TMI Blog1976 (11) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... 76 relates to the assessment year 1970-71. Under section 5 of the Central Sales Tax Act (74 of 1956), exemption is given from payment of Central sales tax when a sale or purchase of goods is said to take place in the course of import or export. Sub-section (1) of section 5 provides that a sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. Under sub-section (2) of section 5, a sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India. Since the transactions in question relate to the export of iron ore and manganese ore from India, we are only concerned with sub-section (1) of section 5. The question as to when the sale can be said to have taken place in the course of the export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in buyers' corresponding sale contract. Buyers will assign the relevant foreign letter of credit which is to be opened in their name by their foreign buyer, Messrs. Associated Metals and Minerals Corporation, on receipt from the sellers of a bank draft for difference between buyers f.o.b. purchase value and f.o.b. sale value, that is, $1.00 (Rs. 4.75) per dry long ton for a bank guarantee from a scheduled bank guaranteeing that sellers will pay buyers immediately upon shipment/shipments the difference between buyers' f.o.b. purchase value as shown in this contract and buyers' f.o.b. sale value as shown in foreign letter of credit, that is, $1.00 (Rs. 4.75) per dry long ton by bank draft for each shipment and the buyers will endorse the bills of lading and deliver the same to sellers to negotiate against the above-mentioned letter of credit. Balance after destinational weight and analysis on the basis of documents mentioned in S. T. C.'s corresponding sale contract with buyers. If the balance 10 per cent is insufficient to cover shortfall in weight and analysis at destination or any penalty imposed by the S.T.C.'s foreign buyers, the additional amount shall be payable by sellers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the rigid rule of privity of contract should be relaxed on considerations of equity and justice and a realistic approach should be adopted. The manner of entering into contracts through the channel of the corporation raised in reality a presumption of the corporation being an agent of the appellant in the integrated transaction. On these contentions, the learned Judges, who constituted the majority of the Bench of five Judges, held that the corporation alone had agreed to sell the goods to the foreign buyer and was the exporter of the goods; that there was no privity of contract between Mohammed Serajuddin and the foreign buyer; and that the privity of contract was between the corporation and the foreign buyer. It was further held that the immediate cause of the movement of goods and export was the contract between the foreign buyer, who was the importer, and the corporation, who was the exporter and shipper of the goods. All the relevant documents were in the name of the corporation whose contract of sale was the occasion of the export. According to the learned Judges, who constituted the majority, the expression "occasions" in section 5 of the Central Sales Tax Act means the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the fact that the exports could be made only through the State Trading Corporation did not have the effect of making the appellant the exporter where there was direct contract between the corporation and the foreign buyer. Restriction on export that export could be made only through the State Trading Corporation was a reasonable restriction and was valid and the decision of the High Court that the sales of the appellant to the corporation were exigible to tax because they were not sales in the course of export was upheld by the Supreme Court. After the decision of the Supreme Court in Mod. Serajuddin v. State of Orissa(1), a Bill was introduced in Parliament for amending the Central Sales Tax Act and the statement of objects and reasons pointed out that the Central Sales Tax Act, 1956, had formulated the principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce or outside a State or in the course of import into, or export from, India. The Act also provides for the levy, assessment and collection of tax on sales of goods in the course of inter-State trade or commerce. Further, the Act declares certain goods to be of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch export. It is thus clear that, in the light of what was held by the Supreme Court in Mod. Serajuddin v. State of Orissa[1975] 36 S.T.C. 136 (S.C.)., the Parliament gave relief to exports of goods from India if, either by statute or because of the requirement of trade, the export of goods was done through a statutory agency such as the State Trading Corporation or through the machinery of an export house to enable such agency or export house to export those goods in compliance with an existing contract or order. Therefore, the Parliament proposed to provide, by amending section 5 of the Central Sales Tax Act, that the sale or purchase of any goods preceding the sale or purchase occasioning export of those goods out of the territory of India shall also be deemed to be in the course of such export if such last sale or purchase took place after and was for the purpose of complying with, the agreement or order for, or in relation to, such export. This Bill, being Bill No. 84 of 1976, was enacted as the Central Sales Tax (Amendment) Act, 1976 (103 of 1976) and it became law with effect from 7th September, 1976. By section 3 of the Central Sales Tax (Amendment) Act, 1976, in sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst those orders, the petitioner filed appeals to the Assistant Commissioner of Commercial Taxes. The petitioner also filed writ petitions in 1961 in the Supreme Court under article 32 of the Constitution of India. Those writ petitions were dismissed by the Supreme Court on the ground that the petitioner was not a citizen entitled to fundamental rights. Thereafter, writ petitions were filed in this court contending that the transactions were exempt from sales tax. Those writ petitions were dismissed by this Court in 1968 on the ground of alternative remedy being available to the petitioner; but the merits of the case were not examined by this Court while dismissing those writ petitions. The Assistant Commissioner of Commercial Taxes gave relief to the petitioner in the light of the decisions of the Supreme Court in Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer[1964] 15 S.T.C. 753 (S.C.). and Khosla and Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes[1966] 17 S.T.C. 473 (S.C.). However, after the Supreme Court delivered the judgment in Mod. Serajuddin v. State of Orissa[1975] 36 S.T.C. 136 (S.C.)