1994 (12) TMI 312 - HC - VAT and Sales Tax

Summary

Issues:
- Claim of exemption on turnover as "export sales"
- Interpretation of "export sale" under section 5(1) of the Central Sales Tax Act, 1956

Analysis:
The petitioner, a dealer under the Andhra Pradesh General Sales Tax Act, claimed exemption on turnover for the assessment year 1973-74, asserting the sales were "export sales." The matter involved a dispute over whether the transactions constituted export sales as per section 5(1) of the Central Sales Tax Act, 1956. The petitioner exported castor oil, but the State Trading Corporation became the canalising agent for export from April 1973 onwards. The key question was whether the sales qualified as "export sales" under the statutory provisions.

The Court examined the requirements under section 5(1) of the Central Sales Tax Act, which deems a sale to take place in the course of export if certain conditions are met. The petitioner argued that the sale should be considered an export sale as the documents of title were transferred after the goods crossed the customs frontiers of India. Reference was made to a previous judgment highlighting the significance of the transfer of documents of title post-crossing of customs frontiers for a sale to be deemed an export sale.

However, the Court distinguished the present case from precedents, emphasizing that the sale was completed before the goods crossed the customs frontiers, thereby not meeting the criteria for an export sale under section 5(1). The Court cited a Supreme Court ruling to support its position that integral connection between contracts does not automatically qualify a sale as an export sale. Additionally, a Karnataka High Court decision was referenced, emphasizing the need for a foreign importer in export sales.

Ultimately, the Court concluded that neither limb of section 5(1) applied to label the sales as "export sales." Given the State Trading Corporation's role as the Indian buyer and exporter, the petitioner's turnover claim for sales to the Corporation for export did not qualify as export sales. Consequently, the Tax Revision Case was dismissed, with no costs awarded.

In summary, the judgment delved into the intricacies of export sales under the Central Sales Tax Act, highlighting the specific requirements for a sale to be considered in the course of export. The Court's analysis focused on the timing of document transfers and the involvement of foreign buyers, ultimately determining that the petitioner's sales did not meet the statutory criteria for export sales, leading to the dismissal of the Tax Revision Case.