TMI Blog2018 (3) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... Case Revision No.42 of 2017, is filed against the order, dated 30.11.2010, passed in T.A.No.188 of 2007, passed by the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai, for the assessment year 2003-04. 2. Tax Case Revision No.43 of 2017, is filed against the order, dated 30.11.2010, passed in T.A.No.298 of 2007, passed by the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai, for the assessment year 2001-02. 3. Short facts leading to Tax Case Revision No.42 of 2017, are that M/s.Forward Shoes Pvt. Ltd., Chennai, were assessed on a total and taxable turnover of ₹ 2,79,54,101/- for the assessment year 2003-04, under the Tamil Nadu General Sales Tax Act, 1959 (In short, the Act ). The assessee had purchased materials such as thread, taps, foils and solutions, against Form XVII and used the same for the manufacture of shoes and dispatched them to other countries. Alleging violation of Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959, the assessing officer levied tax at 1%, on the turnover of ₹ 2,00,81,189/-, pertaining to the purchases of raw materials, against Form XVII, availing concessional rate of tax and used the same for manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portions of one such order, in the case of T.A.No.188 of 2007, as follows: 9. The learned counsel for the appellant would simply and at the same time strenuously submit that export sale is also a sale as mentioed in Section 3(4) of the TNGST Act, 1959 and hence, export sale cannot be disallowed for the purpose of availing concessional rate of tax in respect of the corresponding purchase of raw materials. The learned State Representative would submit that a correct interpretation of Section 3(4) of the TNGST Act, 1959, would make it abundantly clear that local sale of the manufactured goods alone will qualify for purchase of raw materials at the concessional rate of tax under Section 3(3) of the TNGST Act, 1959. In support of this contention, the learned State Representative would rely upon the case law reported in (2004) 136 STC 215 in ELGI Equipments v. Assistant Commissioner of Commercial Taxes and (1997) 107 STC 571, in State Karnataka v. B.M.Ashraf Co., 10. To repel this contention, the learned counsel for the appellant/assessee would submit that recently a Division Bench of the Honourable High Court of Madras, in a batch of Tax Case Revisions by a common order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether the order of the Appellate Tribunal is correct in interpreting the expression does not sell the goods so manufactured occurring in sub-Section (4) of Section 3 of the Tamil Nadu General Sales Tax Act, 1959, as including not only intra state but also export sale? (2) Whether the Appellate Tribunal is correct in invoking the principle of situs as envisaged in explanation 3(a) to Section 2(n) of the Tamil Nadu General Sales Tax Act, 1959 for the purpose of interpretation of expression does not sell the goods so manufactured as contained in sub Section (4) of Section 3 of the Act so as to bring it within the ambit of the said explanation? (3) Whether the Appellate Tribunal is legally correct in distinguishing the judgment of Hon'ble Supreme Court in the case of State of Karnataka vs. B.M. Ashraf Co. reported in 107 STC 571 wherein it was held that a sale deemed to be in the course of export under Section 5(3) of the Central Sales Tax Act, 1956 cannot be regarded as an intrastate sale? (4) . Whether the Appellate Tribunal is correct in construing that the levy of tax attracted under Section 3(4) of the Act in the event of export sale of the manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale . She therefore submitted that the Tribunal has erred in interpreting the expression in any other manner occurring under sub Section (4) of Section 3 of the TNGST Act, 1959, would not include export sale within its ambit. 10. On the contention that the State has filed SLP(C)Nos.8629 to 8678 of 2012, before the Hon'ble Supreme Court, against the decision made in Tube Investment of India Ltd., v. State of Tamil Nadu, reported in [2010] 36 VST 67 (Mad.), learned Special Government Pleader fairly submitted that the abovesaid SLPs are dismissed, on the ground of delay and review petition has been filed. Heard the learned counsel appearing for the parties and perused the materials available on record. 11. Few provisions relevant for the instant tax case revision are as follows: (i) Explanation 3(a) to Section 2(n) of the Tamil Nadu General Sales Tax Act, 1959, reads as follows: Explanation (3)- (a) The sale or purchase of goods shall be deemed for the purposes of this Act, to have taken place in the State, wherever the contract of sale or purchase might have been made, if the goods are within the State-- (i) in the case of specific or ascertained g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em to a place outside the State either by branch transfer or by transfer to an agent, by whatever name called, for sale, or in any other manner, except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall pay in addition to the concessional rate of tax already paid under sub-section (3), tax at one per cent on the value of the goods so purchased. (iii) Section 5(3) of the Central Sales Tax Act, 1956, is extracted hereunder: 5. When is a sale or purchase of goods said to take place in the course of import or export:- (1) ......... (2) ......... (3) Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the 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. 