Pinaki Chandra Ghose, J.
1. The writ petition has been directed against an order of the West Bengal Taxation Tribunal (hereinafter referred to as the Learned Tribunal) dated August 10, 2007.
2. Facts of the case briefly are as follows:
The petitioner is a public limited company having its unit at Kolkata, Pune and Cochin for preparing packet tea, blended tea and tea bags. According to the petitioner, the said units are 100% export oriented undertakings. The petitioner is a registered dealer under the provisions of West Bengal Sales Tax Act, 1994 (hereinafter referred to as the said Act) and the Central Sales Tax Act, 1956 (hereinafter referred to as the 1956 Act). The petitioner purchased tea at Kolkata and Siliguri tea auctions through tea brokers.
3. West Bengal Sales Tax Rules, 1995 framed Rule 42 made pursuant to Section 17(3)(a)(xi) of the Act and Rule 81 made pursuant to Section 17(3)(3)(iii) of the Act which provided for exemption of tax on sales of tea at such auctions if such tea with or without further processing is exported. It further appears that under the said provision, for availing such exemption the petitioner has to furnish a declaration in the prescribed Form 9 to the seller which has to be obtained from Sales Tax Authorities.
4. The case of the petitioner that the petitioner used to apply for such declaration forms from the authorities and used to furnish the same to its sellers at the auctions. In the year 2001, sales tax authorities refused to give such declaration forms to the petitioner. Representations were filed which were rejected on the ground that tea purchased at the auctions were sent by its two units in Pune and Cochin for blending and for packeting and were exported from the said place and the said Sales Tax authorities held that in terms of Rule 42 of the Rules such activities i.e. blending, packeting etc. had to be undertaken within the territory of West Bengal for availing the exemption and the exports also should have been made from West Bengal only.
5. The petitioner went before the Learned Tribunal, Learned Tribunal passed an interim order directing the sales tax authorities to issue the declaration forms to the petitioner to enable it to furnish to its sellers and the petitioners were directed to furnish a Bank Guarantee to the tune of Rs. 50 lakhs in favour of the authorities and to keep the same alive.
6. Subsequently, after the pleadings were filed before the Learned Tribunal, the matter was taken up by the Learned Tribunal. The contention before the Learned Tribunal that there is no such restrictions/conditions had been made by the Legislators in Rule 42 of the said Rules and such conditions cannot be imposed by the sales tax authorities.
7. However, Learned Tribunal held that on August 10, 2007 the petitioner is not entitled to claim the exemption and the authorities were justified in refusing to issue declaration forms sought for by it. But the Learned Tribunal further accepted the contention of the petitioner that there is no restriction has been imposed under the said Rule 42 with regard to geographical restriction as to the place from which the export was to be effected and the petitioner could not be denied the benefit only on the ground that the exports were not made from West Bengal. But it appears that Learned Tribunal further proceeded that said Rule 42 was made with reference to Section 5(1) of the 1956 Act and the said Rule had no application in case of the petitioner and further held that transfer of the goods/tea by the petitioner from Kolkata unit to Cochin and Pune Units amounted to an intervening transaction which was covered by declaration in Form F. Therefore, the petitioner was not entitled to have the benefit of exemption.
8. Mr. Bajoria, Learned Advocate appearing on behalf of the petitioner submitted that Article 286 of the Constitution debars the States from levying any tax on the sale or purchase of goods where it takes place in the course of exports of goods out of the territory of India and under the said Article, Parliament was authorised to formulate the principles for determining when a sale or purchase so takes place. He further drew our attention to Sub-section (3) of Section 5 of the 1956 Act and submitted that the said sub-section provides that the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of India shall also be deemed to take place in the course of such export. However, such last sale or purchase takes place applying with the agreement or order for or in relation to such export. He also drew our attention to Section 17(3)(a)(xi) and Section 17(3)(a)(iii) and submitted that where goods purchased are exported in India, it would be excluded from taxable turnover and Section 17(3)(a)(xi) provides for excluding such other sales on such conditions or restrictions as may be prescribed and he drew our attention to Rule 42 which was framed in accordance with Section 17(3)(a)(xi) of the Act. The said Rule 42 is set out hereunder:- 42. Exemption from tax on sales of tea for the purpose of export
(1) Where any dealer makes sale in auction held in Kolkata under the auspices of the Calcutta Tea Traders Association or at Siliguri under the auspices of Siliguri Tea Auction Committee or on internet under the auspices of the Teauction. Com Limited, an auction house for tea holding licence issued by the Tea Board, Calcutta to a registered dealer, of tea (including containers or other materials for its packing sold along with the tea) for the purpose of export (whether the export sale of tea is made after further processing or blending by him or not) by the purchasing dealer out of the territory of India, such dealer may, for the purpose of determining his taxable turnover of sales, deduct such sale under Sub-clause (xi) of Clause (a) of sub-section (3) of Section 17 from his gross turnover of sales, subject to the conditions provided in sub- rule (2) and sub-rule (3).
