1961 (9) TMI 61 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether the sales to Messrs Beardsell and Co. and Rallis India Ltd. were export sales exempt from sales tax.
2. Whether the exporting houses acted as agents of the assessee in the sale transactions.
3. Whether the sales were in the course of export.

Issue-wise Detailed Analysis:

1. Whether the sales to Messrs Beardsell and Co. and Rallis India Ltd. were export sales exempt from sales tax:

The assessee claimed that a turnover of Rs. 4,45,125 represented export sales to foreign buyers through local agents. The Tribunal rejected this claim except for a small turnover of Rs. 22,768. The Tribunal concluded that the transactions did not involve foreign buyers and were instead sales to local exporting houses, with the transfer of property completed within the State, disassociating them from export transactions. The High Court examined the transactions with Messrs Beardsell and Co. (Rs. 1,90,638-13-8) and Rallis India Ltd. (Rs. 52,04-4-0) as the assessee could not produce documents for the remaining turnover. The Court found that the contracts with these firms did not establish direct sales to foreign buyers, thus not qualifying as export sales exempt from sales tax.

2. Whether the exporting houses acted as agents of the assessee in the sale transactions:

The assessee argued that the exporting houses acted as their agents, making the sales direct to foreign buyers. The Court noted that the exporting firms had not entered into any contracts with foreign buyers at the time of taking over the goods. The contracts indicated that the goods were to be sold abroad, but the ultimate buyers were unknown. The Court referred to a previous case (T.C. No. 150 of 1959) where it was held that an export sale requires a privity of contract between the local seller and the foreign buyer. The absence of such a contract was fatal to the claim of an export sale. The Court concluded that the exporting houses did not act as agents of the assessee, as there was no contract with foreign buyers.

3. Whether the sales were in the course of export:

The assessee contended that the sales were in the course of export, with the property in the goods passing to the buyers only after entering the stream of export. The Court examined the contracts and found no stipulation on when the property in the goods was to pass. The contracts indicated delivery at the godowns of the exporting houses, with part payment made on delivery. The Court held that delivery of goods by the seller to the buyer passes the property in the goods unless a different intention appears. The terms of the contracts did not suggest that the property passed only upon export. The Court concluded that the property in the goods passed on delivery to the exporting houses, making the sales local and not in the course of export.

Conclusion:

The High Court dismissed the revision petition, holding that the sales to Messrs Beardsell and Co. and Rallis India Ltd. were local sales and not exempt from sales tax. The exporting houses did not act as agents of the assessee, and the sales were not in the course of export. The decision in O.S.A. No. 22 of 1955, which dealt with agency relationships, did not affect this conclusion. The petition was dismissed with costs, and counsel's fee was set at Rs. 100.