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TMI Blog1969 (10) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions effected on 7th July, 1955, prior to 6th June, 1955, when the Sales Tax Laws Validation Act of 1956 was in force; and (2) a turnover of Rs. 23,631-4-0 which relates to transactions held on 22nd February, 1956. The contention of the assessee in regard to the first item of Rs. 16,672-2-0 was that although the transactions covering that return fall within the period regarding which the validating law can be said to operate, even then as the explanation to article 286(1)(a) applies to those transactions the sales tax authorities were wrong in refusing exemption of the tax on those transactions. It is not in doubt that the collection of tax on inter-State sales was validated by the Sales Tax Laws Validation Act, 1956, with respect to the period from 1st April, 1951, to 6th September, 1955. The only effect of the Validation Ordinance or Act was to save from the ban imposed by clause (2) of article 286 those sales which came within the purview of explanation to clause (1)(a) and not any sales outside the explanation. It is obvious therefore that the Validation Act, 1956, merely lifted the ban imposed by clause (2) and not by clause (1)(a) read with the explanation. See State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property in the goods by such sale or purchase has passed within its territory. It will thus be seen that the explanation is an explanation of what is meant by the expression "outside the State" in clause (1)(a). But this is done not directly but in an indirect manner. The scope of what is "outside the State " is indicated by stating what is deemed to be inside the State. Whatever is not deemed to be inside the State according to this explanation would be "outside the State" for the purpose of clause (1)(a). If after the application of the foregoing tests, a sale is found to be inside one State, no other State could tax such sale, and in such a case, it is immaterial whether the property in the goods has, under the general law, passed in another State. The explanation in short introduced a fictional situs of the sale in place of its actual situs. In the Bengal Immunity case', it was laid down that the only purpose of the explanation was to explain what an outside sale is, and once a transaction becomes an outside sale within the meaning of the explanation, a State outside which such sale takes place according to the explanation is debarred from taxing the sale by reason of clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds "for the purpose of consumption" cannot be dissociated from the word "delivery". In that context, much significance to the prima facie presumption raised under section 39 cannot be attached; and even if it constitutes a notional delivery, the explanation is not concerned with any such notional delivery but is only concerned with the actual delivery. Now, it is true that the mode of actual delivery may vary from case to case and no hard and fast rule can be laid down to suggest as to in what circumstances actual delivery would be deemed to have taken place. What has, however, to be found out in each case is whether the property has been placed in the actual custody or possession of the purchaser. Mere handing over of documents such as railway receipts would not, unless something more is done, constitute actual delivery. In Bajarang Jute Mills Ltd. v. State of Andhra Pradesh [1964] 15 S.T.C. 430., the Supreme Court said: "To attract the explanation, the goods had to be actually delivered as a direct result of the sale, for the purpose of consumption in the State in which they were delivered. It is not disputed that the goods were supplied for the purpose of consumption outside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x[1967] 19 S.T.C. 366. has to be understood keeping in view the facts of that case. Their Lordships dealt extensively with the clauses of the contract. It is only on an appreciation of the entire nature of the transactions and the contract that it was held that while the major part of the operations of the contract with regard to delivery were to be performed at Dhamtari, the seller was not relieved of all liability as to delivery until the goods were finally accepted at the destination by the consignee. The place of actual delivery in the light of the circumstances of the case was held to be the place of destination of the goods and it was found that the goods can only be said to be fully delivered and finally accepted after they were acknowledged at the destination by the Sleeper Control Officer. That case therefore does not decide anything contrary to the above-said two cases. C.P. Timber Works v. Commissioner of Sales Tax [1967] 20 S.T.C. 335. has again to be understood in the light of the facts of that case. It is not necessary to detail the facts. They clearly appear from the judgment. It is, however, sufficient to note that the Inspecting Authority in that case after inspe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to reject the goods if not approved, even then it was held that the actual delivery in the context of the facts and circumstances of the case took place at Mandla Fort and not at the other end. It is clear that inspection and approval of the goods may not be decisive of the fact as to where actual delivery has taken place because in Bengal Timber Trading Co. Ltd. v. Commissioner of Sales Tax[1967] 19 S.T.C. 366., clause 11(f) had provided that on arrival at destination, the consignee shall check the number of sleepers and report on any shortage or the receipt of defective sleepers. But clause 3(a) had stated that the prices named in the schedule shall cover till the sleepers are delivered and finally accepted under the terms of the contract. In that case, relying also upon the terms of inspection it was held that the place of actual delivery in the light of the circumstances of the case can only be the destination of the goods. From the above-said decisions, it would be clear that for the purposes of constituting actual delivery mere handing over of endorsed railway receipts or merely because the railway receipts are made f.o.r. Kakinada, by themselves cannot constitute actual d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the words "for the purpose of consumption" while trying to find out as to where actual delivery of the goods had taken place. That is quite proper because the words "actual delivery" as stated earlier are qualified by the words "for the purpose of consumption." For the aforesaid reasons, we are satisfied that in the transactions relating to this disputed turnover, actual delivery had not taken place within the territory of Andhra Pradesh but it took place only at the destination State where the goods were intended to be consumed. The case thus squarely falls within the ambit of the explanation and this State has no jurisdiction to tax those transactions. In regard to the other item of Rs. 23,631-4-0 the principle underlying section 3(b) of the Central Sales Tax Act is applicable. That provision says: "A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase............... (b) is effected by a transfer of documents of title to the goods during their movement from one State to another." In this case, in so far as the transactions covered by this turnover are concerned, they were effected by endorsement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale and the export-were said to be integrated." Thus to constitute a sale in the course of export, 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 actual export. The obligation, however, may arise by reason of statute or contract between the parties. Every transaction of sale, the goods involved in which ultimately find their way to foreign country, is not necessarily a sale in the course of export. A transaction of sale which is preliminary to export may be regarded as a sale for export. To occasion export there must exist a bond between the contract of sale and the actual exportation, and that each link should be inextricably connected with the one immediately preceding it. Without such a bond, a transaction of sale cannot be called a sale in the course of export of goods out of the territory of India. Merely because the goods have ultimately been exported by the purchasers or at the time of the sale the seller had the knowledge that the purchaser is purchasing it for the purpose of export or the seller even helps him in some way or the other in exporting the goods, that does not necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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