SRINIVASA TRADING COMPANY Vs. STATE OF ANDHRA PRADESH
LAWS(ST)-1998-11-11
SALES TAX TRIBUNAL
Decided on November 25,1998

Srinivasa Trading Company Appellant
VERSUS
STATE OF ANDHRA PRADESH Respondents

JUDGEMENT

Dubagunta Subrahmanyam, Chairman - (1.) IN this batch of appeals common questions of facts and law arise. Hence, they are heard together and are being disposed by a common order. The particulars of the appeals are as stated hereunder: (Note: The details of appeal orders and disputed turnovers are not printed to save space.) Undisputed facts for the disposal of the present Batch of appeals are as follows: - The appellants entered into contracts with the exporters in Bombay to supply groundnut kernel as per the specifications and other terms and conditions stipulated in the contracts. They have purchased groundnuts from local vendors and in their turn sold the groundnut kernel to the exporters at Bombay. The exporters at Bombay sold the commodity to the Foreign buyers. The sales by the appellants to the exporters are accepted by the Revenue as sales in the course of export. However, the anterior purchases of groundnuts by the appellants were treated by the assessing authorities as last purchases at their hands in the State and were subjected to tax under the provisions of the APGST Act. The assessing authorities relied upon a judgment of A.P. High Court in Bismillah & Co., vs. State of A.P. ( : 73 STC 135). On the basis of principles laid down in the above decision, the assessing authorities came to conclusion that exemption under Section 5(3) of the CST Act cannot be extended to the purchase anterior to the sales to exporter. Accordingly, the assessing authorities made provisional assessments for the assessment years 1996 -97 and 1997 -98 and levied tax under the provisions of APGST Act. The appellants felt aggrieved by the provisional assessments made by assessing authorities and preferred appeals before the concerned Appellate Deputy Commissioner(CT). They claimed that the purchases made by the appellants from the local traders are also covered by exemption under Section 5(3) of the CST Act and therefore, they are not liable to be taxed. Various decisions have been cited before the Appellate Deputy Commissioners(CT). However, the Appellate Deputy Commissioners upheld the provisional assessment orders of the assessing authorities and dismissed the appeals. Aggrieved by the orders of the Appellate Deputy Commissioners, the appellants preferred the present batch of appeals.
(2.) THE question that falls for consideration in the batch of present appeals is, whether the purchases made by the appellants prior to the sale to the exporters are not liable to be taxed under the provisions of the APGST Act? For proper appreciation of the dispute involved in the appeals and for a just decision, we feel it necessary to extract hereunder relevant provisions under Section 5 of the CST Act and Sections 7 and 38 of APGST Act. Section 5 of CST Act: - 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 goods have crossed the customs frontiers of India. (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. Section 7 of APGST Act as amended by Act 18 of 1985 with effect from 1.7.1985 reads as follows: Stage of levy of taxes in respect of imported and exported goods. Where in the case of the goods, tax is leviable at one point in a series of sales or purchases, such series shall - -(a) in the case of goods imported into the State either from outside the territory of India or from any other State in India, be deemed to commence at the stage of the sale or purchase effected immediately after the import of such goods; (b) in the case of goods exported out of the State to any place outside the territory of India or to any other State in India, be deemed to conclude at the stage of sale or purchase effected immediately before the export of such goods. Explanation: - For the purpose of clause (b), the expression "sale or purchase effected immediately before the export of such goods" in so far as it relates to export to any place outside the territory of India, shall include the last sale or purchase of any such goods preceding the sale or purchase effected immediately before the export of such goods, as referred to in Sub -section (3) of Section 5 of the CST Act, 1956. Section 38 of the A.P. General Sales Tax Act reads as follows: - Act not to apply to sales or purchases outside the State, in the course of import or export, etc. Nothing contained in this Act shall be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods, where such sale or purchase takes place, - (i) outside the State; or (ii) in the course of the import of the goods into or export of the goods out of the territory of India; or (iii) in the course of inter -State trade or commerce Explanation: - The provisions of Chapter II of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) shall apply for the purpose of determining when a sale or purchase takes place in the course of inter -State trade or commerce or outside a State or in the course of import or export.
(3.) SECTION 5(3) of the Central Sales Tax Act is the relevant provision to be considered in the present batch of appeals. As per Section 5(1), sale or purchase of goods in the course of export is exempted from tax. As per Section 5(3), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods shall be deemed to be in the course of such export, if such last sale or purchase takes place after and was for the purpose of complying with, the agreement or order for or in relation to such export. Therefore, undisputedly, the sale or purchase preceding the sale or purchase for the purpose of export also gets exempted from tax. In the present cases, there is no dispute by the assessing authorities that the sales by the appellants to the exporters took place after, and was for the purpose of complying with the agreement or order for or in relation to such exports.;


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