12. In Tube Investment of India Ltd., v. State of Tamil Nadu, reported in [2010] 36 VST 67 (Mad.), after considering a catena of decisions, a Hon'ble Division Bench of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 3(3) of the Act gets attracted. 27. The crucial test to be made therefore relates to the expressions does not sell the goods so manufactured and in any other manner used in Section 3(4) of the Act. The stand of the revenue of the State is that since the words in any other manner occurs prior to the exempted category of interstate sale and after the covered category of despatch to a place outside the state by way of branch transfer or by transfer to an agent for the purpose of sale, it should be construed that the export sale would fall under the said set of expressions in any other manner in as much as such sale is not within the State. 28. To counter the said submission, on behalf of the assessees it is contended that if really the law makers wanted to restrict the sale only to a sale inside the State and not to export sale, such a restriction would have been clearly set out in the Section itself as has been provided in Sections 3(3), 7(A)(b) and 9(b) of the Act. 29. At the very outset, it will be worthwhile to make a mention about the restrictions imposed on imposition of tax by the State on Export sales under Article 286(1)(a) (b) of the Constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 286 as a 'deemed export' as set out under Section 5(3) of the Central Sales Tax Act, the same cannot be countenanced. In this context, it will be worthwhile to refer to a Division Bench decision of this Court reported in 2005 (3) LW 101 (N.PRIYADARSHINI VS. THE SECRETARY TO GOVERNMENT, EDUCATION DEPARTMENT, FORT ST. GEORGE, CHENNAI-9 AND ANOTHER). Para 27 of the said decision is relevant for our purpose, which reads as under:- .....27. In this connection, it may be mentioned that according to theory of the eminent jurist Kelsen (the pure theory of law) in every country there is a hierarchy of laws and the general principle is that a law in a higher layer of this hierarchy will prevail over the law in a lower layer of the hierarchy (see Kelsen's The General Theory of Law and State ) In our country this hierarchy is as follows:- (i) The Constitution of India (ii) Statutory law (which may be either Parliamentary law or law made by the State legislature). (iii) Delegated Legislation (which may be in the form of rules made under the statute, regulations made under the statute, etc) (iv) Purely administrative or executive orders. Applying t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that Explanation-3(a)(i) is attracted viz., that such goods are specific or ascertained goods. It is also not in dispute that such ascertainment of the goods were existing at the time when the contract of sale or purchase in respect of the export was made. When such stipulations to be satisfied as prescribed under Explanation-3 are fulfilled, certainly the export sale is also deemed to be a sale as defined under Section 2(n) of the Act for the purpose of the Act. 38. When once we are able to assimilate the definition of 'sale' in the case of an export under the provisions of the Act, we are convinced that such a sale, is nothing but a sale for which an exigency of tax liability would not occur as provided under Section 3(4) of the Act. 39. In other words, the expression but does not sell the goods so manufactured cannot be put against the export sale in order to levy the tax on the value of the goods so purchased by availing the concessional rate of tax under Section 3(3) of the Act. 40. In view of our above conclusions, we have no hesitation to hold that such an export sale cannot be brought under the set of expressions in any other manner as used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant as regards the sales being in the course of export, as in the present case. In the context of sales tax law, the expression sale in the State occurring in Section 6 can only mean a local sale or an intra State sale as opposed to sale in the course of export or in the course of inter-State trade or commerce. Therefore, wherever, there is a sale in the course of export or an inter-State sale, then, that would not be regarded as a sale in the State falling under Section 6(i) of the Act and therefore, sale by the respondent to Kalbhavi, which was admittedly a sale in the course of export under Section 5(3) would not be regarded as sale in the State ...... 