Madras High Court
State vs . M/S.Vijayalakshmi Leather on 11 February, 2020
Author: V.K
Bench: Vineet Kothari, R.Suresh Kumar
Judgment Dt: 11.02.2020
W.P. Nos.3987, 3997 & 3721/2003
State vs. M/s.Vijayalakshmi Leather
1/47
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 11.02.2020
CORAM:
THE HONOURABLE DR.JUSTICE VINEET KOTHARI
AND
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR
W.P. No.3987, 3997 and 3721 of 2003
The State of Tamil Nadu,
rep. By the Deputy Commissioner
Madurai Division, Madurai ... Petitioner
versus
1.M/s.Vijayalakshmi Leather Industries P Ltd.,
No.38, North Car Street, Dindigul
2.The Secretary,
Tamil Nadu Sales Ta Appellate Tribunal,
(Additional Bench), Madurai ... Respondents
Writ Petition filed under Art.226 of the Constitution of India praying for
a Writ of Certiorari calling for the records of the 2nd Respondent pertaining to
the order dated 31.12.1999 in M.T.A.Nos. 839, 840, 838 of 1998 and quash the
same as illegal.
For petitioner : Mr.Mohammed Shaffiq,
Special Government Pleader (Taxes)
assisted by
Ms.A.N.R.Jayapratha
For Respondents : Mr.A.Chandrasekaran,
for Mr.P.Radhakrishnan
http://www.judis.nic.in
Judgment Dt: 11.02.2020
W.P. Nos.3987, 3997 & 3721/2003
State vs. M/s.Vijayalakshmi Leather
2/47
COMMON ORDER
(made by Dr.VINEET KOTHARI, J.) The State of Tamil Nadu has filed these writ petitions aggrieved by the order passed by the learned Tamil Nadu Sales Tax Appellate Tribunal on 31 December 1999, by which the learned Appellate Tribunal allowed the appeals filed by the Assessee against the order passed by the Appellate Assistant Commissioner, disallowing the exemption to the Assessee under Section 5(3) of the Central Sales Tax Act, 1956, in respect of purchase of raw hides and skins which were tanned, and upon manufacture of leather garments, such leather garments were exported by the Assessee. The said exemption under Section 5(3) for the penultimate sale purchase of raw hides made in the course of export was denied by the said Assessing Authority on the ground that the goods in question exported viz., leather garments were not the “same goods” as the goods purchased, viz., Raw Hides and Skins and therefore, the Assessee was not entitled to exemption under Section 5(3) of the Act.
2. Against the assessment order dated 25 April 1997, the Assessee also filed appeal before the Appellate Assistant Commissioner, who confirmed the said Assessment order vide his order dated 5 August 1998 for the three http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 3/47 assessment years in question viz., Assessment Years 1993-94, 1994-95 and 1995-
96. Aggrieved by the same, the Assessee filed second appeal before the Tamil Nadu Sales Tax Appellate Tribunal, (Additional Bench), Madurai, which, however, allowed the appeals of the Assessee with the following observations:-
Points (i) and (ii) In all the three appeals, the main reasons stated by the assessing officer are:-
(a) When the goods were converted into different commercial commodities and exporter exemptions is not admissible;
(b) The exemption under the CST Act, 1956 will be applicable only if there is complete identity between the goods purchased and exported;
(c) Purchase of raw materials which are utilised in the manufacturing of finished goods which are meant for export are not eligible for exemption;
(d) The assessee have purchased raw skins, tanned them and manufactured leather garments and exported which is a different commercial commodity. The raw materials purchased for manufacturing of leather garments are not eligible for exemption.
http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 4/47 From the above reasons stated by the Assessing Officer the following points are to be noted to decide whether levy of tax for leather at purchase point is correct or not ?
1. Whether the raw hides and skins and tanned hides and skins are two different commodities or one and the same?
2. When the commodity had already been exempted from Tax under section 5(3) of the CST Act, 1956, when called in different names can be taxed again under the TNGST Act 1959?
Coming to the facts of the case, it is to be noted that the main contention of the department raw hides and tanned skins are entitled to the benefits 5(3) of the CST Act, 1956, relying on the judgement in 69 STC 325, 73 STC 228 and 95 STC 122. Further section 14(iii) of the CST Act, 1956 which reads as follows:-
“hides and skins whether in a raw or dressed state”.
Hence, it is clear that dressed hides and skins are included in the “hides and skins”. In the case of Mahi Traders reported in 73 STC 228, the Supreme Court relied on the Tribunal's (sic) Circular No.SET/18(495/14) dated November 11 1957, issued http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 5/47 by the Ministry of Commerce and Industry clarified as under:-
“Turning to coloured leather, at the outset, refer to a very important instance referred to by the respondents. When CST Act, 1956 came into force on 1st April 1957, a question was raised regarding the meaning of the expression “Hides and skins in dressed state” used in section 14. The matter was referred to the Leather Development Wing of the Ministry of Commerce and Industry which gave the following opinion :
Hides and Skins are obtained from either slaughtered or dead animals. The Raw hides and skins thus obtained are known to be in the green state. These are necessarily putrescible, if proper precautions are not taken, they would easily rot and decay. Since the tanneries are not always very near the source of raw hides and skins, the question of preserving them for a temporary period till they reach a tanning centre assumes importance. Raw hides and skins are 'cured' by either wet slating, dry slating or drying. In the 'cured state', the raw materials can be preserved for a temporary period. In the third state of temporary preservation, the hides and skins are 'picked'. During the next stage, http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 6/47 they are tanned, in which state, they can be preserved almost indefinitely. These tanned hides and skins which are for use, “dressed or finished material” could also be preserved almost indefinitely.
