COFFEE BOARD Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) The brief facts of the case leading to this petition are as follow:- The petitioner-Coffee Board (hereinafter referred to as Board) had a total turnover of Rs. 46,23,87,356-93 paise for the period between 1-4-1974 and 31-3-1975 including sale turnover of transactions arising within the State amounting to Rs. 23,75,20,382-38 paisc. The dealer, namely, the Board, claimed deduction in respect of turnover of Rs. 22,41,37,445-00 as export sales. After verification of the books of accounts and the documents produced in support of the export sales, the assessing authority found that export of goods in a sum of Rs. 1,07,88,750-00 was made through State Trading Corporation of India (hereinafter referred to as STC) which does not amount to direct export sale within the meaning of Section 5(1) of the Central Sales Tax Act, 1956. On that a proposition notice was issued by the assessing authority to bring the said turnover to tax at 10% as inter-State sale and not covered by C & D forms. By an order dated 2-12-1978 the Assistant Commissioner of Commercial Taxes, Asst.-I, City Division, Bangalore, completed the assessment of the petitioner under the Central Sales Tax Act, 1956 (hereinafter referred to as the Act) on a turnover of Rs. 1,15,97,031-70 paisc. This sum was further split into two categories in the following manner: A sum of Rs. 7,08,281-70 was held to be the turnover of sale of coffee covered by C & D forms and was assessed to tax at 3 per cent while a sum of Rs. 1,07,88,750/- was held to be the turnover of sale of coffee to STC not covered by C & D forms and was assessed to tax at 10 per cent.

(2.) The correctness of the assessment was challenged in appeal before the Deputy Commissioner of Commercial Taxes, principally, on two grounds. Firstly, that the supply of coffee effected through STC to foreign buyer is an export sale exempted from taxation and, secondly, that the dealer did not have sufficient opportunity to file C forms of export transactions effected through STC. The Deputy Commissioner held that there was no privity of contract between the foreign buyer and the dealer and therefore the transactions or sales were not in the course of export and the dealer cannot claim exemption as covered by Section 5(1) of the Act. In regard to the request of the dealer to grant time to file C forms to avail of the concessional rate of tax he found that sufficient time had already been given to the dealer to file C forms, but it failed to do so. The Deputy Commissioner also observed that nothing prevented the dealer to file C forms under protest before the assessing authority at the time of assessment reserving the right to challenge the levy and dismissed the appeal. When the matter was taken up in second appeal to the Karnataka Appellate Tribunal, the Tribunal held that the transactions between the dealer and the STC, on the one hand, and the STC and foreign buyer, on the other, were two independent transactions and therefore not covered by Section 5(1) of the Act. It also repelled the contention of the dealer that the transactions amount to sale by transfer of documents of title after the goods had crossed the customs frontier of India and upheld the orders made by the assessing authority and the first appellate authority. Aggrieved by that order the dealer has filed this revision petition.

(3.) Before us, the contentions raised in the appeals are reiterated. The learned State Counsel supported the assessment order as affirmed in appeals. The Board contended that the contract with STC clearly stipulated the terms in relation to passing of goods and the sale was by transfer of documents of title to the goods, namely, the bills of lading after the goods crossed the custom frontiers of India and thus the sale in question was in the course of export within the meaning of second part of Section 5(1) of the Act.