COMMISSIONER OF SALES TAX versus LEATHER FACTS CO.

Citation: [1987] 2 S.C.R. 630 · Decided: 24-03-1987 · Supreme Court of India · Bench: M.P. THAKKAR · Disposal: Disposed off

Judgment (excerpt)

A 
COMMISSIONER OF SALES TAX ' 
v. 
LEATHER FACTS CO. 
Y'-
• 
MARCH 24, 1987 
B 
[M.P. THAKKAR AND B.C. RAY, JJ.] 
Central Sales Tax Act, 1956-Section 5(3)-Transaction of sale/ 
purchase 'in course of export'-Not exigible to tax-Use of Form III-A +-
under Rule 12-A of U.P. Sales Tax Act, 1948 by trader-Whether 
State empowered to levy tax. 
.A., 
c 
U. P. Sales Tax Act, 1948-Rule 12-A Form III-A-Trader 
using such Form-Whether liable to tax on transactions 'in course of 
export.' 
y 
The respondent, a dealer in hides and skins and exporting the 
D same out of the territory of India, entered into transactions falling 
within the purview of sub-section (3) of Section 5 of the Central Sales 
Tax Act, 1956 and which could not be taxed because of constitutional 
bar under Article 286(l)(a) of the Constitution oflndla, furnished Form 
III-A under Rule 12-A of the U.P. Sales Tax Act, as an appropriate 
form to meet the situation was not devised under the U.P. Sales Tax 
E Act, and sought a clarification from the Commissioner, Sales Tax, as to r--
whether the firm was liable to tax under Section 3-AAAA of the U.P. 
Sales Tax Act on the purchases made against Form III-A or H under the 
Cen~al Sales Tax Act, when such dressed hides and skins were 
--
exported beyond the territory of India. The Commissioner, Sales Tax 
F 
clarified and held that the purchases of dressed hides and skins made 
against Form H were not liable to purchase tax under Section 3-AAAA 
~ 
of the U .P. Sales Tax Act provided the same were exported outside the 
~' 
territory of India and the conditions laid down in Section 5(3) of the 
·. 
Central Sales Tax Act were satisfied, but if the purchases were made 
against Form III-A and exported outside the territory of India, they 
G 
shall be liable to purchase tax under Section 3-AAAA. 
On appeal, the Sales Tax Tribunal held that the respondent was 
not liable to any purchase tax under Section 3-AAAA of the U.P. Sales 
>...... .. 
Tax Act whether they were purchased against or without Form III-A or 
H, as the same were exported outside the territory of India in comp-
H liance with the order received from the foreign buyers and those trans-
actions were exempted under Section 6 of the Central Sales Tax Act. 
630 
---~ 
-
COMMR. SALES TAX v. LEATHER FACTS CO. 
631 
A Revision Petition filed before the High Court by the appellant 
A 
Revenue, contending that the decision of the Tribunal was bad in law 
was dismissed. 
Disposing of the appeal by the U .P. Sales Tax authorities, this 
Court, 
HELD: 1.1 The mere fact that Form III-A bas been given will 
not empower the State to collect or levy the sales tax/purchase tax in 
respect of a transaction in the course of export which satisfies the tests 
prescribed hy Section 5(3) of the Central Sales Tax Act. It would be 
unconstitutional in view of the constitutional bar to levy tax on sales in 
B 
the course of export regardless of the fact whether an appropriate form C 
is used or not. [633E-F] 
1.2 The transactions entered into by the respondent which are 
such on which sales tax/purchase tax cannot be levied on account of the 
constitutional bar read with sub-section (3) of Section 5 of the Central 
Sales Tax Act, cannot become exigible to tax merely because a wrong D 
form is used (particularly when the appropriate form has not been 
devised by the rule making authority). [633F-G] 
1.3 Liability for tax in respect of such transactions cannot be 
fastened on the respondent for the very good reason that the State bas 
no power to collect or levy sales tax/purchase tax on such transactions. E 
The U .P. Sales Tax authorities should have devised an appropriate 
form in this behalf. They can do so even now (as bas been done under 
the Delhi Sales Tax Act, by prescribing Form 49 to meet such a 
situation). [633G-H; 634A] 
1.4 For the future purposes instead of furnishing Form III-A F 
under rule 12-A of the U.P. Sales Tax Act, the respondent will furnish a 
photostat copy of Form H under the Central Sales Tax Act. [ 634B] 
So fas as the past transactions are concerned, the respondent will 
not be liable provided the tests prescribed under Section 5(3) of the 
Central Sales Tax Act, are satisfied. [6340] 
G 
Consolidated Coffee Ltd. v. Coffee Board, Bangalore, A.I.R. 
(Vol. 46) p. 164 refferred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 350 H 
(NT) of 1987. 
A 
B 
c 
D 
632 
SUPREME COURT REPORTS 
[1987] 2 S.C.R. 
From the Judgment and Order dated 19 .1L1985 of 

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