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TMI Blog2023 (1) TMI 1179X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent dated 29.10.2004, iii. quash the impugned proceedings dated 29.10.2004 and 08.03.2006 in so far it relates to the tax on the last purchase of the raw hides and skins pursuant to the export order, and iv. direct the first respondent not to impose any tax on the last purchase of the raw skins pursuant to the export order till the disposal of the Civil Appeal No.3773/2000 pending on the files of the Supreme Court and the reference made to the Constitutional Bench of the Apex Court in C.A.Nos.5616 & 5617 of 2000 reported in 145 STC 176 in relation to Section 5(3) of the Central Sales Tax Act, 1956. 2. The petitioner is aggrieved by the first mentioned impugned Assessment Order dated 29.10.2004 passed by the first respondent Commercial Tax Officer for the Assessment Year 2002-2003, wherein, the total and taxable turnover were determined as against the total and taxable turnover reported by the petitioner in the return filed by it. Details of total and taxable turnover are given below:- Turnover Reported by the petitioner Determined by the first respondent Total Rs.4,68,46,396/- Rs.5,59,31,898/- Taxable Rs.60,93,882/- Rs.5,54,07,663/- 3. By the second mentioned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing authority in the prescribed manner and within the prescribed period, a declaration duly filled in and signed by the dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority. Provided further that any dealer who, after purchasing the goods in respect of which he had furnished any declaration, fails to make use of the goods so purchased for the purpose specified in the declaration but disposes of such goods in any other manner, shall pay the difference of tax payable on the turnover relating to sale of such goods at the rate prescribed and three per cent: Provided also that the dealer purchasing the goods maintains a separate stock account for each of the goods purchased by him showing such particulars as may be prescribed. Where any dealer, after availing the concessional rate of tax under sub-section (3), does not sell the goods so manufactured, but despatches them 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold or purchased had undergone any transformation. Since the dressed hides and skins exported by the appellants were goods different from raw hides and skins purchased by it, the appellant was not entitled to the benefit of exemption of the penultimate sale or purchase under Section 5(3)". Following the principles laid down in the case laws referred to above to the facts of the case on hand, I see no valid reason to interfere with the assessment made on the turnover of Rs.4,02,28,278/- at 4% and accordingly, it is ordered to be sustained. 11. Thus, only with reference to imposition of penalty under Section 12(3)(b) of the TNGST Act, the Assessment Order dated 29.10.2004 was set aside and the case was remitted back by the second respondent to the first respondent Assessing Officer applying the ratio of the decision of this Court in Appollo Saline Pharmaceuticals Vs. Commercial Tax Officer (FAC) and others, (2002) 125 STC 505 Mad. 12. In support of the present Writ Petition, the learned counsel for the petitioner submitted that when the second mentioned impugned order was passed by the second respondent Appellate Authority in A.P.No.4 of 2005 filed by the petitioner against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to tax under this Act) in circumstances in which no tax is payable under sections 3 or 4, as the case may be, not being a circumstance in which goods liable to tax under subsection (2) of section 3 or section 4, were purchased at a point other than the taxable point specified in the First, the Fifth, the Eleventh or the Second Schedule and either, - (a) consumes or uses such goods in or for the manufacture of other goods for sale or otherwise; or (b) disposes of such goods in any manner other than by way of sale in the State, or (c) despatches or carries them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall pay tax on the turnover relating to the purchase aforesaid at the rate mentioned in sections 3 or 4, as the may be. 19. The point for consideration in the present Writ Petition is "whether the exemption under Section 5(3) of the Centrals Sales Tax Act, 1956 r/w. Article 286 of the Constitution of India would inure to an exporter like the petitioner who purchased goods from a dealer without payment of sales tax, part of which was utilized for export?" In other words, "whether the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of documents of title to the goods before the goods have crossed the customs frontiers of India. 26. Section 5(1) and Section 5(2) of the Central Sales Tax Act, 1956 read as under:- Section 5(1) of the Central Sales Tax Act, 1956 Section 5(2) of the Central Sales Tax Act, 1956 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. 5. When is a sale or purchase of goods said to take place in the course of import or export:- (2) A sale or purchase of good 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. 27. Section 5(3) of the Act contains a non-obstante clause. As per Section 5(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricable link between local/inter-state sale or purchase with a pre-existing export order and eventual link. For the sake of clarity, Sections 5(3) and 5(4) of the Central Sales Tax Act, 1956 are reproduced below:- Section 5(3) of the Act Section 5(4) of the Act, 1956 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. The provisions of sub-section (3) shall not apply to any sale or purchase of goods unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filed and signed by the exporter to whom the goods are sold in a prescribed form obtained from the prescribed authority. 33. To facilitate a selling dealer to avail exemption, the exporter has to obtain Form-H prescribed under Rule 12(10) of the Central Sales Tax Act (Registration and Turnover) Rules, 1957 and furnish it to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Lanka Ashok Leyland Ltd., Colombo. Therefore, Tata Engineering Locomotive Co. Ltd, supplied chassis to assessee Azad Coach Builders (P) Ltd. for bus building for export to Lanka Ashok Leyland Ltd., Colombo. 38. The assessee, M/s.Azad Coach Builders (P) Ltd., was requested to build bus bodies by the exporter, Tata Engineering Locomotive Co. Ltd. in accordance with the specifications provided by the foreign buyer, Lanka Ashok Leyland Ltd., Colombo. 39. The Court took cognisance of the specimen copy of the purchase order dated 11.07.1988 placed on the assessee M/s.Azad Coach Builders (P) Ltd., by the Tata Engineering Locomotive Co. Ltd. which revealed that the assessee M/s.Azad Coach Builders (P) Ltd., was asked to fabricate bus bodies on the chassis supplied by the exporter Tata Engineering Locomotive Co. Ltd in accordance with the specifications given by the foreign buyer. 40. In one of the communications received from the said foreign buyer, it was stipulated that the steel and aluminium panels of the bus bodies be built by the assessee M/s.Azad Coach Builders (P) Ltd., since the customers in Sri Lanka preferred them. 41. The assessee M/s.Azad Coach Builders (P) Ltd., thus m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the territory of India. 46. Ultimately, the test laid down by the Hon'ble Supreme Court in Paragraph 27 of the above case reads as under:- 27. ...... Therefore, the test to be applied is, whether there is an inseverable link between the local sale or purchase and export and if it is clear that the local sale or purchase between the parties is inextricably linked with the export of the goods, then a claim under Section 5(3) for exemption from State sales tax is justified, in which case, the same goods theory has no application. 47. Though, on a cursory reading of the decision of the Hon'ble Supreme Court, it may appear that there was an apparent contradiction between the law declared by it in Paragraph 19 and its conclusion in Paragraph 31. However, it must be borne in mind that what was sold by the assessee M/s.Azad Coach Builders (P) Limited to the exporter Tata Engineering Locomotive Co. Limited was bus body manufactured by it which was mounted on the chassis supplied by the exporter Tata Engineering Locomotive Co. Limited for export. Thus, sale of bus body was prior to the export and was a penultimate sale. It is in this background the Court held that "same goods theory" ..... X X X X Extracts X X X X X X X X Extracts X X X X
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