TaxTMI 
TaxTMI 
1999 (12) TMI 833
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....ions required under section 5(3) of the Central Sales Tax Act. After referring to certain decisions, the assessing authority proposed to disallow exemption on a turnover of Rs. 5,34,18,977 taxable at 5 per cent. After considering the objections the proposal was confirmed. The said revised order dated March 31, 1982 gave rise to a first appeal No. 205 of 1982. The first appeal having been partly allowed on May 31, 1988 the assessee filed a second appeal M.T.A. No. 291 of 1988 and the revenue filed a E.P. No. 152 of 1988. 2.. For the assessment year 1982-83 the very same assessee reported a total turnover of Rs. 7,44,67,608.40 and a taxable turnover of Rs. 89,904. On a check of accounts it was found that in respect of the purchase of prawns the assessee had purchased the same at various places in Tamil Nadu on bought notes. The entire purchase turnover of prawns was claimed to be exempted on the plea that they had exported them outside the territory of India. It was found that the petitioner had made direct exports as well as exports through others, called "export houses". As many as twentytwo export houses were involved and the total export through such export houses amounted to Rs....
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.... eligible for exemption under section 5(3) of the Central Sales Tax Act and consequently whether the purchases made by them in respect of such sales through export sales liable to be taxed as the last purchase in the State at 5 per cent single point? (2) Is the Sales Tax Appellate Tribunal right in deleting the turnover of Rs. 1,13,99,454 for the year 1976-77 and a turnover of Rs. 89,73,181 for the year 1982-83 on the ground that goods to that extent were not exported and whether the Tribunal is justified in allowing the same as wastage involved in processing the goods, and therefore not liable to be taxed at purchase point? 4.. Mr. C. Natarajan, arguing for the assessee had taken us through the relevant documents and a sample agreement between the assessee and the export houses, to impress upon us that the sale in favour of the export house is "only in form and not in effect". That is, apparent and not real. He laid emphasis on the fact that 2 per cent of the f.o.b. value was paid to the assessee as service charges by the export house. That apart, the export house pays 1 per cent in lieu of the transfer of the replenishment licence. The assessee alone was entitled to get the d....
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....ancement as per assessing officer's order. 6.. We will now take up the year 1982-83. The assessing authority on check of accounts made an order as follows on November 26, 1984. For the purpose of convenience we will extract it again. "Sales turnover of ice as per ... Rs. 89,905.00 at 5% s.p. accounts Sales of discarded materials as per accounts ... Rs. 573.00 at 5% m.p. Purchase turnover of prawns as ... Rs. 5,27,83,418.00 at 5% s.p. estimated above involved in export by others as listed out above ------------------ Taxable turnover ... Rs. 5,28,73,896.00 Add: Turnover eligible for deduction: 1. Purchase turnover of prawns as ... Rs. 1,69,88,717.00 was worked out above involved in direct exports. 2. Second sale of H.S.L & Lubricant as per accounts ... Rs. 28,00,.72.00 3. Sales turnover of cuttle fish esti... Rs. 8,92,834.00 mated ---------------- Total turnover ... Rs. 7,35,55,519.00" 7.. On first appeal the Appellate Assistant Commissioner adopted his reasoning for the year 1976-77. What is more, without any particulars he adopted the percentage of wastage as in the year 1976-77 and held 17 per cent of the turnover of Rs. 5,27,83,418 was not exported by way of wastage a....
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....s. We will first take the second question dealt with by the Sales Tax Appellate Tribunal and involved in T.C. No. 213 of 1993 (1982-83) to the tune of Rs. 89,73,181 and T.C. No. 214 of 1993 (1976-77) to the tune of Rs. 1,13,99,454. In an earlier judgment in T.C.R. Nos. 329, etc. of 1997, dated November 17, 1998 (East Bay Fisheries v. State of Tamil Nadu [2000] 120 STC 99) this Special Tribunal has taken the view that natural wastage involved in purchasing prawns and cleaning them by removing inedible portions and exporting only the edible portions, would result in a difference between weight of purchases and weight of actual export. Such difference in weight cannot be subjected to tax at purchase point on the ground that they had not been exported. But the difference or wastage should be within reasonable limits. In that very case we permitted wastage up to 10.8 per cent but remanded a case where there was 27 per cent wastage to find out whether the assessee had diverted the purchases in which case, he will be liable to be taxed. The Appellate Assistant Commissioner found 17 per cent wastages in 1976-77 and adopted the same percentage for 1982-83 and proceeded to fasten tax liabili....
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....ttitude of traders to get the best of both the worlds but we will restrict ourselves to the issues before us to find out as to who was the actual exporter in respect of the disputed transactions. The very fact that in respect of a number of exports the assessing authority has accepted the assessee as the direct exporter, while in respect of certain other transactions, he has held that the assessee had exported the goods through certain export houses, itself suggests that the assessing authority was clear in his mind about the actual exporter to be decided on the basis of documents. Before us only one agreement between the assessee and one of the export houses, namely, Greaves International Limited, has been disclosed. We will therefore, take that agreement as the model for all cases. The preamble portion of the agreement shows that the export house was engaged in marketing marine products in international market and the assessee was engaged in the processing of goods. It is also mentioned that the assessee would effect shipment of the goods in pursuance of the purchase orders procured by the export house. There is also an alternative clause saying that the assessees could also proc....
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....' to the 'buyer' are as given below." What is more the export house has imposed a condition that if there is any change in the Import Trade Control Policy of the Government of India and it is unfavourable to the export house, they can terminate the agreement. 11.. Mr. C. Natarajan, projects his argument by referring to a single purchase order procured in the name of the assessee, on March 3, 1983 from M/s. Ebino Daimaru Company Limited and explains how the assessee has supplied the entire quantity of 1,000 cartons through different export houses, namely, M/s. Brijmohan Purusottamdas, Bombay, and M/s. Siemens India Limited, Bombay. We do see that the export houses have referred to the contract obtained by the assessee and proceed to make the invoices accordingly and negotiate the bills as per agreement. In our opinion, this does not alter the character of the transactions. Similarly, the purchase order from M/s. Kanematsu-Gosho Limited, has been executed through M/s. Greaves International Limited. 12.. According to the Sales Tax Appellate Tribunal the 2 per cent service charges and 1 per cent for transfer of licence, received by the assessee, would not amount to valuable consider....