STATE OF TAMIL NADU Vs. CATHERENE TRADERS

JUDGEMENT

(1.) TWO different assessees had been subjected to assessment and tax on the packing materials used for export of banians. They, however, succeeded before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, in getting an order that the sales of polythene bags to the export merchants by them for the purpose of packing banians for export to foreign countries were not liable to tax. The State has preferred these petitions against the said order of the Tribunal.

(2.) IT is not in dispute that polythene bags were sold by the respondents/assessees to the export merchants for packing of banians. IT is also not in dispute that the polythene bags were utilised for packing of the banians, which were exported to foreign countries. The case of the petitioner herein is that the records produced in support of their claim by the assessees/respondents reveal that goods were exported by the exporters, but there was no mention in the bill of lading about the use of polythene bags for packing the materials. IT is thus a case in which exemption could be granted in respect of sales of the commodity exported and not in respect of any other commodity sold to the merchants who exported their goods. Reliance has been placed upon the proviso to section 9(b) of the Tamil Nadu General Sales Tax Act, 1959, read with section 5(3) of the Central Sales Tax Act, 1956, to contend that the limitation on the exemption must be understood to apply to such goods only which are exported and not to any other goods. Section 9 of the Tamil Nadu General Sales Tax Act states : "Where in the case of any goods tax is leviable at one point in a series of sales or purchases, such series shall -(a) ................. (b) ................. Provided that in the case of goods exported out of the State to any place outside the territory of India, where the sale or purchase effected immediately before the export of such goods is under sub-section (3) of section 5 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), a sale or purchase in the course of export, the series of sales or purchases of such goods shall be deemed to conclude at the stage of the sale or purchase immediately preceding such sale or purchase in the course of export."

(3.) THE Tribunal has found that the polythene bags sold to the export merchants were part and parcel of the commodity exported. It is not in dispute however that banians which were exported were/are exempted from tax. THE question herein is whether the packing material, which was utilised by the merchants for packing the banians also was a sale or purchase of goods as envisaged in sub-section (3) of section 5 of the Central Sales Tax Act or not.