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2016 (1) TMI 998
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....e Companies Act, has branches in different parts of the country including one at the Special Economic zone Kakkanad, Cochin, and another in Secunderabad. They are engaged in the business of trading in yeast, bakery ingredients and chillies. A substantial part of their operations is said to be of direct export of chillies to foreign countries through its branch at Cochin, and its importer and exporter Code Number is stated to be 0288001532. According to the petitioner, only discoloured chillies or broken chillies, which cannot be exported, are sold either locally or in the course of inter-State trade and commerce; their branch at Cochin, on receipt of orders from intending buyers in foreign countries, intimates the Secunderabad branch to purchase chillies of the required specifications; the Secunderabad branch purchases chillies, strictly in accordance with the requirements of the Cochin branch, in the market yards at Guntur both from cultivators, who are not registered under the AP VAT Act, and also from registered VAT dealers; the chillies, so purchased, are despatched, by way of stock transfer notes and way bills, to the branch at Cochin for export; the Cochin branch, in turn,....
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....deration for exports received by way of foreign remittances to the petitioner's bank accounts, show that the petitioner is the direct exporter; the "Fforms" prove inter-branch transfers and the subsequent export by the petitioner; and the purchases made, within the State of Telangana and Andhra Pradesh, constitutes purchase in the course of export immune from State taxation. The 1st respondent rejected the contentions, put forth by the petitioner in reply the show cause notice, and passed an assessment order levying purchase tax under Section 4(4) of the A.P. VAT Act. In his counter-affidavit, the Deputy Commercial Tax Officer stated that the petitioner has an efficacious alternative remedy of an appeal under the provisions of the A.P. VAT Act; they cannot, therefore, invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India; the respondent visited the petitioner's business premises, and verified the records; examination of the record revealed that the petitioner had not paid tax on the purchase of chillies, and did not claim input-tax credit in accordance with the provisions of the Act; a show cause notice was issued on 28.02.2012, calli....
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....of non-submission of 'H' Forms by the petitioner; the petitioner's branch in Secunderabad can neither be described as a dealer selling goods to their own branch in Cochin SEZ, nor can the latter be described as an exporter to whom the goods were sold by the Secunderabad branch within the meaning of Section 5(4); it is not necessary, therefore, to file 'H' Forms; the petitioner has issued Form 'H' declarations, to all registered VAT dealers from whom chillies were purchased, to enable them to claim exemption from tax; and the subject transactions constitute purchases in the course of export. Dr. S.R.R. Viswanath, Learned Counsel for the petitioner, would submit that the impugned assessment order is without jurisdiction and in violation of Articles 286(1) (b) of the Constitution read with Sections 4(4)(iii) and 5 of the A.P. VAT Act; purchases in the course of export enjoy constitutional immunity from state taxation; levy, under the A.P. VAT Act, is without jurisdiction; the petitioner is, therefore, entitled to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India; Article 286(1)(b) of the Constitution stipulates that no law of a State....
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....which is a dealer under the AP VAT Act were transferred outside the State, the ingredients of Section 4(4) are attracted; as the State Legislature has jurisdiction to levy tax, the petitioner cannot avoid liability to pay tax claiming exemption under the Central Sales Tax Act; and, as the assessing authority had levied tax, in accordance with Section 4(4) of the A.P. Vat Act, no interference is called for. Sri J. Anil Kumar, Learned Special Standing Counsel for Commercial Taxes, would refer to the assessment order to submit that the petitioner had filed their return in Form 200; and, in column 12 thereof, they had claimed that the transactions were stock transfers exempt from tax; they did not state, in their return, that these goods were sold in the course of export under column 13; as the petitioner had themselves claimed exemption as stock transfer, the assessing authority was justified in levying tax under Section 4(4)(iii) of the A.P. VAT Act; and, even otherwise, since the assessing authority had rejected the petitioner's contention on this short ground, he should be permitted to examine the records, and determine whether or not the goods purchased from unregistered dealer....
