TMI Blog2007 (10) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... the demand made for penalty is not tenable. In this case, the High Court directed the respondent to release the goods on obtaining the bank guarantee for the disputed amount, but in spite of the bank guarantee being furnished, the goods were not released and as a matter of fact, a contempt petition has also been filed against the respondent. Hence, on this point also, we are of the view that the respondent is not legally entitled to claim penal charges and demurrage charges. For the foregoing reasons, the writ appeals are dismissed confirming the order made in the respective writ petitions. The conditions imposed by the learned single judge shall be followed by either of the parties. The time for furnishing bank guarantee and payment as directed in condition No. 3 in the impugned order stands extended by one month from the date of communication of this order. The connected miscellaneous petitions are consequently dismissed. - Writ Appeal Nos. 405,412,413,414 of 2003 - - - Dated:- 25-10-2007 - RAVIRAJA PANDIAN K. AND CHITRA VENKATARAMAN , JJ. The judgment of the court was delivered by K. RAVIRAJA PANDIAN J. Writ Appeal No. 405 of 2003 is filed against the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against are one and the same. Writ Appeal No. 405 of 2003 is taken up as a typical case. For the sake of convenience, the parties are hereinafter referred to in the manner they were referred to in the writ petition. The writ petitioner (relating to W. A. No. 405 of 2003) was a partnership firm engaged in the business of processing and exporting sandal wood. The petitioner claimed that it had received a specific export order dated December 20, 1998 for sandalwood chips to be exported to Hong Kong. The petitioner had participated in the auction dated April 28, 1999 conducted by the second respondent, the District Forest Officer, as per the auction notice dated March 21, 1999. The petitioner was declared as a successful bidder in respect of 15 metric tonnes of sandal wood for the bid amount of Rs. 51,29,000. The petitioner paid a sum of Rs. 1,00,000 by way of earnest money deposit and a further sum of Rs. 10,36,500 representing 20 per cent of the sale amount as required by the sale notice dated March 21, 1999. The petitioner claimed that inasmuch as the purchase was made for the purpose of meeting the prior export order, the petitioner was exempted from paying sales tax as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrote back on October 4, 1999 again referring to the order passed by this court stating that the demand of penal interest, demurrage was not justified inasmuch as the goods were yet to be handed over to it. The District Forest Officer gave a reply on November 2, 1999 stating that the request to release the sandal wood without payment of penal interest and demurrage was not acceptable. Subsequently, the District Forest Officer again wrote a letter directing the petitioner to pay sales tax due, penal interest and demurrage along with other dues. The petitioner again gave a reply reiterating about the order passed by this court and the fact that the petitioner had participated in the auction for meeting the export order and the demand of penal interest and demurrage charges were unjustified. The correspondence continued and ultimately on January 23, 2000 an order was passed forfeiting the amount already paid. That order was challenged by the petitioner by filing Writ Petition No. 14418 of 2000. Upon hearing the counsel on either side and upon perusing the material placed before the court, the learned single judge disposed of the writ petition with certain directions which read as f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice, the petitioner cannot maintain a writ petition wriggling out from its contractual obligations. After (1)See page 122 infra. the confirmation of the sale in favour of the petitioner a concluded contract came into existence and the impugned order of forfeiture was passed in accordance with the terms of sale notice. As per the condition No. 25 of the sale notice, the petitioner has to pay sales tax as per the rates which are in force along with the first instalment of the purchase price. The sale of sandal wood is a local sale and therefore, tax has to be paid as per the Tamil Nadu General Sales Tax Act, 1959. As per condition No. 9 of the sale notice the petitioner has to pay 25 per cent of the sale amount as the first instalment within 15 days from the date of confirmation and another 25 per cent within 30 days from the date of receipt of confirmation order and the balance of 50 per cent less the earnest money deposit already paid has to be paid within 45 days. If there is any breach, the respondent is entitled to charge penal interest and if the sandal woods were not removed within the stipulated period, the petitioner is liable to pay demurrage. However, the learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der has to pay sales tax at eight per cent under the Tamil Nadu General Sales Tax Act as per the terms of the sale notice. The condition on which reliance has been placed by the forest department for demanding the sales tax at eight per cent is to the following effect: 25. The purchaser should pay the forest department in one lumpsum a sales tax/income-tax at the rates in force at the time of confirmation of the sale on the full purchase amount along with the first instalment of the purchase price. There is no dispute of payment of income-tax in this case. The dispute is regarding the liability of the purchaser to