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Allahabad High Court · body

2005 DIGILAW 1002 (ALL)

Commissioner, Trade Tax v. Rajendra and Company

2005-05-20

PRAKASH KRISHNA

body2005
PRAKASH KRISHNA, J. ( 1 ) THE above revision is directed against the order dated 23rd of November, 1995 passed by the trade Tax Tribunal Gorakhpur in second appeal No. 184 of 1992. ( 2 ) THE dealer opp. party carried on the business of purchase and sale of Kirana, spices etc. For the assessment year 1987-88 the dealer opp. party claimed exemption on the sale turnover of Rs. 1,74,722-70 on the ground that it was sale in the course of export to Nepal. The Assessing officer accepted the account books but rejected the aforesaid claim of exemption on the ground that the nature of transaction was different from transaction of sale in the course of export. In support of the claim, the dealer produced 4 custom certificates issued from the office of Bhairwa, out of them the Custom Officer, Bhairwa by his letter dated 6. 9. 1990 informed that except one certificate other certificates were forged. Signature of Shri Vyas on the custom certificate produced by the dealer did not tally with the genuine signature of Shri Vyas. The Custom Officer informed about the other irregularities also to show that the custom certificates produced by the dealer opp. party were not genuine and they contained fabricated seal. The assessment order was confirmed in appeal. But the Tribunal in second appeal accepted the aforesaid claim of sale in the course of export to Nepal. ( 3 ) HEARD the counsel for the parties and perused the record. ( 4 ) THE learned standing counsel for the department submitted that the dealer opp. party has failed to establish the genuineness of the custom certificates and that the sales were made in the course of export to Nepal. The goods were dispatched from Gorakhpur to Nepal. The goods were dispatched from Gorakhpur to Nautanwa through M/s. Deepak Transport Agency. According to him the necessary ingredients to establish the sale in the course of export are missing in the present case. It is not sufficient that the goods have ultimately went out of the country. It is essential that the sale made by the dealer opp. party should be intimately connected with the movement and export and must result in crossing outside the country and must run a channel. They must be connected with each other and if interlinked then only it can be said in the course of export. It is essential that the sale made by the dealer opp. party should be intimately connected with the movement and export and must result in crossing outside the country and must run a channel. They must be connected with each other and if interlinked then only it can be said in the course of export. The learned counsel for the dealer opp. party supported the order of the Tribunal. ( 5 ) THE assessing officer found that on verification of custom certificates produced by the dealer during the course of original assessment proceedings, they were found to be forged and fictitious. It has been further found that the custom certificates of Custom Officer, Bhairwa were forged in asmuch as the signatures of Shri Vyas, the then Custom Officer, Bhairwa were fabricated on the said custom certificates. The signature of the Custom Officer on the custom certificates produced by the dealer opp. party did not tally with the genuine signature of the custom Officer. The seal on the custom certificate was also fabricated one. These findings of the assessing Authority were confirmed in appeal by the First Appellate Authority. However, the tribunal by a strange process of reasoning has set aside the reassessment order. The Tribunal was of the view that the officer who has issued custom certificate, only he can dispute the genuineness of the custom certificate and no other person has such authority. The perversity of the above reasoning is writ large. The Assessing Authority has given valid and good reasons such as the signature on the disputed certificates did not tally with the undisputed signature of the Custom Officer. Besides it the seal of the Custom Office put on the disputed certificates is not genuine. These findings have not been set aside by the Tribunal. It is relevant to state here that the dealer opp. party could not dare to produce the account books on any other material to dispute the correctness of the aforesaid observations of the Assessing Officer. The Tribunal was of the view that for the purposes of export, only this much is required to be seen as to whether the goods have been exported outside India or not. The aforesaid reasoning of the Tribunal cannot be accepted. The dealer claimed exemption from tax on the basis of custom certificates which have been found to be forged and fabricated one. The aforesaid reasoning of the Tribunal cannot be accepted. The dealer claimed exemption from tax on the basis of custom certificates which have been found to be forged and fabricated one. It was for the dealer to establish that the goods have been sent outside the country. There is no material on record