STATE OF A P Vs. VASAVI TRADERS

JUDGEMENT

(1.) This batch of tax revision cases are filed by the State against the Common Order of the Sales Tax Appellate Tribunal dated 25th November, 1998. As common issues are involved in all these TRCs., they are heard together and are being disposed of by this common judgment for the sake of convenience.

(2.) The undisputed facts of the case are that the dealers in all these cases entered into contracts with the Exporters in Bombay to supply groundnut kernel as per the specifications, subject to other terms and conditions stipulated therein. In turn, the dealers purchased the groundnuts from the local vendors and in their turn sold the groundnut kernel to the exporters at Bombay. The Exporters at Bombay sold the same to a foreign buyer. The sales by the dealers to the exporters are considered by the revenue authorities as sales in the course of exports. However, the purchases made by the dealers were treated as last purchase in the State. Therefore, they were subjected to purchase tax as per Section 6 under item-6 of the Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to 'the APGST Act'). While doing so, the assessing authority relied upon a Judgment of this Court in the case of Bisimillah & Co. v. State of Andhra Pradesh, 73 STC 135. The assessing authority, therefore, made provisional assessments for the assessment year 1996-97 and 1997-98 and levied tax accordingly under the provisions of the APGST Act. The dealers were unsuccessful before the Appellate Deputy Commissioner, but however, on further appeal before the Sales Tax Appellate Tribunal they were successful. The Tribunal accepted the contention of the dealers that by virtue of the explanation to Section 7(b) of the APGST Act, the benefit was held to have extended to a step further beyond what was contemplated under Section 5(3) of the Central Sales Tax Act (hereinafter referred to as 'CST Act'). Therefore, the purchases effected by the dealers are not liable to tax under the provisions of the Act and accordingly granted the relief by majority, though the accountant Member disagreed with the said view and passed a dissenting orderTejecting the claim of the dealer. The Tribunal also accepted the claim of exemption by virtue of G.O. Ms. No.537 Revenue dated 24-3-1984 and held that the dealers in question are not liable to purchase tax. Aggrieved by the said orders, the Revenue is before us in this batch of TRCs.

(3.) The learned Special Government Pleader contended that the Tribunal erred in considering the provisions of the APGST Act, especially explanation to Section 7(b) of the Act. It is contended by the learned Counsel that originally only sale or purchase occasioned the movement of the goods to outside the State was treated as a sale in the course of inter-State trade, which was exempt from tax under Section 5(1) of the CST Act. However, subsequently, subsection (3) of Section 5 was inserted in the year 1976, as a result of which the benefit was extended to a step ahead of the sale or purchase effecting the movement of the goods in the course of inter-State trade. The learend Counsel also contended that Section 7(b) of the APGST Act refers to the relief that was extended under Section 5(1) of the CST Act in respect of the inter-State transactions. Similarly, the explanation refers to the relief that was granted under Section 5(3) of the CST Act and not beyond. Therefore, the learned Counsel contended that the Tribunal was clearly in error in presuming that the explanation was intended to give the benefit to a step further i.e., one more transaction of sale or purchase. The learned Counsel contended that the purchase of groundnuts are taxable under Item-6 of the Third Schedule at the point of the last purchase in the State by the dealers other than decorticating millers. The Dealers in question being the last purchasers in the State having sold the groundnuts to exporters in the course of inter-State transaction, they are liable to tax under the provisions of the APGST Act. The learned Counsel also contended that in the course of export sales to outside the territory of the State, there is a sale by the Exporter to the Importer, who is a foreign buyer. The exporter in rum purchased the goods from the dealers in the State. The said purchase or sale is exempt under Section 5(3) of the CST Act and the said benefit of exemption is not extended beyond i.e., to the purchases made by the dealers in the State. The learned Counsel also relied upon a decision of the Supreme Court in the case of Coffee Board v. Joint Commercial Tax Officer, 25 ITR 528, in support of his contention that a sale by an exporter to an importer outside the country would be considered as a transaction which is exempt under Section 5(1) of the CST Act. To the same effect, the learned Counsel also relied upon another decision of the Supreme Court in the case of Mohd. Serajuddin v. Stare of Orissa, 36 STC 136, where the Appellant dealer entered into contracts with the State Trading Corporation for the sale of mineral ore and in fact in the course of the said sale the Appellant had even effected the shipment in Calcutta harbour. Though it was claimed that the State Trading Corporation was only an agent and the Appellant dealer was real exporter, the said contention was rejected by the Supreme Court and held that the sale effected by the Appellant was not in the course of export and the exporter is only the State to which the appellant dealer has affected the sale. The learned Counsel also relied upon a decision of the Supreme Court in the case of Khosla and Co. v. Deputy Commissioner of Commercial Taxes, 17 STC 473.