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TMI Blog1970 (11) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... letter as well as from the statement of the case we find that the linseed oil purchased by Netherland Selling Organisation Ltd. was to be exported under export licences which the applicant had held. The letter also shows that the goods would bear various "shipment marks" stating, inter alia, different places in Indonesia as their destination. In terms of this agreement, it is stated, the goods were to be put on board the ship arranged by the purchasers. The bills of lading were in the name of the purchasers as shippers of the goods. The sales aforesaid were to the extent of Rs. 16,200.10. Before the Commercial Tax Officer the dealers claimed exemption under section 5(2)(a)(v) of the Act. According to these provisions a dealer's "taxable turnover" is to be determined after deducting therefrom his turnover during the relevant period on, inter alia, sales of goods in the course of export of the goods out of the territory of India within the meaning of section 5 of the Central Sales Tax Act, 1956. In the instant reference, however, we are not concerned with section 5 of the Central Sales Tax Act but with article 286(1) of the Constitution. It provides, inter alia, that no law of a S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ean on board' mate's receipt along with the relative G.R. 1 forms in triplicate. It will appear that the bill of lading was made out, not in the name of the petitioner but in the name of the purchaser In acceptance of the terms of this letter, the sale was evidently made. The circumstances fit in more with a case of sale before the goods entered the export stream. The sale does not appear to be one which occasioned export; it was a sale for the purpose of export." The Board has referred to this court the following question: "Whether in the facts and circumstances of the case the sale of linseed oil amounting to Rs. 16,200.10 is exempt from sales tax under article 286(1)(b) of the Constitution?" In construing the expression "in the course of export of the goods out of the territory of India" in article 286(1) of the Constitution we may, to start with, refer to the amendments to this article that were introduced by the Constitution (Sixth Amendment) Act, 1956, which came into force on the 11th September, 1956. Sub-article (2) of article 286 was one of the amendments introduced and it said: "Parliament may by law formulate principles for determining when a sale or purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also no evidence, according to him, of any integrated activity between the sale and the export inasmuch as the applicant did not prove that the goods had crossed the customs frontiers of India. Mr. Sen Gupta relied on several decisions in support of his contention aforesaid. In Sales Tax Officer, Jodhpur v. Messrs Shiv Ratan G. Mohatta[1965] 16 S.T.C. 599 (S.C.); A.I.R. 1966 S.C. 142. , it was held that when an assessee claimed exemption under article 286(1)(b), the burden of proving the facts was on him. This proposition is undisputed. Reliance was placed on the Supreme Court judgments in B.K. Wadeyar v. Messrs Daulatram Rameshwarlal[1960] 11 S.T.C. 757 (S.C.). and The State of Madras v. Davar Co.[1969] 24 S.T.C. 481 (S.C.). Both these cases were on the second limb of the amended sub-section (1) of section 5 of the Central Sales Tax Act and their Lordships of the Supreme Court were principally concerned with what was meant by crossing the customs frontiers of India. As the applicant in this reference is not relying on the second limb these authorities would not help us to answer the question referred. Mr. Sen Gupta also invited us to consider the cases of Burmah Shell Oil Sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y other foreign country. The buyer was under an obligation under condition No. 29 to produce evidence of the export. The buyer had to pay a penalty under condition No. 30 if within the specified period or any extended period it failed or neglected to export as required. And under condition No. 31 the unexported coffee could be seized and dealt with by the Board. The Supreme Court was of the view that the sales effected by the Coffee Board were not sales in the course of export as those sales did not occasion the export of goods. The reason was that there were two independent sales involved in the export programme. The first was the sale by the Coffee Board as seller to the export-promoter. Then there was a sale by the export-promoter to a foreign buyer. Of the latter sale, the Supreme Court said, the Coffee Board did not have any inkling when the first sale took place. In other words, the Coffee Board sale was not in any way related to the second sale. Therefore, the first sale, according to the Supreme Court, had no connection with the second sale which was in the course of export, that is to say, the movement of goods between an exporter and an importer. When we pointed out to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the activity of sale; (c) where the export is a direct result of the sale; and (d) where the export and the sale constitute parts of an integrated activity. In our case in the second paragraph of the statement of the case we are told that the Netherland Selling Organisation Ltd. had entered into an agreement with the applicant-dealers for purchase of linseed oil on f.o.b. Calcutta terms. We have, therefore, to examine the features or incidents of a f.o.b. contract and then decide whether the sale and the export in the instant case constituted an interlinked or integrated activity. In Mulla's Sale of Goods Act, third edition, at pages 167 to 168, all the relevant English and Indian authorities on f.o.b. contracts have been summarised and the observations made are as follows: "This is a contract for the sale of goods to be delivered free on board a ship. The buyer must name a ship upon which they are to be delivered and the seller must put them safely on board, meet the cost of doing so, and for the buyer's protection give possession of them to the ship only upon the terms of a reasonable and ordinary bill of lading or other contract of carriage; there the contractual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presenting to the proper officer in the case of goods to be exported in a vessel..........a shipping bill.....in the prescribed form. (2) The exporter of any goods, while presenting a shipping bill....., shall at the foot thereof make and subscribe to a declaration as to the truth of its contents. 51.. Clearance of goods for exportation.-Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation." These provisions clearly show that the seller in the instant reference after payment of customs duty and Port Commissioners' charges had obtained the customs clearance for exportation before the goods were loaded on the vessel. And the contract between the parties stipulates that payment would be made to the seller only against the presentation of 'clean on board" mate's receipt along with the relative G.R. 1 forms in triplicate. It appears that the property in the goods, on the terms of this contract, passed to the buyer upon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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