pay sales tax. As per the conditions, sales tax at the rate in force at the time of confirmation of sale on the full purchase amount has to be made. The condition stated above cannot be regarded as contended by the forest department that the sales tax at eight per cent under the Tamil Nadu General Sales Tax Act has to be paid. Sales tax has to be paid at the rate in force at the time of confirmation of sale. But the question whether the petitioner is liable to pay sales tax or is exempted in view of its contention that the purchase was covered under section 5(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner, which has been defended on behalf of the forest department by contending that the purchaser has not established that the purchase of sandal wood was for export sale and it was an auction in general. As per condition No. 27 of the sale notice, the purchaser should pay the intra-State sales tax on the date of confirmation of sale. The purchaser therein was not having any valid licence to export goods so as to enable it to claim the benefit under section 5(3) of the Central Sales Tax Act on the date of sale and it was not established that the sale was for the purpose of export based on an earlier order obtained from the foreign buyers. The Division Bench, after referring to section 5(3) of the Act, considered its applicability by referring to decision of the Supreme Court in the case of Mohd. Serajuddin v. State of Orissa [1975] 36 STC 136 (SC) and the decision in the case of Consolidated Coffee Ltd. v. Coffee Board, Bangalore [1980] 46 STC 164 (SC); AIR 1980 SC 1468 and held that if the petitioner was able to establish that it purchased the goods pursuant to an agreement or order under which the goods were to be exported in compliance with such an agreement or order, it was ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Advocate-General has submitted that the sandal woods which are the subject-matter of the first writ appeal are available with the respondent and in respect of other cases, the sandal wood were already sold and are not available for delivery. This contention also cannot be countenanced for the reason that after obtaining the orders from this court in writ petition, the petitioner has taken out 24 demand drafts 14 demand drafts each for a sum of Rs. 9,00,000, bearing Nos. 993328 to 993330, 993332 to 993340, 993361 and 993362, one demand draft for a sum of Rs. 5,92,500 bearing No. 993341, one demand draft for Rs. 1,92,500 bearing No. 993327, one demand draft for Rs. 7,87,900 bearing No. 993331, one demand draft for Rs. 2,00,000 bearing No. 993363 all drawn in Dena Bank, Nungambakkam, 3 demand drafts each for a sum of Rs. 9,00,000, bearing Nos. 501139 to 501140 and one demand draft for a sum of Rs. 2,00,000 bearing No. 501141 drawn in State Bank of Bikoner Jaipur, Mylapore branch, one demand draft for Rs. 1,50,00,000 bearing No. 062548 drawn in State Bank of India, Commercial Branch, one demand draft for Rs. 2,00,000 bearing No. 111672 drawn in State Bank of India, Eluru Branc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition after writ petition claiming the statutory benefit, that too, relying on the judgment of the Division Bench of this court. In addition to that, the Commercial Taxes Department has also given clear guidelines to accept the bank guarantee whenever successful bidder claimed benefit under section 5(3) to release the goods by its order dated September 16, 1998. But in spite of all these precedent and guidelines, the respondents were not inclined to accept the bank guarantee to deliver the goods to the petitioner, but ventured in filing appeals after appeals. Hence, the equity is in favour of the writ petitioner. Further, it is not as if the forest department is not having any sandal wood for disposal. Periodically they are auctioning sandal wood in several metric tonnes. That is the reason the District Forest Officer has sworn the solemn affidavit and assured that the goods would be delivered on the petitioner succeeding in the appeals. Hence, the contention of the Additional Advocate-General that the goods are not available for delivery cannot be accepted. The State has to deliver the goods from its stock as undertaken by the District Forest Officer in the solemn affidavit dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Civil Appeal Nos. 826 and 829 of 2001 decided on May 2, 2006See Page 122 infra wherein it was held as follows: . . . Accordingly, the High Court directed the appellant to release the goods, if not already done so, without payment of any demurrage charges or penalty. The respondent was not responsible for the delay. The delay, if any, was caused due to the unreasonable stand taken by the appellant. We agree with the view taken by the High Court that the respondent could not be fastened with the liability to pay the demurrage charges or penalty, as the respondent was not responsible for the delay. Delay, if any, was caused by the appellant in not releasing the goods in spite of the specific directions issued by the High Court to that effect. In this case, the High Court directed the respondent to release the goods on obtaining the bank guarantee for the disputed amount, but in spite of the bank guarantee being furnished, the goods were not released and as a matter of fact, a contempt petition has also been filed against the respondent. Hence, on this point also, we are of the view that the respondent is not legally entitled to claim penal charges and demurrage charge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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