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TMI Blog1968 (2) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... d to sales tax on a gross turnover of Rs. 5,64,631 and a taxable turnover of Rs. 2,92,319 by the Assistant Superintendent of Commercial Taxes, Darbhanga, by his order dated the 25th of October, 1959, a copy of which is annexure A appended to the statement of case. The assessee claimed before the said officer that the sales of goods made to customers in Nepal to the extent of Rs. 1,11,220 should be exempted from assessment of sales tax on the ground that the sales aforesaid took place in the course of export of the goods out of the territory of India. While rejecting the claim of the assessee, the Assistant Superintendent of Commercial Taxes held that since the delivery of goods was taken from the assessee by the Nepal purchasers at Jainagar in Bihar, transport cost to Nepal had been paid for by the customers, and although the customs receipts were in the name of the assessee, the customs duty was paid by the Nepal purchasers, the sale was completed at Jainagar in the State of Bihar and hence the assessee was not entitled to claim any exemption on account of the sales to Nepal purchasers. The assessee went up in appeal to the Deputy Commissioner of Commercial Taxes, Patna; a copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercial Taxes, but the Board ordered no enhancement on this score. 3. The assessee filed an application before the Board under section 25(1) of the Bihar Sales Tax Act, 1947, as the proceeding related to its liability under the said Act. The application for reference was transferred to the Tribunal after its constitution under section 34A of the Bihar Sales Tax Act, 1959, in view of the proviso to sub-section (3) of section 47 of the said Act. The reference accordingly has been made by the Tribunal. 4.. When the reference in the first instance came up for hearing and answer of the question of law referred, before my Lord the Chief Justice and B.N. Jha, J., the correctness of a Bench decision of this Court in Dulichand Hardwari Mull v. State of BiharA.I.R. 1963 Pat. 359; page 255 infra., to which I was a party, was challenged in the light of the observations made by their Lordships of the Supreme Court in Ben Gorm Nilgiri Plantations Co. v. The Sales Tax Officer[1964] 15 S.T.C. 753; A.I.R. 1964 S.C. 1752. and other decisions of the Supreme Court. Hence their Lordships, by their order dated 11th December, 1967, were pleased to refer this case for hearing by a larger Bench. 5.. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of time, the property in the goods passed to the foreign buyers and the sales were completed within the meaning of the Sale of Goods Act, the sale and the resultant export were held to form part of a single transaction, the former occasioning the latter. The meaning of the words used by the learned Chief Justice in the first cashew-nut case[1952] 3 S.T.C. 434. were further clarified and explained in the second cashew-nut case[1953] 4 S.T.C. 205., in which Patanjali Sastri, C.J., stated at page 212 of 4 Sales Tax Cases: "What is exempted under the clause is the sale or purchase of goods taking place in the course of the import of the goods into or export of the goods out of the territory of India. It is obvious that the words 'import into' and 'export out of' in this context do not mean the article or commodity imported or exported. The reference to 'the goods' and to 'the territory of India' make it clear that the words 'export out of' and 'import into' mean the exportation out of the country and importation into the country respectively. The word 'course' etymologically denotes movement from one point to another, and the expression 'in the course of' not only implies a per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of export of goods out of the territory of India, common intention of the parties to the transaction to export the goods followed by actual export of the goods to a foreign destination is necessary. But intention to export and actual exportation are not sufficient to constitute a sale in the course of export, ..... ..... A sale in the course of export predicates a connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted, without a breach of the contract or the compulsion arising from the nature of the transaction. In this sense to constitute a sale in the course of export it may be said that there must be an intention on the part of both the buyer and the seller to export, there must be an obligation to export, and there must be an actual export. The obligation may arise by reason of statute, contract between the parties, or from mutual understanding or agreement between them, or even from the nature of the transaction which links the sale to export. A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a sale for export, but is not nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seller, the sale is not for export, and the two activities-one of sale and the other of actual export-remain disintegrated and dissociated. If a buyer commits the breach of such an obligation to export, it may be that in the absence of proof of actual exportation, in respect of the sale, though it may be complete within the meaning of the Sale of Goods Act by transfer of title and delivery of the goods to the buyer, exemption from imposition of sales tax is not possible. In that view of the matter, the buyer may be liable to the seller for breach of the obligation to compensate for payment of sales tax or the like. That is not a question for determination before us. What, however, is to be emphasised is that all the three elements, namely, (i) common intention of the parties to the transaction to export, (ii) actual exportation and (iii) obligation to export, must exist and be found to bring the case within the exemption of Article 286(1)(b). 