1996 (2) TMI 480 - HC - VAT and Sales Tax

Summary

Issues:
1. Quashing the order of assessment regarding purchase turnover of groundnut seeds subjected to purchase tax.
2. Interpretation of sub-section (3) of section 5 of the Central Sales Tax Act.
3. Applicability of previous judgments in similar cases.
4. Exemption from levy of tax on purchases made from unregistered dealers.

Analysis:
1. The writ petition sought to quash the order of assessment regarding the purchase turnover of groundnut seeds subjected to purchase tax under the Karnataka Sales Tax Act for the assessment year 1994-95. The petitioner, running a decorticating mill, had purchased groundnut seeds worth Rs. 15 lakhs from unregistered dealers and sold them to exporters who exported the seeds. The assessing officer disallowed the exemption claimed by the petitioner, leading to the imposition of purchase tax on the turnover. The petitioner contended that the assessing officer erred in levying tax based on the transactions involved.

2. The key issue revolved around the interpretation of sub-section (3) of section 5 of the Central Sales Tax Act, which states that the last sale or purchase preceding the export sale shall be deemed to be in the course of export if it complies with certain conditions. The court analyzed the transactions involved, including sales between unregistered dealers, the petitioner, and the exporter, concluding that only the last sale preceding the export sale qualifies as a sale in the course of export. Therefore, the purchase made by the petitioner from an unregistered dealer did not fall within the scope of the provision, justifying the levy of purchase tax by the assessing officer.

3. The petitioner referenced two Supreme Court judgments, Consolidated Coffee Ltd. v. Coffee Board and Commissioner of Sales Tax v. Leather Facts Co., to support their case. However, the court found that these judgments were not applicable to the facts of the present case. The court also discussed previous cases where the Supreme Court interpreted section 5(1) of the Act, emphasizing the distinction between sales in the course of export and other transactions.

4. Ultimately, the court dismissed the writ petition, upholding the assessing officer's decision to levy purchase tax on the turnover in question. The court concluded that the purchase made by the petitioner from unregistered dealers did not qualify as a sale in the course of export under section 5(3) of the Act, leading to the rejection of the petitioner's claim for exemption from tax on those purchases.