CWP No. 4748 of 1992 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No. 4748 of 1992 Date of Decision: 5.10.2010 M/s Sagar Cotton Company and another ....Petitioners. Versus State of Haryana and others ...Respondents. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Avneesh Jhingan, Advocate for the petitioners. Mr. Gagandeep Singh Wasu, Sr. DAG, Haryana. ADARSH KUMAR GOEL, J. 1. This petition seeks quashing of order of assessment as affirmed by the Sales Tax Tribunal, Haryana to the extent the tax has been levied on cotton bales sent for export to foreign countries. 2. Case of the petitioners is that they were branches at Dabwali with head office at Bombay. They purchased cotton and sent the same to their head office from where the goods were exported. The shipping bills issued by the custom authorities evidenced this fact. 3. The assessing authority following the order of the Tribunal in a similar case of Nipha Exports disallowed the deduction of the said turnover out of the total turnover on the ground that transfer of goods for further export could not be held in the course of export as there was no direct link between the assessee and the foreign buyers. The said view was upheld by the appellate authority as also by the Tribunal. The CWP No. 4748 of 1992 -2- finding recorded by the Assessing Authority is as under:- “In my view the ruling of the Haryana Tribunal passed in STA No. 30 of 1977-78 and reaffirmed in STR No. 19 of 1979-80 in the case of M/s Nepha Exports, Faridabad Vs. State is fully applicable. The facts of the case are similar to those of the present case. In those decisions, the ld. Tribunal has held the judgment of the Hon'ble Punjab and Haryana High Court cited at 25-STC-496, is not applicable, that of the Hon'ble Supreme Court cited 36-STC-475, is not relevant and the ratio of the judgment of Hon'ble Supreme Court in the case of M/s Mohmmed Serajuddin reported at 36 STC 135 was fully applicable. It can be said without hesitation that the goods from Haryana where it did not move under contract of sale with the foreign buyers but were transferred and stocked at Head Office, Bombay, represented stock transfers and not sale in the course of Export out of India by the dealer in Haryana. These become subject matter of the Sales Tax Authorities of the State where Head Office is located, once the goods were stocked there. In view of the fact that there was no direct link between the branch office Dabwali and buyers. The despatch of goods could not be taken to have been occasioned by the contract of sale entered into by the Dabwali CWP No. 4748 of 1992 -3- branch office with the buyers. Therefore, the transactions were only in the nature of branch transfers.” 4. We have heard learned counsel for the parties. 5. Learned counsel for the petitioners-assessee submits that view of the Tribunal in Nipha Exports was reversed by a Division Bench of this Court in Nipha Exports Pvt. Ltd. v. State of Haryana and others [1998] 108 ITR 337 which was further upheld by the Hon'ble Supreme Court in State of Haryana and other v. Nipha Exports Pvt. Ltd., [2006] 27 PHT 339 (SC) and it was held that transfer of goods to head office when such goods are thereafter exported will amount to sale in the course of export. 6. Learned State counsel points out that movement of goods of the assessee was not in pursuance of contract of export already reached. 7. This plea cannot be accepted. The authorities have based their view on judgment of the Tribunal which stands reversed by this Court. Moreover, after amendment by way of addition of Section 5(3) in the Central Sales Tax Act, 1956, earlier view in Mohd. Serajuddin v. State of Orissa (1975) 36 STC 136 (SC) no longer stands and even sale penultimate to export is sale in the course of export as held in State of Karnataka v. Azad Coach Builders Pvt. Ltd. and another (2006) 3 SCC 338. 8. In view of above, the plea of the petitioners has to be upheld. The turnover of sale of goods sent by the petitioners to head office which were thereafter exported has to be held to be in the course CWP No. 4748 of 1992 -4- of export. View taken to the contrary has to be set aside. 9. The petition is disposed of accordingly. (ADARSH KUMAR GOEL) JUDGE October 5, 2010 (AJAY KUMAR MITTAL) gbs JUDGE