DEPUTY COMMISSIONER CT Vs. VASANTHA MILLS LIMITED

JUDGEMENT

(1.) THIS matter has come before the Full Bench on an order of reference made by V. Ramaswami and Sethuraman, JJ. as they had felt that the correctness of the decision of the Division Bench in State of Tamil Nadu vs. Cauveri Spg. & Wvg. Mills Ltd. is open to doubt in view of the later decision of the Supreme Court in Modh. Sirajudeen vs. State of Orissa.

(2.) THE assessee in this case is a dealer in cotton and cotton yarn. For the asst. yr. 1966-67 it had reported a total turnover of Rs. 2, 83, 45, 614.33 and out of the total turnover, a sum of Rs. 1, 23, 362.40 was claimed to represent sales of cotton yarn in the course of export. This claim was not accepted by the assessing authority who held that the said turnover represented intra-State sales. On appeal, the AAC also upheld the view of the assessing authority. On a further appeal to the Tribunal, it was held that the said disputed turnover of Rs. 1, 23, 362.40 represented export sales and as such it should be excluded from the taxable turnover. THE State Government had challenged the decision of the Tribunal in this Tax Case.

(3.) THOUGH the minority view of Khanna, J. purports to follow the earlier decision of the Supreme Court on the point, the majority has, after explaining the earlier decisions, struck a different note and according to them, it is only the sale between the exporter and the foreign buyer, which has a direct nexus with the export, that can be said to occasion the export. Under S. 5 of the Central ST Act there can be only one sale which occasions an export and if the local sellers have no concern with the actual export of the goods under the terms of their contract, the mere fact that they had shipped the goods in pursuance of a term of the contract of sale will not make their transaction of sale and integrated transaction with the export. THOUGH the earlier view was that more than one sale could occasion export if they are so inter-connected as to form an integrated transaction, latest view of the Supreme Court in the above case is that there can be only one sale which can occasion the export and that sale can only be with a foreign buyer.