to show that the goods were dispatched outside the country in the absence of valid custom certificates. The Tribunal has assumed facts on the basis of the custom certificates sent by the Nepal dealer that the goods were exported outside India. ( 6 ) THE Tribunal treated the transaction in question as sale in the course of export on the ground that the real test is whether the goods have actually crossed the border of the country or not. The approach of the Tribunal in the matter is contrary to the various judicial pronouncements and therefore cannot be approved. ( 7 ) IN order to appreciate the view taken by the Tribunal it is necessary to refer to Section- 5 of the Central Sales Tax Act, which reads as under: 5. When is a sale or purchase of goods said to take place in the course of import or export; (1) 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. (2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India. " ( 8 ) THE phrase " (in the course of export)" infect has been borrowed from Article 286 of the constitution. Supreme Court has considered this matter in number of cases including in B. B. Nilgiri Plantation Company v. Sales Tax Officer 15 STC 753. " ( 8 ) THE phrase " (in the course of export)" infect has been borrowed from Article 286 of the constitution. Supreme Court has considered this matter in number of cases including in B. B. Nilgiri Plantation Company v. Sales Tax Officer 15 STC 753. It has laid down following principles of law on page 759: "a sale in the course of export predicates a connection between the sale and export, the two activities bring so integrated that the connection between the two cannot be voluntarily interrupted without breach of the contract or the compulsion arising from the nature of the transaction. In this sense to constitute a sale in the course of export it may be said that there must be an intention on the part of both the buyer and the seller to export, there must be an obligation to export and there must be an actual export. The obligation may arise by reason of statute; contract between the parties or from mutual understanding or agreement between them or even from the nature of transaction which links the sale to export. A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a sale for export, but is not necessarily to be regarded as one in the course of export unless the sale occasions export. And to occasion export there must exist such a bond between the contract of sale and the actual exportation, that each link is inextricably connected with the one immediately preceding it. Without such a bond, a transaction of sale cannot be called a sale in the course of export of goods out of the territory of India. There are a variety of transactions in which a sale of a commodity is followed by export thereof At one end are transactions in which there is a sale of goods in India for foreign consumption. For instance the foreign purchaser either by himself or through the agent purchases goods with in the territory of India and exports the goods and even if the seller has the knowledge that the goods are intended by the purchaser to be exported, such a transaction is not in the course of export for the seller does not export the goods, and it is not his concern as to how the purchaser deals with the goods. Such transaction without more cannot be regarded as one in the course of export because etymologically "in the course of export" contemplates an integral relation or bond between the sale and the export. " ( 9 ) BOTH the learned counsel for the parties have placed reliance upon the aforesaid paragraph of the judgment. Learned counsel for the dealer opposite party has placed further reliance upon Full bench judgment of this Court given in the case of National Carbon Company v. Commissioner of Sales Tax, 23 STC 388. Relevant paragraph is quoted below: "4- This passage has been relied by learned counsel for both parties. The learned counsel for assessee emphasized on the observations, such a transaction without more cannot be regarded as one in the course export and urged that ratio of this case did not apply as there was more in this case which resulted in making the sale "in course of export". The learned counsel argued that in national Carbon Company v. Commission of Sales Tax, 23 STC 388 it was held by a Full Bench of this Court: "from what has been stated above it is clear that the destination of the goods shown in Form A r-4 was a place in Nepal and the route by which the goods were intended to be exported was also indicated The name of the buyers mentioned in that form also is that of the dealer of Nepal. These facts show very clearly not only the intention of the parties to export, but also an obligation on their part to do so. As the assessee company was to claim rebate of the excise duty and that rebate was admissible only if goods were actually exported outside India in accordance with the declaration contained in Form AR-4 an understanding between the assessee company and the buyers to export the goods outside the India territory can safely be assumed. " Reliance was