43. While examining the reliance placed upon the said decision on behalf of the State, it will have to be noted that Section 6 of the Karnataka General Sales Tax Act is more or less in pari materia with Section 7(A) of the Act i.e., (TNGST Act). From what has been laid down by the Hon'ble Supreme Court in the first blush, it does appear that irrespective of the fact that the sale of fish oil by the assessee therein was a sequel to an export order thereby governed by Section 5(3) of the CST Act, but, yet the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- .....The Court would not construe a Section of a statute with reference to that of another statute unless the latter is in pari materia with the former. Therefore, a decision made on a provision of a different statute will be of no relevance unless underlying objects of the two statutes are in pari materia. .... Support can also be had on the very recent decision of the Hon'ble Supreme Court reported in 2009 (8) SCC 483 (BIHAR SCHOOL EXAMINATION BOARD VS. SURESH PRASAD SINHA). In paragraphs 20, 21, 22, the Hon'ble supreme Court after referring to certain earlier decisions has held as under in para 23:- .... 23. We have referred to the aforesaid decisions and the principles laid down therein, because often decisions are cited for a proposition without reading the facts of the case and the reasoning contained therein. ... 45. Applying the principles referred to in the above two decisions and the reliance placed upon Ashraf's case, it will have to be held that the said decision rendered in the context of the specific provisions contained in Section 6(i) of the Karnataka Act cannot be mutatis mutandis apply to the case on hand where Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Delhi. The legislature was enacting a piece of legislation intended to levy tax on dealers who are laymen and we have no doubt that if the legislative intent was that resale should be within the territory of Delhi and not outside, the legislature would have said so in plain unambiguous language which no layman could possibly misunderstand. It is a well-settled rule of interpretation that where there are two expressions which might have been used to convey a certain intention, but one of those expressions will convey that intention more clearly than the other, it is proper to conclude that, if the legislature used that one of the two expressions which would convey the intention less clearly, it does not intend to convey that intention at all. We may repeat what Pollock, C.B., said in Attorney-General Vs. Sillem. That if this had been the object of our legislature, it might have been accomplished by the simplest possible piece of legislation ; it might have been expressed in language so clear that no human being could entertain a doubt about it . We think that in a taxing statute like the present which is intended to tax the dealings of ordinary traders, if the intention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transaction for the purpose of sales tax nor does the circumstances that delivery was to the captain on board the ship within the territorial waters make it a sale outside the State of Tamil Nadu. .... To support the above conclusion, the decision of the Hon'ble Supreme Court reported in 134 STC 473 (ASHOK LEYLAND LTD VS. STATE OF TAMIL NADU AND ANOTHER) can also be referred to. Paragraphs 69 and 71 of the said decision reads as under:- ...69. The expression For the purpose of this Act , unless the context otherwise requires would mean all the purposes thereof. ...... 71. The expression for the purpose of the said Act must also be given effect to. The same would ordinarily mean for the purpose of all the provisions of the said Act . ...... Applying the said ratio, it can be safely held that the export sale of the petitioners would squarely fall under the definition of 'sale'. 48. We therefore hold that the 'export sale' is also a 'sale' as contemplated in the first part of Section 3(4) of the Act and consequently the exigibility to tax as provided under the said Section cannot be applied. 49. On behalf of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluded, the state would be deprived of its revenue in all respects and that was not the contemplation of the provision contained in Section 3(3) and 3(4) of the Act. 52. In fact the said contention was repelled by the Hon'ble Supreme court in the following words in paragraph 5 of the decision reported in (1994) 2 SCC 434 (PRINTERS (MYSORE) LTD. AND ANOTHER VS. ASSTT. COMMERCIAL TAX OFFICER AND OTHERS):- ....Section 8, read as a whole, sys inter alia : where a dealer purchases goods (being non-declared goods) required by him for use in the manufacture or processing of goods for sale and issues Form 'C' to the selling dealer, the selling dealer shall be liable to pay tax only @ 4% as per Section 8(1) and not 10% as provided in Section 8(2), provided that the certificate of registration of the purchasing dealer specifies the class of goods purchased by him. (In case of declared goods, the selling dealer has to pay tax at the rate applicable to sale of such goods within the appropriate State.) It necessarily means that the