Section 5 of the Central Sales Tax Act, 1956, read with section 5A of the Kerala General Sales Tax Act, 1963 - When is a sale or purchase of goods said to take place in course of import or export - Assessment year 1998-99 - Assessee was engaged in business of export of cashew kernels - Assessing Officer was of view that during relevant year, assessee had purchased cashew kernels of value of Rs. 1,92,67,236 from unregistered dealers in State and, consequently, it was liable to pay sales tax under section 5A of 1963 Act - Assessee denied said allegation and claimed that it had purchased those goods from registered dealers within State of Kerala for purpose of export; according to it, said purchases were covered by declarations in Form No. 18A and, therefore, same stood covered by section 5(3) and were not liable to tax within State of Kerala - In support of its claim, assessee produced trading accounts and details of purchases for relevant assessment year, list of domestic purchases supported by sale bills issued by registered dealers within and outside State against Form No. 18A, prior purchase orders of foreign buyers, copies of export invoices, bill of lading and other records – It was found that Assessing Officer had not decided as to whether purchases made by assessee were in course of export in terms of section 5(3) - Whether it was duty of Assessing Officer to collate facts and ascertain whether purchases in question were effected in course of export and, hence, matter was to be remitted to Commissioner (Appeals) to consider averments of assessee and decide matter after taking into consideration documents submitted by assessee - Held, yes [Paras 8 and 9]
Alagendran Exports (P.) Ltd. v. State of Kerala [Civil Appeal No. 4998 of 2008]
The assessee-company was engaged in the business of export of cashew kernels. In respect of the assessment year 1998-99, the department issued a pre-assessment notice, in which it was alleged that the assessee had failed to produce any evidence indicating payment of tax on purchases made by it from the local dealers and, consequently, it was liable to pay sales tax under section 5A of the 1963 Act. The assessee denied the said allegation and claimed to have purchased casehew kernels for the value of Rs. 1,92,67,236 from the registered dealers within the State of Kerala for the purposes of export. According to the assessee, the said purchases were covered by declarations in Form No. 18A and, therefore, the same stood covered by section 5(3) and were not liable to tax within the State of Kerala. The Assessing Officer did not accept the contentions of the assessee and held that since the goods were either stock transferred or effected vide deemed export sales, the purchases were liable to tax under section 5A of the 1963 Act. On appeal, the Dy. Commissioner (Appeals) held that the assessee was unable to prove that the purchases were from registered dealers and, therefore, the assessing authority was right in assessing the turnover to tax under section 5A of the 1963 Act. The Tribunal as well as the High Court also upheld the said order.
On appeal to the Supreme Court:
It appeared from the records that the authority below rejected the claim of the assessee on the ground that it had purchased cashew kernels from unregistered dealers in the State. This allegation had been denied by the assessee. The most important aspect, which had not been decided by the Assessing Officer, was whether the purchases made by the assessee were in the course of export in terms of section 5(3). It appeared from the memo of appeal filed before the Tribunal that the assessee had produced trading accounts and details of purchases for the assessment year 1998-99, list of domestic purchases supported by sale bills issued by registered dealers within and outside the State against Form No. 18A, prior purchase orders of foreign buyers, copies of export invoices, bill of lading and other records. In such matters, it was the duty of the Assessing Officer to collate the facts and ascertain whether the purchased cashew kernels worth Rs. 1,92,67,236 were effected in the course of export. [Para 8]
Therefore, the matter needed to be remitted to the Dy. Commissioner (Appeals), who will consider the averments in the memo of appeal filed by the assessee and decide the matter after taking into consideration the documents referred to above and give a finding as to whether the purchases worth Rs. 1,92,67,236 were effected in the course of exports or not. For that purpose, the Dy. Commissioner (Appeals) will have to ascertain the exact date of purchase from the local market, the date on which the assessee received the export orders from foreign buyer, copy of export invoices, bills of lading, etc. Lastly, the Dy. Commissioner (Appeals) will also examine the question as to whether the assessee itself effected exports or whether, in turn, it sold the goods in question to other exporters. All these questions were required to be decided only in the context of purchases effected by the assessee worth Rs. 1,92,67,236. [Para 9]
For the aforestated reasons, the civil appeal was to be allowed and the matter was to be remitted to the Dy. Commissioner (Appeals) to decide the aforestated aspect once again in accordance with law. [Para 10]