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TMI Blog2023 (3) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial tax for their transaction by the Deputy Commercial Tax Officer, Karaikudi. The petitioner claims that they have operation at Karaikudi, State of Tamil Nadu as well as a Branch Office at Kushal Nagar, State of Karnataka. The petitioner engaged in procuring raw coffee seeds within the State of Tamil Nadu and sent them to the Karnataka Unit, where the raw seeds are processed and exported to foreign countries. For the Assessment Year 2001-2002, the petitioner reported a total taxable turnover of Rs.40,39,994/-. They claimed exemption from levy of tax to the tune of Rs.2,24,00,783/-, which, according to the petitioner, falls under the definition of Inter-State stock transfer of goods purchased for foreign country export. The petitioner claims that the transfer and movement of coffee seeds worth Rs. 2,24,00,783/- was a result of direct purchase by the Karnataka Branch in the course of Inter-State purchase. In such circumstances, Section 7-A of the TNGST Act will not apply. The Assessing Authority after verification of their accounts, disallowed the claim of exemption and levied tax with penalty. The assessment order dated 29.08.2003, imposing tax on turnover of Rs.2,24,00,783/- a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36(6)(a) of the TNGST Act to review the order of the Sales Tax Appellate Tribunal [Additional Bench], Madurai, in M.T.S.A.No.382 of 2004, dated 18.10.2004, granting exemption to the assessee and reversing the levy of tax and penalty imposed by the Assessing Officer. 2.6. In the Review Petition, it was contended by the State that the Sales Tax Appellate Tribunal, Madurai, failed to follow the principle laid down by the Hon'ble Supreme Court in the case of State of Karnataka vs. B.M.Ashraf and Co. reported in 1997 (8) SCC 468, wherein the Hon'ble Supreme Court has held in similar kind of transaction, viz., purchases from unregistered dealers and sold to exporters, who purchase the goods in order to comply with the export order from its buyer in a foreign country, the sale effected by the dealer to the exporter has to be regarded as the sale in the course of export by virtue of Section 5(3) of the CST Act and since it was not pursuant to an inter-State sale or as a result of inter-State sale, it fell directly within the ambit of Section 6(1) of the Karnataka Sales Tax Act and the dealer was therefore, liable to pay purchase tax for the purchases from unregistered dealers. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83/- fall within Section 5(3) of the CST Act, 1956 and such turnover is directly fall within the ambit of Section 6(1) of the Karnataka Sales Tax Act and will not fall under Section 7-A(1)(c) of the TNGST Act. The judgment in Razack Trading Co. [cited supra] is heavily relied upon by the assessee in support of their submission. However, the Sales Tax Appellate Tribunal entertained the Review Application and also set aside the exemption granted by the first Appellate Authority. 3. The copy of the order dated 20.01.2007, made in the Review Application C.T.S.R.A.No.2 of 2006, was communicated to the assessee on 02.08.2007. The same is challenged before this Court on the ground of maintainability and misapplication of Section 7-A(1)(c) of the TNGST Act. 4. The following judgments are relied by the learned counsels for the petitioner and the respondents and taken up for consideration to decide the question of law whether the Review Application filed by the State under Section 36(6)(a) of the TNGST Act is maintainable? and if yes, whether the turnover of Rs.2,24,00,783/- is only a stock transfer not liable for tax? (i) Tamil Nadu Iron and Steel Co. vs. The State of Tamil Nadu reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to tax under sub-section (2), (2-A) or (2-C) of Section 3 or 4, were purchased at a point other than the taxable point specified in the First, the Fifth, the Eleventh or the Second Schedule) respectively, and either, - (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; or According to the learned Additional Government Pleader representing for the Department, the registered dealer has purchased raw seeds within the State of Tamil Nadu from unregistered dealers. In normal course, the same is liable to be taxed. If the dealer establishes that the purchase effected by him in the course of export, then, such sale is exempted from tax under Section 5(3) of the CST Act, 1956. In this case, purchase was effected by the dealer at Karaikudi, Tamil Nadu to its Branch at Kushal Nagar, Karnataka. Admittedly, the purchase was done from unregistered dealers. The said purchase has been brought on record and goods were transported to Kushal Nagar, Karnataka, accompanied with Form-F. If the same is not liable for tax and the penultimate sale was meant for export by the Branch Office, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinct acts of the dealer and it has to be considered as inseparable continuous action. 11. The Tribunal has taken note of the fact that the dealer has raised purchase bills while procuring coffee seeds from the planters in Tamil Nadu and thereafter, the goods were transported to the Branch Office at Kushal Nagar, Karnataka, under Form-XX Delivery Note issued to the dealer in the State of Tamil Nadu. Therefore, the contention of the dealer as well as the reasoning of the Appellate Authority was held to be factually incorrect. The dealer has admitted that the raw seeds were procured within the State of Tamil Nadu and transported to Karnataka and the same was processed at the Karnataka Unit. A portion of the processed seeds was sent back to Tamil Nadu for sale, another portion was sold in Karnataka and major portions were exported to the foreign countries. The actual portion of the raw seeds procured in Tamil Nadu, transported to Karnataka and thereafter, exported to foreign after processing, has not been specifically stated under Form-H, which would reflect the quantum of the seeds procured actually transported to the foreign countries. In the absence of purchase order from the Karn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the case, it is very clear that the dealer himself had disclosed a turnover as stock transfer and it had also been assessed by the Assessing Authority under Section 6-A of the CST Act, for which, the liability and the taxable turnover under Section 7-A(1)(c) of the TNGST Act is attracted. 15. Thus, on considering the order passed in Review Appeal, we find that a new fact on verifying the CST files of the assessee, the inconsistent stand of the assessee under the State Act and the Central Act has come to light. This is not a case of intra-State transaction or transfer of goods uninterrupted to the exporter, based on specific agreement for export. The legal position of transaction of this nature is well explained by the Tamil Nadu Taxation Special Tribunal in Razack Trading Co. Vs State of Tamil Nadu reported in MANU/ST/0007/1999 in the following words:- ''14. It is to be noted that while dealing with Section 5(3) of the TNGST Act in the commentaries of the CST law by Shri S. Srinivasan, in the first edition 1998 at page 88 in the second and third paras it has been clearly explained as follows : "Where a tax on purchases (and not sales) is leviable under the State ..... X X X X Extracts X X X X X X X X Extracts X X X X
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