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....Maharashtra; Pratap Singh v. State of Haryana; and GKN Driveshafts (India) Ltd. v. ITO) (2002) 7 SCC 484. Even otherwise the rule of exclusion of the writ jurisdiction, in view of the existence of an alternative remedy, is not a rule of compulsion. (Harbans Lal Sahnia10; Gujarat Ambuja Cement11). When, on undisputed facts, the taxing authorities are shown to have assumed jurisdiction which they do not possess, a writ petition can be entertained. (Gujarat Ambuja Cement11). Some exceptions to the rule of alternative remedy have been recognized i.e. where the statutory authority has not acted in accordance with the provisions of the enactment or in defiance of the fundamental principles of judicial procedure etc. (Chhabil Dass Agarwal (2014) 1 SCC 603). The existence of an alternative remedy is merely a factor to be considered, and would not impinge upon the jurisdiction of the High Court to deal with the matter itself if it is in a position to do so on the basis of the affidavits filed. (S.J.S. Business Enterprises (P) Ltd. v. State of Bihar). If the High Court has entertained a petition, despite availability of an alternative remedy, and has heard the parties on merits it would, ....
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....ttract levy of tax at the stage of its purchase. Broadly speaking, the effect of Section 4(4) is: tax payable at sale point becomes tax payable on the purchase point in certain circumstances. Because the seller is not, or cannot be, taxed for certain reasons, the purchasing dealer is being taxed. The purchaser is taxed provided one of the conditions specified in clauses (i) to (iii) of Section 4(4) are satisfied. (Hotel Balaji v. State of A.P. (1993) 88 STC 98). Where goods, liable to tax under the Act, are purchased by a VAT dealer from other dealers who are not registered under the Act, and the goods have not suffered any sales tax, a liability is imposed on the purchasing dealer to the extent the goods purchased by him are used as specified in clauses (i) to (iii) of Section 4(4). (M/s. P. Subbaraju & Co., Kondapalli v. State of A.P.; Hindustan Milkfood Manufacturers Ltd. (1982) 51 STC 1 (APHC)). Section 4(4)(iii) of the A.P. VAT Act stipulates that every VAT dealer, who in the course of his business purchases any taxable goods from a person or a dealer not registered as a VAT dealer or from a VAT dealer in circumstances in which no tax is payable by the selling VAT dealer....
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....l within the ambit of Section 4(4)(iii) of the Act. There is a bar, under Article 286(1)(b) of the Constitution, for the State to impose tax on the sale or purchase of goods, where such sale or purchase takes place in the course of export of goods out of the territory of India. Article 286 of the Constitution places restrictions as to the imposition of tax on the sale or purchase of goods and, under clause (1)(b) thereof, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place in the course of the import of the goods into, or export of the goods out of, the territory of India. Article 286(1)(b) of the Constitution forbids a State from imposing or authorising the imposition of a tax on the sale or purchase of goods when such sale or purchase takes place in the course of the export of goods outside the territory of India. (State of Maharashtra v. Embee Corporation). In view of the bar imposed by Article 286(1)(b) of the Constitution of India, Section 5(b) of the A.P. VAT Act also stipulates that nothing contained in the A.P. VAT Act shall be deemed to impose or authorize the imposition of a t....
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....r export outside of, the territory of India. (Embee Corporation, Bombay32) . Section 5, in Chapter II of the CST Act, stipulates when a sale or purchase of goods is said to take place in the course of import or export and, under sub-section (1) thereof, a sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. Section 5(3) stipulates that, notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods, preceding the sale or purchase occasioning the export of those goods out of the territory of India, shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export. Section 5(4) stipulates that the provisions of sub-section (3) shall not apply to any sale or purchase of goods unless the dealer selling the goods furnishes to the prescribed authority, in the prescribe....
