Madras High Court
The Commercial Tax Officer vs K.P.L.International Limited on 5 January, 2023
Author: S. Vaidyanathan
Bench: S.Vaidyanathan, Mohammed Shaffiq
W.A.Nos.2832 and 2834 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 05.01.2023
CORAM:
THE HONOURABLE MR.JUSTICE S.VAIDYANATHAN
AND
THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ
W.A.Nos.2832 and 2834 of 2022 and
CMP.Nos.23174, 23178 and 23180 of 2022
The Commercial Tax Officer,
Saidapet Assessment Circle,
Saidapet,
Chennai- 600 015. ... Appellant in both Appeals
-vs-
K.P.L.International Limited
Represented by its Senior Vice President,
R.P.Mundra,
183, Mount Road,
Saidapet,
Chennai-600 015. ... Respondent in both Appeals
Prayer: Writ Appeals filed under Clause 15 of Letters Patent, to set aside the order
dated 17.10.2019 passed in W.P.Nos.1776 and 1777 of 2010.
For Appellant : Mr.C.Harsharaj
Additional Government Pleader (T)
For Respondent : Mr.N.Inbarajan
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W.A.Nos.2832 and 2834 of 2022
C O M M ON J U D G M E N T
These Appeals have been preferred by the Appellant challenging the common order of the learned Single Judge dated 17.10.2017 made in W.P.Nos.1776 and 1777 of 2010, in allowing the Writ Petitions by setting aside the orders of the Appellant dated 24.12.2009 in denying the benefit of Section 5(3) of Central Sales Tax, 1956 (in short 'CST Act') in respect of the chemical by name (Carnal) Tri-Polyphosphate (in short 'chemical') against Form H declarations to exporters.
2. It is not in dispute that the Writ Petitioner is the supplier of the chemicals raw rice and Carnal/Tri-Polyphosphate to exporters of seafood to various destinations all over the world. The seafood had been treated by dipping in the chemical, the purpose of dipping being the preservative of seafood by ensuring that there is no deterioration of shrimps during the process of export.
3. It submitted by the learned counsel for the Appellant/State that the question that arises for consideration is whether the purchase of Chemicals in the above circumstances is entitled to benefit under Section 5 (3) of CST Act. For the purpose of claiming benefit under Section 5(3) of CST Act, the goods purchased and exported must be one and the same. However in the instant case, the chemicals and shrimps are two 2/6 https://www.mhc.tn.gov.in/judis W.A.Nos.2832 and 2834 of 2022 different products and would not satisfy the "same goods" theory i.e., the goods purchased and exported must be one and the same. Thus, the transaction in question would not qualify as sales in the course of export in terms of Section 5(3) of the CST Act 1956.
4. To the contrary, it was contented by the learned counsel for the respondent / assessee that Carnal 6595 is a preservative and as a matter of fact the invoice of the exporter itself stipulates that the sea food shall be kept in specific chemical mix supplied by the respondent/assessee. Further, the preservatives are in relation to the export, since, but for the preservative/chemical the shrimps would deteriorate, thereby rendering the export practically and commercially in expedient. While examining the claim under Section 5(3) the CST Act, it is necessary to bear in mind the nature of the transaction and goods involved. In this regard, it may be relevant to note that the Hon'ble Supreme Court in the case of State of Karnataka Vs. Azad Coach Builders Ltd. [(2010) VST 1] has an occasion to decide whether the supply of bus bodies by the assessee in that case to an exporter, who had ultimately exported buses that were finished in all respects, would be entitled to a claim under Section 5 (3) of the CST Act. The Hon'ble Supreme, after considering all the earlier Judgments and after a detailed examination of the matter, set out the test and principles that would emerge upon 3/6 https://www.mhc.tn.gov.in/judis W.A.Nos.2832 and 2834 of 2022 analyzing the statement of objects and reasons for Amending Act 103 of 1976, that introduced Section 5(3) of the CST Act, as follows:
“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 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.” The Hon'ble Supreme Court proceeded that the "same goods" theory may not be applicable while examining the claim under Section 5(3) of the CST Act.
5. Keeping in mind the above principle laid down by the Hon'ble Supreme Court and on the basis of the order of the learned Single Judge, the sale of chemicals by the respondent /assessee would qualify as a sale in the course of export in terms of Section 5(3) the CST Act. The relevant portion of the Single Judge Order is extracted here under:
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https://www.mhc.tn.gov.in/judis W.A.Nos.2832 and 2834 of 2022 “13.In the present case, the chemical dip,which has been supplied by the petitioner to the exporter, forms a critical and vital link in the chain of export seeing as the commodity actually exported, seafood, could not have been exported without chemical dipping. In fact, the invoice of the exporter stipulates that the seafood shall be dipped in the specific chemical mix that has been supplied by the petitioner. Even if that were not so, seafood, being perishable would have to be preserved till such time it is received at its destination. In such a case, all materials utilised/consumed to aid the proper delivery of the seafood at its destination would be necessary for the purpose of export. The use of the phrase occasioning the export in 5(3) refers to all processes that are critical and vital for the process of export itself and the process of dipping as in the present case, is one such process.”
6. We do not find any reason to interfere with the order of the learned Single Judge. Hence, these Writ Appeals stand dismissed. No costs. Consequently, connected Miscellaneous Petitions are also closed.
[S.V.N., J.] [M.S.Q., J.]
05.01.2023
Index: Yes / No
Internet: Yes / No
arr
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https://www.mhc.tn.gov.in/judis
W.A.Nos.2832 and 2834 of 2022
S. VAIDYANATHAN, J.
and
MOHAMMED SHAFFIQ, J.
arr/ mka
W.A.Nos.2832 and 2834 of 2022 and
CMP.Nos.23174, 23178 and 23180 of 2022
05.01.2023
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