NADEEM LEATHERWARE EXPORTS Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) Raising the following questions of law, the assessee is on revision as against the order passed by the Sales Tax Appellate Tribunal in STA No.313 of 2007 relating to the assessment year 2001-2002.

(2.) The assessee herein imported wet blue skins from Tvl.Samimpex (K) Ltd., Kenya. Admittedly, a portion of the wet blue skin was used by the assessee for conversion into finished leather. Stating that the import in entirety was unfit for its use, the assessee is stated to have corresponded with the foreign supplier and there afterwards, the same were handed over to M/s. Munasser Leather Private Limited as per the instructions from the foreign supplier. The assessee stated that this was informed to the Reserve Bank of India, General Manager, Exchange Control, Chennai. The bill of entry and bill of lading was transferred to M/s.Munasser Leather Private Ltd., In the return filed, the assessee stated that the purchasers returned back to the foreign supplier the goods to the extent of Rs.52,33,463/- and on the directions of the foreign supplier the same were handed over to M/s.Munasser Leather Private Limited. For this, the assessee further submitted that it had not received any consideration from M/s.Munasser Leather Private Limited, it not being the outright sale, it pleaded for exclusion of this turnover. The Assessing Officer, however, rejected the assessee's contention by pointing out that there was no written contract entered into in support of the claim of the assessee. There was no proof of remittance to the Reserve Bank of India to establish the connectivity between the purchaser M/s. Munasser Leather Private Limited and the foreign supplier. The letter dated 27.03.2001 in Annexure-D from the foreign supplier read as "Kindly help me to sell out the stock lying at your tannery". Thus the Officer viewed that the import transaction had ended with the assessee itself and just to accommodate the foreign sellers, the assessee had acted as a principal/agent and sold the goods to M/s.Munasser Leather Private Limited and the turnover was assessed under the provisions of the Tamil Nadu General Sales Tax Act, 1959.

(3.) Aggrieved by this, the assessee went on appeal before the Appellate Assistant Commissioner, who accepted the case of the assessee and held that the invoices revealed that the assessee was only a customer and the transactions went through by transfer of documents through the Bank. None of the documents showed that the assessee acted as an agent of the foreign sellers. In the circumstances, the First Appellate Authority agreed with the assessee and set aside the order of the Assessing Officer on this turnover. The First Appellate Authority further pointed out that records like the letter addressed to the Exchange Control Department, Reserve Bank of India, the letter addressed by the purchaser of the assessee to hand over the bill of entry and acceptance by them towards payment of clearing charges and to remit the money to the foreign seller. Entries in the assessee's books would establish the fact that the goods ultimately reached M/s.Munasser Leather Private Limited only and were not disposed of by the assessee by way of sale. So holding, the Appellate Assistant Commissioner set aside the order of assessment.