Export-linked counter-sales, retrospective interest and reassessment scope clarified under Rajasthan sales tax law.

Counter-sales of gems, jewellery and similar goods to foreign tourists under an export promotion scheme were held to be local sales because a sale is protected as being in the course of export only where there is an integral link with actual export; purchase against foreign exchange and an undertaking not to resell in India were insufficient. Interest on the assessed tax was not leviable for the relevant period because the amendment extending section 11-B applied only from 1 April 1987. Reassessment was validly initiated where disclosed counter-sales had escaped proper assessment, as the statutory phrase "for any reason whatever" was wide enough to cover such cases.

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Issues: (i) Whether counter-sales of gems, jewellery and other goods to foreign tourists under the Export Promotion Scheme against foreign exchange were local sales or sales made in the course of export. (ii) Whether interest was leviable on the tax assessed for the relevant period. (iii) Whether reassessment proceedings could validly be initiated under section 12 of the Rajasthan Sales Tax Act, 1954.

Issue (i): Whether counter-sales of gems, jewellery and other goods to foreign tourists under the Export Promotion Scheme against foreign exchange were local sales or sales made in the course of export.

Analysis: A sale is protected as a sale in the course of export only when there is an integral and inextricable link between the sale and actual export. The mere requirement that the foreign tourist should purchase against foreign exchange, coupled with an undertaking not to dispose of the goods in India, does not by itself amount to export. Since no actual export of the goods sold at the counter was shown, the transactions could not be treated as sales in the course of export.

Conclusion: The counter-sales were local sales and were liable to tax.

Issue (ii): Whether interest was leviable on the tax assessed for the relevant period.

Analysis: Interest under section 11-B, so far as it was linked with the amendment bringing section 12 into section 11-B, became applicable only from 1 April 1987. The assessment in question related to a period prior to that date and had already been framed earlier. On that footing, interest could not be charged for the relevant period.

Conclusion: Interest was not leviable on the tax amount for the relevant period.

Issue (iii): Whether reassessment proceedings could validly be initiated under section 12 of the Rajasthan Sales Tax Act, 1954.

Analysis: Section 12 authorises reassessment where any part of the dealer's business has escaped assessment for any reason whatever. The case was not one of impermissible collection of additional evidence; it concerned taxability of disclosed counter-sales which had escaped proper assessment. The statutory expression "for any reason whatever" was wide enough to cover the initiation of reassessment in such circumstances.

Conclusion: Reassessment proceedings under section 12 were validly initiated.

Final Conclusion: The counter-sales were taxable, reassessment was upheld, and only the levy of interest for the relevant period was disallowed, resulting in partial relief to the assessee.

Ratio Decidendi: A sale is not a sale in the course of export unless actual export is integrally connected with the sale, and reassessment may be initiated where taxable turnover has escaped assessment for any reason within the scope of the statute.

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