TaxTMI 
TaxTMI 
2008 (12) TMI 686
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....ed, the assessee filed A.P. Nos. 3 and 5 of 1995, which were allowed. The Joint Commissioner, invoking his suo motu powers of revision, set aside the above orders, confirming the original orders. The assessee thereafter filed W.P. No. 10390 of 2004 with regard to the sale to Apex Exports, claiming the benefit of section 5(3) of the CST Act. The assessee also filed an appeal before the Tamil Nadu Sales Tax Appellate Tribunal with regard to the sale to Chettinad Granites. The Tribunal allowed this appeal. So, the Revenue has filed W.P. No. 22939 of 2004. We will deal with the facts separately and then with the submissions and the legal points together. M/s. Chettinad Granites is a 100 per cent export-oriented unit. According to the assessee, the rough granite blocks purchased by them are cut in standard sizes through sawing machines. Thus, there is no chemical process involved and there is no change in the chemical or physical composition of the goods purchased and sold. The learned senior counsel Mr. R.L. Ramani appearing for the assessee submitted that the granite blocks are merely cut to size for export and only the end-users shape them to their specific requirement. Therefo....
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....granite blocks. This is seen from the export documents. Therefore, there is a difference in the goods exported by Chettinad Granites and the goods exported by Apex Exports. We will see whether it changes the taxability. The learned senior counsel relied on Commissioner of Income-tax v. Vijay Granites P. Ltd. [2006] 146 STC 688 (Mad), wherein it was held that cutting and polishing of granite slabs did not involve manufacture and State of Karnataka v. Azad Coach Builders Pvt. Ltd. [2006] 145 STC 176 (SC), where the question was whether the body builder, who is the penultimate seller, would be entitled to the benefit of section 5(3) and the Supreme Court had referred the matter to a Larger Bench, Ram Bhadur Takkur Takkur (P.) Ltd. v. Coffee Board, Bangalore [1991] 80 STC 199 (Mad), which dealt with coffee powder and the exemption under section 5(3) of the CST Act and also Collector of Central Excise v. Associated Stone Industries (Kota) Ltd. [2003] 10 SCC 771. The learned Special Government Pleader (Taxes) submitted that the Tribunal had totally lost sight of the change in identity of the goods at the hands of the exporter, and neither granite slabs nor dressed granite....
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....erritory of India. If, in order to fulfil an export obligation, an exporter purchases goods and as result of some processing the identity and character of the goods change, then it will not be a case of export of the same goods. The penultimate sale or purchase of goods must be of those goods which were actually exported." In Shafeeq Shameel and Company v. Asst. Commissioner, Commercial Taxes [2003] 129 STC 1 (SC), which related to the question whether raw hides and skins were same as dry hides and skins, the Supreme Court observed as follows: (at page 1) "...that section 5(3) of the Central Sales Tax Act, 1956, was not applicable where the goods which were sold or purchased had undergone any transformation. Since the dressed hides and skins exported by the appellant were goods different from raw hides and skins purchased by it, the appellant was not entitled to the benefit of exemption of the penultimate sale or purchase under section 5(3) of the CST Act, 1956." We have already found that what were exported by Chettinad Granites were slabs and not blocks. The rough granite blocks undergo a process before they are converted into slabs which are polished on the one side by ....
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....e rough granite blocks. The learned senior counsel also referred to Deputy Commissioner of Sales Tax (Law) v. Pio Food Packers [1980] 46 STC 63 (SC) which dealt with the question whether sliced, canned pineapple was the same as pineapple. There, the words in the section were "consumes such goods in the manufacture of other goods for sale or otherwise" and the court held that pineapple fruit is not consumed in the manufacture of pineapple slices for the purpose of being sold in sealed cans. In fact, there is no manufacture in the present case and therefore, this decision cannot help the assessee. The other case was with regard to shrimps, prawns and lobsters bought locally, whose heads and tails were cut, peeled, deveined, cleaned and frozen before exporting them. The Supreme Court held that the goods were the same. Before the Division Bench of the Karnataka High Court T. Azeezur Rahman and Company v. State of Tamil Nadu [1991] 82 STC 355 was also cited, but that decision had been overruled. In any event, the Karnataka High Court did not rely on this judgment. It held that the rough granite blocks that were sold by the assessee and the polished tiles which were exported by the ex....
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....maller blocks or cut sizes of granite blocks to the exporter and if that exporter exports those small cut sizes of granite blocks, it can definitely be said, that what is sold and what is exported are one and the same commodity...If it was a case of mere cutting or sawing to a specific dimension and beveled edges are polished, it could be a case of export of the same goods and therefore, eligible for tax exemption under section 5(3) of the Act..." The Joint Commissioner has erred under the misconception that the exporters sold granite slabs. We find from the bills of lading that Apex Exports exported dressed granite blocks. A random comparison of the assessee's invoices and the bills of lading showed that even the number of blocks is the same. We are informed that dressing only means that the blocks are cleaned and the rough edges are smoothened. To repeat the words of the Supreme Court in Sterling Foods' case [1986] 63 STC 239: (at page 243) "...The test which has to be applied for the purpose of determining whether a commodity subjected to processing retains its original character and identity is as to whether the processed commodity is regarded in the trade by thos....
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.... with the agreement or order for or in relation to such export must be the same goods which are exported out of the territory of India. Therefore, in view of this decision, the said words must be read in reference to the "agreement or order". The learned senior counsel submitted that Sterling Foods case [1986] 63 STC 239 may not be relied on since in Azad Coach Builders' case [2006] 145 STC 176 (SC), the correctness of the said judgment has been doubted and the matter has been placed for consideration before a larger Bench. In Azad Coach Builders' case [2006] 145 STC 176 (SC), it was held thus: (at pages 181 and 182) "In our view, the scope of section 5(3) needs to be reconsidered. In none of the above judgments cited on behalf of the department, due weightage has been given by this court to the words 'in relation to such exports' occurring in section 5(3). There cannot be a bus without a bus body. The subject-matter of the inter-State movement and the subject-matter of the export is a 'bus' and not a 'bus body'. It cannot be denied that the sale of the bus body by the assessee to the exporter is in the course of export of the bus to Sri....
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....58; [1980] 3 SCR 625 which is called second Coffee Board case. In that case Tulzapurkar, J. speaking for the Bench had to consider the constitutional validity of section 5, sub-section (3) of the Central Sales Tax Act, 1956 which was brought on the statute book in the light of the earlier Coffee Board case judgment of the Constitution Bench in Coffee Board [1970] 25 STC 528 (SC); [1969] 3 SCC 349 and the decision in Serajuddin's case [1975] 36 STC 136; [1975] 2 SCC 47. By the said amendment to section 5(3) the Legislature thought it fit to grant exemption also to the penultimate sales prior to the sales in the course of export by the canalising agency. That was with a view to boost up foreign exchange earnings. While upholding the said amendment it was held that section 5(3) of the Central Sales Tax Act has been enacted to extend the exemption from tax liability under the Act not to any kind of penultimate sale but only to such penultimate sale as satisfies the two conditions specified therein, namely, (a) that such penultimate sale must take place, (i.e., become complete) after the agreement or order under which the goods are to be exported and (b) it must be for the purpose o....