TMI Blog1989 (7) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 per cent as inter-State sale and not covered by C and D forms. By an order dated 2nd December, 1978, the Assistant Commissioner of Commercial Taxes, Asst.-I, City Division, Bangalore, completed the assessment of the petitioner under the Central Sales Tax Act, 1956 (hereinafter referred to as "the Act"), on a turnover of Rs. 1,14,97,031.70. This sum was further split into two categories in the following manner: A sum of Rs. 7,08,281.70 was held to be the turnover of sale of coffee covered by C and D forms and was assessed to tax at 3 per cent while a sum of Rs. 1,07,88,750 was held to be the turnover of sale of coffee to the STC not covered by C and D forms and was assessed to tax at 10 per cent. 2.. The correctness of the assessment was challenged in appeal before the Deputy Commissioner of Commercial Taxes, principally, on two grounds. Firstly, that the supply of coffee effected through the STC to foreign buyer is an export sale exempted from taxation and, secondly, that the dealer did not have sufficient opportunity to file C forms of export transactions effected through the STC. The Deputy Commissioner held that there was no privity of contract between the foreign buyer an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovides for enactment by Parliament to lay down the principles to determine when a sale or purchase takes place in the course of import or export and pursuant thereto the Act was enacted in which section 5 laid down such principles. The provisions of the Act with which we are concerned during the relevant period did not contain sub-clause (3). Section 5(1) of the Act as it stood then, which deals with export of sales, could be analysed as follows: A sale or purchase of goods shall be deemed to take place in the course of the export of goods out of the territory of India only: (a) if the sale or purchase either occasions such export; (b) is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. The expression "crossing the customs frontiers of India" has been defined under the Act, by section 2(ab), as meaning crossing the limits of area of a customs station in which imported goods or export goods are ordinarily kept before clearance by customs authorities. 5.. After the enactment of the Act a number of cases have come up before the Supreme Court in which section 5(1) of the Act has been interpreted. The first of those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he position was further explained in Binani Bros. (P.) Ltd. v. Union of India [1974] 33 STC 254 (SC); AIR 1974 SC 1510, which was a case of import. The facts of the case were that the petitioner imported non-ferrous metals from foreign countries in order to fulfil the contract between the petitioner and the Government department. The Government of India while placing orders with the petitioner used to grant licence in terms of the contract. It was held in that case that though the purchase of goods from the foreign buyer had occasioned import of goods the sale by the petitioner inside India was distinct and liable to tax. The court rejected the contention based on the fact that the import licence was procured at the instance of the department solely for the supply of goods under the contract, as it was found that there was no absolute obligation on the department to procure those licences. It followed, therefore, that the dealer was not acting in the capacity of an agent of the department and hence could have diverted the goods after the import. Explaining the concept of export, the Supreme Court in Burmah Shell Oil Storage and Distributing Co. of India Ltd. v. Commercial Tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payments to the supplier of the full f.o.b. value of the goods, less half per cent service charges on the said value after the presentation of the documents to the bank in accordance with clause 11 above. * * * 16.. (iii) The coffee remains the property of the supplier until it has been paid for in full and till the goods cross the customs frontiers of India even if the supplier has already parted with the goods or the documents which represent them." No doubt clause 10 extracted above shows that the shipping documents are made out in the name of the petitioner. But the documents in this case clearly disclose that what is contemplated therein is transfer of title to the goods after they pass the customs frontiers and not a sale of goods by transfer of documents. Therefore, in our opinion, the second. limb of section 5(1) is not at all attracted to the present case. However, the learned counsel submitted that though the goods were sold to the STC the dealer continued to be the owner of the goods till the same crossed the customs frontiers and entered the export trade. He contended that sale between the dealer and the STC should be exempt from tax on the ground that the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal nor the authorities have acted in a reasonable manner in rejecting the request of the dealer to give it an opportunity of producing C and D forms in order to claim concessional rate of taxation. The proposition notice itself discloses that the sales in question between the dealer and the STC were inter-State sales but not covered by C and D forms. The main contention of the dealer has been that its transactions are export sales and, therefore, exempt from taxation, which was of course raised after due deliberation in consultation with legal advisers. Therefore, it cannot be said that the dealer had deliberately omitted to obtain C and D forms. Moreover, the transaction is between a statutory organisation and a public sector undertaking and, therefore, the dealings between them cannot be doubted to say that there is anything shady in their transaction and even at this distance of time it would be reasonable therefore to permit the petitioner to avail of the opportunity to produce the C and D forms within one month from today and claim the benefit thereof before the assessing authority. 9.. In the result we make the following order: (i) This revision petition is accordingly a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
