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TMI Blog2023 (3) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... y are not relevant. It held that the Appellate Authority has come to an erroneous conclusion that the purchase within the State of Tamil Nadu and transport of the coffee seeds to Karnataka are not two distinct acts of the dealer and it has to be considered as inseparable continuous action. The Tribunal has taken note of the fact that the dealer has raised purchase bills while procuring coffee seeds from the planters in Tamil Nadu and thereafter, the goods were transported to the Branch Office at Kushal Nagar, Karnataka, under Form-XX Delivery Note issued to the dealer in the State of Tamil Nadu. Therefore, the contention of the dealer as well as the reasoning of the Appellate Authority was held to be factually incorrect - The actual portion of the raw seeds procured in Tamil Nadu, transported to Karnataka and thereafter, exported to foreign after processing, has not been specifically stated under Form-H, which would reflect the quantum of the seeds procured actually transported to the foreign countries. In the absence of purchase order from the Karnataka Branch and export order from foreign buyer or contract between foreign buyer and Karnataka Unit, exemption cannot be granted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tamil Nadu General Sales Tax Act, 1959 [hereinafter referred to as ''the TNGST Act''] read with Rule 30 of the Tamil Nadu General Sales Tax Rules, 1959, is directed against the order passed by the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, in Review Application No.2 of 2006, dated 20.01.2007. 2. The factual background leading to filing of this case is re-capitulated as under:- 2.1. The petitioner is the dealer in coffee seeds. They are assessed to commercial tax for their transaction by the Deputy Commercial Tax Officer, Karaikudi. The petitioner claims that they have operation at Karaikudi, State of Tamil Nadu as well as a Branch Office at Kushal Nagar, State of Karnataka. The petitioner engaged in procuring raw coffee seeds within the State of Tamil Nadu and sent them to the Karnataka Unit, where the raw seeds are processed and exported to foreign countries. For the Assessment Year 2001-2002, the petitioner reported a total taxable turnover of Rs.40,39,994/-. They claimed exemption from levy of tax to the tune of Rs.2,24,00,783/-, which, according to the petitioner, falls under the definition of Inter-State stock transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sult, the tax and penalty levied for the turnover of Rs.2,24,00,783/- was set aside. 2.4. Not satisfied with the order of the Appellate Authority allowing exemption, the State preferred an Appeal before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madurai, in M.T.S.A.No.382 of 2004, vide order dated 18.10.2004. The Tribunal dismissed the Appeal, confirming the order of the Appellate Authority. 2.5. Challenging the said order, the State preferred Review Application No. 2 of 2006 under Section 36(6)(a) of the TNGST Act to review the order of the Sales Tax Appellate Tribunal [Additional Bench], Madurai, in M.T.S.A.No.382 of 2004, dated 18.10.2004, granting exemption to the assessee and reversing the levy of tax and penalty imposed by the Assessing Officer. 2.6. In the Review Petition, it was contended by the State that the Sales Tax Appellate Tribunal, Madurai, failed to follow the principle laid down by the Hon'ble Supreme Court in the case of State of Karnataka vs. B.M.Ashraf and Co. reported in 1997 (8) SCC 468 , wherein the Hon'ble Supreme Court has held in similar kind of transaction, viz., purchases from unregistered dealers and sold to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... du on behalf of its Karnataka Branch and transported it to its Karnataka Branch. The payment for such purchase was paid by Karnataka Branch under bought voucher. It was at the instruction of the Karnataka Branch, the purchase has been effected and the same has been exported by the Karnataka Branch after processing. Therefore, it is a purchase in the course of export to a foreign country, which is exempted from levy of tax as per the Statutes and judicial pronouncements. 2.11. The assessee's contention was that the turnover to the tune of Rs.2,24,00,783/- fall within Section 5(3) of the CST Act, 1956 and such turnover is directly fall within the ambit of Section 6(1) of the Karnataka Sales Tax Act and will not fall under Section 7-A(1)(c) of the TNGST Act. The judgment in Razack Trading Co. [cited supra] is heavily relied upon by the assessee in support of their submission. However, the Sales Tax Appellate Tribunal entertained the Review Application and also set aside the exemption granted by the first Appellate Authority. 