2011 (4) TMI 1264 - HC - VAT and Sales Tax

Whether the pumps are different from the items that exported by the assessee? Held that - In the facts of the present case the assertion of the assessee is that aerosol valves and non-aerosol pumps are supplied to the persons involved in the export, so also situated within the export zones. To substantiate the claim, forms H and C are relied upon by the assessee. The export of the containers fitted with the valves and pumps are not at all disputed by the Revenue. So, the valves and pumps involved in the transactions in the case would become goods supplied in relation to export. Hence, the contention of the State that the pumps are different from the items that exported by the assessee is not justified. Appeal is allowed

Summary

Issues:
- Exemption under section 5(3) of the Central Sales Tax Act, 1956 for the sale of goods for export.
- Interpretation of the phrase "sale in the course of export" as per section 5(3) of the CST Act.
- Dispute regarding the applicability of exemption for the sale of aerosol valves and non-aerosol pumps to exporters.
- Challenge of rejection of exemption claim by the Additional Deputy Commissioner of Commercial Taxes for certain periods.
- Comparison of previous tribunal rulings and the current case for granting exemption.

Exemption under section 5(3) of the Central Sales Tax Act:
The case involved the appellant, a private limited company engaged in manufacturing aerosol valves and non-aerosol pumps, supplying these articles to exporters in export zones. The appellant claimed exemption under section 5(3) of the CST Act for sales made under form H. The dispute arose when the Additional Deputy Commissioner rejected the exemption claim for certain periods, leading to the appeal.

Interpretation of "sale in the course of export":
The court referred to the principles laid down by the apex court in a previous case, emphasizing that for a sale to be considered in the course of export, there must be an inseverable link between the local sale and the export. The immediate cause of export and compliance with the export agreement or order are crucial factors in determining the applicability of exemption under section 5(3) of the CST Act.

Dispute over exemption for aerosol valves and non-aerosol pumps:
The appellant contended that the valves and pumps supplied to exporters were directly linked to export activities and supported their claim with forms H and C. The court noted that the Revenue did not dispute the export of containers fitted with the valves and pumps. Therefore, the valves and pumps were considered as goods supplied in relation to export, justifying the exemption under section 5(3) of the CST Act.

Challenge of rejection and comparison with tribunal rulings:
The appellant relied on previous tribunal rulings that granted exemption for the same activities in earlier years, which were not challenged by the Revenue. The court upheld the appellant's submission, concluding that the rejection of the exemption claim by the Revenue was not justified. Consequently, the court allowed the appeal, setting aside the impugned order and confirming the order of the first appellate authority in favor of the appellant.

In conclusion, the court's judgment favored the appellant, recognizing the link between the sale of aerosol valves and non-aerosol pumps to exporters as part of export activities, thereby justifying the exemption under section 5(3) of the CST Act. The court's decision was based on the interpretation of the phrase "sale in the course of export" and the application of principles established in previous legal precedents.