TMI Blog2009 (7) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... nge the levy of Central sales tax on the alleged export of cotton yarn by the assessee to an extent of Rs. 1,50,32,547.21 for the assessment year 1988-89. By an order of revision of assessment dated April 8, 1991, the first respondent determined the revised taxable turnover of this item alone at a sum of Rs. 1,05,11,878 and determined the tax in a sum of Rs. 2,10,238. The petitioner's appeal before the Additional Appellate Commissioner as well as the Tribunal having been rejected the petitioner has come forward with this writ petition challenging the order of the Tribunal dated November 9, 1988, passed in C.T.A. No. 248 of 1993. We heard Mr. N. Sri Prakash, learned counsel appearing for the petitioner and Mr. Haja Nazaruddin learned Special Government Pleader (Taxes) appearing for the respondents. The contention of Mr. N. Sri Prakash, learned counsel appearing for the petitioner is two-fold. In the first place he relied upon the Notification of the State Government issued under section 8(5) of the Central Sales Tax Act dated July 27, 1970 and contended that by virtue of the said notification, the petitioner having satisfied that the supply effected by him was to a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted the benefit of section 5(3). Having heard the learned counsel for the respective parties, we are of the view that the petitioner's claim based on the notification dated July 27, 1970, merits acceptance and that even the relief as claimed under section 5(3) also has to be granted. To appreciate the contention of the respective parties, we deem it appropriate to refer to sections 5(1) to (3), 6(1) with its proviso and 8(1) and (5) along with Notification dated July 27, 1970, which reads as under: Section 5. When is a sale or purchase of goods said to take place in the course of import or export. (1) 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. (2) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such lower rates other than those specified in sub-section (1) or sub-section (2) as may be mentioned in the notification. Notification No. 197(b) of 1970, dated the 27th July, 1970: In exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), the Governor of Tamil Nadu hereby directs that in respect of cotton yarn manufactured by the mills in Tamil Nadu no tax under the said Act shall be payable by them in respect of the sales of such cotton yarn in the course of inter-State trade or commerce by the mills to registered exporters, outside Tamil Nadu subject to the condition that the mills shall produce proof of export before the final check of their accounts for the year concerned, to the satisfaction of the assessing authority concerned. When we consider the submissions of the learned counsel for the petitioner based on section 6(1) vis-a-vis the invocation of section 5, as rightly contended by the learned counsel for the petitioner, while section 6(1) talks of the liability on inter-State sales, the application of that very provision gets excluded in the case of export obligation when once section 5(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability on the sale or purchase of goods in respect of inter-State sales or any sale by way of import or export outside the territory of India. In fact, the Statement of Objects and Reasons while introducing section 5(3) under Act 103 of 1976 with effect from April 1, 1976, also indicates as to how the Parliament thought it fit to even include penultimate sale in respect of sales on exports in the interest of the nation or otherwise any levy of tax at the State level would result in corresponding increase in the price of goods which will have its consequential repercussion in the price of goods meant for exports which would ultimately create an uncompetitive situation for the exporters in the international market. In fact the introduction of that very provision seems to have been thought of after taking note of the Full Bench decision of the honourable Supreme Court rendered in Mod. Serajuddin v. State of Orissa [1975] 36 STC 136, wherein the honourable Supreme Court rejected the claim of the assessee who is stated to have effected supplies to a State Trading Corporation in respect of its export order in the course of export sale made by the Corporation by strictly construing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8(5) would be available and any such contention to the contrary cannot be accepted. We therefore hold that the petitioner herein is entitled to the relief of the notification dated July 27, 1970, issued under section 8(5) of the Act which automatically continues to remain in force even as on date and consequently the only condition to be satisfied by the petitioner is that he effected inter-State sale in favour of a registered exporter outside the State of Tamil Nadu and that by virtue of such sale, the export obligation was carried out before the final check of its accounts for the year concerned. The fact that the petitioner effected an inter-State sale by way of export through its invoice dated November 14, 1988, is not in dispute and the further fact that the foreign buyer order to the exporter was dated December 26, 1987, is also not in dispute. The order of revised assessment dated April 8, 1991, itself discloses that the petitioner filed form H and form AR 4A along with bill of lading and invoice copies to the value of Rs. 1,05,11,878 in proof to the fact that such export obligation was carried out to a registered exporter before the final check of their accounts t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to an extent of Rs. 1,05,11,878 came to be rejected on the ground that the purchase order dated December 17, 1987, was prior to the date of foreign buyer order with the registered exporter which was dated December 26, 1987. The petitioner contended that the sale was really effected by it through its invoice dated November 14, 1988, which was long after the export order dated December 25, 1987. In this context, we find force in the reliance placed by the learned counsel for the petitioner on the decision in Consolidated Coffee Ltd. v. Coffee Board, Bangalore reported in [1980] 46 STC 164 which fully supports the stand of the petitioner. In the said decision, the honourable Supreme Court has held as under at page 182: . . . It is true that the benefit of the exemption was intended to be extended to small and medium scale manufactures desirous of exporting their goods but the requirement of the new provision is not that they must procure or have with them a foreign buyer's contract but the requirement is that before they complete the sale of their goods to the canalising agency or the private export house there must be in existence a foreign buyer's contract to implem ..... 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