From the above discussion, it can be seen that dressed hides and skins and coloured leather are the outcome of raw hides and skins after curing and processing and they are not a different commodity as stated by the Assessing Officer. Since the raw hides and skins cannot be exported as such, they are subjected to tanning and being exported. No doubt that the process of tanning amounts to manufacturing. But merely there is a manufacturing process is undergone it need not to be inferred that different goods emerges. The only condition is whether the dealers have complied with the orders entered into with the foreign buyers to export hides and skins. In the State of Andhra Pradesh vs Muhammad Bazeer Company, reported in 72 STC 185, it was held that the dealers are not liable to pay tax on the Purchase turnover of raw, untanned hides and skins. Inasmuch as they purchase the said goods for the purpose of complying with the order for export of the goods within the meaning of section 5(3) of the CST Act, 1956. In the instant http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 7/47 cases also, the department did not deny the fact that the appellants had effected purchase of raw hides and skins for the purpose of export in pursuance of contract entered into between Appellants and foreign buyers.
e) After the amendment is made in section 5(3) of the CST Act, 1956, last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall be deemed to be in the course of export, if such last sale or purchase took place after and was for the purpose of complying the order of the foreign buyer. In other words, even the sale or purchase precedent to export sale is also to be treated as purchase or sale in the course of export. From the above, it can be noted that no tax can be levied at the point of last purchase of raw hides and skins. Further, the judgement of Tvl.K.A.K.Anwar and company reported in 56 STC 58 (High Court) and 108 STC 258 (SC) and 91 STC P.l (Tvl.Brown Leather Company) are one and the same. But, after the judgment in Brown Leather Company recorded in 91 STC 1, the clarification in D.Dis.Acts/Cell.III/1298030/98 issued on the basis of Additional Government Pleader's opinion No.92/94 dated 29.6.94, should be considered. The http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 8/47 clarification reads as follows:-
The additional Government Pleader (Taxes), Madras opined that the case of Brown Leather Company Vs.State of Tamil Nadu reported in 91 STC P1 in Para 24, 26 and 38 which clearly given the answer that the raw hides and dressed skins are different for the purpose of levy under the State law, while for taxation under Central Sales Tax, if the local purchase of raw hides and skins are converted into finished leather and then exported against the specific order for export, such raw hides and skins and dressed hides and skins are to be treated as one and the same commodity as per Mahi Traders Judgment rendered by the Supreme Court of India in the case of Tvl.K.A.K.Anwar and company, dated 2.11.97, the subsequent latest, judgment in SLP (Civil No.22914/1994) in the case of Hifiz Sultan Ali and sons, it has been held that if the raw hides by Alahabad dealer are sold to export at by the Madras party, Madras, against phone orders, for export after tanning by the Madras party, were export sales exempt under section 5(3) of the CST Act, 1956 (as held by the Supreme Court reported in 108 STC page 5). Similarly in the subsequent case reported in 111 STC 313, it has been held that exemption should be given on the http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 9/47 preceded purchase of raw skins towards the direct export”.
(f) In an identical issue, the Assessing Officer had made revision of Assessment to Tvl.Saddique Leathers, Dindigul, based on the reference from the Accountant General Audit, Chennai, para1/II-A & 5/II-B of the Accountant General Audit – II/SIR-
I/TX/15-29/98-99 dated 17.7.98. So, for the very same issue, the department cannot take dual stand for different Assesses.
(g) From the foregoing facts and
circumstances, the assessment made by the
Assessing Officer for all the three years 1993-94, 1994-95, 1995-96 is not sustainable and ordered to be deleted
(h) Item (ii) With regard to penalty the Assessing Officer had not passed any best of judgement assessment order falling under section 12(2). The turnover of the appellants are already available under export sales and claimed as exemption and it cannot be said to be suppression from outside the books. So the assessment was made under section 12(1) of TNGST Act, 1999. Penalty cannot be levied and is unwarranted as per the ratio of the decision reported in 28 STC 70 in http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 10/47 the case of Tvl.S.G.Jeyaraj Nadar and sons. Hence, the penalty levied by the Assessing Officer and confirmed by the Appellate Assistant Commissioner in all the three appeals are deleted.
Aggrieved by the same, the State has filed the present writ petitions.
3. Raising a preliminary objection against the maintainability of the writ petitions itself, the learned counsel for the Respondent/Assessee, Mr.A.Chandrasekaran submitted that at the point of time when the Tribunal passed the impugned order on 31 December 1999, the State had a remedy by way of filing a Tax Revision Case before the Special Tribunal constituted within the State of Tamil Nadu under Article 323B of the Constitution of India, which Tribunal, of course, now stands abolished and therefore, having not availed that proper remedy at that point of time, the State cannot be permitted later on to assail the said order by way of filing Writ Petition in the year 2003 and therefore, the present Writ Petitions are not maintainable on the ground of delay and latches.
4. However, looking into the important questions of law involved in the present case, we overrule the said objection and we have heard the Writ http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 11/47 Petitions on the merits of the case also.