(2) No claim for deduction of sale as referred to in sub-rule (1) shall be allowed unless (a) tea including containers and other materials for its packing is exported by the purchasing dealer out of the territory of India within six months from the date of such sale; (b) the dealer making the sale of such tea furnishes, on demand, a declaration in form 9, obtainable from the appropriate assessing authority, duly filled in and signed by the purchasing dealer or by such other person as may be authorised in this behalf by the purchasing dealer, along with the evidence for export as prescribed in the Schedule appended to the said declaration: (i) tea (including containers and other materials for its packing sold along with the tea) cannot be exported by the purchasing dealer out of the territory of India for reasons beyond the control of such purchasing dealer within a period of six months from the date date of such sale as specified in Clause (a) of this sub-rule; and (ii) the dealer making such sale in auction as referred to in sub-rule (1) before the expiry of the said period of six months makes an application to the Commissioner, stating all particulars in respect of such sale of tea and in respect of the intended export thereof by the purchasing dealer and the reason for seeking extension of such period to such date as may be required by such purchasing dealer to effect the export of such goods, the commissioner may, if he is satisfied with the reasons shown in the application for extension referred to in Clause (ii) of this proviso, extend; by an order in writing, such period to such date as he thinks fit and proper.
(3) Where tea covered by a single sale in the auction referred to in sub-rule (1) is partly exported out of the territory of India by the purchasing dealer, exemption shall not exceed that part of sale-price of tea so exported by the purchasing dealer.
9. He further drew our attention to Rule 81 which is also necessary to reproduce herein:
81. Declaration and evidence for deduction of sale of tea at auction immediately preceding export (1) Where a dealer makes a sale to a registered dealer of tea act auction held in Kolkata under the auspices of the Calcutta Tea Traders Association or at Siliguri under the auspices of the Siliguri Tea Actuion Committee or on internet under the auspices of the Teauction.Com Limited, an auction house for tea holding license issued by the Tea Board Kolkata and such sale is claimed to be the last sale for export within the meaning of sub-section (3) of Section 5 of the Central Sales Tax Act, 1956 and he intends to claim deduction of such sale under Sub-clause (iii) of Clause (a) of sub-section (3) of Section 17, such dealer shall, on demand by appropriate assessing authority, furnish a declaration in Form 9 obtainable from the purchasing dealer duly filled in and signed by the dealer who exports such tea out of the territory of India along with the evidence therefor as referred to in the Schedule to the declaration as aforesaid.
10. He further pointed out that Rule 81 has been made with reference to Section 17(3)(a)(iii) read with Section 5(3) of the 1956 Act to cover cases where goods purchased are exported without being subjected to further processing. Rule 42 has been made with reference to Section 17(3)(a)(xi) to exempt sales of tea which is ultimately exported after processing. Rule 42 is specific for tea only and has been made in view of features peculiar to the tea trade.
11. Mr. Bajoria also contended that Learned Tribunal has erred in holding that Rule 42 was made with reference to Section 5(1) of the Act of 1956. Learned Tribunal failed to appreciate that in case of a transaction within the scope of Section 5(1), neither Rule 42 nor Rule 81 has any relevance. The transaction referred to in Section 5(1) is that between the Indian seller and the foreign buyer. Therefore, there is scope for foreign buyer to obtain any declaration form from any Assessing Authority or of his furnishing it to the dealer exporting the goods.
12. He further pointed out that Learned Tribunal also erred in holding that the petitioners case did not fall within the scope of Rule 42 or that the petitioner had not applied for the forms under the said Rule. Mr. Bajoria pointed out that several letters were addressed to the sales tax authorities claiming the benefit under Rules 42/81 of the Rules.
