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TMI Blog2017 (12) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... f Form XVII declaration and used them in the manufacture of goods and effected export sales. The assessing authority rejected the claim of the assessee that the purchase turnover, under Section 3(3), corresponding to the export turnover, would not be assessed to tax under Section 3(4) of the TNGST Act, 1959 and assessed the turnover of Rs. 19,50,273/-, by adopting a formula at 1%, under Section 3(4) of the TNGST Act, 1959. Aggrieved by the same, the dealer has filed an appeal in A.P.No.1 of 2012, before the Appellate Deputy Commissioner (CT)-IV, FAC, Chennai, who partly allowed the appeal, by setting aside the assessment made, on the turnover of Rs. 19,50,272/- at 1%, under Section 3(4) of the TNGST Act, 1959. 3. Against which, the State has preferred a second appeal in S.T.A.No.34 of 2012, before the Tamil Nadu Sales Tax Appellate Tribunal (Main Branch) Chennai. Following the decision of this Court, in Tube Investment of India Ltd., v. State of Tamil Nadu reported in [2010] 36 VST 67 (Mad.), the Appellate Tribunal, vide order, dated 18.02.2013, has passed the following orders, "9. The learned State Representative would submit that a correct interpretation of Section 3(4) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Tribunal and on the other hand, the case law relied on by the Counsel for the appellant (i.e.) 36 VST67, mentioned supra is the one rendered by the Honourable High Court of Madras and we are bound by the decision of the Division Bench of Honourable High Court of Madras only. 12. Though the State has contended in the grounds of appeal that the Appellate Deputy Commissioner (CT) ought to have seen that against the order of the Division Bench of the Honourable High Court of Madras, the State has filed SLP before the Honourable Supreme Court, the State has not filed any deferment petition to defer the hearing of the appeal and the learned State Representative is not able to furnish the Writ Appeal Number. He is not able to convince the Tribunal that the Writ Appeal has been taken on file. In such circumstances, since the State has not satisfied that SLPhas been filed and pending, the prayer sought for in this regard by the State is also not accepted. 13. Hence, we have no hesitation to hold, the first appellate authority following the ratio held by the Division Bench of Honourable Madras High Court of Madras in 36 VST 67 mentioned supra has given his findings that export is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 3 of the Tamil Nadu General Sales Tax Act, 1959 would not include export sale within its ambit? (6) Whether the Appellate Tribunal has failed to appreciate that sections 3(3) and 3(4) of the Tamil Nadu General Sales Tax Act, 1959 are not designed as charging provisions as evident from the non-obstante clause occurring at the beginning of Section 3(3) of the said Act? (7) Whether the Appellate Tribunal has totally failed to consider that Tamil Nadu General Sales Tax Act, 1959 was enacted to levy tax on sales or purchases within the State of Tamil Nadu alone as evident from the pre-factory explanation to the said Act?" 5. In support of the substantial questions of law raised, Mrs.Narmatha Sampath, learned Special Government Pleader submitted that the Appellate Tribunal has grossly erred in interpreting the expression "does not sell the goods so manufactured "occurring in sub Section (4) of Section 3 of the TNGST Act, 1959, as including not only intra state but also export sale, without appreciating the fact that Section 3(3) and 3(4) of the said Act, are not designed, as charging provisions, which according to the State, is evident from the non-obstante clause, occurring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior or subsequent to such appropriation." (ii) Sub-Sections (3) and (4) of Section 3 of the said Act, read as follows: "Section 3(3): Notwithstanding anything contained in (sub-section (2), (2-A) or (2-C), but subject to the provisions of sub-section (1), the tax payable by a dealer in respect of sale of any goods including consumables, packing material and labels, but excluding plant and machinery, to another dealer for use by the latter in the manufacture, and assembling, packing or labelling in connection with such manufacture inside the State, for sale by him of any goods other than ethyl alcohol, absolute alcohol, methyl alcohol, rectified spirit, neutral spirit and denatured spirit goods falling under Part A of the Third Schedule, goods falling under item 1 of the Sixth Schedule and arrack, shall beat the rate of only three per cent on the turnover relating to such sale: PROVIDED that the provisions of this sub-section shall not apply to - (a) any sale of high speed diesel oil, light diesel oil and molasses; and (b) any sale, unless the dealer selling