5. On the merits of the case, the learned Counsel for the State Mr.Mohammed Shafiq submitted that Section 5(3) of the CST Act permits the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India, shall be deemed to be in the course of such export, only if such local sale or purchase took place after, and was for the purpose of complying with the agreement, or order, for or in relation to such export. He submitted that the goods in question purchased by the Assessee were Raw Hides and Skins, which were processed by the Assessee by the procedure of tanning and then, the assessee manufactured ready made leather garments, which were later exported by the Assessee. But since the goods exported viz., the leather garments were not the same goods, viz., Raw Hides and Skins and the two were commercially different articles, therefore, the Assessee was not entitled to exemption on the purchase of Raw Hides and Skins and the Tribunal has erred in allowing such exemption. He further submitted that unless the inextricable link between the purchase of Raw Hides and Skins is established by leading evidence by the Assessee, with the pre-existing export orders in hand of the Assessee, Section 5(3) of the Act is not attracted. He relied upon several case laws in support of his contention, http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 12/47 including the recent Constitution Bench decision of the Hon'ble Supreme Court in the case of State of Karnataka vs. Azad Coach Builders, 2010(9) SCC 524 and submitted that though the Hon'ble Supreme Court in the said Constitution Bench decision has held that in case the Assessee is able to establish the inextricable link between the local sale or purchase and the export of goods, then only, the interpretation given by the Constitution Bench of the Hon'ble Supreme Court that the theory of 'same goods' need not be applied in such cases, and the exemption to the penultimate sale or purchase in the State inextricably linked to the export of goods can be given a go bye and not otherwise. He drew the attention of the court towards paragraphs 27 to 30 of the said decision of the Constitution Bench of the Hon'ble Supreme Court to emphasize his submission.
6. We will deal with the said judgment cited at the Bar by the learned Counsel for the Revenue as well as other judgments cited by the learned Counsel for the Assessee, a while later.
7. Per contra, the learned Counsel for the Assessee Mr.A.Chandrasekaran submitted that the inextricable link between the export of the ready made garments and the purchase of Raw Hides and Skins by the http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 13/47 Assessee is deemed to have been established by the Assessee, because in the very first round of assessment, the Assessing Officer had allowed such exemption under Section 5(3) of the Act in respect of purchase of raw hides and skins by the Assessee, but, however, only upon a revision of the original assessment order after serving a notice for the same on 16 August 1996, the Assessing Officer, had passed the impugned re-assessment order on 25 April 1997, denying such exemption, which after confirmation by the First Appellate Authority was allowed in favour of the Assessee only by the learned Tribunal by the impugned order. However, he admitted that details of export orders, purchases of the Raw Hides and Skins, names of the local sellers of raw hides and skins and their importers in the foreign country etc. are not discussed in the orders passed by the Assessing Officer as well as by the two Appellate Authorities below.
8. He urged that with the Constitution Bench Judgment of the Hon'ble Supreme Court in the case of Azad Coach Builders, the 'same goods' theory as propounded by the decision of the Hon'ble Supreme Court and various other High Courts prior to that point of time has been given a complete go-bye and therefore, if the link between the local sale or purchase and the export is established, even if the goods are in different form, the Assessee is entitled to http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 14/47 the exemption from tax on such local sales or purchases of goods, which are made to comply with the export obligations with the export orders with the Assessee. And therefore, the learned Tribunal has rightly allowed exemption to the Assessee, which requires no interference by this Court in the present Writ Petitions filed by the State. He had also relied upon certain judgments in support of his contentions, which we will deal hereafter.
9. The provisions of Section 5 of the Central Sales Tax Act, are quoted below for ready reference :-
5. When is a sale or purchase of goods said to take place in the course of import or export.— (1) A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India.
(2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 15/47 goods before the goods have crossed the customs frontiers of India.
(3) Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export.] (4) The provisions of sub-section (3) shall not apply to any sale or purchase of goods unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the exporter to whom the goods are sold in a prescribed form obtained from the prescribed authority.
(5) Notwithstanding anything contained in sub-section (1), if any designated Indian carrier purchases Aviation Turbine Fuel for the purposes of its international flight, such purchase shall be deemed to take place in the course of the export of goods out of the territory of India.
Explanation.—For the purposes of this sub- section, “designated Indian carrier” means any http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 16/47 carrier which the Central Government may, by notification in the Official Gazette, specify in this behalf.]
10. Sub Section(1) of Section 5 of Central Sales Tax Act, 1956, deals with the sale or purchase of goods which occasions the export out of India. Sub Section (2) deals with the sale or purchase in the course of import which occasions such import. Sub section (3) deals with the sale or purchase of goods preceding the sale or purchase which occasions the export of those goods and which is deemed by a legal fiction to be in the course of export. Sub section (4) attaches a condition to be fulfilled for claiming the benefit under sub section (3) viz., furnishing of prescribed declaration (Form H). Sub section (5) of Section 5 deals with the purchase of Aviation Turbine Fuel on international flights.
11. We are concerned in the present case with sub Section (3) of Section 5 of the Act. A closer look at sub section (3) of Section 5 with a Non obstante clause, makes it clear that the said sub section (3) enacts a deeming provision for the last sale or purchase of any goods also to be treated as exempted sale or purchase in the course of export, notwithstanding sub-Section (1) which http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 17/47 talks of sale occasioning in the export and straightaway exempt from Central Sales Tax. But the condition to be fulfilled for availing the said exemption from CST under sub-section(3) is that such last sale or purchase of 'any goods' preceding the sale or purchases occasioning the export of 'those goods' out of the territory of India shall be deemed to be in the course of export, subject to the condition that such last sale or purchase took place 'after' and was for the purpose of complying with the agreement or order for or in relation to such export. All these different words and phrases in sub-Section (3) have given rise to considerable litigation and debates in the Courts of law and have resulted in several judgments from various High Courts and even the Apex Court of the country.
12. The parts of sub-Section (3) in our understanding upon closer analysis are:-
(i) Last sale or purchase of any goods preceding the sale or purchase occasioning the exports;
(ii) The goods exported should be “those goods” (same goods) which have been last purchased or sold;
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(iii) Such last purchase or sale should be in the course of export, or in other words, should have direct and immediate nexus to the sale which occasions export;
(iv) Such last sale or purchase should took place 'after' and for complying with the export order.
13. Thus, not only the inextricable link of the last sale or purchase with the actual export has to be established, but those very goods which are exported should have been purchased by the dealer and in compliance of pre-
existing export orders are so purchased for the purpose of export out of India.
