In the Court of Commissioner

1

IN THE COURT OF COMMISSIONER

DEPARTMENT OF TRADE & TAXES

GOVERNMENT OF NCT OF DELHI

VYAPAR BHAWAN, NEW DELHI

M/s.Brindco Sales Ltd, No: 205/CDVAT/2008/

S-53 Okhla Industrial Area, Dated:

New Delhi - 110 020.

ORDER

Present for the Applicant:Sh. Rajesh Mahna, Advocate

Present for the Department:Shri Nityanand, DR

The above named Applicant has filed this application on 22.4.2008 under Section 84(4)(f) of the Delhi Value Added Tax Act, 2004 and the question put up before this Court for determination under the aforesaid provisions of law is as under:

“Whether the transactions made by the Appellant dealer on account of sale to M/s.Alpha Future Airport Retail Private Limited are exempt in terms of Section 7 of the DVAT Act read with the Section 5 of the Central Sales Tax Act and is exempt from the tax?”

2.The application for determination has been made in the prescribed format DVAT-42 and the requisite fee of Rs.500/- paid through Demand Draft No.469592 dated 04-06-08.

3.According to the Applicant, he is a dealer engaged in the sale of various kinds of wine, beer, liquor and imported liquor etc. and have been making sales to various customers like Hotel, licensed shops, Jet Airways and M/s.Alpha Future Airport Private Limited by charging tax on the invoices raised on them for the supply of imported beer, spirits, whisky, wine etc. The commodity dealt by the appellant dealer is taxable @ 20% which the dealer has been charging and depositing the same as per law.

4.The Applicant contends that the sales to M/s.Alpha Future Airport Private Limited are not liable to tax @ 20% and not liable to tax under Section 7 of the DVAT Act, 2004 read with Section 5 of the Central Sales Tax Act, 1956. This contention is urged on the basis that the sales are made for the benefit of the passengers who are likely to board the aircraft for a foreign destination from whom the consideration is received in foreign currency and identifiable passengers on the basis of their passport, air ticket, boarding pass etc. and no part of the stock are liquidated or sold to purchasers in the local market and are therefore exempt in terms of Section 7 of the DVAT Act, 2004 read with Section 5 of the Central Sales Tax Act, 1956. Hence, the Appellant contends that it is not required to charge tax on the said transactions.

5.Shri Rajesh Mahna, Advocate, appeared on behalf of the Appellant dealer and reiterated the contentions set out in the application. In addition he has cited the decision of a learned Single Judge of the Kerala High Court in the case of M/s.Flemingo (DFS) Private Limited Vs. State of Kerala and Ors. No other case has been cited by the learned Advocate.

6. So far as the said decision cited by the learned Advocate is concerned, it may straightaway be pointed out that the High Court has not decided any question of law on this aspect and has stated in Para 21 as under:

“If the factual situation stated by the Petitioner is true certainly the Petitioner has got a strong case to claim exemption by virtue of provisions of Article 286(1)(b) of the Constitution and the provisions of Section (ab) and Section 5(3) of the CST Act, 1956. However, this is a matter for evidence, which in the ordinary course has to be agitated before the statutory authorities under the Act. In other words the Petitioner has got effective remedy with respect to the claim made in this writ petition by way of raising objection to the assessment, if any, proposed under the KGST Act and if aggrieved, to take up the matter in appeal before the appellate authorities and before this Court in revision.”

7.Therefore, the said decision cannot come to the aid of the Applicant for decision of the legal question raised by it.

8.The D.R. stated that the contentions of the Applicant are not tenable in law in view of specific terms of Section 7 of the DVAT Act, 2004 read with Section 5 of the Central sales Tax Act, 1956 and the law declared by the Hon’ble Supreme Court and various High Courts. The D.R. further states that the requirements of sub-section (3) of Section 5 of the Central Sales Tax Act, 1956 have not been complied with in this case since the sales in question cannot be said to have taken place after or were for the purpose of complying with the agreement or order for or in relation to such export.

9.I have perused in detail the application under Section 84 of the DVAT Act, 2004. I have also perused the opinion dated 29.5.2007 rendered by Shri V.N.Khare, former Hon’ble Chief Justice of India to M/s.Alpha Future Airport Private Limited, wherein it has been opined inter alia, that “Moreover, under the provisions of sub-section (3) of Section 5 of the Central Sales Tax Act, 1956 the penultimate sale i.e. the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such exports, if such last sale or purchase takes place for the purpose of such export.” I have heard both the parties.

10. On the basis of material placed before me, I do not accept the contention of the Applicant that the “penultimate sale” in this case would come within the protection of sub-section (3) of Section 5 of the Central Sales Tax Act, 1956.I am of the view that the concerned transaction would not come within the parameters of Section 7 of the DVAT Act, 2004 read with sub-section (3) of Section 5 of the Central Sales Tax and hence the transaction would be taxable under the DVAT Act, 2004 at the relevant rate, which at present time is 20%. Held accordingly.

(Archna Arora)

Commissioner (T&T)

Copy for information and necessary action to:

1. The Applicant.
2. The Addl. Commissioner (L&J) ,Vyapar Bhawan,New Delhi.

3. The Sales Tax Bar Association,Vyapar Bhawan,New Delhi.

1. The Value Added Tax Officer, Policy Branch, Vyapar Bhawan,New Delhi.

5. Guard File.

(Archna Arora)

Commissioner (T&T))