13. Mr. Bajoria further pointed out that the provisions of Rules 42 and 81 are self-evident. Rule 42 grants exemption to sales made for the purpose of export, whether after processing or blending or not, under Section 17(3)(a)(xi) of the Act whereas Rule 81 grants exemption to sale immediately preceding the export under Section 5(3) of the 1956 Act read with Section 17(3)(a)(iii) of the Act. Rule 81 deals with the situation where the export is immediately made all the goods purchased at the auctions. Rule 42 is an independent exemption granted to cover cases of export of tea after processing or blending to which Section 5(3) of the 1956 Act may not be attracted. Rule 42 recognizes the features peculiar to the tea trade namely, that tea purchased at the auctions cannot be exported as such in most cases and blending or other processing is inevitable to meet the requirements of the foreign buyer. Rule 42 has been made by the State Government in view of the nature of the tea export trade. According to Mr. Bajoria, most of the tea is grown in the gardens of Assam and West Bengal. Such tea is mostly sold at auctions, which are primarily held at Kolkata and Siliguri. Blending and packeting are most important elements of tea trade both within and outside India. Therefore, he submitted that Rule 42 equally applies in the case of processing or blending of tea purchased at the auctions to be done only in West Bengal or such activities can be undertaken outside West Bengal and whether exports have to be made only from West Bengal. He further submitted that Rule 42 does not provide so. No restrictions or conditions can be added to Rule 42. Learned Tribunal also accepted that there is no geographical limitation that export has to be made only from a place in West Bengal. In these circumstances, he drew our attention to certain Sections, which are specifically mentioned about West Bengal. The said Sections are as follows: -
Section 17(2)(b)(i). Four per centum of such part of his taxable turnover of sales as represents sales to a registered dealer of goods, other than goods specified in Part B of the Schedule IV, of the class or classes specified in the certificate of registration of such dealer, as being intended for use by him directly in the manufacture in West Bengal of goods other than taxable goods, or newspapers for sales, other than the sale referred to in Section 15, by him in West Bengal, and of containers and other materials for the packing of goods of the class or classes so specified.
Section 17(2)(ca). Four per centum of such part of his taxable turnover of sales as represents sales to a registered dealers of containers and other materials for the packing of goods which are intended for used by him in the packing in West Bengal of goods, other than taxable goods or newspaper, manufactured by him in West Bengal, for sale, other than the sales referred to in Section 15, by him in West Bengal.
14. From these two Sections it would be apparent that the restrictions on place of manufacture only but not on place of sale only made under Section 17(2)(b)(ii), Section 17(2)(c), Section 17(2)(e), Section 17(2)(hh), Section 17(2)(hhh) and he further drew our attention to Section 17(2)(d) where no restriction has been made under the said provision. After drawing out attention to all these Sections Mr. Bajoria contended that Rule 42 does not stipulate that the processing or blending should be carried out in West Bengal or that the export should be made from West Bengal and he relied upon the decisions of the Hon'ble Supreme Court reported in (1978) 41 STC 409 (Polestar Electronic (Pvt.) Ltd. v. Additional Commissioner, Sales Tax and Anr.), (1981) 48 STC 239 (Assessing Authority-cum-Excise and Taxation Officer, Gurgaon and Anr. v. East India Cotton Mfg. Co. Ltd.), (1999) 112 STC 248 (Hindalco Industries Ltd. v. State of Bihar and Ors.) and (2007) 8 VST 477 (State of Haryana and Ors. v. Nipha Exports Pvt. Ltd.). Accordingly, he submitted that the export which has been made by the company from its units only and further the said units are not distinguished or independent from the petitioner, but are merely the establishments of the petitioner. According to Mr. Bajoria, Learned Tribunal completely overlooked and ignored the provisions of Rule 42 and could not appreciate the submissions made by him on the basis of the said Rule. He further pointed out that Learned Tribunal further erred in holding that there was a transaction declaration in Form F for movement of tea purchase at the auctions to the petitioners unit at Pune and Cochin. Under Section 6A of the 1956 Act whenever movement of the goods takes place otherwise on sale the goods have to be covered by such declaration in Form F. Therefore, use of Form F is only for procedural purpose and further for ensuring that there is no evasion of tax. Therefore, Mr. Bajoria submitted that the order of the Learned Tribunal holding that the sales of tea at the tea auctions to the petitioner are not entitled to exemption be set aside and such sales are entitled to get the exemption under Rule 42 of the Rules and the respondents should be directed to issue Form 9 to the petitioner and the Bank Guarantee already furnished by the petitioner, should be discharged. Mrs. Roy, Learned Advocate appearing in support of the respondents contended that once the goods have already been transferred from the State to the other, then automatically the said Rule 42 has no application in case of the petitioners export in question. Therefore, she submitted that Learned Tribunal correctly held that the said Rule 42 has no application in the case of the petitioner and the petitioner is not entitled any benefit out of that. Accordingly, she submitted that this application should be dismissed and furthermore, on the ground of furnishing the Form F, is nothing but to prove that goods were transferred from West Bengal to Cochin and therefore, the petitioner has no right to get benefit under Rule 42 of the said Rules.