8.. As said by Shah, J., at page 760 of 15 Sales Tax Cases"No single test can be laid as decisive for determining that question. Each case must depend upon its facts. But that is not to say that the distinction between transactions which m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the export by sale of the goods purchased to a foreign buyer. The first sale was constitutionally held to be not a sale in the course of the export. No case where under the contract of sale a buyer had bound himself to export the goods cropped up. And, that is the reason that, while discussing the point of obligation to export, largely the connection or the obligation of the seller to export was noticed. But the learned Advocate-General conceded, and, in my opinion, rightly, that such an obligation may be even of the buyer and if such a fact exists along with the other two facts of intention to export and actual exportation, the sale would attract the protection of Article 286(1)(b) of the Constitution from imposition of sales tax. 9.. In view of the clear enunciation of law by the Supreme Court as discussed above, there was practically no dispute between the learned counsel for the parties, as there was no scope for it, in that regard. The dispute, however, centred round the application of the law to the particular facts of the case. The learned Advocate-General also conceded that no wrong principle of law was laid down by the Bench of this Court, which decided the case of Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion the crucial findings in this case are that the credit memos were prepared in the name of the Nepal parties and the goods were actually exported to Nepal in pursuance of the contract of sale between the parties." (underlining* mine). Having said so, the material facts of Dulichand's caseA.I.R. 1963 Pat. 359; page 255 infra. were held to be parallel to those of the Supreme Court case in The State of TravancoreCochin v. Bombay Company Ltd.[1952] 3 S.T.C. 434. and it was further said that the principle of that decision must govern Dulichand's case(2) also. 12.. The facts of the instant case as recorded in the order of the Board on the basis of which the statement of the case has been drawn up by the Sales Tax Tribunal are almost similar to those of the case of Dulichand(2) to the extent they have been discussed by the Bench in its judgment in A.I.R. 1963 Pat. 359 (Dulichand Hardwari Mull v. State of Bihar). Whether the sale was on cash basis by issuance of the cash memo or on credit by issuance of credit memo is of no consequence for the determination of the liability. The common facts of the two cases, however, are that the sale within the meaning of the Sale of Goods Act was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that there must have been a mutual understanding between the parties which bound the Nepal purchaser to export the goods outside the territory of India ; otherwise the Indian dealer would not have sold the goods to him free of sales tax. The argument was quite attractive and had great force to induce us to accept it. But the difficulty is that at no point of time such a case was made out by the assessee before any of the authorities. In the grounds of appeal which was filed before the Deputy Commissioner, it was stated in ground No. 6 that the customs receipts were sufficient to prove and establish that the goods had been exported to Nepal and once it is proved, the sale should be held to be one in the course of export. As I have said above, although the expressions used by Patanjali Sastri, C. J., in the two cashewnut cases enunciated the law in the manner as has been explained, if I may say so with respect, by Shah, J., in the case reported in Ben Gorm Nilgiri Plantations Co. v. The Sales Tax Officer[1964] 15 S.T.C. 753., the common people and some lawyers seem to have remained under the impression, although wrongly, that the last sale to a foreign buyer by an Indian dealer wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t leviable to such transactions as it was the sale to Nepal parties which occasioned the movement of goods to Nepal." On concession of the learned Advocate for the assessee, when the learned Member, Board of Revenue, recorded the facts in his order in revision in the manner, as has been stated above, it is to be noted here that those facts were not challenged by the assessee in his reference application under section 25(1) of the Bihar Sales Tax Act, 1947, except one that the sales were not on cash payment but actually the sales were on credit for which credit memos were issued by the assessee. It was not asserted either that even though the seller had no "further responsibility in regard to the despatch or conveyance or delivery of the goods in Nepal", the buyer had such a responsibility or obligation under the transaction of sale either because of any express talk between the parties at the time of the transaction or impliedly by mutual understanding. Such a case was tried to be made out by filing an affidavit in this Court with certain annexures; but the learned Advocate for the petitioner fairly and rightly conceded that he could not, in law, make use of it. I am, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test can be laid down, as pointed out by their Lordships in the aforesaid Supreme Court case at page 1756: "No single test can be laid as decisive for determining that question. Each case must depend upon its facts. " The expression "one series of acts so connected together as to form the same transaction" is a familiar one in criminal procedure, and occurs in sub-section (1) of section 235, Criminal Procedure Code, and also in section 239(a), Criminal Procedure Code. In The State of Andhra Pradesh v. Cheemalapati Ganeswara RaoA.I.R. 1963 S.C. 1850., their Lordships, while construing the said expression, observed as follows: "But it is generally thought that where there is proximity of time or place or unity of purpose and design or continuity of action in respect of a series of acts, it may be possible to infer that they form part of the same transaction. It is, however, not necessary that every one of these elements should co-exist for a transaction to be regarded as the same. But if several acts committed by a person show a unity of