selling dealer will collect (pass on) tax from the purchasing dealer only at the said concessional rate. The idea behind this provision is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase tax, the ratio of the decision of the Hon'ble Supreme Court in Ashraf's case was fully applicable. The said decision cannot however be applied to the case relating to the applicability of Section 3(3) and 3(4) of the Act. Reliance was placed upon the decision of the Supreme Court reported in 95 STC page 93 (STATE OF ORISSA VS. JOHRIMAL GAJANAND). The Hon'ble Supreme Court while dealing with the provision contained in the Orissa Sales Tax Act, in the context, where an Assessee, a registered dealer to the said Act, purchase certain goods from another registered dealer based on a declaration furnished by it for resale of the purchased goods in the state and the goods were however sold in the course of inter state trade, in that context, held as under at page 97:- .....It is the admitted case of the assessee that the sales in question were the sales in the course of inter-State trade and if that is the position then the question of the same sales being the sales within the State did not arise. ....... Having regard to the peculiar facts involved in that case, the decision rendered therein cannot be applied to the facts of this case. 55. Similarly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court itself which is free to review the same and depart from its earlier opinion if the situation so warrants. What is binding is, of course, the ratio of the decision and not every expression found therein. (b) The decisions of the High Court are binding on the subordinate courts and authorities or Tribunals under its superintendence throughout the territories in relation to which it exercises jurisdiction. It does not extend beyond its territorial jurisdiction. (c) The position in regard to the binding nature of the decisions of a High Court on different Benches of the same court may be summed up as follows: (i) ....... (ii) A Division Bench of a High Court should follow the decision of another Division Bench of equal strength or a Full Bench of the same High Court. If one Division Bench differs from another Division Bench of the same High Court, it should refer the case to a larger Bench. (ii) In Rajasthan Public Service Commission v. Harish Kumar Purohit reported in (2003) 5 SCC 480, the Hon'ble Court held that a bench must follow the decision of a coordinate bench and take the same view as has been taken earlier. The earlier decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Bench of Himachal Pradesh High Court in Hans Raj Dhir vs State Of Himachal Pradesh reported in 1985 Cri LJ 1030, observed as follows: Mere preferment of an appeal does not automatically operate as a stay of the decision under appeal and till an application for stay is moved and granted by the appellate Court, or, in the alternative, the Court which rendered the decision is moved and grants an interim stay of the decision pending the preferment of an appeal and grant of stay by the appellate Court, the decision continues to be operative. Indeed, non-compliance with the decision on the mere ground that an appeal is contemplated to be preferred or is actually preferred, and that, therefore, the matter is sub-judice, may amount to contempt of Court punishable under the Contempt of Courts Act, 1971. While observing thus, the Hon'ble Division Bench of the Himachal Pradesh High Court has considered a decision of the Hon'ble Supreme Court in Baradakanta Mishra v. Bhimsen Dixit reported in 1973 Crl.L.J. 19. 18. In Dr.Sajad Majid v. Dr.Syed Zahoor Ahmed reported in 1989 Crl.L.J 2065, a Hon'ble Division Bench of Jammu and Kashmir High Court, faced with a similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the order of implementation. We, therefore, make it clear that a party against whom order has been passed by the Court, having knowledge of the same or the order being served on him, cannot take refuge of limitation period for preferring an appeal for non-compliance of the order or even if the appeal has been filed but no stay has been obtained against the order, contempt proceedings will be entertained against such party for non-compliance. However, it is the discretion of the Court finally, while holding the defaulting party guilty, to pass appropriate orders looking to the gravity of the matter and conduct of such party, but in no case rebate of non-compliance of the Court order will be made available merely an appeal without stay is pending. 19. The Hon'ble Supreme Court in Collector of Customs, Bombay v. M/s.Krishna Sales (P) Ltd., reported in AIR 1994 SC 1239 = 1994 Supp (3) SCC 73, wherein, at Paragraph No.6, observed as follows: If the authorities are of the opinion that the goods ought not to be released pending the appeal, the straightforward course for them is to obtain an order of stay or other appropriate direction from the Tribunal or the Supreme 5 C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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