DEPUTY COMMISSIONER Vs. SEA ROSE MARINE PVT. LIMITED
HIGH COURT OF KERALA
Sea Rose Marine Pvt. Limited
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G .SIVARAJAN,J. -
(1.) The State is the revision petitioner. The assessee is the
respondent. The assessment years concerned are 1983 -84 and 1984 -85. The
respondent - assessee is engaged, inter alia, in the export of marine
products. The assessments for the two years under the Kerala General
Sales Tax Act, 1963 (for short "the Act") were completed on July 30, 1994
and August 31, 1994 respectively. In the said assessments the claim for
exemption on the purchase turnover of shrimps amounting to Rs. 64,70,403
and Rs. 2,05,08,630 respectively under section 5(3) of the Central Sales
Tax Act, 1956 was denied on the ground that the assessee's sale to the
export house was the penultimate sale which occasioned the export. Being
aggrieved, the assessee filed separate appeals before the Additional
Deputy Commissioner (Appeals), Agricultural Income -tax and Sales Tax,
Ernakulam. The Deputy Commissioner by separate orders dated January 30,
1995 and March 10, 1995 respectively set aside the two assessment orders and remanded the matter to the assessing authority for verifying whether
the purchases of prawns took place after and was for the purpose of
complying with the agreement or order for or in relation to such export
and as to whether the assessee had satisfied all the conditions of
section 5(3) of the Act. Not being satisfied with the order of the first
appellate authority the assessee took up the matter in second appeal
before the Tribunal. The Tribunal disposed of both the appeals by a
common order dated November 21, 1995 allowing the claim made by the
assessee under section 5(3) of the CST Act. These two revisions at the
instance of the State are against the said common order of the Tribunal.
(2.) THE only question that arises for consideration in these two revisions is regarding the correctness of the order of the Tribunal
granting the claim of the assessee for exemption made under section 5(3)
of the Central Sales Tax Act for the aforesaid two years.
The State has raised the following questions of law for decision :
"(a) Is the Tribunal under the facts and circumstances in case, justified in excluding the purchase turnover of prawns from exigibility to tax taking shelter under section 5(1) of the CST Act ? (b) Whether the Tribunal is justified in holding that sale has been effected by transfer of documents of title to the goods after the goods have crossed the customs frontiers of India - The brief facts necessary for adjudication of the issue as summarized by the Tribunal are as follows :
"The appellants are registered exporters. They undertake exports of marine products. The exports are undertaken in terms of agreements that the appellants have entered into with export houses. The agreements are executed in writing between the appellants and the export houses. The foreign orders are procured through the export houses. Prices are negotiated by the export houses. The foreign buyers open irrevocable and transferable letters of credit in the name of the export houses. The appellants name is marked in the foreign order as the shipper. The appellants procure the materials, process and pack it, takes to Cochin port, clear the customs checking, load the goods on board the ship. The sales invoices are raised by the appellants against the foreign buyers and the bill of lading is obtained in the name of the appellants. Packing credit advance available to the exporters is availed by the appellants from the bank. All the cost and expenses including freight and insurance are paid by the appellants. Export duty if any is paid by the appellants. The incentives available to exporters like duty drawback, cash assistance, etc., are paid to the appellants by the concerned agencies of the Central Government. After the shipment, the documents are transferred to the export house. In all the export documents, the name of the concerned export house is endorsed with a prefix 'account'. The export house negotiates the export documents with the bank. The letter of credit is endorsed in favour of the appellants by directing the bank to credit the export proceeds in foreign exchange to the account of the appellants in the bank designated by the appellants. The REP licences/additional licences for which the appellants are entitled on account of the exports undertaken by them are transferred to the export houses with a disclaimer letter addressed to the Joint Chief Controller of Import and Exports. In turn, the export houses make a payment of 20 per cent of the F.O.B. value of the exports to the appellants as premium of the REP licence transferred by them."
(3.) THE learned Government Pleader appearing for the State submitted that the assessee is not entitled to exemption from payment of sales tax
made under section 5(3) of the CST Act for the reason that the assessee
had not satisfied all the conditions stipulated in the said sub -section.
The Government Pleader submitted that since the assessee is not the
exporter of the goods purchased by it locally and since the assessee did
not have any foreign contract for export of shrimps the assessee is not
entitled to exemption under section 5(3). The Government Pleader
submitted that the export house is the exporter and the purchase of
shrimps effected by the assessee acquired the quality of last purchase by
the sale effected by it to the export house. The Government Pleader
submitted that the Tribunal had in fact considered the question only
under section 5(1) of the CST Act and that there was no consideration as
to whether the purchase turnover of shrimps effected by the assessee is
entitled to exemption under section 5(3) of the Act.;
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