LexVIJAYALAXMI CASHEW COMPANY AND ORS. versus THE DEPUTY COMMERCIAL TAX OFFICER AND ANR.
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VIJAYALAXMI CASHEW COMPANY AND ORS. A v. THE DEPUTY COMMERCIAL TAX OFFICER AND ANR. DECEMBER 15, 1995 [A.M. AHMADI, CJ, B.L. HANSARIA AND SUHAS C. SEN, JJ.] B Central Sales Tax Act, 1956: S.5(3 )-Sate or purchase taking place in the course of export/im- port-Raw cashew nuts purchased iii tlte penultimate sale-Held, not the C same goods as raw cashew kemels-lmmw1ity /tom taxation by State-Only when goods exported are the same which were purchased. In the present batch of appeals against the judgment of the Madras High Court, the appellants contended that cashew bought and sold by them in the course of export trade was not different from cashew kernels; D that the Judgment in State of Travancore-Cochin & Ors. v. Shanmugha Vilas Cashew Nut Factory & Ors., [1954] SCR 53 dealt with Art. 286 of the Constitution and did not conclude the questions raised in these appeals; that the said Judgment was based on peculiar findings of facts made in that case; that the perception of the Court in this type of controversy has E changed as would be evident from the later decisions of the Supreme Court; and that sub-section (3) of S.5 of the Central Sales Tax Act, 1956 was not considered in Shanmugha Vilas case. Dismissing the appeals, this Court HELD : 1.1. Cashew nut kernels are not the same goods as raw cashew nuts. It does not appear that either on facts found or in law, the decision in Shanmugha Vilas Case needs reconsideration. F 1.2. The distinction sought to be drawn between the provisions of sub-section (3) of Section 5 of the Central Sales Tax Act and Article 286(1) G of the Constitution is misconceived. Under Article 286(1) the Court has to examine whether any tax is being imposed by the State Legislature on the sale or purchase of goods "in the course of the import of the goods into or export of the goods out of the territory of India". In order to resist imposition of sales tax by the State, the assessee will have to establish the H 719 720 SUPREME COURT REPORTS [1995] SUPP. 6 S.C.R. A identity of the goods purchased with the goods to be exported out of the territory of India. In order to fulfil an export obligation, if an exporter purchases goods and as a result of some processing, the identity and character of the goods change, then it will not be a case of export of the same goods. There is no dispute that every change does not bring into B existence new goods nor can it be said that however small the change may be due to the processing, the identity of the goods will be completely lost. It is a question of fact and degree. But the point to note is that the issue before the Supreme Court in Shanmugha Vilas case and the issue that has been raised in the present case are the same. Therefore, it will be wrong to distinguish the judgment of the Supreme Court in Shanmugha Vilas case C as confined to Article 286 of the Constitution. It cannot be said that the judgment in Shanmugha Vilas does not throw any light on the interpreta- tion of sub-section (3) of Section 5 of the Central Sales Tax Act. The controversy raised in both the cases is about the identity of the goods purchased and the identity of the goods sold. In the present cases the D penultimate sale is in question. Shanmugha Vilas considered only the case of the actual export sale or the last sale in course of export under Article 286 of the Constitution. But the present cases relate to a sale which took place immediately before the actual sale for export. [722-H, 723-A-E) 1.3. The question in this case is whether the cashew nut kernels which E were exported are 'those goods' which were purchased by the assessee in the penultimate transaction. This was precisely the question that was answered in the negative in Shanmugha Vilas case. Therefore, no distinc- tion can be drawn between the cases now under appeal and the decision of this Court in Shanmugha Vilas's case on the plea that the scope of snb-sec- F tion (3) of Section 5 of the Central Sales Tax Act was wider than Article 286 of the Constitution. It is true that sub- section (3) by a legal fiction has widened the scope of export sale, but the basic concept remains the same. In order to get immunity from taxation by the State legislature, the goods exported must be the same goods which were purchased. [724-B-C] G 1.4. In the cases under appeal, it has been noted in the order dated 15th April, 1982 by the Deputy Commercial Tax officer that cashew nut
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