such goods furnishes to the assessing authority in the prescribed manner and within the prescribed period, declarati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempted goods, such sale would attract levy of only 3% by way of sales tax to be collected by the seller. The levy is however subject to Section 3(1) wherein the turnover limit for levy of tax has been prescribed. The proviso to Section 3(3) however makes it clear that any dealer after purchasing the goods by using Form-XVII violates the conditions of such purchase as stipulated in Section 3(3) and the declaration contained in Form-XVII but dispose of such goods in any other manner should pay the difference of tax payable on the turnover relating to sale of such goods at the rate prescribed under the Act and the 3% which is already paid. The second proviso prescribes that a separate stock account of the goods purchased by using Form-XVII should be maintained by the purchasing dealer. 25. As submitted by the learned counsel, the apparent purport of Section 3(3) is to provide a concessional rate of tax for the purchasing dealer who carries on any manufacturing activities inside the State and who also sell such manufactured goods within the State except by way of inter state sale which is governed by the CST Act. It is also apparent that in the event of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale the same is covered by the provisions of the Central Sales Tax Act in which the respective States get a part of the tax collection. As far as the export sales are concerned, it is needless to state that in the national interest, when by virtue of such exports, considerable foreign exchange is earned, by way of incentives and to augment more of such exports, the levy of any tax on such export sale is prohibited. 30. In fact under Section 5(3) of the Central Sales Tax Act, the last sale or purchase of any goods preceding the sale or purchase occasioning the export is also to be deemed as export sales. Such extended definition of export making it applicable even to the last sale or purchase of any goods plays a vital role in the article to be exported. Ultimately it only implies that the Constitutional framers want to attach great significance to export and its promotion in the national interest of earning sizeable foreign exchange. 31. Keeping the above prospective in mind, it will be appropriate to examine as to whether the export sale would fall within set of expression "but does not sell the goods so manufactured" as used in Section 3(4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply to the export sale of the assesses will run counter to the well laid legal principles referred to above and the same cannot be countenanced. 33. On these grounds itself, it can be held that there would be no scope for invoking Section 3(4) in regard to the export sales of the goods manufactured. 34. When we examine the other submissions of the learned counsel appearing for the petitioners that the export sale is fully covered by the definition of 'sale' under Section 2(n) read along with Explanation 3(a) and thereby that is also a sale within the State, on that ground as well, no liability by way of tax can be fastened under Section 3(4) of the Act. The said submission of the learned counsel for the petitioners is also well founded. 35. When we examine Section 2(n) which defines sale to mean "every transfer of the property in goods other than by way of a mortgage, hypothecation, charge or pledge by one person to another in the course of business for cash, deferred payment or other valuable consideration". The Explanation 3(a) makes it further clear that such export sale should also be construed as a sale for the purposes of this Act. In order f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the effect that any despatch to a place outside the State either by way of branch transfer or by transfer to an agent by whatever manner called, either for sale or for any other purpose, certainly it cannot be attributed to an export sale. It would be directly covered by the definition of 'sale' under Section 2(n) of the Act and thereby would not come within the exclusion of sale. We therefore need not have to even deal with the submission based on the comparison made by making a reference to Section 7(a), 7(b) and 9(b) of the Act. 42. On behalf of the State, heavy reliance was placed upon the decision of the Hon'ble Supreme Court reported in (1997) vol 107 STC 571 (STATE OF KARNATAKA VS. B.M.ASHRAF & CO.). That was a case where, the assessee thereon purchased fish oil from unregistered dealers within the State of Karnataka, in turn, it sold the said oil to another dealer, who purchased the said oil in order to comply with the export order from its buyer in a foreign country. The assessee therein, claimed exemption from payment of sales tax on the sale made to another by claiming