TMI Blog1997 (10) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... d M. Veerappa, Advocates, with him), for the appellant. -------------------------------------------------- The judgment of the Court was delivered by B.N. KIRPAL, J.- The respondent is a registered dealer under the provisions of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the Act ) and the only question which arises for consideration in this appeal by special leave is whether it is liable to pay purchase tax under the provisions of section 6 of the said Act. 2.. The respondent had purchased fish oil from unregistered dealers within the State of Karnataka. It, in turn, sold the said oil to M/s. Kalbhavi Venkatarao Bros. (hereinafter referred to as Kalbhavi ) who purchased the said oil in order to comply with the export order from its buyer in a foreign country. 3.. In respect to the assessment year 1st September, 1978 to 31st August, 1979, the respondent claimed exemption from payment of sales tax on sales made to Kalbhavi as the export sales of the goods referred to under section 5(3) of the Central Sales Tax Act, 1956. This claim was allowed by the assessing authority but he came to the conclusion that the transaction of respondent of pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a direct result of sale or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under section 5: Provided that this section shall not apply- (i) in respect of sale or purchase of goods specified in the Fourth Schedule,- (a) which are taxable at the point of purchase; and (b) which have already been subjected to tax under sub-section (4) of section 5. (ii) in respect of sale or purchase of goods specified in the Second Schedule which have already been subjected to tax under clause (a) of sub-section (3) of section 5. (iii)...................... (iv)....................... (v) in respect of the purchase of cocoa pods and cocoa beans by a co-operative society registered under the Karnataka Co-operative Societies Act, 1959. Provided further that the tax payable under this section on the purchase of butter and ghee shall be calculated at the rate of two per cent. Explanation.-For the purpose of this section consumes such goods in the manufacture shall include goods consumed for ancillary purposes in or for such m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the levy of purchase tax under section 6 of the Act. The sale by the respondent to Kalbhavi is the last sale preceding the sale occasioning the export of those goods out of the territory of India and is, therefore, deemed to be sale in the course of export as envisaged by section 5(3) of the Central Sales Tax Act. The sale by Kalbhavi to the foreign purchaser was also a sale in the course of export falling under section 5(1) of the Central Sales Tax Act. Inasmuch as the sale by the respondent to Kalbhavi was a sale in the course of its export, therefore, no tax was levied under section 5 of the Act. 10.. The High Court while holding that the purchase transactions by the respondent were of goods on which no tax was leviable under section 5 of the Act and that by virtue of section 5(3) of the Central Sales Tax Act read with article 286 of the Constitution of India, the sale by the respondent to Kalbhavi was not taxable nevertheless came to the conclusion that the respondent had sold the fish oil to Kalbhavi within the State of Karnataka and, therefore, this would be regarded as a sale as sale in the State under section 6(i) of the Act and, therefore, exempt from levy of purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of this Court in the case of Murli Manohar Co. v. State of Haryana [1991] 80 STC 79. In that case the registered dealer had purchased raw material without paying tax against declaration on the basis of registration certificate. From that raw material certain goods were manufactured and sold to other dealers who, in turn, exported the goods outside India. The question which arose was whether the dealer was liable to pay purchase tax on the raw material under section 9(1) of the Haryana General Sales Tax Act, 1973. This Court had held, that the registered dealers were not entitled to exemption under section 9(1) of the Haryana General Sales Tax Act, 1973 because the sales made by them were not in the course of export outside the territory of India within the meaning of section 5(1) of the Central Sales Tax Act. It may appear that this decision would support the dealer but the provisions of section 9 of the Haryana General Sales Tax Act and section 6 of the Act, with which we are concerned in the present case, are different with regard to one important and relevant circumstance. Section 9(1) of the Haryana General Sales Tax Act which was under consideration in Murli Manohar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling within the scope of section 5(1). It seems clear, from the circumstances referred to below, that the Legislature deliberately used these words and intended to give a restricted operation to section 9(1)(a)(ii) and (b). These circumstances are: (1) Section 9(1)(a)(ii), as originally framed, merely uses the words in the course of export outside the territory of India . Clause 9(1)(b) referred to cases where raw materials were purchased and exported and the word export was defined in section 2(e) as meaning the taking out of goods from the State to any place outside it otherwise than by way of sale in the course of inter-State trade or commerce . Act 44 of 1976 amended the definition of export in section 2(e) by adding the wide words or in the course of export out of the territory of India with effect from April 1, 1976. But the same Act narrowed down the scope of clause (a)(ii) by adding the restrictive words at the end of the clause. (2) If a reference is made to section 24, one finds that section 24(1)(iii) refers again to sub-section (1) of section 5 of the Central Sales Tax Act only. However, the language of the two provisos simultaneously introduced in section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter-State sale and, therefore, would fall within the exemption contained under section 9(1) of the Haryana General Sales Tax Act. Such a question does not arise in the present case because whereas in Murli Manohar s case [1991] 80 STC 79 (SC), the goods had gone out of State of Haryana prior to its export from India, in the present case, according to the learned counsel for the appellant, Kalbhavi exported the goods from Mangalore, i.e., from within the State of Karnataka. There was thus no occasion of movement of goods from one State to another and as the sale in the course of export is not entitled to the exemption from payment of purchase tax under section 6 of Karnataka Sales Tax Act, the decision of the High Court [B.M. Ashraf Co. v. State of Karnataka [1992] 84 STC 394 (Kar)] regarding the sales in question as being sales in the State and, therefore, immune from levy of purchase tax, cannot be sustained. 15.. From the aforesaid discussion, it follows that by virtue of section 5(3) of the Central Sales Tax Act, the sale effected by the respondent to Kalbhavi has to be regarded to be in the course of export by virtue of which fish oil was exported to a place outside the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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