STATE OF TAMIL NADU Vs. MADRAS PACK MARINE

JUDGEMENT

(1.) THE above tax revision cases have been filed by the State against the common order of the Sales Tax Appellate Tribunal, Additional Bench, Madurai, dated December 14, 1988 in T.A. Nos. 291 of 1988, 292 of 1988, and M.T.M. Ps. Nos. 152 of 1988 and 153 of 1988. The respondent-assessee was originally assessed on a total and taxable turnover of Rs. 5,88,30,453 and Rs. 2,36,442 respectively for the assessment year 1976-77 in proceedings dated September 13, 1977. By an order dated March 31, 1982, it was held by the assessing authority that on re -examination of the accounts it was found that the claim of exemption under Section 5(3) of the Central Sales Tax Act, 1956 on a turnover of Rs. 5,34,18,977, was allowed by mistake. In the revised order it is stated that the goods sold to the foreign buyers did not satisfy the pre -conditions required under Section 5(3) of the Central Sales Tax Act. After referring to certain decisions, the assessing authority proposed to disallow exemption on a turnover of Rs. 5,34,18,977 taxable at 5 per cent. After considering the objections the proposal was confirmed. The said revised order dated March 31, 1982 gave rise to a first appeal No. 205 of 1982. The first appeal having been partly allowed on May 31, 1988 the assessee filed a second appeal M.T.A. No. 291 of 1988 and the revenue filed a E.P. No. 152 of 1988.

(2.) FOR the assessment year 1982 -83 the very same assessee reported a total turnover of Rs. 7,44,67,608.40 and a taxable turnover of Rs. 89,904. On a check of accounts it was found that in respect of the purchase of prawns the assessee had purchased the same at various places in Tamil Nadu on bought notes. The entire purchase turnover of prawns was claimed to be exempted on the plea that they had exported them outside the territory of India. It was found that the petitioner had made direct exports as well as exports through others, called "export houses". As many as twenty -two export houses were involved and the total export through such export houses amounted to Rs. 8,26,09,825. The purchase turnover to the tune of Rs. 7,08,04,732 was claimed to be exempted. The direct export related to a turnover of Rs. 2,01,14,513 was allowed exemption by the assessing authority. In respect of the turnover relating to export houses, the assessing authority held that the conditions of Section 5(3) were not satisfied and the assessee had only sold to the export houses and the export houses in turn had sold the goods to the foreign buyers. But, prawns being a commodity taxable at the point of last purchase in the State, the purchases made by the assessee were liable to be taxed at 5 per cent single point. The purchase value was worked out to Rs. 5,27,83,418. Accordingly, the assessing authority made an assessment as follows : <FRM>JUDGEMENT_1_LAWS(STT)12_1999.htm</FRM>

(3.) MR . C. Natarajan, arguing for the assessee had taken us through the relevant documents and a sample agreement between the assessee arid the export houses, to impress upon us that the sale in favour of the export house is "only in form and not in effect". That is, apparent and not real. He laid emphasis on the fact that 2 per cent of the f.o.b. value was paid to the assessee as service charges by the export house. That apart, the export house pays 1 per cent in lieu of the transfer of the replenishment licence. The assessee alone was entitled to get the drawback benefits and not the export houses. The words "sale or purchase" in the agreement cannot be taken as decisive for giving a finding one way or the other. The whole agreements between the parties have to be looked into to find out whether there was privity of contract between the foreign buyer and the assessee. We find on a perusal of the documents and the order of the Sales Tax Appellate Tribunal that different stands were taken in respect of different assessment years, i.e., 1976 -77 and 1982 -83, We have therefore, to find out whether the approach made by the assessee in respect of the two assessment years is justified and in accordance with law.