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TMI Blog1977 (9) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... ravancore-Cochin v. Bombay Company Ltd.[1952] 3 S.T.C. 434 (S.C.); [1952] S.C.R. 1112. and State of TravancoreCochin v. Shanmugha Vilas Cashew-nut Factory[1953] 4 S.T.C. 205 (S.C.); [1954] S.C.R. 53., that there could be a sale in the course of export even when there are more than one sale involved, which occasions the export of the goods. All that was required was that the sales must be so linked or so inextricably connected with each other to form a single transaction which causes the export and which causes the movement of the goods to make the sale in the course of export. Reference has been made to the property passing in the goods by transfer of documents of title to determine whether the sale was in the course of export or not. All this has become ancient history now for we are now governed by the section which we have extracted notwithstanding the observations in a number of decisions of the Supreme Court, most of which had been noticed recently by the Supreme Court in the decision in Mod. Serajuddin v. State of Orissa[1975] 36 S.T.C. 136 at 149 (S.C.)., wherein the assessee had sold mineral ore to the State Trading Corporation and the State Trading Corporation had exported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the foreign buyer. The immediate cause of the movement of goods and export was the contract between the foreign buyer who was the importer and the Corporation who was the exporter and shipper of the goods. All relevant documents were in the name of the Corporation whose contract of sale was the occasion of the export. The expression 'occasions' in section 5 of the Act means the immediate and direct cause. But for the contract between the Corporation and the foreign buyer, there was no occasion for export. Therefore, the export was occasioned by the contract of sale between the Corporation and the foreign buyer and not by the contract of sale between the Corporation and the appellant." It is clear from the above passage that the Supreme Court has considered that the sale by the assessee to the State Trading Corporation was a distinct and separate sale which had no link or connection with the export effected by the State Trading Corporation. The facts of this case as stated in paragraphs 2 and 3 of the order of the Tribunal are as follows: "...The appellant Tvl. Chillies Export House Ltd., is a private limited company, while the other two appellants are partnership firms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Every agreement for sale between the appellants and the local buyer refers to the "commitment" which the local buyer had under an agreement for supply of chillies to the foreign importer. The presence of such a preexisting contract is not disputed by the authorities. For example, the Appellate Assistant Commissioner in Appeal No. 295/72 dated 16th September, 1972, has reproduced this fact in the history of the case without any comment. It is clear that the local buyer was getting 1 per cent of the invoice price in respect of contracts for assessment years 1969-70 and 1970-71. For assessment year 1971-72, the contract does not mention the rate of commission as the price for the year was not inclusive of commission as in earlier years. But it is stated on behalf of the appellants that it was about 2 per cent. It appears that the Government of India wished to regulate the export of chillies through its own channels to avoid cut-throat competition among the Indian exporters and at the same time assure the quality of the export to the satisfaction of the Ceylon Government, which was managing the foreign importer. The preamble to each contract clearly states that the contract between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim was also subject to arbitration as provided in the agreement between the local buyer and the foreign importer. Otherwise, the agreement was subject to interpretation and arbitration of the Chairman of the local buyer. This is the summary of the provisions in the various contracts between the appellants and the local buyer. Apart from the above contracts, the appellants have filed before us a copy of the statements of sales showing the various details of invoice numbers, bill of lading number, date of despatch of documents, copies of accounts in its books, etc. Invoice is invariably made out in the name of the foreign importer for alleged sale made "through" the local buyer. Bill of lading shows the local buyer as the exporter, and the foreign importer as consignee. Agmark certificate and certificate of weight are in favour of the appellants. Both these certificates show that they refer to exports from Tuticorin. Shipping agent's bill shows that the bill is in the name of the appellants and that all the expenses have been listed in respect of the charges incurred by the shipping agent. The appellants also produced before us copies of export applications made by the shipping age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (1) of section 5. Therefore, we should not go into this question in the revisions before us. Considering the large interests involved, we would have been inclined to have the matter investigated if on the rulings of the Supreme Court, there was a plausible case to be urged by the assessee before the Tribunal or before any lower authority to whom the case may be remitted. We say so by reason of that part of the judgment that we have already extracted from the decision in Mod. Serajuddin v. State of Orissa[1975] 36 S.T.C. 136 (S.C.). and by virtue of what has been stated in the head-note of the decision in Coffee Board v. Joint Commercial Tax Officer[1970] 25 S.T.C. 528 (S.C.); [1970] 3 S.C.R. 147., in these terms, which correctly summarises the point decided in the case: "..... The word 'course' in the expression 'in the course of' means 'progress or process of', or shortly 'during'. The phrase expanded with this meaning reads 'in the progress or process of export' or 'during export'. Therefore, the export from India to a foreign destination must be established and the sale must be a link in the same export for which the sale is held. To establish export a person expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course for export, unless the sale occasions export. And to occasion export there must exist such a bond between the contract of sale and the actual exportation, that each link is 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 (see Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer, Special Circle, Ernakulam[1964] 15 S.T.C. 753 (S.C.); [1964] 7 S.C.R. 706.). The appellants in that case were carrying on the business of growing and manufacturing tea in their estates. They sold tea to the local agents of the foreign buyers. The sales were by public auction at Fort Cochin, through brokers in accordance with the provisions of the Tea Act, 1953. The purchases by the local agents of the foreign buyers were with a view to export the goods to their principals abroad and the goods were in fact exported out of India. It was held that the sales by the appellants to the agents of the foreign buyers did not come within the purview of article 286(1)(b) of the Constitution. Dealing with the contention that the sellers had knowledge that the goods purch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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