1976 (12) TMI 165 - SC - VAT and Sales Tax

Whether the appellants are the last purchasers of manganese ore within the State of Andhra Pradesh? Held that - Appeal allowed. It has to be found out whether the contracts between the merchants and the corporation are integrated contracts in the course of export or they are different. If they are different contracts, as they are in the present case, the last purchaser within the State is the M.M.T.C.

Summary

Issues:
Determining last purchaser of goods within a state for sales tax liability based on contracts with trading corporations and foreign buyers.

Analysis:
The main issue in this case was whether the appellants were the last purchasers of manganese ore within the State of Andhra Pradesh or if the Mines and Minerals Trading Corporation (M.M.T.C.) should be considered the last purchaser liable for tax payment. The High Court concluded that the appellants were indeed the last purchasers within the state, as their sales to M.M.T.C. were integral to the export process, forming a bond between the contracts and the actual exportation of goods.

The Supreme Court referred to the decision in Mohd. Serajuddin v. State of Orissa, highlighting that contracts should either directly cause the export or involve a transfer of title documents after crossing customs frontiers for sales to be deemed out of India. It was emphasized that contracts between the appellants and M.M.T.C. were separate from M.M.T.C.'s contracts with foreign buyers, making M.M.T.C. the exporter of goods.

The Court rejected the argument that M.M.T.C. could be the last purchaser based on the passing of property on board the ship, citing that f.o.b. character in contracts did not establish them as f.o.b. contracts with foreign buyers. The concept of string contracts was explained, emphasizing the distinction between contracts for export and contracts for delivery to the ship.

The Court clarified that there cannot be two last purchasers or exporters for the same goods within a state, overruling previous decisions like National Tractors case. The importance of integrated contracts in the course of export was highlighted, emphasizing the need to determine if contracts between merchants and trading corporations were integrated or separate to identify the last purchaser within the state.

Ultimately, the appeals were allowed, setting aside the High Court's judgment, and each party was directed to bear their own costs.