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Issues: (i) Whether rule 29(v) of the Punjab General Sales Tax Rules, 1949 entitled the assessee to deduct the value of goods proved to have been exported out of India through a series of transactions. (ii) Whether rule 29(v) was repugnant to section 5 of the Central Sales Tax Act, 1956 or inconsistent with the Punjab General Sales Tax Act, 1948.
Issue (i): Whether rule 29(v) of the Punjab General Sales Tax Rules, 1949 entitled the assessee to deduct the value of goods proved to have been exported out of India through a series of transactions.
Analysis: The rule was construed as permitting deduction of the value of goods proved to be exported out of the territory of India, whether by one transaction or by a series of transactions. The expression was treated as wide enough to cover export effected directly or indirectly through intermediary transactions. Since the finding that the goods of the relevant value were actually exported outside India was not disturbed, the contractual chain through the State Trading Corporation did not defeat the deduction.
Conclusion: Yes. The assessee was entitled to the deduction under rule 29(v).
Issue (ii): Whether rule 29(v) was repugnant to section 5 of the Central Sales Tax Act, 1956 or inconsistent with the Punjab General Sales Tax Act, 1948.
Analysis: Sections 5 of the Central Sales Tax Act, 1956 and the Punjab General Sales Tax Act, 1948 were treated as provisions governing the incidence and computation of taxable turnover, while rule 29(v) operated independently to grant additional deductions. Rule 27 and rule 29 were read as providing a more liberal exemption structure, and no repugnancy arose because the rule enlarged, rather than curtailed, the relief available under the taxing framework. The Court therefore rejected the contention that the Central Act displaced the rule.
Conclusion: No. Rule 29(v) was not repugnant to the Central Sales Tax Act, 1956 or the Punjab General Sales Tax Act, 1948.
Final Conclusion: The reference was answered against the Revenue and in favour of the assessee, and the deduction claimed for the export turnover was upheld.
Ratio Decidendi: A state sales tax rule that independently grants deduction for goods proved to have been exported, including exports effected through a series of transactions, is valid and not repugnant where it affords a broader exemption than the central export-sale provision.
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