Unless such immediate link between the local sale or purchase deemed to be in the course of export and claimed to be exempted from tax have inextricable or integrated link with the actual export, Section 5(3) cannot be applied to grant exemption from the Central Sales Tax on such immediately preceding actual sale or purchase.
14. Some of the cases which arose in this context and propounded the theory of 'same goods' earlier are discussed in the following cases:
(a) In M/s.Sterling Foods vs. State of Karnataka and anr. (1986) 3 SCC 469, three Judges Bench of the Hon'ble Supreme Court was dealing with http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 19/47 the case of Shrimps, prawns and lobsters locally purchased for complying with the export orders and after the process of cutting their heads and tails, peeling, deveining, cleaning, freezing, such goods were exported outside India under prior contract of sale. The Court held that even after such processing of these sea food items, they retained their original identity and do not become different commodities and therefore, the Assessee was entitled to exemption from tax under Section 5(3) of the Act.
The following extract from the judgment is quoted below for ready reference.
“In commercial parlance and according to what is understood in the trade by the dealer and the consumer, processed or frozen shrimps, prawns and lobsters retain their original character and identity as shrimps, prawns and lobsters and do not become a new distinct commodity and are as much “shrimps, prawns and lobsters”, as raw shrimps, prawns and lobsters. Therefore, section 5(3) of the Central Sales Tax Act would be attracted. Since with a view to fulfilling the existing contracts for export, the assessee purchased raw shrimps, prawns and lobsters and processed and freezed them, such purchases of raw shrimps, prawns and lobsters http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 20/47 would be deemed to be in course of export so as to be exempt from liability to State sales tax.
(b) However, in Vijayalakshmi Cashew Co. Vs. C.T.O., 1996(1) SCC 468, the Hon'ble Supreme Court held that export of cashew kernels obtained out of raw cashew nuts would not be export of same thing and raw cashew nuts purchased in the penultimate sale were not the same goods as cashew nut kernels and therefore, the Assessee was not entitled to exemption under Section 5(3) of the Act.
(c) Way back in the year 1975, the Constitution Bench of the Hon'ble Supreme Court in the case of Mohammed Serajuddin and ors. vs. State of Orissa, 1975(2) SCC 47, dealt with the case of the Assessee carrying on the business of mining and exporting mineral ores to foreign countries. The Assessee entered into four contracts for sale of chrome concentrates. Two of these contracts were directly with foreign buyers while the two others were with the State Trading Corporation. Since the export of mineral ores was channelized through STC, the STC in turn entered into a contract with foreign buyers. The High Court held that sales under first two contracts directly with foreign buyers were exempt from sales tax, being in the course of export but http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 21/47 held that sales under the contract with STC were not exempt from sales tax.
The Assessee took up the matter before the Hon'ble Supreme Court and the Hon'ble Supreme Court held that the two contracts in question, one with the foreign buyers and the other with the STC were integrally connected and were part of one integrated transaction which resulted in the export of the goods and therefore, the Assessee was entitled to the exemption from sales tax on the export of the goods through STC also. The relevant conclusions of the Hon'ble Supreme Court in paragraphs 57 and 59 are quoted below for ready reference:-
“57. The facts of the case, in my opinion, go to show that the export of the chrome concentrates was occasioned by one transaction. The parties to that transaction were the appellant, STC and the foreign buyer. STC was brought into the picture as an intermediary because of the legal requirement, according to which the export of chrome concentrates was to be canalised through STC. Although the above requirement necessitated the execution of two agreements, one between the appellant and STC and the other between STC and the foreign buyer, there can, in my opinion, be no doubt that the agreements were part of one integrated transaction which resulted in the export http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 22/47 of the goods. The interconnection between the two agreements was so intimate that one agreement could not stand without the other. It was accordingly provided that the cancellation of one agreement would automatically result in the cancellation of the other agreement.
...
59 ... The Coffee Board case [(1969) 3 SCC 349 : (1970) 3 SCR 147], which too was decided by the Constitution Bench, could not set at naught the rule laid down in a series of earlier decisions and, in fact it did not do so as is apparent from the passage reproduced above wherein Hidayatullah, C.J. dealt with the question as to whether the two contracts were independent or not. The correct legal position, in my opinion, is that if there is one integrated transaction which results in export the fact that the transaction takes the shape of two interlinked contracts would not make much material difference.”
(d) In K.A.K.Anwar and Co. vs. State of Tamil Nadu, 1998(1) SCC 437, a Three Judges Bench of the Hon'ble Supreme Court dealt with the contention of the Assessee who contended that after purchase, the “Raw Hides and Skins” were dressed which had the effect of preserving them and they did not http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 23/47 undergo any change and therefore, “Raw Hides and Skins” and “dressed hides and skins” could not be considered as commercially separate commodities and therefore, they could be taxed at only one stage in the State as a result of restrictions imposed under Section 15 of the CST Act because, both Raw Hides and Skins and Dressed Hides and Skins were included in Section 14(iii) of CST Act and being “Declared Goods”, they could be taxed only one point of tax in the State. Following the decision of the Constitution Bench in the decision of the Hon'ble Supreme Court in the case of A.Hajee Abdul Shukoor and Co. vs. State of Madras, AIR 1964 SC 1729, the Hon'ble Supreme Court rejected the said contention of the Assessee and came to the conclusion that Raw Hides and Skins and Dressed Hides and Skins are not the one and the same commodity and merely because both were mentioned as one entry in section 14(iii) of CST Act, the same could not be treated as one commodity but they were different commodities and therefore, the Assessee was held liable to tax on the sale of dressed hides and skins.
