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TMI Blog1966 (4) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee executed such orders and the coal was in fact exported in pursuance thereof, though the names of the foreign buyers were unknown to the assessee. (ii) As regards the second item, the coal was supplied by the assessee to the B.N. Railway, inter alia, in compliance with the directions of the Government of India, by loading the coal into wagons at the assessee's colliery sheds in Bihar. In the railway receipts, the assessee was named as the consignor and the B.N. Railway as the consignee and some place in West Bengal was shown as the destination. The assessee's claim for exemption having been disallowed by all the authorities up to the Board of Revenue, the assessee made an application under section 21(1) of the Act (annexure H, p. 60 of the paper book) to have the questions of law stated therein referred to the High Court. The Board, however, refused to refer and the assessee was obliged to apply to the High Court under section 21(2). This Court (annexure K, p. 77, paper book) allowed the application and directed the Board to refer to itself the five questions, which have, accordingly, been referred by the Board. These questions are: "(a) Whether on the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's application for reference, the first question was framed, not with reference to the Constitution, but to "the Bengal Finance (Sales Tax) Act" generally. Taking advantage of this fact, it has been urged by Dr. Pal, on behalf of the assessee, that the wide question of assessability under the Act is open to this Court under question (a) and that he is, accordingly, entitled to urge that the transaction in item (i) did not amount to a "sale" at all, as defined in the Act, being a transaction made under the directions of the Government of India under clause 12E of the Colliery Control Order, 1945, and that this question should be answered in favour of the assessee if he succeeds in showing that it was not a ''sale" under the law as it now exists. Mr. Mitra, on behalf of the Board, has vehemently opposed this on the ground that it is a new case which was never urged before the authorities below so that there is no finding thereon. It has further been urged that throughout the statement of case upon which this reference has been made, it has been assumed that the disputed transaction is a ''sale" and even question (a) has been framed with reference to the "sales in question". In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a with approaches leading to different points therein...... All that section 66(1) requires is that the question of law which is referred to the Court for decision and which the Court is to decide must be the question which was in issue before the Tribunal. Where the question itself was under issue, there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal. It will be an over-refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of section 66(1) of the Act." In the case before the Supreme Court, the question which was debated before the revenue authorities was whether the specified sum could be assessed for the year 1946-47 or the sum was received in a previous year, as contended by the assessee. The question which was eventually referred to the High Court was in this form: "Whether the sum of Rs. 9,26,532 was properly included in the assessee-company's total income computed for the assessment year 1946-47?" In the High Court, it was contended by the assessee that the amount could not be assessed for the year 1946- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moved by section 31 of the Amending Act of 1953 and it was held that it was the duty of the Court to answer the question referred to it with reference to the changes introduced by section 31 of the Amending Act, even though that section was not even brought to the notice of the High Court by the parties. In this opinion, Raghubar Dayal, J., concurred. Their Lordships relied upon the Scindia Steam Navigation case[1961] 42 I.T.R. 589; A.I.R. 1961 S.C. 1633. referred to by me above. But even where the question is wide enough to admit of new aspects of law involved in the question, the High Court cannot answer the new aspect if it cannot be done without the investigation of new facts, which is a business of the revenue authorities and not the High Court. In such a contingency, there is no other alternative left to the High Court than to ask the Tribunal below to send a supplementary statement of case under sub-section (4) of section 21 of the Act (which corresponds to section 66(4) of the Incometax Act: vide Zoraster Co. v. Commissioner of Income-tax[1960] 40 I.T.R. 552; A.I.R. 1961 S.C. 107 at p. 111. Having regard to the foregoing authorities, we are satisfied that we are justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re established in the instant case by the opening sentence of para. 2 of the statement of case and nothing more is required to apply the New India Sugar Mills decision(1) to come to the conclusion that the transaction referred to in question (a) was not taxable as a "sale" under the Bengal Finance (Sales Tax) Act, 1941. The question is answered accordingly. Question (b): This question relates to Article 286(1)(b) of the Constitution which makes it unconstitutional for a State to tax a sale or purchase which takes place: "in the course of the import of the goods into, or export of the goods out of, the territory of India." No separate treatment of section 27(1)(a)(ii) of the Act is necessary inasmuch as it merely reproduces the foregoing provision of the Constitution for the sake of incorporating a comprehensive provision in the statute itself. This question relates to item (i) and proceeds on the assumption that the transaction in question is a "sale". Hence, even though the answer to question (a) were against the assessee, the transaction in item (i) would be exempted from taxation in case it is established that the transaction took place "in the course of export of the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot in the name of the assessee, but in the name of the Government of India. What we have to determine, on the foregoing facts, is whether the transaction as between the assessee and the Government of India or the latter's nominee, the shipping agents, was a transaction "in the course of export" of the goods across the borders of India. The material time in the instant case, as has been stated at the outset, is 1951-52. The meaning of the expression "in the course of" export or import in Article 286(1)(b) of the Constitution was explained by the Supreme Court in the leading case of State of Travancore-Cochin v. Shanmugha Vilas Cashew-nut Factory[1953] 4 S.T.C. 205; [1954] S.C.R. 53 at pp. 62, 92. It was laid down there that a transaction of sale or purchase may take place in the course of export or import in one of two ways: (i) Where a sale or purchase occasions an import into or an export out of the territory of India; (ii) Where a sale or purchase by transfer of shipping documents takes place before or after (as the case may be) the goods have crossed the customs frontiers of India. We are concerned, in the instant case, as to the applicability to its facts of the first of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occasion the export or import of the goods, as the case may be, out of or into the territory of India come within the exemption." This proposition was affirmed by the Court in the Second Travancore-Cochin case[1953] 4 S.T.C. 205; [1954] S.C.R. 53., and such sale or purchase which occasions the export or import was termed by the Court as "export sale" and "import purchase", in order to distinguish them from local transactions such as "a purchase for the purpose of export " and "a sale after import" (pages 63-64); also State of Madras v. Gurviah[1955] 6 S.T.C. 717; A.I.R. 1956 S.C. 158., which would not be transactions "in the course of export or import" and would not be included within the exemption offered by the Constitution in Article 286(1)(b). That the expression "in the course of " implies a movement of the goods from one terminus to another was emphasised by Sastri, C.J., in the Second Travancore-Cochin case[1953] 4 S.T.C. 205; [1954] S.C.R. 53., in these words (page 62): "The word 'course' etymologically denotes movement from one point to another, and the expression in the course of not only implies a period of time during which the movement is in progress but postulates al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied in the next case of Cement Marketing Co. v. State of Mysore[1963] 14 S.T.C. 175; A.I.R. 1963 S.C. 980, 983, 984. In Tata Iron Steel Co. v. Sarkar[1960] 11 S.T.C. 655; A.I.R. 1961 S.C. 65, 72. and in State Trading Corporation v. State of Mysore[1963] 14 S.T.C. 188; A.I.R. 1963 S.C. 548, 549., it was expressed as a movement resulting from a "covenant" or "incident" of the contract of sale. Another judgment of the Court per Venkatarama Ayyar, J., is East India Tobacco Co. v. State of Andhra Pradesh[1962] 13 S.T.C. 529; A.I.R. 1962 S.C. 1733, 1736., where his Lordship quoted the observations of Sastri, C.J., in the First Travancore-Cochin case[1952] 3 S.T.C. 434; [1952] S.C.R. 1112, 1118. , to explain what was the test to determine whether a sale was "in the course of export""The phrase integrated activities' was used in the previous decision to denote that 'such a sale' (i.e., a sale which occasions the export) cannot be dissociated from the export without which it cannot be effectuated, and the sale and the resultant export form parts of a single transaction. It is in that sense that the two activities-the sale and the export-were said to be integrated. A purchase for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al sale to the Government of India, though the purpose or object of the transaction was to export. In support of this contention, the learned counsel relies on the recent decision in Ben Gorm Nilgiri Plantations v. Sales Tax Officer[1952] 3 S.T.C. 434; [1952] S.C.R. 1112, 1118. But, as will be seen just now, neither in this case nor in any of the earlier cases on Article 286(1)(b) has it been said that there cannot be any sale in the course of export except where the seller sells the goods directly to the foreign buyer under a direct contract between them. This is no doubt a most usual instance of such a transaction as would come under Article 286(1)(b), but this is not the exclusive instance. A contract between the seller and the foreign buyer resulting in export was dealt with by the Supreme Court in the First TravancoreCochin case[1952] 3 S.T.C. 434; [1952] S.C.R. 1112, 1118. and it was held that it was an instance of a sale which "occasioned the export": "Such sales must of necessity be put through by transporting the goods by rail or ship or both out of the territory of India, that is to say, by employing the machinery of export. A sale by export thus involves a series of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a transaction which has occasioned the export, may have to be determined on a correct appraisal of all the facts. No single test can be laid as decisive for determining that question. Each case must depend on its facts." It is thus clear that the mere fact that there is no contract between the seller and the foreign buyer does not conclusively establish that a transaction cannot be one "in the course of export". it may still be held to be such transaction provided