IMPORTANT POINT
Where the sale by virtue of Section 5(3) of Central Sales Tax Act has to be regarded to be in the course of export by virtue of which goods were exported to a place outside the State and since despatch was not pursuant to an intra-state sale or as result of sale in the course of inter state trade, said sale attracted Purchase Tax u/s 6 of Karnataka Sales Tax Act.

JUDGMENT

Kirpal, J.-The respondent is a registered dealer under the provisions of Karnataka Sales Tax Act, 1957 (hereinafter referred to as the Act ) and the only question which arises for consideration in this appeal by special leave is whether it is liable to pay purchase tax under the provisions of Section 6 of the said Act.

2. The respondent had purchase fish oil from un-registered dealers within the State of Karnataka. It, in turn, sold the said oil to M/s. Kalbhavi Venkatarao & Bros. (hereinafter referred to as "Kalbhavi") who purchased the said oil in order to comply with the export order from its buyer in a foreign country.

3. In respect to the assessment year 1.9.78 to 31.8.79, the respondent claimed exemption from payment of sales tax on sales made to Kalbhavi as the export sales of the goods referred to under Section 5(3) of Central Sales Tax Act, 1957. This claim was allowed by the assessing authority but he came to the conclusion that the transaction of respondent of purchasing the fish oil from un-registered dealers would attract the levy of purchase tax under Section 6 of the said Act. Accordingly, the assessment was made, levying purchase tax on the purchase of fish oil, made by the respondent which, in turn, had been sold to Kalbhavi.

4. An appeal was filed before the Deputy Commissioner of Commercial Taxes, Mangalore by the respondent but without success. Its second appeal to the Karnataka Appellate Tribunal, Bangalore was also dismissed with the Tribunal confirming the Order of the Assessing Authority in treating the transaction of purchase of fish oil as attracting the provisions of Section 6 of the Act.

5. The decision of the Tribunal was challenged by the respondent in a Revision Petition filed in the High Court. The High Court, interpreted Section 6 of the Act and came to the conclusion that the purchase of fish oil, which was sold by the respondent, did not attract purchase tax under Section 6 of the Act inasmuch as the purchases made by the respondent were sold within the State of Karnataka and as such the ingredients of Section 6 of the Act, so as to make the purchase taxable, were not attracted.

6. Having heard learned counsel for the appellant, we are of the opinion that the conclusion of the High Court that no purchase tax was payable by the respondent, on the facts and under circumstances of the present case, was not correct. As we shall presently see on the correct interpretation of the provisions of Section 6 of the Act read with Section 5 of the Central Sales Tax Act, the purchase of fish oil made by the respondent and sold to Kalbhavi would attract the levy of purchase tax.

7. It is appropriate to refer to Section 6 of the Act and Section 5 of the Central Sales Tax Act which read as under :

"6: Levy of purchase tax under certain circumstances Subject to the provisions of sub-section (5) of Section 5, every dealer who in the course of his business purchases any taxable goods in circumstances in which no tax under Section 5 is leviable on the sale price of such goods, and

(i) either consumes such goods in the manufacture of other goods for sale or otherwise (or consumes otherwise) or disposes of such goods in any manner other than by way of sale in the State, or

(ii) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-state trade or commerce,

shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under Section 5:

Provided that this section shall not apply-

(i) in respect of sale or purchase of goods specified in the Fourth Schedule-

(a) which are taxable at the point of purchase; and

(b) which have already been subjected to tax under sub-section (4) of Section 5.)

(ii) in respect of sale or purchase of goods specified in the Second