(e) Dealing with the case of sale in the course of import under Section 5(2) of CST Act, the Hon'ble Supreme Court in the case of K.Gopinathan Nair and others vs. State of Kerala, 1997 (10) SCC 1, summarized the settled http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 24/47 legal position, emerging from the various Constitution Bench decisions of the Hon'ble Supreme Court in the following manner:-
14. In the light of the aforesaid settled legal position emerging from the Constitution Bench decisions of this Court the following propositions clearly get projected for deciding whether the concerned sale or purchase of goods can be deemed to take place in the course of import as laid down by Section 5(2) of the Central Sales Tax Act:
(1) The sale or the purchase, as the case may be, must actually take place.
(2) Such sale or purchase in India must itself occasion such import, and not vice versa i.e. import should not occasion such sale.
(3) The goods must have entered the import stream when they are subjected to sale or purchase.
(4) The import of the goods concerned must be effected as a direct result of the sale or purchase transaction concerned.
(5) The course of import can be taken to have continued till the imported goods reach the local users only if the import has commenced through the agreement between foreign exporter and an intermediary who does not act on his own in the http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 25/47 transaction with the foreign exporter and who in his turn does not sell as principal the imported goods to the local users.
(6) There must be either a single sale which itself causes the import or is in the progress or process of import or though there may appear to be two sale transactions they are so integrally interconnected that they almost resemble one transaction so that the movement of goods from a foreign country to India can be ascribed to such a composite well-integrated transaction consisting of two transactions dovetailing into each other.
(7) A sale or purchase can be treated to be in the course of import if there is a direct privity of contract between the Indian importer and the foreign exporter and the intermediary through which such import is effected merely acts as an agent or a contractor for and on behalf of the Indian importer.
(8) The transaction in substance must be such that the canalising agency or the intermediary agency through which the imports are effected into India so as to reach the ultimate local users appears only as a mere name lender through whom it is the local importer-cum-local user who masquerades.
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15. If the aforesaid conditions are satisfied then obviously the transaction of sale or purchase would be in the realm of sale or purchase in the course of import entitling it to earn exemption under Section 5(2) of the Central Sales Tax Act. But if on the contrary the transactions between the foreign exporter and the local users in India get transmitted through an independent canalising import agency which enters into back-to-back contracts and there is no direct linkage or causal connection between the export by foreign exporter and the receipt of the imported goods in India by the local users, the integrity of the entire transaction would get disrupted and would be substituted by two independent transactions, one between the canalising agency and the foreign exporter which would make the canalising agency the owner of the goods imported and the other between the import canalising agency and the local users for whose benefit the goods were imported by the wholesale importer being the canalising agency. In such a case the sale by the canalising agency to the local users would not be a sale in the course of import but would be a sale because of or by import which would not be covered by the exemption http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 27/47 provision of Section 5 sub-section (2) of the Central Sales Tax Act.
16. On the facts of these cases and in the light of the propositions enumerated above it is impossible to accept the contention of the learned Senior Counsel for the appellants that the sales in the present cases effected by the CCI in favour of the local users were in course of import of raw cashew from African countries.
15. Thus, hitherto, the concept of inextricable link between the local sale or purchase immediately preceding the sale occasioning in the export and the goods exported being the same goods as purchased, on which exemption under Section 5(3) was claimed, prevailed.
16. Then came the decision of the Constitution Bench of the Hon'ble Supreme Court in the case of State of Karnataka vs. Azad Coach Builders (P) Ltd. And another, 2010(9) SCC 524, in which the Constitution Bench of the Hon'ble Supreme Court dealt with the case where the Respondent Assessee M/s.Azad Coach Builders was requested by exporter, M/s.Tata Motors to fabricate bus bodies on the chassis supplied to them by the exporter M/s.Tata Motors in accordance with the specifications given by the foreign buyers or http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 28/47 importers of Sri Lanka. The said foreign buyers had written to the Tata Motors that the steel and aluminum panels of the bus bodies should be built by the Assessee – Azad Coach Builders as the customers in Sri Lanka preferred them.
Accordingly, the Assessee manufactured the bus bodies and mounted the same on the chassis made available by the exporter - M/s.Tata Motors, making it a complete bus body ready for export. The Assessee claimed exemption from State Sales Tax on the sale of such bus bodies as penultimate sales in the course of export in terms of Section 5(3) of the Central Sales Act, which was denied by the Revenue Department solely on the ground that complete bus body was not the “same goods” as the chassis of the bus and therefore, the requirement of Section 5(3) of the Act was not satisfied and the Assessee was not entitled to such exemption.
17. The Constitution Bench of the Hon'ble Supreme Court however decided in favour of the Assessee that since the transactions between the Assessee (Azad Coach Builders) and exporter (M/s.Tata Motors) is inextricably connected with the export of goods to Sri Lanka and the communications between the foreign buyer and the exporter M/s.Tata Motors reveal that the foreign buyer wanted the bus bodies to be manufactured by the Assessee only under the specifications stipulated by the foreign buyer and since these two http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 29/47 transactions between the Assessee and the exporter and the transactions between the exporter and the foreign buyer were inextricably connected with each other, the “same goods” theory will have no application in such facts and the Assessee will be entitled to exemption on the sale of bus bodies to the exporter M/s.Tata Motors under Section 5(3) of the Act, who actually exported the buses, as made by the Assessee M/s.Azad Coach Builders to the importers in Sri Lanka. The relevant portion of the said judgment are quoted below for ready reference :-
26. When we analyze all these decisions in the light of the Statement of Objects and Reasons of the Amending Act 103 of 1976 and on the interpretation placed on Section 5(3) of the CST Act, the following principles emerge:
- To constitute a sale in the course of export there must be an intention on the part of both the buyer and the seller to export;
- There must be obligation to export, and there must be an actual export.
