1995 (2) TMI 414 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the sale made by the assessee to M/s. Aluminium Industries Ltd. was an intra-State sale or a sale in the course of export under Section 5(1) of the Central Sales Tax Act, 1956.
2. Interpretation of the terms of the contract and the conduct of the parties to determine the nature of the sale.
3. Application of the legal principles established by the Supreme Court in similar cases.

Issue-wise Detailed Analysis:

1. Nature of the Sale:
The primary issue was whether the sale by the assessee to M/s. Aluminium Industries Ltd. was an intra-State sale in Maharashtra or a sale in the course of export under Section 5(1) of the Central Sales Tax Act, 1956. The Tribunal and the High Court concluded that the sale was an intra-State sale taxable under the Bombay Sales Tax Act. The assessee argued that the sale was on an f.o.b. basis and hence a sale in the course of export. However, the court found that the property in the goods passed to the buyer on June 14, 1980, before the goods were put on board on June 19, 1980, making it an intra-State sale.

2. Interpretation of Contract Terms and Conduct:
The court examined the terms of the contract and the conduct of the parties. The contract specified that payment was to be made through a letter of credit within 45 days after presenting specified documents, including a clean on board bill of lading. However, full payment was made before the goods were put on board. The court noted that the terms of the contract and the conduct of the parties indicated that the sale was complete in Maharashtra. The court also noted that the contracts between Kamani Engineering and Aluminium Industries, and between Aluminium Industries and the assessee, were independent contracts and did not constitute a sale in the course of export.

3. Application of Supreme Court Decisions:
The court referred to several Supreme Court decisions, including Mod. Serajuddin v. State of Orissa and State of Punjab v. New Rajasthan Mineral Syndicate, which established that for a sale to be considered in the course of export, there must be a direct cause or occasion for the export. The court found that the sale by the assessee to Aluminium Industries did not occasion the export; rather, it was the contract between Kamani Engineering and the foreign buyer that occasioned the export. The court concluded that the sale by the assessee was an intra-State sale and not a sale in the course of export.

Conclusion:
The High Court held that the sale made by the assessee to M/s. Aluminium Industries Ltd. was an intra-State sale in Maharashtra and not a sale in the course of export under Section 5(1) of the Central Sales Tax Act, 1956. The Tribunal's conclusion was justified based on the facts and circumstances of the case and the evidence on record. The court answered the reference in the affirmative, i.e., against the assessee and in favor of the revenue.