Pvt. Ltd. Vs. State of Kerala  INSC 1348 (12 August 2008)
JURISDICTION CIVIL APPEAL NO.4998 OF 2008 (Arising out of S.L.P.(C)
No.10325/2007) Alagendran Exports Pvt. Ltd. ...Appellant(s) Versus State of
Kerala ...Respondent(s) ORDER Leave granted.
This Civil Appeal is
directed against the judgment and order dated 29th August, 2006 passed by the
Kerala High Court in S.T.Rev.No.104/2004. By the impugned order, the Revision
filed by the appellant herein stood dismissed on the ground that the issue is
covered by the decision of this Court in the case of State of The appellant is
a private limited Company incorporated under the Companies Act, engaged in the business
of export of cashew kernels. It has purchasing depots in the State of Kerala
for the purchase of cashew kernels for exports.
During the Assessment
Year 1998-1999, the appellant claims to have purchased cashew kernels for the
value of Rs.1,92,67,236/- from the registered dealers within the State of
Kerala for the purposes of export. According to the appellant, the said
purchases were covered by declarations in Form 18A. The 1 appellant claims that
since the said purchases were covered by declarations in Form 18A, the
transactions stood covered by Section 5(3) of the Central Sales Tax Act, 1956
(1956 Act, for short) and such purchases/sales were not liable to tax within
the State of Kerala.
In this case, the
Department had issued a pre-assessment notice dated 5th March, 2003 in which it
was alleged that the appellant had failed to produce any evidence indicating
payment of tax on purchases made by it from the local dealer and, consequently,
the appellant was liable to pay tax under Section 5A of the Kerala General
Sales Tax Act, 1963 (1963 Act, for short). This allegation was denied by the
appellant in its reply to the notice dated 5th March, 2003. By order dated 20th
March, 2003, the Assessing Officer (AO) held that since the goods were either
stock transferred or effected vide deemed export sales, the purchases were
liable to tax under Section 5A of the 1963 Act. The AO further held that the
appellant had not produced any evidence to show payment of tax on the cashewnut
kernels purchased by it locally. Consequently, the Returns filed by the
appellant stood rejected.
Aggrieved by the
Order passed by the AO, the appellant carried the matter in S.T.A.Nos.380 &
381/03 before the Deputy Commissioner (Appeals). The Appeal was dismissed.
While dismissing the Appeal, the Deputy Commissioner (A) held that the
appellant was unable to prove that the purchases were from registered dealers
and, therefore, according to the Deputy Commissioner, the Assessing Authority
was right in assessing the turnover to tax under Section 5A of the 1963 Act.
Accordingly, the Deputy Commissioner (A) dismissed the Appeal filed by the
This order has been
confirmed by the Tribunal in Second Appeal and finally by the High Court.
Hence, this Civil Appeal.
In this case, there
is total confusion regarding the facts. The transactions undertaken cover
exports and deemed exports sale. In this Civil Appeal, we are concerned only
with the question as to whether the purchases of the value of Rs.1,92,67,236/-
made by the appellant were purchases in the course of export and, if so,
whether the said transactions stood covered by Section 5(3) of the Central
Sales Tax Act, 1956 and, consequently, not liable to tax under Section 5A of
the 1963 Act.
It appears from the
records that the authorities below rejected the claim of the appellant on the
ground that the appellant had purchased cashew kernels from unregistered
dealers in the State. This allegation has been denied by the appellant.
In our view, the most
important aspect, which has not been decided by the AO, is whether the
purchases made by the appellant were in the course of export in terms of
Section 5(3) of the 1956 Act. It appears from the Memo of Appeal filed before
the Appellate Tribunal that the appellant had produced Trading Accounts and
details of purchases for the Assessment Year 1998-1999, list of domestic
purchases supported by sale bills issued by registered dealers within and
outside the State against Form 18A, prior purchase orders of foreign buyers,
copies of export invoices, bill of lading and other records. In such matters,
it is the duty of the AO to collate the facts and ascertain whether the
purchased cashew kernels worth Rs.1,92.67,236/- were effected in the course of
export. Applicability of B.M.Ashraf's case (supra) would depend on the factual
foundation. In this case, that factual foundation is missing.
Therefore, in our
view, the matter needs to be remitted to the Deputy Commissioner (Appeals)-I,
Commercial Taxes, Ernakulam. We make it clear that 3 the Deputy Commissioner
(A) will consider the averments in the Memo of Appeal filed by the appellant
herein and decide the matter after taking into consideration the documents
referred to herein-above and give a finding as to whether the purchases worth
Rs.1,92,67.236/- were effected in the course of exports or not. For that
purpose, the Deputy Commissioner (A) will have to ascertain the exact date of
purchase from the local market, the date on which the appellant received the
export orders from foreign buyer, copy of export invoices, bills of lading etc.
Lastly, the Deputy Commissioner (A) will also examine the question as to
whether the appellant itself effected exports or whether, in turn, the
appellant sold the goods in question to other exporters. All these questions
are required to be decided only in the context of purchases effected by the
appellant worth Rs.1,92,67,236/-.
For the afore-stated
reasons, Civil Appeal is allowed and the matter is remitted to the Deputy
Commissioner (A) to decide the afore-stated aspect once again in accordance
No order as to costs.
Delhi, August 12, 2008.