High Court decision on Tax Case Revision: Exemption granted for cement export, purchase tax liability upheld.

The High Court allowed the Tax Case (Revision) partly. The assessee was granted exemption under Section 5(3) for the sale of cement to NBCCL for export to Maldives without the requirement of Form H. The liability to pay purchase tax on Fly Ash from TNEB was upheld. However, the penalty on the disputed turnover related to the purchase tax on Fly Ash was not restored to maintain consistency with previous rulings.

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Issues Involved:
1. Whether the sale of cement to NBCCL is deemed to be a sale in the course of export under Section 5(3) of the Central Sales Tax Act, 1956.
2. Whether the production of Form H is necessary for claiming the benefit under Section 5(3) of the Central Sales Tax Act, 1956.
3. Whether the assessee is liable to pay purchase tax on the purchase of Fly Ash from the TNEB (Tuticorin Thermal Power Plant).

Issue-wise Detailed Analysis:

1. Sale of Cement to NBCCL as Deemed Export:
The assessee, a manufacturer of cement, claimed exemption under Section 5(3) of the Central Sales Tax Act for the sale of cement to NBCCL, which exported it to Maldives for constructing a hospital. The Officer rejected the claim due to the absence of Form H, a decision upheld by the Appellate Deputy Commissioner and the Sales Tax Appellate Tribunal. The Tribunal noted that the sale to NBCC was not due to any agreement with the foreign buyer and was for a works contract in Maldives. The High Court, however, highlighted that the requirement for Form H was introduced in 2004, and prior to that, the claim could be substantiated by other materials. The court referred to the agreement between the Government of India and the Government of Maldives and concluded that the sub-contract given to NBCC, and subsequently to the assessee, satisfied the conditions under Section 5(3). The court also referred to the Supreme Court's decision in the case of Builders Association of India, which supported the view that the absence of a direct contract with the foreign buyer does not nullify the claim. Hence, the court held that the assessee is entitled to the exemption under Section 5(3).

2. Necessity of Form H for Claiming Exemption:
The Tribunal and the Appellate Authority rejected the assessee's claim for exemption due to the non-filing of Form H. The High Court clarified that the mandatory requirement for Form H was introduced only in 2004. For the assessment year 1991-92, the law allowed claims to be substantiated by other means. The court emphasized that the Revenue did not dispute the sale of cement to NBCC, which was exported to Maldives. Thus, the non-filing of Form H alone could not be a ground for rejecting the claim. The court concluded that the assessee could prove the claim through other materials, and the exemption under Section 5(3) was valid.

3. Liability to Pay Purchase Tax on Fly Ash:
The assessee's liability to pay purchase tax on Fly Ash from TNEB was already decided against the assessee in a previous case (T.C(R). No. 34 of 2011). Following this precedent, the High Court answered this issue against the assessee, confirming the liability to pay purchase tax on Fly Ash.

Penalty on Disputed Turnover:
The Tribunal had confirmed a 50% penalty on the disputed turnover related to the penultimate sale and purchase tax on Fly Ash. However, the High Court noted that in a previous assessment year (1986-87), the penalty on purchase tax was deleted and not contested by the Revenue. To maintain consistency, the court found no justification to restore the penalty on the current assessment year (1991-92) regarding the purchase tax levy on Fly Ash.

Conclusion:
The High Court partly allowed the Tax Case (Revision). The assessee was granted exemption under Section 5(3) for the penultimate sale of cement leading to export, and the necessity of Form H was dismissed for the relevant assessment year. The liability to pay purchase tax on Fly Ash was upheld, but the penalty on the purchase tax was not restored to maintain uniformity with previous rulings.

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