CASE NO.: Special Leave Petition (crl.) 20028 of 2006 PETITIONER: National Aluminium Co. Ltd RESPONDENT: The State of A.P. & Ors DATE OF JUDGMENT: 19/02/2008 BENCH: Dr. ARIJIT PASAYAT & P. SATHASIVAM JUDGMENT:
J U D G M E N T
CIVIL APPEAL No. OF 2008
(Arising out of SLP (C) No. 20028 of 2006)
with
Civil Appeal No. /2008
(Arising out of SLP (C) No. 20030 of 2006),
Civil Appeal No. /2008
(Arising out of SLP(C) No.20031/2006,
Civil Appeal No. /2008
(Arising out of SLP (C) No. 20032/2006)
Dr. ARIJIT PASAYAT, J
1. Leave granted.
2. Challenge in these appeals is to certain conclusions
recorded in the order passed by the Sales Tax Appellate
Tribunal, Andhra Pradesh, Hyderabad (in short the ‘Tribunal’)
in TMP Nos.125 of 2005, 259/2005,260/2005 and 261/2005.
3. Background facts in a nutshell are as follows:
National Aluminium Co. Ltd. is a Government of India
enterprise under the administrative control of the Ministry of
Mines. The registered and corporate office of the appellant is
situated at Bhubaneswar in Orissa State, while it has
mercantile offices in a few cities including Visakhapatnam.
The substantial part of the commercial operations of the
appellant are carried out only in the State of Orissa. For the
purpose of causing export to foreign countries,
Visakhapatnam port is being used by the appellant. It is the
case of the appellant that there is no sale or purchase of goods
carried out by it in the State of Andhra Pradesh.
It is also the case of the appellant that they would earn
Credit Duty Entitlement Pass Book (DEPB) licence as
contemplated under Exim Policy as a result of their export.
For the period from 1.4.1997 to 31.3.2001, the Duty
Entitlement Pass Book scheme was there. The object of the
scheme was neutralization of incidence of customs duty on
the import content of the export product. Such neutralization
was provided by way of grant of duty credit against export
product. The export unit has also been conferred with the
right to utilize the said credit for its own purpose or to
transfer of the same to third parties for availment of the
benefit of the said credit.
For the exports made by the appellant from
Visakhapatnam Port, the petitioner submits an application for
issue of DEPB to DGF`I’, Cuttack, Orissa along with customs
endorsed copy of shipping bill. The customs authorities check
the details of exports mentioned in the DEPB with their
records, register the license and return the original license to
the appellant. It is also the case of the appellant that since the
exports of the appellant are effected at Visakhapatnam Port,
an account of DEPB licenses is maintained by the customs
authority at Visakhapatnam.
The appellant either uses DEPB licence for payment of
customs duty for their own import or sells the surplus DEPB
license by inviting advertisement. As per the terms, the DEPB
license entitles the holder of such license to import through
any port in the country. Accordingly, the appellant had been
exporting aluminium through Visakhapatnam Port in Andhra
Pradesh. Against these exports, the petitioner got some import
duty entitlement under the DEPB scheme. It held open
auctions of these entitlements from the Head Quarters at
Bhubaneswar in Orissa State. In those auctions the bidders
from West Bengal and Maharashtra emerged as the highest
bidders. Accordingly, the appellant sold the import duty
entitlement under the DEPB Licenses to the highest bidders
and treating the same as inter-state sale, collected and paid
CST to the Government of the exporting State i.e., Orissa.
The Assessing Authorities in Andhra Pradesh issued
show cause notice proposing to levy tax under the Andhra
Pradesh General Sales Tax Act, 1956 on the transactions
relating to transfer of the DEPB Licenses on the ground that
such licenses were registered with Visakhapatnam Port
through which the export took place. The authorities
considered it to be local sales within Andhra Pradesh and
accordingly levied tax.
The appellant filed appeals before this Court. A three-
judge judge Bench by order dated 1st February, 2005 in Civil
Appeal Nos. 1649-1654 of 2001 directed the matter to be
considered by the Tribunal for determining the issues
involved. That is how the Tribunal took up the matter for
consideration. By the impugned common judgment, the
Tribunal decided the matter in favour of the appellant holding
that the sale did not take place within the State of Andhra
Pradesh. But held that it took place inside the State of Orissa
as per Section 4(2) of the Central Sales Tax Act, 1956 (in short
the ‘CST Act’). The ultimate conclusion which is the subject
matter of challenge in these appeals reads as follows:
“In the light of the discussions, we hold that
the sales took place within the State of Orissa
and not within the State of Andhra Pradesh
and as such it should be treated as intra-state
sale within the State of Orissa and not intra-
state sale within Andhra Pradesh.”
4. It is the stand of the appellant in these appeals that the
Tribunal could not have recorded a finding that there was an
intra-state sale within the State of Orissa. That was not the
subject matter of dispute before the Tribunal. Strictly speaking
there was no sale involved to attract levy of any sale tax. But
without any material to hold that there was any sale involved
and that too an intra state sale within the State of Orissa, the
Tribunal could not have come to the impugned conclusion. It
is contended that Central Sales tax has been deposited in the
State of Orissa in respect of the transaction, though legally no
tax was payable.
5. Learned counsel for the State of Andhra Pradesh
submitted that the Tribunal has decided the basic issues that
there was no sale within the State of Andhra Pradesh. But on
the facts came to a tentative conclusion about this intra-state
sale in the State of Orissa.
6. Learned counsel for the State of Orissa submitted that
the Tribunal’s conclusions do not suffer from any infirmity.
According to him, there may be a typographical error i.e. intra-
state sale in place of inter-state sale.
7. It is clear that the scope of consideration before the
Tribunal was very limited as to whether any sale took place
within the State of Andhra Pradesh. Having decided that
issue, Tribunal was not required to go into any other question
particularly when the relevant factors were not before it. As
rightly contended by the appellants there was no material
whatsoever to show that the sales could be treated as intra
state sale within the State of Orissa. The assessing authorities
proceeded to levy tax on erroneous premises. In the ultimate
analysis the Tribunal held that the sales did not take place
within the State of Andhra Pradesh. The conclusions to the
effect that they are intra-state sales in Orissa are
unsustainable. It was rightly decided that there was no intra-
state sale within Andhra Pradesh. But for further conclusion
that there was an intra state sale within the State of Orissa,
materials were required to be examined. That has not been
done. There was no material before the Tribunal to come to a
definite finding, as done, that the transaction should be
treated as intra state sale within the State of Orissa. The
observations, therefore, have no relevance and need to be set
aside, which we direct.
8. The appeals are allowed to the aforesaid extent.