Madras High Court
The State Of Tamil Nadu vs Tvl.Parasakthi & Co. on 5 February, 2021
WP.Nos.44202 & 44203
of 2002
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 05.2.2021
CORAM
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MS.JUSTICE R.N.MANJULA
Writ Petition Nos.44202 & 44203 of 2002
The State of Tamil Nadu, rep.by
the Deputy Commissioner (CT),
Madurai Division, Madurai ...Petitioner in
both WPs
Vs
1.Tvl.Parasakthi & Co., Theni ...R1 in WP.No.
44202 of 2002
2.Tvl.Eswar Finance Corporation,
Theni ...R1 in WP.No.
44203 of 2002
3.The Secretary, Tamil Nadu Sales
Tax Appellate Tribunal (AB), Madurai ...R2 in both
WPs
PETITIONS under Article 226 of The Constitution of India
praying for the issuance of Writs of Certiorari to call for the records
on the file of the second respondent pertaining to the common order
dated 02.12.1999 made respectively in M.T.A.Nos.818 and 819 of
1998 and quash the same as illegal.
https://www.mhc.tn.gov.in/judis/
WP.Nos.44202 & 44203
of 2002
For Petitioner in
both WPs : Mr.Mohammed Shaffiq, SGP
For R1 in WP.No.
44202 of 2002 : Mr.R.Sivaraman
For R2 in WP.No.
44203 of 2002 : Mr.P.Rajkumar
COMMON ORDER
(Order of the Court was made by T.S.SIVAGNANAM,J)
These writ petitions have been filed by the State challenging
the common order passed by the Tamil Nadu Sales Tax Appellate
Tribunal, Additional Bench, Madurai.
2. We have heard Mr.Mohammed Shaffiq, learned Special
Government Pleader appearing for the petitioner, Mr.R.Sivaraman and
Mr.P.Rajkumar, learned counsel appearing for the respective first
respondent in both the writ petitions.
3. The short question, which falls for consideration, is as to
whether the the respective first respondent/dealers are entitled to the
benefit of Section 5(3) of the Central Sales Tax Act, 1956 (for short,
the Act).
4. Section 5 of the Act deals with sale or purchase of goods said
to have taken place in the course of import or export. Sub-Section (3)
of Section 5 of the Act states that not withstanding anything
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WP.Nos.44202 & 44203
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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.
5. The case of the State before us is that the respective dealers
would not be entitled to the benefit of Section 5(3) of the Act because
what were exported, were not those goods, which were purchased.
The dealers purchased coffee seeds and the exporters exported
instant coffee, soluble coffee, Indian spray dried coffee and Indian
soluble coffee. The State would take a stand that the character of the
goods had undergone a change, as, in the instant case, the goods
exported were not the same as coffee seeds.
6. In order to demonstrate the difference between ground
coffee and instant case, the learned Special Government Pleader has
produced a literature. This is with a view to buttress his submission
that both products are commercial commodities and in the instant
case, coffee seeds underwent a process and that the same goods,
which were purchased, were not exported.
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WP.Nos.44202 & 44203
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7. The Tribunal considered the entire factual matrix, took note
of the documents, which were filed, which established that the coffee
seeds were purchased and what was exported was instant coffee. The
Tribunal had to consider as to whether the goods purchased by the
exporter were actually exported as such or as a different commodity.
After taking note of all the features as well as documents, the
Tribunal held that the dealers were entitled to exemption under
Section 5(3) of the Act, as the coffee seeds supplied by the dealers
were roasted, ground, extracted and spray dried, which did not alter
the character of the goods supplied by the dealers.
8. The State seeks to place reliance on the decision of the
Hon'ble Division Bench of this Court in the case of State of Tamil
Nadu rep.by the Deputy Commissioner, Madurai Division,
Madurai Vs. M/s.Vijayalakshmi Leather Industries P. Ltd. [W.P.
Nos.3987, 3997 and 3721 of 2003 dated 11.2.2020].
9. On perusal of the said decision of this Court, we find that the
Hon'ble Division Bench, after noting the decision of the Constitution
Bench of the Honble Supreme Court in the case of State of
Karnataka Vs. M/s.Azad Coach Builders (P) Ltd. [reported in
(2010) 36 VST 1], held that in the said case, there was no link
established between the sale or purchase of raw hides and skins by
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the assessee therein and the export of leather garments or dressed
hides and skins. Furthermore, the Court found that there was no
export order available on record nor the specifications of the purchase
of raw hides and skins by the importer in foreign countries and thus,
held that the decision of the Hon'ble Supreme Court in the case of
M/s.Azad Coach Builders will not help the assessee therein.
