9911796707
TMI Blog1996 (10) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... tonnes (5 per cent more or less) of unblended Assam tea were to be supplied. In turn, STC entered into a contract on 4th August, 1986, with the appellants for the tea, to which a copy of STC's contract with the Iranian buyer was annexed. Pursuant to the contract between STC and the appellants, the appellants purchased from tea auctions the tea to be supplied under the aforesaid contracts. The deliveries of the tea were made to the Iranian buyer under the aforesaid contracts. In June, 1987, the appellants received letters from the auction brokers from whom the tea was purchased which stated that the auction brokers had received notices from the respondent, sales tax authorities, requiring the appellants to pay sales tax upon the purchases of tea from the auction brokers. The appellants filed the writ petition praying for a declaration that the sale of the tea by the auction brokers to the appellants was exempt from payment of sales tax under the provisions of section 5(3) of the Central Sales Tax Act, 1956. The writ petition was transferred for hearing to the West Bengal Taxation Tribunal. The Tribunal, after hearing the parties, came to the conclusion that the sales of the tea by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract between STC and the Iranian buyer. The tea should be "as per the sample approved by the foreign buyer". The price was quoted and was said to be "inclusive of STC's service charge of 1 per cent of f.o.b. value of the contracted quantity and the same will be recovered from the realisation of export proceeds. All other charges including bank charges for negotiation, LC advising, amendment charges, etc., were to the account of the appellants". Markings would be as required by the Iranian buyer, but the STC's logo would be printed on each tea chest. The Iranian buyer's representatives and surveyors, including STC's personnel, would have access to visit and inspect all phases of the appellants' work. The Iranian buyer would also have the right to send its representatives to the loading point or port for surveying the quantity and quality of tea and all necessary documents would be counter-signed by them and inserted in the letter of credit. The Iranian buyer would open an irrevocable, non-transferable, non-divisible and non-confirmed letter of credit in favour of STC, payable against shipping documents, including a full set of clean on board bills of lading issued or endorsed to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants to the Iranian buyer. Learned counsel cited from the judgment of this Court in the case of Bhopal Sugar Industries Ltd. v. Sales Tax Officer, Bhopal [1977] 40 STC 42, the following: "It is well-settled that while interpreting the terms of the agreement, the court has to look to the substance rather than the form of it. The mere fact that the word 'agent' or 'agency' is used or the words 'buyer' and 'seller' are used to describe the status of the parties concerned is not sufficient to lead to the irresistible inference that the parties did in fact intend that the said status would be conferred. Thus the mere formal description of a person as an agent or a buyer is not conclusive, unless the context shows that the parties clearly intended to treat a buyer as a buyer and not as an agent. Learned counsel for the appellant relied on several circumstances to show that on a proper construction of the agreement it could not, but be, held to be a contract of sale. Learned counsel strongly relied on a decision of this Court in Sri Tirumala Venkateswara Timber and Bamboo Firm v. Commercial Tax Officer, Rajahmundry [1968] 21 STC 312 at 316 (SC), where this Court held the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our attention to the fact that the advantage of duty drawback in respect of the aforesaid contracts had been received by the appellants. In his submission, the property in the tea had not passed from the appellants to STC. The purchase of the tea by the appellants at the auctions was, therefore, the penultimate sale in the course of export and, therefore, exempt from the levy of sales tax by the provisions of section 5(3). Learned counsel for the respondent sales tax authorities submitted that the export sale covered by section 5(1) was the sale of the tea by STC to the Iranian buyer; the penultimate sale in the course of export was the sale of the tea by the appellant to STC, which was covered by the provisions of section 5(3); therefore, the purchase by the appellants of the tea at the auctions was exigible to sales tax. Learned counsel for the respondents drew our attention to the judgment of this Court in Mod. Serajuddin v. State of Orissa [1975] 36 STC 136. This was a case in which, admittedly, the Indian company had sold the goods to STC. The situation, therefore, was entirely different and the judgment has no application to the present case, where the contention on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endorsement on the bill of lading in favour of STC that would suggest transference to it of title in the tea. The typing of the words "A/c. the State Trading Corporation of India" below the name and address of the appellants against the column "shipper" does not constitute an endorsement. There was no endorsement upon the bill of lading signed by or on behalf of the Teheran Bank, which is the consignee, or the Iranian buyer. There is, therefore, nothing in the contract between the appellants and STC or in the manner of its execution that establishes that there was a transfer of the property in the tea by the appellants to STC before it was transferred to the Iranian buyer. Hence, the purchase of the tea by the appellants at the auctions in fulfilment of the export obligation to the Iranian buyer was the penultimate sale in the course of export and covered by the terms of section 5(3). It was, accordingly, exempt from the payment of sales tax. In the result, the appeals succeed and are allowed. The judgment and order of the Tribunal is set aside and the rule in the writ petitions filed by the appellants is made absolute. There shall be no order as to costs. Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X
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