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TMI Blog1960 (9) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... Additional Solicitor-General of India, (S.N. Andley, J.B. Dadachanji, Advocates of Messrs Rajinder Narain Co., with him), for the respondents (in C.A. No 45 of 59) and appellants (in C.A. No. 46 of 59). -------------------------------------------------- The Judgment of the Court was delivered by DAS GUPTA, J. -M/s. Daulatram Rameshwarlal, a firm registered under the Indian Partnership Act (referred to later in this judgment as "sellers") are registered dealers under section 11 of the Bombay Sales Tax Act. In their return of turnover for the period from April 1, 1954, to March 31, 1955, they claimed exemption from sales tax in respect of sales of cotton of the total value of Rs. 68,493-2-6 and sales of castor oil of the total value of Rs. 6,47,509-1-6 on the ground that these sales were on FOB contracts, under which they continued to be the owners of the goods till the goods had crossed the customs barrier and thus entered the export stream, and so no tax was realisable on these sales in view of the provisions of Article 286(1)(b). The Sales Tax Officer rejected this claim for exemption and assessed them to sales tax on a taxable turnover including these sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if the property in the goods passes to the buyer after they have for the purpose of export to a foreign country crossed the customs frontier the sale has taken place "in the course of export" out of the territory of India. If therefore in the present sales the property in the goods passed to the buyers on shipment, that is, after they had crossed the customs frontier the sales must be held to have taken place "in the course of export" and the exemption under Article 286(1)(b) will come into operation. The sellers' case is that these were sales on FOB contracts. Though the learned Solicitor-General appearing on behalf of the Sales Tax Officer tried to convince us that these were not really FOB contract sales, it appears that the averment in paras. 11 and 13 of the writ petition that these sales were made on FOB basis were not denied in the counter-affidavit sworn by the Sales Tax Officer. It is also worth noticing that in the assessment order itself the Sales Tax Officer referred to these sales as sales on FOB basis. The specimen contract produced also used the words "FOB delivered". There can be no doubt therefore that these were sales under FOB contracts. The normal rule in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Q.B. 499., the Court of Appeal in England held that the judgment in Brandt's case(1) does not cover every FOB contract and that in the special facts of the particular case before them it was for the sellers to obtain the licence and this view was approved by the House of Lords ([1956] A.C. 588), it is in our opinion correct to state that the presumption in FOB contracts is that it is the duty of the buyers to obtain export licence, though in the circumstances of a particular case this duty may fall on the sellers. The third circumstance on which reliance is placed on behalf of the Sales Tax Officer is that the Export (Control) Order, 1954, which was passed in the exercise of powers conferred by Import and Export (Control) Act, 1947, contained a provision in its clause 5(2) in these words: "It shall be deemed to be a condition of that licence..................that the goods for the export of which licence is granted shall be the property of the licensee at the time of the export." It has been strenuously contended by the learned Solicitor-General that it will be reasonable to think that the parties to the contract intended to comply with this condition and to agree as between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods cross the customs barrier. These decisions as regards the commencement of the course of export are of no assistance in deciding about the point of time when the export proper commences. As we have already pointed out when export has been defined in the Import and Export (Control) Act, 1947, as "taking out of India by land, sea, or air", export in the Export (Control) Order cannot be held to have commenced till at least the ship carrying the goods has left the port, though it may in some contexts be more correct to say that it does not commence till the ship has passed beyond the territorial waters. We have therefore come to the conclusion that there is no circum- stance which would justify a conclusion that the parties came to a special agreement that though the sales were on FOB contracts property in the goods would pass to the buyer at some point of time before shipment. We think that the learned Judges who heard the appeal in the Bombay High Court were right in their conclusion that the goods remained the seller's property till the goods had been brought and loaded on board the ship and so the sales were exempted from tax under Article 286(1)(b) of the Constitution. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore con- tended that "a person" in section 8(b) should be interpreted to include a registered dealer or anybody else. We are unable to agree. A close examination of sections 8 and 10 justifies the conclusion that the Legislature was anxious to secure that the declaration as regards intention of the goods being despatched outside the State of Bombay should be carried out by despatch by "a registered dealer" to whom he sells the goods. If such despatch outside the State of Bombay is by a person to whom the certifying dealer has sold the goods but who is not a registered dealer the certificate has not been complied with. It will be in our opinion unreasonable to think that though the Legislature insisted that the certificate should declare the goods purchased were intended "for being despatched by him or by a registered dealer to whom he sells the goods outside the State of Bombay" the Legislature would be content to accept actual despatch outside the State of Bombay by one who is not a registered dealer as sufficient. Mr. Sanyal contended that the certificate has to declare only an intention and that if ultimately the actual despatch is made by some person who is not a registered dea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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