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of <h1>High Court revises case, emphasizes Supreme Court principles on local sales vs. exports</h1> <h3>M/s. Allied Galsses Pvt. Ltd. Versus The Commisisoner, Commercial Taxes</h3> The High Court allowed the revision and remanded the case back to the Tribunal for reconsideration, emphasizing the need to apply the principles ... Benefit of exemption under Section 5(3) of the Central Sales Act - Whether the Tribunal was justified in denying the benefit of exemption under Section 5(3) of the Central Sales Act to the applicant and rejecting Form-H having been filed by the applicant, only on the basis that the goods sold by the applicant to the purchaser/ exporter have not been exported by it in the same form, which is contrary to the decision of the Hon'ble Apex Court in the case of State of Karnataka Vs. Azad Coach Builders Pvt. Ltd. [2010 (9) TMI 879 - SUPREME COURT OF INDIA] - Held that:- Section 5(3) of the Act clearly indicates that the phrase 'in the course of export' comprises in itself three essentials, namely; (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 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 significance, depending on the context in which it is used and they are not words of restrictive content and ought not be so construed. If there is in- severable link between the local sale or purchase and 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 the claim of exemption under Section 5(3) from State Sales Tax shall be liable to be allowed. - Decided in favour of assessee. Issues Involved:Interpretation of Section 5(3) of the Central Sales Tax Act regarding the benefit of exemption, denial of exemption based on goods not being exported in the same form, consideration of the Constitution Bench judgment of the Hon'ble Supreme Court in the case of State of Karnataka Vs. Azad Coach Builders Pvt. Ltd.Detailed Analysis:1. Interpretation of Section 5(3) of the Central Sales Tax Act:The case involved the interpretation of Section 5(3) of the Central Sales Tax Act regarding the benefit of exemption. The applicant had sold toughened glass to a company that used it in the export of various products. The applicant claimed exemption under Section 5(3) of the Act, but the authorities denied it, citing that the same goods were not exported. The applicant argued that the sale was inextricably linked to the export, as per the law laid down by the Hon'ble Supreme Court in the case of Azad Coach Builders Pvt. Ltd.2. Denial of Exemption Based on Goods Not Exported in the Same Form:The authorities, including the Tribunal, denied the applicant the benefit of exemption under Section 5(3) of the Act on the grounds that the same goods were not exported in the same form. The applicant contended that the immediate cause of export and the inextricable link between the local sale and export should be considered, as per the principles established by the Hon'ble Supreme Court in the Azad Coach Builders Pvt. Ltd. case.3. Consideration of the Constitution Bench Judgment in Azad Coach Builders Pvt. Ltd.:The applicant argued that the Tribunal and the authorities below erred in rejecting the claim for exemption without considering the law laid down by the Hon'ble Supreme Court in the Azad Coach Builders Pvt. Ltd. case. The judgment highlighted the importance of the in-severable link between the local sale or purchase and export, emphasizing that if the transactions are inextricably linked with the export of goods, the same goods theory should not apply.4. Judgment and Remand Order:After considering the submissions and the relevant legal provisions, the Hon'ble High Court allowed the revision and remanded the matter back to the Tribunal. The Court directed the Tribunal to decide afresh, considering the law laid down by the Hon'ble Supreme Court in the Azad Coach Builders Pvt. Ltd. case. The Court emphasized the need for the Tribunal to apply the principles established in the said judgment while deciding the matter expeditiously.In conclusion, the judgment focused on the correct interpretation of Section 5(3) of the Central Sales Tax Act, emphasizing the inextricable link between local sales and exports as established by the Hon'ble Supreme Court in the Azad Coach Builders Pvt. Ltd. case. The Court's decision to remand the matter back to the Tribunal for a fresh decision underscores the importance of applying established legal principles in tax exemption cases.
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