15. After analyzing the facts of this case and the Rules as well as the Sections as placed before us, it appears to that in the case Polystar Electronic (Pvt.) Ltd. v. Additional Commissioner, Sales Tax and Anr.(supra), the Hon'ble Supreme Court has held at Page 428 of the Reports as follows:
16. Similarly, for the same reasons, which we need not repeat again, manufacture and sale in Section 5(2)(a)(ii) and the second proviso mean manufacture and sale anywhere without any geographical limitation and neither manufacture or sale is restricted to the territory of Delhi. There are no words like inside the Union territory of Delhi to qualify manufacture or sale and there is no cogent or compelling reason for reading such words in Section 5(2)(a)(ii) and the second proviso. The use of the goods purchased as raw materials in the manufacture of goods may, therefore, take place anywhere and not necessarily inside Delhi and equally the sale of goods so manufactured may be effected anywhere, whether inside or out-side Delhi. The only end use of the goods purchased required to be made for attracting the applicability of Section 5(2)(a)(ii) is that the goods must be utilised by the purchasing dealer as raw materials in the manufacture of goods and the goods so manufactured must be sold, irrespective whether the manufacture or sale takes place inside Delhi or outside... At page 429 of the Reports it was further held as under:
17. The subsequent history of the Act also supports the construction which we are inclined to place on Section 5(2)(a)(ii) and the second proviso. Section 5(2)(a)(ii) was amended with effect from 28th May, 1972, by the Finance Act, 1972, and the words in the Union Territory of Delhi were added after the word manufacture so as to provide that manufacture should be inside the territory of Delhi. It was also provided by the amendment that the sale of manufactured goods should be inside Delhi or in the course of inter-State trade or commerce or in the course of export outside India. This amendment clearly excluded manufacture of goods as also sale of manufactured goods outside Delhi. It is clear from the statement of objects and reasons that this amendment was not introduced by the Parliament ex abundanti cautela, but in order to restrict the applicability of the exemption clause in Section 5(2)(a)(ii) . The statement of objects and reasons admitted in clear and explicit terms that:
18. At present sales of raw materials in Delhi are exempted from tax irrespective of the fact whether the goods manufactured therefrom are sold in Delhi or not. It is, therefore, made clear that sales of raw materials will be tax-free only when such sales are made by those who manufacture in Delhi taxable goods for sale. At Pages 435-6 of the Reports it was further held as under:
Lastly, it was contended that the resales effected by the branches of the assessees outside Delhi could not be regarded as resales by the assessees must be held to have utilised the goods for a purpose of different from that for which the goods were purchased, namely, resale by them, and the price of the goods purchased must be included in their taxable turnover under the second proviso. But this contention fails to take into account the plain and obvious fact that when the branches of the assessees resell the goods outside Delhi, it is really the assessees who resell the goods, for the branches are not distinct and independent from the assessees but are merely establishments of the assessees. Re-sales made by the assessees at the branches and hence it is not possible to say that when the goods were resold by the branches, the resales were not by the assessees so as to attract the applicability of the second provisos.