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....pany, and do not possess separate juridical personalities. The branches have no independent and separate entity and, where a branch office sells the goods to the buyer, it is a sale between the Company and the buyer. (Sahney Steel & Press Works Ltd. (1985) 60 STC 301 (SC); English Electric Company of India Ltd. (1976) 38 STC 475 (SC)). Where the movement of the goods from the registered office in one State is occasioned by the order placed by a foreign buyer, or is an incident of such a contract, its movement from the very beginning, from the State of A.P/Telangana all the way until delivery is received by the foreign buyer, is movement of goods for the purpose of export. The purchase of goods in the State of Andhra Pradesh/Telangana, and its movement thereafter to the branch office outside these States, is an incident of the contract entered into with the foreign buyer, if it was intended that the same goods should be delivered by the branch office outside these States to the foreign buyer as there would be no break in the movement of the goods. (Sahney Steel & Press Works Ltd.2). In Nipha Export Pvt. Limited v. State of Haryana, the petitioner-company had its registered off....
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....ents of Section 5(1) of the CST Act, no tax can be levied on the stock transfer of chillies from Secunderabad branch to Cochin branch as it is not a case of a mere stock transfer, and the entire process appear to be in the course of export of the goods outside the territory of India, in terms of Section 5(1) of the CST Act. In East India Tobacco Co.1, the appeals filed before the Supreme Court were against the judgment of the Andhra Pradesh High Court. Prior to 1/10/1953, the area wherein the appellants carried on business formed part of the State of Madras, and on that date the State of Andhra was constituted, and the area in question fell within Andhra State. The law relating to the sales tax in force in that area was the Madras General Sales Tax Act, 1939. After the Andhra State came into existence the Legislature of that State enacted Act XIV of 1955 amending Section 5 of the Madras General Sales Tax Act. Pursuant to the Amendment Act, the Andhra Government issued a notification on 04.11.1955 cancelling the earlier notification No. 144 dated 31/03/1953 issued by the Madras Government. The validity of Andhra Act XIV of 1955, in so far as it imposed a tax on the sale of Virgin....
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....side India. As neither the Secunderabad branch nor the Cochin branch have a distinct and separate legal entity, and only form part of the petitioner company, transfer of stock can neither be treated as a sale of goods by the Secunderabad branch to the Cochin branch nor can the Secunderabad branch of the petitioner company claim the benefit of Section 5(3) of the CST Act whereunder sale of goods, preceding the sale occasioning export, is also deemed to be in the course of export if the conditions stipulated therein are satisfied. Section 6(A)(1) of the CST Act stipulates that, where any dealer claims that he is not liable to pay tax under the CST Act in respect of any goods, on the ground that the movement of such goods from one State to another was occasioned by reason of the transfer of such goods by him to any other place of business, and not by reason of sale, the burden of proving, that the movement of those goods was so occasioned, shall be on that dealer and, for this purpose, he may furnish, to the assessing authority, a declaration duly filled and signed by the principal officer of the other place of business containing the prescribed particulars in the prescribed Form o....
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....ied, the stock transfer from one branch of a company to another for its eventual export cannot, in view of Section 5(b) of the A.P. VAT Act, be subjected to tax under the A.P. VAT Act as it is a sale in the course of export. In any event Section 4(4)(iii) of the A.P. VAT Act is not attracted where the goods, after its purchase, are disposed of in the course of export out of the territory of India. The assessment orders, under challenge in these Writ Petitions, are, accordingly, set aside. As noted hereinabove, Sri J. Anil Kumar, Learned Special Standing Counsel for Commercial Taxes, contended that the assessing authority had rejected the petitioners claim, on the ground that Form-H had not been produced; and he does not appear to have examined whether or not the stock of chillies, purchased by the Secunderabad branch of the petitioner-Company from farmers and then transferred to the Cochin branch, were in fact exported out of the territory of India. Dr. S.R.R. Viswanth, Learned Counsel for the petitioner, would fairly state that the petitioners have no reason to avoid being subjected to scrutiny by the assessing authority in this regard. In Rajesh Spices Co 2008 (11) VST 303 ....