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TMI Blog1973 (7) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... magal Mills, case[1967] 20 S.T.C. 287. , that the canteen sales are not in the course of the assessee's business of running the cotton mills and, therefore, they are not liable to be taxed. But subsequent to the decision of the Tribunal, the Supreme Court in State of Tamil Nadu v. Burmah Shell Co. Ltd.[1973] 31 S.T.C. 426 (S.C.).had held that the principle of the decision in Thirumagal Mills' case(1) will not apply to transactions after the amendment of the definition of "business" in section 2(d) in 1964 and that after the amendment the transactions of sale which are incidental and ancillary to the assessee's trade or commerce can be brought to charge even if there was no profit-motive. In view of the said decision of the Supreme Court, the canteen sales covered by the first item should be held to be taxable. As regards the second item, the assessee's claim was that the sales covered by that item were sales in the course of export and as such exempt from tax. But the assessing authority as well as the Appellate Assistant Commissioner held that the transactions were intra-State sales and as such liable to tax. The Tribunal, however, held that the turnover in question represented sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es or sales which occasioned the export. A Division Bench of this Court held that the actual export was by the federation, that the local dealer (assessee) had nothing to do with the export, that a stipulation in the contract between the local dealer and the federation that the assessee should put the goods on board the ship was only to fulfil the terms of the export sale between the federation and the foreign importer and that will not make the sale between the local dealer and the federation an export sale or a sale which has occasioned the export. It is the contention of the revenue that the said decision squarely applies to the facts of this case. But we find that the facts in this case are not on all fours with the facts in the said case. In that case, the federation had entered into contracts with the foreign importer for the supply of dried chillies and thereafter it entered into contracts with various local buyers for the purpose of export. Further, the contract between the local dealer and the federation provided specifically that the goods should be exported by the local dealers for and on behalf of the federation. It is in view of these facts the court took the view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ceylon importers, the actual exportation of the goods by the assessee was in pursuance of its contracts of sale which would be incomplete without the export. In Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer[1964] 15 S.T.C. 753 (S.C.)., the Supreme Court held that 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, that 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 an actual export, and that the obligation to export may arise by reason of statute, contract between the parties or from mutual understanding or agreement between them or even from the nature of transaction which links the sale to export. The Supreme Court also observed that to occasion an export there must exist such a bond between the contract of sale and the actual exportation, that such link is to be inextricably connected with the one i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court by a Full Bench of the Allahabad High Court: (1) In order that a sale may qualify for exemption under article 286(1)(b) of the Constitution as being a sale in the course of export, the sale must occasion the export. In other words, the exportation of the goods must be a part of the contract of sale or must be a necessary incidence thereof. (2) A sale can be said to occasion an export only (a) if there is a common intention of both the seller and the buyer to export, (b) there is an obligation to export and (c) there is an actual export. (3) The obligation to export may arise from statute, from contract or from the nature of the transaction. In other words, the obligation may be implicit or explicit. (4) The bond between the sale and the export should be such as cannot be broken without a breach of the obligation. In Coffee Board v. Joint Commercial Tax Officer[1970] 25 S.T.C. 528 (S.C.). , the Supreme Court reiterated its decision in Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer[1964] 15 S.T.C. 753 (S.C.). In this case, the Supreme Court observed: "The phrase 'sale in the course of export' comprises in itself three essentials: (i) that there must be a sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 5(2)(a)(v) exempt from liability to sales tax under the Bengal Finance (Sales Tax) Act, for it was a sale in the course of export." In National Tractors v. Commissioner of Commercial Taxes[1971] 27 S.T.C. 271 (S.C.)., a dealer purchased iron ore from mine-owners and sold it to the State Trading Corporation for export on f.o.b. basis. Under the agreement between the dealer and the corporation the ore was to be transported by rail or to be loaded into ships for transportation to foreign countries. All expenses for transportation up to the stage of loading into the ships were to be borne by the dealer. But in all the documents the ore was shown as consigned by the corporation to Itself. The wagons were also arranged by the corporation. All the shipping documents including the export licence were made out in the name of the corporation. The question arose as to whether the sale by the dealer to the corporation was in the course of export. On these facts, the Supreme Court held that in f.o.b. contracts the normal presumption is that the property in the goods passes when they are put on board the ship, unless of course, special circumstances pointing to the passing of property at som ..... X X X X Extracts X X X X X X X X Extracts X X X X
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