1967 (1) TMI 72 - HC - VAT and Sales Tax

Summary

Issues:
- Whether sales to Nepal buyers can be considered as sales in the course of export under Article 286(1)(b) of the Constitution?
- Whether the delivery of goods to Nepal buyers at the railway terminus in India amounts to actual delivery within the State and is subject to tax under the U.P. Sales Tax Act?

Analysis:
The judgment pertains to a reference under section 11(1) of the U.P. Sales Tax Act regarding sales made by M/s. Damodar Dass Vishwanath to dealers in Nepal. The dispute revolved around whether these sales qualified as exports under Article 286(1)(b) of the Constitution. The key issue was whether the sales had occasioned export, as required by law. The Court examined the facts, including the delivery of goods at the Nepalganj railway terminus in India, which was the point of transfer to Nepal. The Court emphasized the need for a common intention to export, followed by actual exportation, to constitute a sale in the course of export. The judges referred to precedents highlighting the integrated nature of activities leading to export and the necessity of a direct connection between the sale and the export.

The Court found that the sales to Nepal buyers did not meet the criteria for sales in the course of export. It noted that the Nepal dealer had the freedom to sell the goods within India at Nepalganj, indicating a lack of a direct connection between the sale and the subsequent export. The Court emphasized the absence of proof or indication of a mutual intention to export the goods to Nepal. Consequently, the Court ruled against the assessee on the first issue, holding that the sales did not occasion export. As a result, the Court did not delve into the second issue extensively but provided an affirmative answer in favor of the tax department.

In conclusion, the Court dismissed the reference, ruling in favor of the tax department and ordering the assessee to pay costs. The judgment underscores the importance of a clear intention and direct connection between sales and exports to qualify as sales in the course of export under relevant legal provisions.