it is established that the contract between the seller and a third party "occasions" the export. The recent decision in Singareni Collieries v. Commissioner of Commercial Taxes(4), also demonstrates that for the application of the principle "occasions the movement" a direct contract between the seller and purchaser is not necessary. (1) [1952] 3 S.T.C. 434; [1952] S.C.R. 1112, 1118. (2) [1953] 4 S.T.C. 205; [1954] S.C.R. 53, 60. (3) [1964] 15 S.T.C. 753; A.I.R. 1964 S.C. 1752, 1756. (4) [1966] 17 S.T.C. 197; A.I.R. 1966 S.C. 563, 570. Of course, if the instant case was a simple case of purchase by a private exporter for the purpose of export, or a transaction of sale preceding the export sale, as happened in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult of ''the covenant or incident of the sale" and these observations are pertinent in the instant case inasmuch as the sale in that case was the result of permits issued by the Government of Mysore. The permits were issued to purchasers on the terms that though the Cement Marketing Co. in the State was named as the supplier and the purchasers had to place their orders with that company, the supplies were to be made by any of the named factories outside the State. On these facts, the question before the Court was "whether the movement of cement from another State into Mysore was the result of a covenant in the contract of sale or an incident of such contract." It was held by the Supreme Court that, even though the contract entered into by the purchaser and the Cement Marketing Co. did not itself stipulate that the cement was to be supplied from a factory outside the State, under the terms of the permit granted by the Government, it could not be supplied otherwise. Hence, it was as an incident of the contract of sale that the goods moved from outside the State of Mysore into it, so that it was a sale "in the course of" inter-State trade. The following observations of the Court (pp. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee (e.g., page 3 of the supplementary paper book) referred to the programme and also intimated that the goods would be lifted from the docks where they were to be delivered by the assessee by the named ship. The movement of the goods outside India was therefore an incident of the ''sale" by the assessee and could not be dissociated from it. It was in the nature of the transaction that the coal supplied by the assessee must be exported. In this state of affairs, it is idle to contend that there was nothing to prevent the Government to divert the coal for purposes of internal consumption. Such diversion would do violence to the arrangement based on the "shipping programme" and would not be imagined by the Court as a real possibility. No doubt in the Ben Gorm case[1964] 15 S.T.C. 753; A.I.R. 1964 S.C. 1752, 1756. the majority made the following observations on which the learned counsel relies: "There is no statutory obligation upon the purchaser to export the chests of tea purchased by him with the export rights. The export quota merely enables the purchaser to obtain export licence, which he may or may not obtain. There is nothing in law or even in the contract between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndermining the "special export programme", as a part of which the transaction with the assessee was made. From all aspects, therefore, we are satisfied that the "sale" in question in the instant case is an "export sale" or a sale which ''occasions" the export or one "in the course of export ". Question (b) must, therefore, be answered in the affirmative and in favour of the assessee. Dr. Pal, on behalf of the assessee, sought to support this conclusion by an additional argument. He pointed out that in some of the bills submitted by the assessee (e.g., at page 86 of the supplementary paper book), the price quoted was F.O.B. and argued that in view of the decision in Wadeyar v. Daulatram[1960] 11 S.T.C. 757; A.I.R. 1961 S.C. 311. , that a sale under an F.O.B. contract would normally constitute an export sale, it must be held that the instant sale should be so held and exempted under Article 286(1)(b). This aspect of the case, however, does not appear in the statement of the case or in the orders of the tribunals below. We cannot, therefore, go into this point nor is it necessary to do so. Question (c): Section 5(2)(a)(ii) of the Act says: "In this Act the expression 'taxable turn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts as stated in the statement of case, has to be determined: "The Government of India issued directions to the different collieries allotting coal to different railways ...... In accordance with the instructions issued to the dealer, coal was loaded into wagons at the dealer's colliery sheds, i.e., at Bhowrah in Bihar. In the railway receipts the petitioner was shown as the consignor and the B.N. Ry. as the consignee, and some places in West Bengal were noted thereon as destination. There is nothing on record to show that it was the railway which accepted delivery of the coal at Bihar as purchaser and arranged its distribution. On the other hand, they seemed to have been consigning coal to a specific point, i.e., to the Superintendent, Mechanical Workshop, Kharida (West Bengal) ..........'' The facts as stated above prima facie bring the transaction between the consignor and consignee within the purview of the Explanation to section 2(g) as quoted earlier, for, it is as a direct result of the transaction that the goods were actually delivered in West Bengal for consumption there. Dr. Pal, however, contends that there was a delivery to the B.N. Railway, the purchaser, as soon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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