umbrage under Section 5(3) of Central Sales Tax Act 1956 i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Karnataka GST Act. 44. But at the very outset, it will have to be stated that the said decision can be considered in the event of a question arising relating to the exigibility of tax (purchase tax) under Section 7-A of the Act. Consequently, it is relevant to note that in Section 6(i) of the Karnataka Act, a specific expression ' by way of sale in the State' has been used and the decision of the Hon'ble Supreme Court was primarily while interpreting the said expression contained in Section 6(i) of the Karnataka Act. It is well laid down principle that a judgment cannot be an authority for a proposition which was not canvassed before it. In this context, it will be appropriate to refer to the decision of the Hon'ble Supreme Court reported in 2003(4) Labour Law Notes = AIR 2003 SC 2661 = (2003) 11 SCC 584 (ASHWANI KUMAR SINGH VS. UTTAR PRADESH PUBLIC SERVICE COMMISSION AND OTHERS), wherein, the Hon'ble Supreme Court has held as under:- ".....Observations of courts are not to read as Euclid's theorems nor as provisions of the statute. These observations must be read in the context in which they appear. Judgments of Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of sale in the State as contained in Section 6(i) of the Karnataka Act is significantly absent in Section 3(4). Therefore, what are to be examined while applying Section 3(4) is as to whether the dealer after availing the concession rate of sale under Section 3(3) failed to effect a sale. It is unnecessary for that dealer to establish that such a sale was a 'sale either by way of intra state sale or export sale'. Keeping the above specific content of Section 3(4) in mind, when we examine, the definition of sale as contained in Section 2(n) read along with explanation 3(a) of the Act, the position becomes clear to the effect that by virtue of the fact that the manufactured goods of the assessee is available in the State and by virtue of compliance of explanation of 3(a) to Section 2(n), the transaction of the assessee even by way of export satisfies the definition of sale under the Act and consequently the application of Section 3(4) automatically gets excluded. Therefore, having regard to the application of Section 2(n) read along with explanation 3(a) of the Act, the invocation of Section 3(4) of the Act stands excluded. The said legal posit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be inside Delhi, the legislature would have expressed itself clearly and not left its intention to be gathered by doubtful implication from other provisions of the Act. The absence of specific words limiting "resale" inside the territory of Delhi is not without significance and it cannot be made good by a process of judicial construction, for to do so would be to attribute to the legislature an intention which has chosen not to express and to usurp the legislative function. ...." 47. Applying the ratio laid down therein and having regard to the specific provision contained in explanation 3(a) to Section 2(n) wherein, it has been specifically provided that by virtue of the said explanation and the satisfaction of which would include the sale or purchase of goods as deemed sale or purchase for the purposes of this Act and in the event of satisfaction of the stipulations contained in Explanation 3(a), such transaction will have to be necessarily construed as a 'sale' within the State, it will stand excluded for the application of Section 3(4) of the Act. When once such a construction is authorized under the Act, negative stipulation viz., 'does not sell the goods s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 (CEMENTO CORPORATION LTD VS. COLLECTOR, CENTRAL EXCISE). In paragraph 17, the Hon'ble Supreme Court held as under:- ".....17. In our view, the Tribunal and the Collector have incorrectly interpreted the provisions of Tariff Item 23 of the First Schedule to the 1944 Act. The tariff heading of the entry is "Cement.". Therefore when TI 23(2) speaks of "all others" it means "all other kinds or varieties of cement". It is axiomatic that if the product is not cement but can be used for some purposes like cement, such product is not cement. The test as enunciated by the Tribunal for determination of the question of classification is no doubt how the product is known to the trade. The appellant has produced evidence to show that lympo had never been known or indeed advertised as "cement" whether of a superior or inferior quality, but was known as a cement substitute. The respondents have produced nothing to show to the contrary. A substitute necessarily implies a difference in identity. When once it is admitted that lympo is a cement substitute, the Tribunal could not have come to the conclusion that lympo was cement or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The