19. In the case of Assessing Authority-cum-Excise and Taxation Officer, Gurgaon and Anr. v. East India Cotton Mfg. Co. Ltd. (supra) the Hon'ble Supreme Court held at Page 246 as follows:
Now here we find that the expression used by the legislature as also the rule-making authority is simpliciter for use . In the manufacture of goods for sale without any addition of words indicating that the sale must be by any particular individual. The legislature has designedly abstained from using any words of limitation indicating that the sale should be by the registered dealer manufacturing the goods. It is significant to note that where the legislature wanted to restrict the sale to one by the registered dealer himself, the legislature used the qualifying words by him after the words for resale in the first sub-clause of Section 8(3)(b) indicating clearly that the resale contemplated by that provision is resale by the registered dealer purchasing the goods and by no one else, but while enacting the second sub-clause of Section 8(3)(b) the legislature did not qualify the words for sale by adding the words by him. This deliberate omission of the words by him after the words for sale clearly indicates that the legislature did not intend that the sale of the manufactured goods should be restricted to the registered dealer manufacturing the goods. If the legislature intended that the sale of manufactured goods should be by the registered dealer manufacturing the goods and by no one else, there is no reason why the words by him should have been omitted after the word for sale when the legislature considered it necessary to introduce those words after the words for resale in the first sub-clause of Section 8(3)(b). The omission of the word by him is clearly deliberate and intentional and it cannot be explained away on any reasonable hypothesis except that the legislature did not intend that sale should be limited to that by the registered dealer manufacturing the goods. The court must construe the language of Section 8(3)(b) according to its plain word and it cannot write in the section words which are not there. To read the words by him after the words for sale in Section 8(3)(b) would not be construction but judicial paraphrase which is impermissible to the court. It is also important to note that the word use is followed by the words by him clearly indicating that the use of goods purchased in the manufacture of goods for sale must be by the registered dealer himself but these words are significantly absent after the words for sale. On a plain grammatical construction these words govern and qualify only use and cannot be projected into the words for sale. The goods purchased by the registered dealer must be used by him the manufacture of goods which are intended for sale but such sale need not be by the registered dealer himself; it may be by anyone.
20. In the case of Hindalco Industries Ltd. v. Stateof Bihar and others (supra), the Hon'ble Patna High Court held at Page 257 of the Reports as follows:
I accordingly find and hold that Section 13(1)(b) of the Bihar Finance Act, 1981 cannot be constructed so as to put a geographical limitation on the situs of manufacture or sale of manufactured goods within the State of Bihar and it is sufficient for the purpose of that section that the purchased goods are directly used in themanufacture of goods though the manufacture might take place outside the State.
21. In the case of State of Haryana and Ors. v. Nipha Exports Pvt. Ltd. (supra), the Hon'ble Supreme Court held at Page 469 of the Reports as under:
We agree with the view taken by the High Court that the movement of the goods from Faridabad to Calcutta was occasioned in the course of export out of India and there could be no sale between the branch office and the head office. Accordingly, we do not find any merit in these appeals and dismiss the same leaving the parties to bear their own costs.
22. After analyzing the said decisions and the facts of this case, we hold that Rule 42 provides for blending or further processing of the tea should take place in or the export should be made from West Bengal. Therefore, in our opinion, the said Rule 42 does not create any restriction with regard to the place of blending/processing of tea. It is true that the concept of a transaction can only arise when there are two parties. Transfer from one branch to other, cannot be treated as a sale and there cannot be any scope of any transfer between the different branches of a same company, merely because the goods were shifted from one branch to another for certain purpose and that too within the meaning of Rule 42 i.e. blending, packeting etc. Learned Tribunal has wrongly held that Rule 42 has no application in the facts and circumstances of this case. On the contrary, we hold that the said Rule is applicable and the petitioner is bound to get the benefit under the said Rule in terms of the order passed by the Hon'ble Supreme Court. The Hon'ble Supreme Court has already considered the issue whether the sales tax provisions applicable to Delhi allowing exemption from tax against declaration for purchase of raw materials for use in manufacture could be construed as requiring such use for manufacture in Delhi only or it could be done at the assessees other units. But in the instant Rule it would appear that there is no restriction has been imposed under the said Rule and that export has to be done from West Bengal or after purchasing the same that as per blended or processed within the territory of West Bengal. Therefore, in our opinion, the petitioner must get that benefit and accordingly, we set aside the order so passed by Learned Tribunal and we hold that the petitioner is entitled to get exemption under Rule 42 of the said Rules and the respondents are directed to issue Form 9 to the petitioner. Bank Guarantee already furnished by the petitioner, also to be discharged.
23. For the reasons stated hereinabove, this application is allowed.
24. Xerox certified copy of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
Prabuddha Sankar Banerjee, J.
25. I agree.