10. The facts in the decision of the Hon'ble Division Bench of
this Court in the case of M/s.Vijayalakshmi Leather Industries P.
Ltd., are entirely different and the assessee was not able to establish
the link as explained by the Hon'ble Supreme Court in the decision in
the case of M/s.Azad Coach Builders, which is in the following
terms :
“We respectfully intend to underline that
the exclusion of applicability of “same goods”
theory by the Constitution Bench of the
Hon'ble Supreme Court was propounded in
view of the peculiar facts of the case before
the Constitution Bench and the first ingredient
to Section 5(3) of the Act being satisfied on
facts that the local sale or purchase viz., sale
of bus bodies was inextricably connected or
linked to the actual sale occasioning the
export of the said commodity viz., bus bodies
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by M/s.Tata Motors to the importers in Sri
Lanka. Therefore, even though the 'chassis'
and 'bus bodies' being not the same goods,
the Hon'ble Supreme Court made a departure
from the “same goods” theory and allowed the
exemption in favour of the Assessee in view of
the said inextricable link of sale immediately
preceding the export by M/s.Tata Motors. We
cannot agree with the contentions raised by
the learned Counsel for the Assessee that the
“same goods” theory has been completely
done away with by the said judgment of the
Hon'ble Supreme Court in the case of Azad
Coach Builders (supra).”
11. As rightly pointed out by the learned Special Government
Pleader, the 'same goods” theory cannot be used to widen the
scope of Section 5(3) of the Act. In fact, this was noted by the
Hon'ble Supreme Court in the decision in the case of M/s.Azad
Coach Builders and it was observed that it all depends on the
question as to whether the sale or purchase is inextricably connected
with the export of goods and not a remote connection.
12. In the instant case, the transaction between the dealers and
the exporter and the transaction between the exporter and the
foreign buyer are inextricably connected and this has been clearly
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brought out by the Tribunal after examining the documents, which
were placed by the dealers before it. Therefore, in terms of the
decision of the Hon'ble Supreme Court in the case of M/s.Azad Coch
Builders, the 'same goods' theory would have no application to the
case on hand.
13. That apart, the Tribunal already examined the 'same
goods' theory and rightly took note of the decision of the Hon'ble
Division Bench of this Court in the case of Ram Bhadur Takkur
Takkur (P) Ltd. Vs. Coffee Board, Bangalore [reported in
(1991) 80 STC 99] wherein the relevant portions read thus :
“30. Again, on referring to
Encyclopaedia Britannica, we find the following
:
'Until coffee is roasted it has none of the
flavour or taste generally associated with
coffee. Roasting creates the brown colour and
transforms the natural chemical constituents
into others that give coffee its splendid
aromatic qualities and pleasing taste.'
31. Thus, we hold that the very seeds
purchased by the appellant for the purposes
of fulfilling its obligations arising out of a
contract with a buyer in Romania, were
converted into powder and exported. As we
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have stated above, the very purpose of
purchasing the seeds was for the purpose of
export by the appellant, the appellant being a
registered coffee exporter having been
registered with the Coffee Board.
32. If the contention of the Board that
the very seeds which were purchased ought to
have been exported to claim exemption is
accepted, then, certainly, the Parliament
would not have failed to use the words goods
"as such". However the words used are "those
goods". In other words, so long as the identity
of the goods is not lost, it would remain 'those
goods'.”
14. In the light of the above, we find that three is no error
committed by the Tribunal warranting interference with the common
impugned order.
15. In the result, the writ petitions fail and are accordingly
dismissed. No costs.
05.2.2021
To
The Secretary, Tamil Nadu Sales Tax Appellate Tribunal (AB), Madurai
RS
https://www.mhc.tn.gov.in/judis/
WP.Nos.44202 & 44203
of 2002
T.S.SIVAGNANAM,J
AND
R.N.MANJULA,J
RS
W.P.Nos.44202 & 44203
of 2002
05.2.2021
https://www.mhc.tn.gov.in/judis/
