ORDER
Janarthanam, J.
1. This revision, at the instance of the Revenue, is directed against the order dated October 11, 1988 of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madras-104 (for short, “the Tribunal”) and made in T.A. No. 1465 of 1986 relatable to the assessment year 1984-85 under the Central Sales Tax Act, 1956 (for short, “the CST Act”).
2. The assessee, Tvl. Trade International, having their place of business at 347. Mint Street, Madras-79, are dealers in paper and plywoods, coming within the jurisdiction of Deputy Commercial Tax Officer, Peddunaickenpet (South) Assessment Circle, Madras-1. The total and taxable turnover of the assessee-dealers were determined at Rs. 5,54,219 and Rs. 3,85,000 respectively by the assessing officer. In respect of the taxable turnover to the tune of Rs. 3,85,000, it is said, the assessee-dealers purchased plywoods from a registered dealer at Arunachala Pradesh, wherein the goods, viz., plywood is stated to be exempt from tax. It appears, the assessee-dealers effected further sales, while the goods were in transit to another registered dealer at Madras. The assessing officer taxed the inter-State sale to the tune of Rs. 3,85,000 at the hands of the assessee-dealers at 4 per cent, since they failed to file E1 form certificate.
3. The assessee-dealers filed an appeal in C.S.T. 156/86 before the Appellate Assistant Commissioner (C.T.)-II, Madras City and he, in turn, after taking into consideration the relevant materials in the file, dismissed the appeal by order dated November 24, 1986 and thereby confirmed the order of the assessing officer.
4. The assessee-dealers further agitated the matter before the Tribunal, as stated above, and the Tribunal, in turn, after taking into consideration the relevant materials in the file, however, allowed the appeal by its order dated October 11, 1988, by setting aside the orders of both the assessing officer, as well as the Appellate Assistant Commissioner, giving rise to the present action – T.C. (R) No. 1041 of 1990.
5. From the pith and submissions of Mr. R. Mahadevan, learned Government Advocate, representing the Revenue and Mr. D. Trilokchand Chopda, learned counsel appearing for the assessee-dealers, the point, as below, emerges for consideration :
Whether the order of the Tribunal giving relief to the assessee-dealers on the ground of the sale falling under section 6(2) of the CST Act, on the facts and in the circumstances of the case, is sustainable in law ?
6. There is no pale of controversy that the assessee-dealers approached a registered dealers at Arunachala Pradesh for the despatch of goods, viz., plywoods from Arunachala Pradesh to Madras, pursuant to a contract of sale. It is also not in dispute that the said Arunachala Pradesh dealer effected the despatch of the said goods as requested for by the assessee-dealers. Equally, it is also not in dispute that the assessee-dealers effected a subsequent sale of the said goods, while they were in transit to another registered dealer at Madras. The moot issue covering the question as framed above is as to whether such a subsequent sale, on the facts and in the circumstances of the case, is exempt from tax under C.S.T. Act falling under the sanguine and statutory provisions adumbrated under section 6(2)(a) of the CST Act.
7. For answering the ticklish issue so posed, better it is, for us to understand the scheme of taxation in CST Act, relatable to inter-State sale or purchase of goods.
(a) Section 3 deals with, when is a sale or purchase of goods said to take place in the course of inter-State trade or commerce.
(b) Section 4 prescribes the parameters as to when is a sale or purchase of goods said to take place outside a State.
(c) Similarly, section 5 incorporates the relevant provisions as to when is a sale or purchase of goods said to take place in the course of import or export.
(d)(i) Section 6 determines the liability to tax on inter-State sales. Subject to the parameters prescribed in the said section, any number of inter-State sales are liable to be taxed.
(ii) Sub-section (2) of the said section contains specific requirements for a subsequent sale effected during movement of goods by transfer of documents for exemption from tax.
(e) The specific requirements are that the sale of such goods must be effected to the Government or to a registered dealer other than the Government and that apart, the sale of the goods effected must be of the description referred to in sub-section (3) of section 8. Unless these requirements are fulfilled, the exemption under the said sub-section is impermissible.
(f) Section 6A deals with the burden of proof, etc., in the case of transfer of goods claimed other than by way of sale.
(g) Section 7 deals with the registration of dealers.
(h) Section 8, deals with the rate of tax of sales in the course of inter-State trade or commerce.
(i)(a) Section 9 deals with the levy and collection of tax and penalties.
According to sub-section (1) thereof, the tax is to be levied by the Government of India and the tax so levied shall be collected by the Government in accordance with the provisions of sub-section (2) in the State from which the movement of goods commenced.
(h) A proviso thereto is also appended and the said proviso prescribes certain parameters or conditions required to be fulfilled before ever the appropriate State Government inheres the power to tax a subsequent inter-State sale. The subsequent sale must have to be happened during the movement of goods from one State to another and that apart, such a subsequent sale does not fall within sub-section (2) of section 6.
(j) If these two conditions are satisfied, the proviso gives power to the State from which the registered dealer obtained or as the case may be, could have obtained the form prescribed for purpose of clause (a) of sub-section (4) of section 8 in connection with the purchase of such goods, to tax. It further provides that where such subsequent sale has been effected by an unregistered dealer, the tax shall be levied and collected in the State from which subsequent sale has been effected.
8. In the back drop of the scheme of taxation, as has been provided in CST Act, let us now make an endeavour to give a legal fitment to the factual matrix of the instant case. No line of enquiry, we rather feel, was undertaken at any level of the proceedings as to whether the goods, viz., plywoods dealt by the assessee-dealers in subsequent sale were covered by certificate of registration, either for the purpose of resale or for use by him in the manufacture or processing of goods for sale, as had been prescribed by sub-section (3) of section 8.
9. Admittedly, in the case on hand, the assessee-dealers were stated to have effected subsequent sale to a registered dealer in Madras. Unless and until the certificate of registration of the assessee-dealers covers the item of goods he purchased on inter-State sale, viz., plywoods, for the purpose of resale, they cannot have the benefit of exemption under section 6(2) of the CST Act. This sort of a thinking was not at all in contemplation at any stage of the proceedings before the authorities below. In such state of affairs, the assessee-dealers could not be expected to furnish relevant materials for getting exemption under section 6(2).
10. In this view of the matter, we rather feel, in the interests of justice, the case has to be remitted back to the assessing officer to have a fresh look into the matter in the light of what we have observed above. We, therefore, set aside the orders of all the authorities below, inclusive of the Tribunal and remit the case back to the assessing officer to consider the matter afresh, as we have indicated above.
11. Before parting with this matter, we desire to pen down here the able assistance rendered by Mr. C. Natarajan, learned Senior Counsel. We procured the amicus curiae assistance of Mr. C. Natarajan, learned Senior Counsel, as suggested by Mr. D. Trilokchand Chopda, learned counsel appearing for the assessee-a fine and appreciable gesture indeed, emerging from such a Senior Counsel. The assistance from the said Senior Counsel was accordingly sought and procured and we are greatly indebted to the assistance so rendered by the said learned Senior Counsel.
12. The revision is thus disposed of. No costs.
13. Petition disposed of accordingly.