After gap of about a year the Service Cell was arranged on 27th June, 2003 at the newly furnished conference hall on the seventh floor of Vikrikar Bhavan. It was a nice thing because chances of opening up of dialogue between Departmental head and dealers/their representatives get enhanced.

During the meeting it was pointed out by representatives of trade that nowadays, for claim of Form N-14B, sales copy of order received from the foreign source is insisted. No exporter is ready to reveal trade secrets and claim of Form N-14B is disallowed (even though it is completely filled in). The point was put up on two occasions. The Hon'ble Commissioner stated, "You will have to shoulder some responsibilities if you want to get exemp-tion. Or do you want us to withdraw Form N-14B?" We were stunned to silence.

We decided to venture through the provisions once again. Section 5(3) was inserted in the Central Sales Tax Act, 1956 with effect from 1-4-1976. The Statement of Objects and Reasons appended to the Act No.103 of 1976 reads as, "According to section 5(1) of the Central Sales Tax Act, a sale or purchase of goods can qualify as a sale in the course of export of the goods out of the territory of India only if the sale or purchase has either occasioned such export or is by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. The Supreme Court has held (vide Mohd. Serajuddin vs. State of Orissa, 36 S.T.C. 136) that the sale by an Indian exporter from India to the foreign importer alone qualifies as a sale, which has occasioned the export of the goods. According to the Export Control Orders of certain goods export can be made only by specified agencies such as the State Trading Corporation. In other case also, manufacturers of goods, particularly in the small scale and medium sectors, have to depend upon some experienced export house for exporting the goods because special expertise is needed for carrying on export trade. A sale of goods made to an export-canalizing agency such as the State Trading Corporation or to an export house to enable such agency or export house to export those goods in compliance with an existing contract or order is inextricably connected with the export of the goods. Further, if such sales do not qualify as sales in the course of export, they would be liable to State sales tax and there would be corresponding increase in the price of the goods. This would make our exports uncompetitive in the fiercely competitive international markets. It is, therefore, proposed to amend, with effect from the beginning of the current financial year, section of the Central Sales Tax Act to provide that the last sale or purchase of any goods preceding the sale or purchase occasioning export of those goods out of the territory of India shall also be deemed to be in the course of such export if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for, in relation to such export." [Emphasis in italics by us.]

Rule 21-A of the Bombay Sales Tax Rules speaks of form of certificate to be furnished by dealer in support of his claim for exemption in respect of sale deemed to be in the course of export out of territory of India. It was inserted on 1-7-1981. Thus Form N-14 B, which was introduced after a gap of five years, is merely a supportive certificate. The claim under section 5(3) has to be allowed on the basis of evidence and documents produced. The main aim to introduce certificate through rule was to bring uniformity in compliance.

Though the Commissioner talked of withdrawing Form N-14B, we do not think it is going to make much of difference. One has to refer to observations of Supreme Court in M/s Leather Facts Co. (66 STC 91) that the State has no right to tax the transactions, which are covered by section 5(3) merely for wrong form furnished. Further it is a well-settled law that Form H prescribed under the CST (Registration and Turnover) Rules is also not mandatory and claim can be proved otherwise by similar documentation.

To cut off one’s legs or hands because they ache is not at all a rational behaviour. What a certificate in Form N-14B goes to prove is an inextricable link between exports and immediate prior sale. We think that pragmatic approach like La Bela {59 STC 221 (Bom)} should be followed because the mode of communication has radically changed and switched over mainly from written one to telephones, E-mails, fax etc. The main grudge of the dealers is that reference of Export Order with date is mentioned in the certificate but nobody is ready to forward the copy of order itself (as in today’s competitive world it would be digging one’s own grave). Even when the matter has reached the Tribunal on one or two occasions, the department had expressed doubts about genuineness of the order reference (or order, if produced) and the Tribunal has remanded the matter for verification and confirmation of those orders. Why to take such a long route? The Department should think of introducing some cell for cross verification of claim [and make sure that it will do allotted work and does not become matter of future ‘halla bol’ from trade.]

When the Central Sales Tax Act had been amended for the benefit of traders who help/boost exports, the actions of the State should be dealer friendly and supportive on all fours to the amendment. It should be seen that the benefit/relief which trade deserves should reach to them in right spirit. The disallowance of claim under some flimsy grounds and under threats of STRA objections should be avoided. What we expect most is attitudinal change from base to boss level.

It is that time of year when we at the Association see change of leadership. We, on behalf of all the members of this august body and valued readership of this journal wish outgoing President, Shri Deepak H. Thakkar all the best in life. We are indeed thankful to him for all the good work done. At the same time we welcome Shri Pravin R. Shah and his team and wish them smooth sailing.