HEMALATHA TEXTILES LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) M/s. Hemalatha Textiles Limited is an incorporated company. Its registered office is in Madras City. But the textile mill, the running of which was one of its objects, was located in Pedakkani in Guntur District of the State of Andhra Pradesh. In 1970-71, the assessee-company entered into a contract with a firm of exporters in Madras called Indo-Burma Trading Corporation, for the sale of 1, 000 bales of cotton yarn of the aggregate value of Rs. 7, 87, 508. The price fixed was f.o.b. Madras. Both the parties knew that this transaction in yarn was for the purpose of export to Burma.

(2.) WHEN the Exemption was claimed by the assessee it was claimed on the footing that this sales turnover represented sales in the course of export outside the territory of India. The assessee claimed in its relevant sales tax assessment that this sale to the Indo-Burma Corporation was not a sale within the State and cannot be brought to charge under the Tamil Nadu General Sales Tax Act, 1959. The assessee contended that this was a sale in the course of export and hence exempt from sales tax. This contention was rejected uniformly by all the sales tax authorities, right from the assessing officer to the Appellate Tribunal. All of them took the view that the sale became complete within the country and it was after the completion of the sale that the export movement began as a separate operation.

(3.) THE assessee has its registered office in Tamil Nadu State. The contract of sale was concluded by the assessee with Indo-Burma Corporation in Madras. But the assessee's manufacturing unit which produces yarn was situated in the State of Andhra Pradesh. The sale was f.o.b. Madras. The 1, 000 bales of yarn came to be manufactured in the assessee's mill in Andhra only after the contract of sale was concluded between the parties, and the order was placed. In any case, the goods were appropriated to the contract from out of the stock of yarn in the mill premises in Andhra Pradesh. The assessee had to apply to the Central excise authorities for permits to move these bales of yarn to Madras. The applications made in statutory forms also contained, on their face, orders of release passed by the excise authorities in Andhra Pradesh. After the goods were moved from the factory in pursuance of these release orders, and brought to Madras, the assessee delivered them over to the clearing agents for being shipped to Burma.