NATIONAL CARBON CO Vs. COMMISSIONER OF SALES TAX U P

JUDGEMENT

(1.) THIS is a reference under section 11(1) of the U.P. Sales Tax Act, 1948 (hereinafter referred to as "the Act") soliciting the opinion of this Court on the following question of law :-

(2.) THIS reference came up for hearing before a Division Bench of this Court constituted by the Honourable Mr. Justice S.C. Manchanda and the Honourable Mr. Justice M. H. Beg. The Division Bench noticed that two cases involving somewhat similar question had already been decided by two different Benches of this Court and the decisions in the two cases were somewhat conflicting even though the facts in the two cases were different. It is for this reason that the instant case has been referred to the Full Bench. The facts of the case, as set out in the statement of the case accompanying the reference, are briefly these : M/s. National Carbon Company Limited (India) (hereinafter referred to as "the assessee") manufactures and sells bulbs, torches, flashlights and radio batteries etc., and has its factory and head office at Calcutta and some branches in U.P. In respect of the assessment year 1958-59, the assessee claimed exemption from tax in respect of its turnover amounting to Rs. 2,14,153 being the sale proceeds of articles supplied to dealers in Nepal. The exemption was claimed under Article 286(1)(b) of the Constitution. The modus operandi of the sales to Nepal dealers and the manner in which the relevant goods were transported to Nepal are set out in two short paragraphs of the statement of the case which are reproduced below :-

(3.) ONE more fact which is not in dispute may be mentioned here. It is common ground that there is no rail link between India and Nepal The assessee-company consigned the goods to the railway terminus near Nepal border from where the goods were transported into Nepal territory by other means of transport. Yet another fact which has been mentioned in the statement of the case but to which due importance doe; not appear to have been given is the fact that the goods which were the subject-matter of sales to Nepal dealers were excisable goods liable to excise duty under the Central Excise Act. These goods were despatched under Form AR-4 (wrongly mentioned in the statement of the case as AR-I) as prescribed in the Central Excise Manual Form AR-4 has been prescribed for the purpose of rule 12 of the Central Excise Rules to enable the manufacturers of excisable goods to claim rebate of or exemption from the excise duty in respect of the excisable goods which are exported outside India. Form AR-I prescribes an application for payment of excise duty before the removal of the goods from the factory in accordance with rule 9 of the Excise Rules. From the entries in the form annexed to the statement of the case it appears that the excise duty on the goods in question was paid by the assessee-company on 10th February, 1960, against Form AR-1 1222. When the goods upon which excise duty has been paid are exported outside India, they are despatched against Form AR-4 to enable the exporter to claim refund of the excise duty. Article 286(1)(b) of the Constitution reads thus :