- The obligation may arise by reason of statute, contract between the parties, or from mutual http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 30/47 understanding or agreement between them, or even from the nature of the transaction which links the sale to export.
- To occasion export there must exist such a bond between the contract of sale and the actual exportation, that each link is inextricably connected with the one immediately preceding it, without which a transaction sale cannot be called a sale in the course of export of goods out of the territory of India.
27. The phrase 'sale in the course of export' comprises in itself three essentials: (i) that there must be a sale: (ii) that goods must actually be exported and (iii) that the sale must be a part and parcel of the export. The word `occasion' is used as a verb and means 'to cause' or 'to be the immediate cause of'. Therefore, the words `occasioning the export' mean the factors, which were immediate course of export. The words `to comply with the agreement or order' mean all transactions which are inextricably linked with the agreement or order occasioning that export. The expression `in relation to' are words of comprehensiveness, which might both have a direct significance as well as an indirect http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 31/47 significance, depending on the context in which it is used and they are not words of restrictive content and ought not be so construed. Therefore, the test to be applied is, whether there is an in- severable link between the local sale or purchase on export and if it is clear that the local sale or purchase between the parties is inextricably linked with the export of the goods, then a claim under Section 5(3) for exemption from State Sales Tax is justified, in which case, the same goods theory has no application.
28. The facts of this case clearly reveal that the transaction between the assessee and the exporter is inextricably connected with the export of the goods to Sri Lanka. The communication between the foreign buyer and the exporter reveals that the foreign buyer wanted the bus bodies to be manufactured by the assessee under the specifications stipulated by the foreign buyer. The bus bodies constructed and manufactured by the assessee could not be of any use in the local market, but were specifically manufactured to suit the specifications and requirements of the foreign buyer. In the Purchase Order placed on the assessee by the exporter, it is specifically indicated that the http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 32/47 bus bodies have to be manufactured in accordance with the specifications provided by the foreign buyer, failure to do so might result in cancellation of the export order. The assessee in this case has succeeded in showing that the sale of bus bodies have occasioned the export of goods. When the transaction between the assessee and the exporter and the transaction between the exporter and foreign buyer are inextricably connected with each other, in our view, the `same goods' theory has no application.
29. We may also indicate that the burden is entirely on the assessee to establish the link in transactions relating to sale or purchase of goods and to establish that the penultimate sale is inextricably connected with the export of goods by the exporter to the foreign buyer, which in this case the assessee has succeeded in establishing.
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30. Mr. T. S. Narasimha, learned counsel appearing for Respondent No. 2 contended that any penultimate sale made in furtherance of export, irrespective of the nature of the goods, would also be covered, is too tall a proposition to be accepted. It all depends on the question as to whether the sale or purchase is inextricably connected with the export of goods and not a remote connection as tried to be projected by the counsel. The connection between the penultimate sale and the export of goods should not be casual, accidental or fortuitous, but real, intimate and inter linked, which depends upon the nature of the agreement the exporter has with the foreign buyer and the local manufacturer, the integrated nature of the transactions and the nexus between the penultimate sale and the export sale.
31. In the facts and circumstances of this case, we are satisfied that the assessee has succeeded in satisfying those tests and hence, eligible for exemption under sub-section (3) of Section 5 of the CST Act.
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18. We respectfully intend to underline that the exclusion of applicability of “same goods” theory by the Constitution Bench of the Hon'ble Supreme Court was propounded in view of the peculiar facts of the case before the Constitution Bench and the first ingredient to Section 5(3) of the Act being satisfied on facts that the local sale or purchase viz., sale of bus bodies was inextricably connected or linked to the actual sale occasioning the export of the said commodity viz., bus bodies by M/s.Tata Motors to the importers in Sri Lanka. Therefore, even though the 'chassis' and 'bus bodies' being not the same goods, the Hon'ble Supreme Court made a departure from the “same goods” theory and allowed the exemption in favour of the Assessee in view of the said inextricable link of sale immediately preceding the export by M/s.Tata Motors.
We cannot agree with the contentions raised by the learned Counsel for the Assessee that the “same goods” theory has been completely done away with by the said judgment of the Hon'ble Supreme Court in the case of Azad Coach Builders (supra).
19. The facts of Azad Coach Builders case (supra) as noted by Reference Bench 2006(3) SCC 338 and Constitution Bench, (2010) 9 SCC 524, are also quoted below. We cannot readily conclude whether it was a case of “sale” of bus bodies by Azad Coach Builders to Tata Motors or was only a 'work http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 35/47 contract' or 'job work' of building of bus bodies on the chassis 'supplied' by Tata Motors itself for such work. Unless there was a 'sale' by Azad Coach Builders to Tata Motors and it was only a job work, the question of claiming exemption under Section 5(3) on the penultimate sale would not even arise. If it was a sale, there has to be first a 'sale' of chassis by Tata Motors to Azad Coach Builders first and then, a 'sale' or a 'resale' of complete bus body or complete bus by Azad Coach Builders to Tata Motors, who has exported the same to Sri Lanka buyers. If it was so, then where is the need to give a go-bye to the “same goods” theory in those facts. What was sold (complete bus) has been exported. But since these aspects are not clearly spelled out in these judgments, we cannot dilate more on them. These facts, as reproduced in the law reports are quoted from these two judgments.
