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TMI Blog1973 (8) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into dated 13th August, 1964, between the Mysore Iron and Steel Ltd., Bhadravati, and M/s. Inden Biselers "for the sale of ferro-silicon produced by the sellers for export to countries abroad and purchase by the buyers". The contention of the sellers was that the sales were in the course of export and, therefore, the turnovers were exempt from tax. 4.. The Assistant Commissioner of Commercial Taxes rejected the contention and brought to tax the turnover in this behalf and his action was upheld by the Deputy Commissioner of Commercial Taxes on appeals. 5.. The further appeals to the Appellate Tribunal also did not meet with success. It held that the sales could not be treated as in the course of export though they could be said to be for purposes of export or for export. It referred to the several clauses in the agreement in this behalf. It noticed, inter alia, that the price stipulated was "f.o.r. loading station, Bhadravati" and the title to the goods would pass to the buyers on their being loaded into the wagons at Bhadravati. Clause 17 of the agreement was as follows: "17. In consideration of the buyers building the export markets for ferro-silicon of the sellers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the buyers. On these circumstances, it was urged that the movement of the goods from Bhadravati to Madras Harbour was a part of the onward journey in the course of export and which occasioned the export. But the Tribunal did not accept this contention. It pointed out that the sellers themselves did not participate in the export undertaken by the buyers and these were not cases where an agent of a foreign buyer entered into an agreement with the sellers and there was no link between the foreign buyers and the sellers and the buyers in these cases intervened between the foreign buyers and the sellers and became an intermediary having independent dealings with the sellers and the foreign buyers thus removing the link between the importer and the sellers. It held that the link was between the buyers and the foreign buyers and there was no link in the chain of export between the sellers and the foreign buyers. The Tribunal pointed out that in the case of the Coffee Board[1970] 25 S.T.C. 528 (S.C.)., the compulsion to export was more than in the cases on hand and if the coffee was not exported such quantities could be seized while there was no such prohibition from not exporting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent, the reasoning in the order of the Tribunal is relied upon and it is contended that in the light of the principles enunciated in the Coffee Board's case[1970] 25 S.T.C. 528 (S.C.)., the conclusion reached is correct. 7.. The argument of the learned counsel based on the terms in the addendum, referred to above, can be of no avail and cannot be accepted. Merely because the parties to the contract agree that the sales are in the course of export and, therefore, the sales tax was not going to be collected, the sale cannot be treated as one in the course of export. The sales must come within the purview of sales in the course of export under law. 8.. The case dealt with in State of Bihar v. Tata Engineering and Locomotive Co. Ltd.[1971] 27 S.T.C. 127 (S.C.). arose under the Bihar Sales Tax Act and the question for consideration was whether the sales were inter-State sales and, therefore, exempt from sales tax under that Act. In such inter-State sales, the turnover is exempt from sales tax in the State from which the goods are moved, but would be exigible to tax in the State of destination. In the case of sales in the course of export, the sales are totally exempt and immune ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the extent of territoiral waters of India was relied upon and it was held that the sales had taken place after ships carrying the goods had crossed the territorial waters and, therefore, were not exempt. This implies that the course of import stops as soon as the limit of territorial waters is crossed. The course of export or import is thus a restricted one. 11.. In State of Bihar v. Tata Engineering and Locomotive Co. Ltd.[1971] 27 S.T.C. 127 (S.C.)., the decision of the Coffee Board's case(1) was explained thus at page 150: "In the Coffee Board's case(1), this court found that what was insisted on by the Coffee Board was that the coffee set apart for the purpose of export must be exported; it was not incumbent on the purchasers at the auction to export that coffee themselves; they may do it themselves or they may sell it to somebody who may export it outside India. On that basis this court came to the conclusion that the sales effected by the Coffee Board are not sales in the course of export; they are only sales for the purpose of export............." In our opinion, no support can be found from this decision for the contention urged for the petitioner. 12.. The tests la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not essentially different from the first. In either case there is a seller and a buyer who by reason of the sale also become exporter and importer respectively. Any other buyer who is not himself the importer buys for export even if export ultimately results. It is to bring out these results that Parliament has recognised only two cases of sale in the course of import: (a) where the sale is effected by a transfer of documents of title to goods after the goods have crossed the customs frontiers, that is to say, the goods are already on the way to the importer and (b) when the sale itself causes the export to take place, that is to say, the exporter and importer negotiate and complete a (1) [1970] 25 S.T.C. 528 (S.C.). sale which without more would result in the export of the goods. No other sale can qualify for the exemption under section 5(1) read with article 286(1)(b)." At page 543 of the Reports it was observed: "One of the indicia of a sale in the course of export is the compulsion to export because the sale which is protected must be Itself inextricably bound up with the export. If this were not so a chain of sales each making a mere condition for terminal export, will ..... X X X X Extracts X X X X X X X X Extracts X X X X
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