purpose or design that would be a strong circumstance to indicate that those acts form part of the same transaction ..... The series of acts w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced by the words "whether on the facts and in the circumstances of the case". According to Mr. Prasad, such a conclusion is an inference of law. 19.. Assuming without deciding that Mr. Rajeshwari Prasad's contention is correct, the further question for consideration is whether such an irresistible conclusion can be made from the primary facts. The actual terms of the contract of sale between the buyer and the seller are not known. It is true that the terms of the contract of sale may be implied; but, even for that limited purpose, the necessary facts and circumstances are not found on the records, nor were they urged before any of the Sales Tax Authorities, as pointed out by my learned brother. Merely because the purchaser came from Nepal to the border town of Jainagar, (1) [1964] 15 S.T.C. 753; A.I.R. 1964 S.C. 1752 (para. 8). purchased the goods, immediately transported them in his bullock-cart to Nepal, paid the customs duty and obtained customs receipts (bhansar receipts) in the names of the buyer and the seller, and then sent the receipts to the seller, it does not necessarily follow that, when he bought the goods from the seller, there was an obligation to export the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistration certificate No. DR 68. For the period from the 1st of April, 1959, to the 30th of June, 1959, the petitioner was assessed to sales tax by the Superintendent of Sales Tax, Darbhanga Circle, on the 22nd February, 1960. The petitioner claimed before the Superintendent of Sales Tax that the sale of goods made to the customers in Nepal to the extent of Rs. 50,015.55 nP. should be exempted from assessment of sales tax, but the claim of the petitioner was rejected by the Superintendent of Sales Tax. The relevant portion of the order of the Superintendent of Sales Tax reads as follows: "The dealer claimed that the despatches to the extent of Rs. 50,015.55 nP. made to Nepal parties should be allowed in full. It was found that the credit memos were prepared in the name of the Nepal parties. Bhansar receipts were in the name of the selling parties. Bhansar tax (chungi) paid by the selling dealer does not find entry into his accounts. The goods having been sold in Bihar in the Indian Union, prices having been paid either in full or part thereof the title of the goods passed in India in the hands of the purchasers. The delivery of the goods to the purchaser or his representatives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s out of, the territory of India. Explanation.-For the purposes of sub-clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State." In our opinion, the argument put forward on behalf of the petitioner is well founded and must be accepted as correct. Upon the facts found by the Superintendent of Sales Tax it is manifest that the petitioner is entitled to exemption from payment of sales tax with regard to these transactions under the provisions of Article 286(1)(b) of the Constitution. In our opinion, the present case is governed by the principle of law laid down by the Supreme Court in State of Travancore-Cochin v. Bombay Co. Ltd., Alleppey[1952] 3 S.T.C. 434. It was pointed out by the Supreme Court in that case that sales and purchases which themselves occasion the export or import of goods, as the case may be, out of or into the territory of India come with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace that credit memos were prepared by the assessee in the name of the Nepal parties. It has also been found that the customs duty was not paid by the petitioner and transport charges were also not paid by the petitioner, though the customs receipts show that the customs duty was paid by the petitioner. It has also been found by the Superintendent of Sales Tax that "the delivery of the goods to the purchaser or his representative is finalised in India without any conclusive evidence to establish that the dealer continued to be the owner of the goods up to and beyond the time when the goods entered into the export or until after the goods cross the customs barrier to make the sale." It has also been found that the transport of the goods to Nepal took place under the direction of the purchaser. In our opinion, the crucial findings in this case are that the credit memos were prepared in the name of the Nepal parties and the goods were actually exported to Nepal in pursuance of the contract of sale between the parties. It is manifest that the material facts of this case are parallel to those of the Supreme Court decision in State of Travancore-Cochin v. Bombay Co. Ltd., Alleppey[1952 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of bullock-cart over this distance. In our opinion, the delivery of goods to a common carrier is not a material circumstance. The true test is whether the sale and the export involves a series of integrated activities, commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods for transport out of the country by land or sea. In other words, the true test is whether the sale occasions the export, and whether the sale and the resultant export form parts of a single and integrated transaction. As we have already stated, the present case comes within the principle laid down by the Supreme Court in State of Travancore-Cochin v. Bombay Co. Ltd., Alleppey[1952] 3 S.T.C. 434.It follows, therefore, that the petitioner is entitled to exemption from sales tax to the extent of Rs. 50,015.55 nP. claimed by it, being the value of the goods exported by it to Nepal parties. Acting, therefore, in exercise of our authority under Article 227 of the Constitution, we set aside the order of assessment of the Superintendent of Sales Tax dated the 22nd February, 1960, and remand the case to him for making a fresh assessment of sales tax in accordance with law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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