3. The copy of the order dated 20.01.2007, made in the Review Application C.T.S.R.A.No.2 of 2006, was communicated to the assessee on 02.08.2007. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meant for export through the dealer's branch at Karnataka. The said levy of tax on Rs.2,24,00,783/- with penalty was in view of applying Section 7-A(1)(c) of the TNGST Act. The said provision reads as below:- ''7-A. Levy of purchase Tax. (1) Subject to the provisions of sub-section (1) of section 3, every dealer who in the course of his business purchases from a registered dealer or from any other person, any goods (the sale or purchase of which is liable to tax under this Act) in circumstances in which no tax is payable under Section 3 or 4, as the case may be, (not being a circumstance in which goods liable to tax under sub-section (2), (2-A) or (2-C) of Section 3 or 4, were purchased at a point other than the taxable point specified in the First, the Fifth, the Eleventh or the Second Schedule) respectively, and either, (c) despatches or carries them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce; or According to the learned Additional Government Pleader representing for the Department, the registered dealer has purchased raw seeds within the State of Tamil Nadu from unregi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007 (8) VST 466 (SC) and emphasised the movement of raw coffee seeds purchased from unregistered dealer in Tamil Nadu by the Head Office to Kushal Nagar, Karnataka Branch Office for export outside India cannot be construed as sale between the Head Office and Branch Office. 10. On review the Tribunal has found that the reasoning given by the Appellate Authority is incorrect and the judgment cited by the dealer and relied by the Appellate Authority are not relevant. It held that the Appellate Authority has come to an erroneous conclusion that the purchase within the State of Tamil Nadu and transport of the coffee seeds to Karnataka are not two distinct acts of the dealer and it has to be considered as inseparable continuous action. 11. The Tribunal has taken note of the fact that the dealer has raised purchase bills while procuring coffee seeds from the planters in Tamil Nadu and thereafter, the goods were transported to the Branch Office at Kushal Nagar, Karnataka, under Form-XX Delivery Note issued to the dealer in the State of Tamil Nadu. Therefore, the contention of the dealer as well as the reasoning of the Appellate Authority was held to be factually incorrect. The de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - as branch transfer coming under Section 6-A of the CST Act and the verification of the assessment order under the CST Act which had been passed by the Assessing Authority on 29.08.2003 revealed that the dealer had claimed exemption on a turnover of Rs.1,46,73,661/- and the Assessing Authority had determined the total turnover that was being the stock transfer of Coffee Seeds to the Branch at Karnataka as Rs.2,24,00,783/- and the exemption claimed was allowed by the Assessing Authority on the ground that the dealer had produced Form-F under the documents and the exemption claimed by the dealer was in order and he had allowed it. As seen from the factual position of the case, it is very clear that the dealer himself had disclosed a turnover as stock transfer and it had also been assessed by the Assessing Authority under Section 6-A of the CST Act, for which, the liability and the taxable turnover under Section 7-A(1)(c) of the TNGST Act is attracted. 15. Thus, on considering the order passed in Review Appeal, we find that a new fact on verifying the CST files of the assessee, the inconsistent stand of the assessee under the State Act and the Central Act has come to light. This i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to light after verification of CST files and it was not been brought to the notice of the Tribunal when the order dated 18.10.2004 in M.T.S.A.No.382 of 2004 came to be passed. 17. Regarding the application of Section 5(3) of CST Act, 1956, reads as below:- '' 5. When is a sale or purchase of goods said to take place in the course of import or export. (3) Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export.'' 18. It is clear that for exemption from levy of tax, the dealer is bound to furnish the agreement or order for or in relation to the export. In this case, the dealer has failed to furnish any agreement or order. The transfer of goods from Tamil Nadu to Karnataka done only by furnishing Form-XX and not by furnishing Form-H. Therefore, on facts also, the dealer cannot seek exemption from tax liability for its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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