GUPTA ENTERPRISES Vs. COMMERCIAL TAX OFFICER MUNNAR

JUDGEMENT

(1.) Are purchases of sandalwood billets, roots, etc., for complying with export orders for sandalwood chips permitted for export, to be deemed to be in the course of such export, for the purpose of Section 5(3) of the Central Sales Tax Act, 1956 ("the CST Act", for short) This, pithily, is the issue in these writ petitions.

(2.) Stated to be to satisfy existing orders for export, the petitioner, engaged in the export of sandalwood, participated in, and successfully bid, different forest auctions held by the Kerala Forest Department. When called upon to pay the entire sales tax due under the Kerala General Sales Tax Act, 1963 ("the KGST Act", for short) along with the balance consideration, the petitioner claimed exemption under Section 5(3) of the CST Act. These writ petitions are filed for a direction to release the goods without collecting sales tax, on furnishing documents in support of the claim of exemption.

(3.) The respondents contend, inter alia, that (i) sandalwood is a taxable 3 item, falling in Fifth Schedule of the KGST Act and it is a condition of the tender that tax at the prescribed rate will be applicable to all successful bids, irrespective of the destination of the goods; (ii) though after the bid, the petitioner informed that the purchase of sandalwood was to fulfil export commitments under subsisting agreements or orders, the sales by the Forest Department to the petitioner were not for the purpose of complying with any export order; (iii) export of sandalwood, a restricted item, can be only under licence issued by the Director General of Foreign Trade ("DGFT", for short) and therefore, there cannot be any sale by the Forest Department in the course of export; (iv) the goods purchased from the Forest Department are different from the goods mentioned in the export orders as well as the goods that could be exported under the law governing exports; (v) the goods purchased are not exported in the same form, without losing their identity and (vi) that therefore, exemption under Section 5(3) of the CST Act is not available.