idea behind this provision is self-evident. It is to ensure that the price of the product manufactured by such purchasing dealers does not go up to the detriment of the consumers of those goods. The Parliament does not want to tax both the raw material and the finished goods at the full rate. Where the finished goods are meant for sale, the raw material utilised or consumed for the manufacture of said finished goods is taxed at the concessional rate, for the reason that the State derives revenue again by taxing the sale of the finished goods. However, it is not necessary that the finished goods are actually subjected to tax on their sale ' for they may be exempted either by the Act or by a notification issued thereunder. It is enough that the finished goods are meant for sale. Ordinarily, of course, their sale is taxed. ....." Therefore, when a constitution embargo is created on export sales, on that sole ground, the contention of the respondent will have to be rejected. 53. The reliance placed upon the Division bench decision of this Court reported in 38 STC 519 (THE STATE OF TAMIL NADU VS. CHETTINAD CEMENT CORPORATION LTD.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the decision rendered therein cannot be applied to the facts of this case. 55. Similarly, the Division Bench decision reported in 45 STC 291 (PONNU SAW MILLS VS. THE STTE OF TAMIL NADU) cannot also be applied inasmuch as the said decision came to be rendered while applying Section 7-A of the Act. Inasmuch as the said section varies in very many degrees as compared to 3(3) and 3(4) of the Act, the same cannot be applied to the facts of this case. Similar is the decision reported in 87 STC 315 (STATE OF TAMIL NADU VS. A.S.RAJ & CO.,). Therefore, the same cannot be applied to the facts of this case. 56. Having regard to our above conclusions, we hold that Section 3(4) of the Act will have no application since situs of the export sales of the petitioners for the purpose of said Section was the State of Tamilnadu and by virtue of the said factual position, the applicability of Section 3(4) stands excluded for the exigibility of tax. The questions are accordingly answered in favour of the petitioners/assessee." 10. In State of Tamil Nadu v. Essar Inc., reported in [2015] 79 VST 588 (Mad.), while considering the very identical substantial questions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of a coordinate bench and take the same view as has been taken earlier. The earlier decision of the coordinate bench is binding upon any latter coordinate bench deciding the same or similar issues. If the latter bench wants to take a different view than that taken by the earlier bench, the proper course for it is to refer the matter to a larger bench. (iii) In State of Punjab v. Devans Modern Breweries Ltd., reported in (2004) 11 SCC 26, the Hon'ble Supreme Court, at Paragraph 339, held as follows: "339. Judicial discipline envisages that a coordinate Bench follow the decision of an earlier coordinate Bench. If a coordinate Bench does not agree with the principles of law enunciated by another Bench, the matter may be referred only to a larger Bench. (See Pradip Chandra Parija v. Pramod Chandra Patnaik, reported in 2003 (7) SCC 01, SCC at paras 6 and 7; followed in Union of India v. Hansoli Devi, reported in 2002 (7) SCC 01, SCC at para 2.) But no decision can be arrived at contrary to or inconsistent with the law laid down by the coordinate Bench. Kalyani Stores, reported in AIR 1966 SC 1686 and K.K. Narula, reported in AIR 1967 SC 1368, both have been rendered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Division Bench of Jammu and Kashmir High Court, faced with a similar situation, like in the present case, has observed and ordered, as hereunder: "8. It is not disputed before us that SLP against the Court direction has been filled before the Supreme Court. It is also not disputed that no stay has been obtained against the implementation of the order but all the same the Court direction has been kept in abeyance by the respondent simply under the pretext of pendency of appeal before the apex Court against the Court order. There is no doubt that appeal against a judgment from one forum to another forum may be available under the Statute, the question is : Whether this provision even if availed by a party without obtaining a stay from the appellate Court will ipso facto keep the implementation of the order in abeyance? ...... Non-compliance of the order during the pendency of appeal without stay order appears to us an attempt by a party to support his intention of not complying the Court direction. The, initiation of contempt proceedings for non-compliance of an order, in our opinion, will forestall only after service of stay order on the party provided, firstly, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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