STATE OF TAMIL NADU Vs. ASHOK LEYLAND LIMITED`

JUDGEMENT

(1.) THE State of Tamil Nadu is the petitioner in this tax revision case. THE assessment year is 1968-69. Three points of dispute arise in this tax revision case and they are : (1) Whether the supply of raw materials by the assessees, viz., Thiruvalargal Ashok Leyland Ltd., Madras, to their customers on purchase orders were all towards works contract not exigible to tax or whether they are sales exigible to tax

(2.) CREDIT note No. 27 dated 22nd November, 1968, for Rs. 1, 47, 219.

(3.) IN Krishnados Kikani v. State of Tamil Nadu a Division Bench of this Court held that as the licensed importer was the assessee and the purchaser could not have placed an order with the foreign seller, there was no privity of contract between the foreign seller and the purchaser, and that therefore, there was a sale by the assessee to the purchaser which was liable to be taxed under the Tamil Nadu General Sales Tax Act, 1959. The decision was of course against the assessee, but if the facts in that case are noticed, it will be clear that the ratio laid down in that case will have no application to the facts of this case. Let us briefly state the facts in that case : IN respect of export of cotton yarn and cotton textiles under the Cotton Textiles Export Promotion INcentive Scheme, the assessees were granted import licence for importation of textile chemicals, dyes and gums. One R agreed to purchase from the assessees the imported dyes and chemicals. But as the licence was not transferable, it was agreed that the assessees would sell to R on monopoly basis the imported goods on forward, afloat or c.i.f. basis at a certain price. On receipt of a part of the sale price, which was the premium, the assessees agreed to hand over the licence to enable the purchaser to take steps for importing the goods in the name of the assessees. The assessees would place an order with the foreign seller suggested by the purchaser for the quantity of goods required by the purchaser. They would also open a letter of credit through a bank or otherwise. All the import documents would have to be in the name of the assessees who agreed to subscribe their signatures to all the papers and documents so as to make the importation possible and enable the purchaser to take delivery of the goods. But the purchaser would have to pay the amount as per the invoice of the foreign sellers and also the customs and excise dues, wharf charges, clearing and forwarding charges and all such other dues including sales tax, if any, payable. If, after receiving the premium or part of the price, the purchaser failed to take necessary steps for importation of the goods in the name of the assessees within the time allowed according to the licence or failed to utilise the licence or caused its validity to expire, the advance amount received by the assessees as part of the sale price was liable for forfeiture. The agreement also provided that the assessees were at liberty after in advance information to the purchaser to make sales of the imported goods to others or delivery the licence at their option to anybody else, if the assessees were not able to get a fair profit from the purchaser. From the above facts, it is easy to perceive the distinguishing features such as that if the purchaser failed to take necessary steps for importation of the goods in the names of the assessees within the time allowed according to the licence or failed to utilise the licence or cause its validity to expire, the advance amount received by the assessees as part of the sale price was liable for forfeiture that, the agreement also provided that the assessees were at liberty after an advance information to the purchaser to make sale of the imported goods to others or deliver the licence at their option to anybody else, if the assessees were not able to get a fair profit from the purchaser. From the above peculiar facts, there can be no doubt as pointed out by the said Division Bench that there were two sales, one by the foreign seller to the importer and another by the importer to the local purchaser.Voltas Ltd. v. Commercial Tax Officer is a decision of a learned single Judge of the Calcutta High Court on a petition filed under articles 31, 226, 265 and 286 of the Constitution of INdia. There, the learned Judge held that. The necessary and relevant evidence was available to show that the sales of the petitioner occasioned import of the goods and were in the course of import and even though the petitioner was authorised to import the goods the consumers/customers really remained the importers and were liable as such and the import of the goods were inextricably linked up with the contract (of the petitioner with its customer)."