open market and on their surrender to the Government of India, even the Government of India cannot use them for trading in the open market and they would stand ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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