MANORAMA MADHVARAJ Vs. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) THE petitioners have challenged the levy of tax on purchases of shrimps and prawns under entry 13a of the Third Schedule to the Karnataka Sales Tax Act. The entry with regard to shrimps, prawns and lobsters other than frozen shrimps, prawns and lobsters prescribed rate of tax of 4 per cent for the year from September 1, 1978 to March 31, 1986 and 5 per cent thereafter. Section 6 of the KST Act, 1957, prescribes the circumstances under which the purchases can be made liable to tax.

(2.) PETITIONERS are the fast stage purchasers in the State of Karnataka and have exported these items. The validity of entry 13a of the Third Schedule to the Act have been assailed on the ground that it is violative of section 5 (1) of the Central Sales Tax Act, 1956. Reliance is placed on the decision given in the case of Nipha Exports Pvt. Limited v. State of Haryana [1998] 108 STC 337 (Pandh), wherein the machinery and the parts purchased by the assessee and despatched to its head office for export in the execution of orders of foreign buyers were held not liable to tax. In the case of the assessee the purchases have been made from unregistered dealer and by the charging section 6 liability of purchase tax comes into play. The dispute is in respect of the period prior to insertion of section 5 (3) of the Central Sales Tax Act. The question of purchases by an exporter were considered by the apex Court in the case of Mod. Serajuddin v. State of Orissa [1975] 36 STC 136, wherein the word "occasions" used in section 5 of the Central Sales Tax Act, was considered and it was found that there was contract between the corporation and the foreign buyer and the appellant who sold the goods to the corporation, has not occasion the export of goods. It is in this context the provisions of section 5 (3) were subsequently incorporated under the Central Sales Tax Act.

(3.) THE statement of objects and reasons while enacting section 5 (3) of the Central Sales Tax Act for giving relief in respect of penultimate sale was as under :