also placed on the following observation in State of Bihar and Ors. v. Tata engineering and Locomotive Co. Ltd. 27 STC 127:"the expression in the course of appearing in Article 286 (1) (b) came up for consideration in state of Travancore Cochin v. Bombay Company Limited. " Reliance was also placed on the following observation in State of Bihar and Ors. v. Tata engineering and Locomotive Co. Ltd. 27 STC 127:"the expression in the course of appearing in Article 286 (1) (b) came up for consideration in state of Travancore Cochin v. Bombay Company Limited. There in this Court held that whatever else may or not fall within Article 286 (1) (b) of the Constitution, sales and purchases which themselves occasion in export or import of the goods as the case may be out of or into the territory of India come within the exemption. In that case this Court further observed that a sale by export involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea. Such a sale cannot he dissociated from the export without which it cannot be effectuated and the sale and the resultant export form parts of a single transaction. Of these two integrated activities, which together constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other. Even in cases where the property in the goods passed to the foreign buyers and the sales were thus completed within the State before the goods commenced their journey from the State, the sales must be regarded as having taken place in the course of the export and therefore exempt under Article 286 (1) (b ). The same exposition of law is true of Clause (2) of Article 286 as it stood prior to its amendment on 11th september, 1956" ( 10 ) IT was also urged that passing of title in Indian Territory was immaterial. Whether the title passed in Indian Territory or foreign territory, according to the learned counsel, did not make any difference as for deciding whether the sale was in course of export, what had to be seen was whether the sale had occasioned the export. Attention was drawn to Commissioner of Sales Tax v. Dhampur Sugar Mills Limited and Anr. , 26 STC 65 where the sale was held to be in course of export although the deliver) of goods was made to foreign buyers within Indian territory. Attention was drawn to Commissioner of Sales Tax v. Dhampur Sugar Mills Limited and Anr. , 26 STC 65 where the sale was held to be in course of export although the deliver) of goods was made to foreign buyers within Indian territory. In this connection learned counsel relied on following observation in Union of India v. K. G. Khosla Co. Ltd. 1979 UPTC 751 "that a sale which occasions movement of goods from one State to another is a sale in course of inter state trade, no matter in which State the property in the goods parses. " ( 11 ) THE aforesaid decisions along with other decisions have been considered by the learned single Judge of this Court in the case of Commissioner of Sales tax v. Ganeshilal and Sons 1981 UPTC Page 128 and has held that from the language of Section- 5 of the Central Sales Tax act it is clear that it a sale in the course of export only which is exempt and not "sale for export ". When can a sale said to be in the course of export or for export depends on the variety of circumstances. The export means taking out something out of the Country across the Custom barriers. The word "course" means "sequence", process, a patch" in which anything moves. The sequence of movement should be preceded by sale and must result in export to attract Section- 5. The sale, movement and export must result in crossing of goods outside the country and must run in a channel. They must be connected with each other and inter linked then only it can be said to be in the course of export. ( 12 ) IN view of the above discussion, it cannot be said that the sales made by the dealer opp. party were made in the course of export to Nepal. There is nothing on record to show that the sales made by the dealer opp. party were part of the movement of goods from India to outside India and was interlinked and connected with the crossing of border of the country. The dealer opp. party transported the goods from Gorakhpur to Nautanwa and the bilti was prepared in its name. There is nothing on record to show that the sales made by the dealer opp. party were part of the movement of goods from India to outside India and was interlinked and connected with the crossing of border of the country. The dealer opp. party transported the goods from Gorakhpur to Nautanwa and the bilti was prepared in its name. Merely because it was mentioned that the goods were meant for export to Nepal, the tribunal committed illegality in drawing an inference that the goods have crossed the custom border of India. Specially when the custom certificates produced by the dealer have been found to be forged and fabricated one. ( 13 ) IN the result the order of the Tribunal cannot be sustained. The same is hereby set aside. The revision is allowed and the appeal filed by the dealer opp. party before the Tribunal stands dismissed with cost of Rs. 1,000/- (Rupees one thousand only ). . .