., the Deputy Commissioner of Commercial Taxes, the 1st respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and wholly for the assessment years 1969-70 and 1970-71, whereas, even in respect of the assessment years 1956-57, 1957-58 and 1967-68 and partly for the assessment year 1969-70, the Assistant Commissioner had given relief to the petitioner. As regards the assessment year 1969-70, against the order of the Assistant Commissioner of Commercial Taxes refusing to grant relief on the turnover in respect of export of iron ore and manganese ore, an appeal was pending before the Sales Tax Appellate Tribunal. It has been pointed out that, for the assessment years 1958-59, 196061 and 1963-64, the Sales Tax Appellate Tribunal had given complete relief to the petitioner in Tribunal Appeals Nos. 702, 703 and 701 of 1968 and the Tribunal's decision was dated 26th March, 1969. At the hearing of these six matters before us, Mr. Dasaratharama Reddi, the learned Advocate for the petitioner in each of these matters, urged the following contentions: (1) There is no illegality in the order of the Commercial Tax Officer or the Assistant Commissioner of Commercial Taxes and merely because the Supreme Court changed its view or laid emphasis on certain aspects of the matter, it could not be said that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Orissa(1) and that forms the basis of the show cause notice. The show cause notice points out: "The benefits of article 286(1)(b) of the Constitution extends to transactions which come within the meaning of the phrase in the course of export'. In view of the decision of the Supreme Court in Serajuddin case(1), it is clear that the transaction anterior to the actual export does not fall within the scope of the exemptions." It was under these circumstances that the Deputy Commissioner proposed to exercise his powers of revision, as pointed out in the show cause notice, so that the orders of the Assistant Commissioner of Commercial Taxes, which were no longer good in view of the decision of the Supreme Court in Mod. Serajuddin v. State of Orissa(1), could be rectified. Mr. Dasaratharama Reddi, in connection with the first point, emphasised that the powers of revision could be exercised only if there was illegality in the orders of the Assistant Commissioner of Commercial Taxes and that merely because there was a change of view regarding the correct legal position, the powers of revision could not be invoked. Reliance was placed on the observations of the Supreme Court, of the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in Mod. Serajuddin v. State, of Orissa[1975] 36 S.T.C. 136 (S.C.)., and it is only to mitigate the hardships of genuine small-scale exporters or those who were directed to export through statutory agencies like the State Trading Corporation, that the sale immediately preceding the sale which occasioned the export is exempt with effect from 1st April, 1976, if the conditions of sub-section (3) of section 5, as inserted by Act No. 103 of 1976, are satisfied. It is erroneous to contend, as has been done by Mr. Dasaratharama Reddi, that in Mod. Serajuddin's case(1), the Supreme Court laid down any new legal position. All that the Supreme Court did was that after considering all the decisions on the point, it emphasised that it is only the last contract of sale between the exporter from India and the foreign importer that can be said to be a sale that occasions the export and hence by virtue of section 5(1) of the Central Sales Tax Act read with article 286 (1)(b) of the Constitution, is exempt from sales tax. In our opinion, the first contention of Mr. Dasaratharama Reddi must be rejected, because the Supreme Court itself explained in State of Madras v. Gurviah Naidu Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of Orissa(3) is not to lay down a new legal position. It was merely emphasising what was being stated by the Supreme Court since the decision in State of Travancore-Cochin v. Shanmuga Vilas Cashew-nut Factory(2). It is, therefore, clear that the position as to what is the meaning of the words "the sale that occasions the export" has been clearly explained all along by the Supreme Court. It is true that, in the show cause notice, the Deputy Commissioner of Commercial Taxes has emphasised the aspect of the legal position as explained by the Supreme Court in Mod. Serajuddin v. State of Orissa[1975] 36 S.T.C. 136 (S.C.)., but it cannot be said, in the light of what is just now pointed out, that the Supreme Court has laid down a new legal position. In that view, the first contention of Mr. Dasaratharama Reddi must be rejected. As regards the contention based on section 20(2-A) of the Andhra Pradesh General Sales Tax Act, it must be pointed out that, if the contentions of Mr. Dasaratharama Reddi regarding the interpretation which he wants us to place on sub-section (2-A) of section 20 were to be accepted, it would mean incorporating the principle of res judicata in sales tax matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act cannot be so read as to bring in the concept of res judicata. The fact that, in appeal, any particular issue or question is either pending decision of the Tribunal or has already been decided by the Tribunal cannot operate as res judicata for other assessment years and cannot prevent the exercise of revisional powers by the Deputy Commissioner except in relation to the particular assessment year in respect of which an appeal is pending before the Sales Tax Appellate Tribunal or in respect of which the question or issue has been decided by the Tribunal. It should be borne in mind that, if the sales tax authorities are aggrieved by the issue or question decided by the Sales Tax Appellate Tribunal either in the appeal, which was pending at the time or in a particular appeal which has already been decided, they can always approach the High Court on a reference so that the matter can be ultimately decided or they can come to the High Court in the exercise of the revisional powers. Under these circumstances, this contention based on section 20(2-A) cannot help the petitioner. In the light of the above discussion, it is clear that each of the three contentions urged by Mr. Dasar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