(i) State of Karnataka v. Azad Coach Builders (P) Ltd., (2006) 3 SCC 338 – (Two Judges Reference Judgment) “1. Manufacturers of buses, such as, TATA and Ashok Leyland get orders for export of buses. One such export order is annexed as “R-3” in the paper- book. These manufacturers manufacture chassis and they thereafter place orders on the assessee for building bus bodies (see Annexure “R-5” in the http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 36/47 paper-book). The name of the assessee in the present case is Azad Coach Builders Pvt. Ltd. The foreign buyers place an order on the exporter, namely, TATAs for supply of “the complete bus/buses” giving specifications of the chassis and the bus body. In some cases, the foreign buyers even indicate the source from which the exporter in India should get the “bus body” constructed. After constructing the bus body as per the specifications and after completing the bus in its entirety, the assessee (body builder) delivers “the complete bus” to TATA/Ashok Leyland who then exports the same to Sri Lanka. For the purposes of accounting, the exporter raises a bill for chassis on the assessee and instead of making entries in the accounts by first debiting the value of the chassis to the body builder (the assessee) and then deducting the amount of chassis from invoice of a complete bus, the exporter invoices the assessee only in respect of bus body and not for the entire complete bus. (Does it not sound like a contract for job work only and not “sale”) It is not disputed that after getting the bus completed, nothing is done by the exporter to change the identity of the bus, thus entitling the assessee to the benefit under Section 5(3) of the Central Sales http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 37/47 Tax Act, 1956 (hereinafter referred to as “the said Act”). (Thus, 'same goods' theory is in fact impliedly adopted by the court and not rejected).
2. According to the Department, the contract given to the assessee by the exporter is for the bus body; that, “bus” and “bus body” are different articles mentioned in Entry 14 to the Second Schedule to the Karnataka State Sales Tax Act; that, the bus body is a separate saleable commodity different from chassis or from the complete bus and, therefore, according to the Department, the assessee is not entitled to the benefit of Section 5(3) of the said Act. According to the Department, in order to attract Section 5(3), the assessee should have manufactured and sold the complete bus in order to constitute penultimate sale under Section 5(3) of the said Act. According to the Department, since the sale is only for the bus body and not for the complete bus by the assessee to the exporter in India, the assessee is not entitled to the benefit of Section 5(3) of the Act. According to the Department, exemption under Section 5(3) is admissible only when the commodity exported is the same as the commodity purchased and in the present case, according to the Department, the http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 38/47 commodity exported is “the complete bus” whereas the commodity purchased by the exporter is only the bus body and, therefore, the assessee is not entitled to exemption under Section 5(3) of the said Act.
....
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7. In our view, these two tests, as mentioned in para 12 of the above judgment, are the only two requirements which every penultimate sale must satisfy in order to attract the benefit of exemption under Section 5(3). In our view, the judgment of this Court in K. Gopinathan Nair [(1997) 10 SCC 1] is correct and in the light of this judgment and the tests propounded therein, we are of the view that the aforestated two judgments of this Court in Sterling Foods [(1986) 3 SCC 469 : 1986 SCC (Tax) 609] and Vijayalaxmi Cashew Co. [(1996) 1 SCC 468] need reconsideration.
8. For the reasons aforementioned, we are of the view that the decisions of this Court cited hereinabove in Sterling Foods v. State of Karnataka [(1986) 3 SCC 469 : 1986 SCC (Tax) 609] and Vijayalaxmi Cashew Co. v. CTO [(1996) 1 SCC 468] need reconsideration by a larger Bench. The papers http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 39/47 may be placed before Hon'ble the Chief Justice of India for further directions.”
(ii) State of Karnataka v. Azad Coach Builders (P) Ltd., (2006) 3 SCC 338 – (Constitution Bench Judgment) “6. Sterling Foods [(1986) 3 SCC 469 : 1986 SCC (Tax) 609] and Vijayalaxmi Cashew Co. [(1996) 1 SCC 468] were essentially advocating the “same goods” theory, of course in different fact situations. Later, in K. Gopinathan Nair v. State of Kerala [(1997) 10 SCC 1] , a three-Judge Bench of this Court examined the question whether the purchase of African raw cashew nuts made by the assessees from Cashew Corporation of India (for short “CCI”) are in the course of import and, therefore immune from liability to tax under the Kerala General Sales Tax Act, 1963. In that case, on facts the Court found that there was no privity of contract between the local users on the one hand and the foreign exporter on the other and held that those two transactions could not be said to be so integrally interconnected as to represent one composite transaction in the course of import of raw cashew nuts. The Court held that those sales by CCI to the local users go out of the sweep of the http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 40/47 exemption provisions engrafted by Section 5(2) of the CST Act, reason being that there was no privity of contract between the local users and the foreign exporters.
7. M/s Azad Coach Builders (P) Ltd., the assessee, was requested to build bus bodies by the exporter, Tata Engineering Locomotive Co. Ltd. in accordance with the specifications provided by the foreign buyer, Lanka Ashok Leyland Ltd., Colombo. The specimen copy of the purchase order dated 11- 7-1988 placed on the assessee by the exporter revealed that the assessee was asked to fabricate bus bodies on the chassis supplied by the exporter in accordance with the specifications given by the foreign buyer. (Does it not spell it as a works contract rather than a sale?) In one of the communications received from the foreign buyer it was stipulated that the steel and aluminium panels of the bus bodies be built by the assessee since the customers in Sri Lanka preferred them. The assessee accordingly manufactured the bus bodies, in accordance with the specifications stipulated by the foreign buyer and mounted the same on the chassis made available by the exporter making it as a complete bus ready for export.
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8. The assessee claimed exemption on sales of bus bodies as penultimate sales in the course of export made to their customers like Telco, Bombay and others which was rejected by the assessing authority, treating the transactions as inter-State sales, on the ground that the “bus bodies” and “buses” are two different commodities and the bus bodies as such were not exported, but complete buses. The assessing authority held that the transactions could not amount to penultimate sale eligible for exemption under sub-section (3) of Section 5 of the CST Act.
20. In quite a contrast with the facts of the case before the Hon'ble Supreme Court in the case of Azad Coach Builders, we do not find even a link established between the purchase of Raw Hides and Skins by the Assessee in the present case to the export of Leather Garments or Dressed Hides and Skins by the Assessee. Neither pre- existence of the export order is available on records before us nor the specification of the purchase of Raw Hides and Skins by the importer in foreign countries is specified as were the facts before the Hon'ble Supreme Court, in the case of Azad Coach Builders, where the Assessee was specified to be the person who shall make the bus bodies, as per http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 42/47 the specifications at the instance of the exporter, M/s.Tata Motors. The inextricable link between the sale claimed to be exempted under Section 5(3) and the actual export has to extend from point “A” of the purchase of the commodity to point “B”, actual export of the commodity. Unless such entire transaction is inextricably linked or integrated part of the same export, the benefit of section 5(3) cannot be given to the Assessee. We have quoted above, section 5(3) of the Act which clearly specifies the word 'those goods' with relating to words 'any goods' in the first part of section 5(3) of the Act.
Therefore, the words 'any goods' and 'those goods' employed in section 5(3) of the Act have to be the 'same goods' and this was the legal position which is culled out from the various other judgments of the Hon'ble Supreme Court, including the one from the Constitution Bench. Therefore, we cannot apply the decision of the Hon'ble Supreme Court in case of Azad Coach Builders ruling out the concept of “same goods” altogether in all cases. That is neither expressly mentioned in the judgment of Azad Coach Builders nor is intended because despite being conscious of the two goods, viz., complete bus and bus chassis being two different goods, the Hon'ble Supreme Court allowed the exemption in view of the inextricable link of the entire transaction. If complete bus body only was sold back by Azad Coach Builders to exporter M/s.Tata Motors, as can be inferred from the facts of the case quoted above, http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 43/47 and such complete bus only was exported, where was the question of excluding the theory of 'same goods'. The goods (complete bus) was 'same goods' only.
Thus, 'same goods' theory is in fact impliedly adopted by the court and not rejected. The very manufacture or making of the bus bodies by the Assessee, Azad Coach Builders was in pursuance of the pre-existing export orders available with M/s.Tata Motors, who in turn supplied the chassis to Azad Coach Builders and directed them to make complete bus bodies which in turn were sold by the Assessee - Azad Coach Builders to M/s.Tata Motors and was claimed to be sale immediately preceding the sale of bus bodies by M/s.Tata Motors, occasioning the export out of India and for that purpose, the Hon'ble Supreme Court, in our respectful understanding, still made a departure from the concept of “same goods” and did not rigidly apply the same to grant the exemption under Section 5(3) of the Act.
21. We may notice here that the other judgment of the Hon'ble Supreme Court like in the case of M/s.Sterling Foods and K.A.K.Anwar and Vijayalakshmi Cashew Co. are not specifically overruled by the Constitution Bench of the Hon'ble Supreme Court in the case of Azad Coach Builders.
Therefore, we cannot infer from the reading of the said judgment in case of Azad Coach Builders that the concept of “same goods” theory has been http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 44/47 altogether done away with. That, in our understanding, is neither called for and it can even be contrary to the plain language of Section 5(3) of the Act as well the previous judgments of the Hon'ble Supreme Court also. Therefore, the application of the said judgment depending upon the inextricable link established for the whole transaction, applied to the peculiar facts of that case.
22. Reverting back to the facts of the present case before us, as noted above, we do not find any such details of entire chain of transactions established by the Assessee at all. Neither the details of export orders are available, nor the purchases of Raw Hides made by the Assessee directly linked to such export orders after being converted into Leather Garments is established. We do not find any such discussion in any of the orders of authorities below passed by them and placed before us. The mere claim of the Assessee that the Assessing Authority had initially allowed such exemption under Section 5 (3) of the Act upon due scrutiny of the transactions is not acceptable, because the finding of facts with regard to inextricable link between the sale or purchase claimed to be exempted under Section 5(3) of the Act and the export has to be established by the Assessee by leading evidence. Since such findings are not available before us, we cannot hold that http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 45/47 the Assessee is entitled to such exemption under Section 5(3) of the Act, nor we can sustain the order of the learned Tribunal or the Assessing Authority, allowing such exemption without the facts being fully and properly examined with due scrutiny by the Assessing Authority.
23. Therefore, in our opinion, the Writ Petition filed by the State deserves to be allowed and the matter deserves to be remanded back to the learned Assessing Officer for passing fresh orders after giving an opportunity of hearing to the Assessee and allowing him to lead requisite evidence to establish such inextricable link between the sale or purchase of the raw hides and skins in question and the export of leather garments or Dressed Hides and Skins by the Assessee. Unless the facts so established with evidence, fall within the four corners of judgment of the Constitution Bench in the case of Azad Coach Builders, the Assessee would not be entitled to exemption, ignoring the theory of “same goods” altogether under Section 5(3) of the Act as canvassed by the learned Counsel for the Assessee.
24. We accordingly allow these Writ Petitions and setting aside the orders passed by the authorities below, we remand the case back to the http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 46/47 Assessing Officer to pass fresh assessment orders in accordance with law, within a period of six months from today. No costs.
(V.K., J.) (R.S.K., J.)
11.02.2020
Index: Yes/no
tar
To
The Secretary,
Tamil Nadu Sales Ta Appellate Tribunal, (Additional Bench), Madurai http://www.judis.nic.in Judgment Dt: 11.02.2020 W.P. Nos.3987, 3997 & 3721/2003 State vs. M/s.Vijayalakshmi Leather 47/47 DR.VINEET KOTHARI, J.
and R.SURESH KUMAR, J.
(tar) W.P. No.3987, 3997 and 3721 of 2003 11.02.2020 http://www.judis.nic.in