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TMI Blog1980 (11) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commissioner of Sales Tax by his order dated 1st December, 1973. In second appeal the Appellate Tribunal, reversing the decisions of the assessing officer and the first appellate authority, allowed the appeal in so far as it related to the contention of the assessee that the turnover of Rs. 14,67,873.28 was not includible in the taxable turnover of the assessee for that assessment year. It is aggrieved by the decision of the Appellate Tribunal that this revision has been preferred by the Deputy Commissioner of Sales Tax under section 41 of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as the Act). 3.. To appreciate the legal points raised in the revision petition it is necessary to state the nature of the transactions, with respect to which taxability under the Act is in dispute, which are as follows: The customers of the assessee had actual user's licences to import goods (chemicals) from foreign countries. They entered into contracts with the assessee quoting their import licence numbers, quantity of goods required, rate, etc., as agreed to between them by prior correspondence. Letters of authority were also furnished to the assessee to import the goods c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that there was no privity of contract between the foreign suppliers and the assessee's customers. He pointed out that the invoices made by the foreign suppliers were all in the name of the assessee for the sales effected by them; in respect of the sales made by the assessee to its customers, subsequent to the clearing of the goods from the customs, the assessee had issued separate invoices to the customers, collecting Kerala general sales tax on such sales; and there were in the process two sales, one by the foreign supplier to the assessee, and the other by the assessee to its customers. According to him, the import stream came to an end with the assessee taking delivery of the goods, thus culminating in the first sale effected by the foreign supplier to the assessee that occasioned the import; so much so, subsequent sales that the assessee effected to its customers were distinct from the first, not falling within the ambit of section 5(2) of the Central Sales Tax Act, 1956, enabling exemption from the liability to tax. 5.. The line of reasoning adopted by the Government Pleader does not appear to be correct. What really transpired is this: The assessee initially entered into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his revisional powers under section 35 of the Act, disallowed the exemption granted by the assessing officer. 6.. In the course of his argument the Government Pleader made a submission that the ruling given by this Court in Deputy Commissioner v. I.C.I. (India) P. Ltd.[1973] 32 S.T.C. 392. would require reconsideration in the light of the subsequent decision of the Supreme Court in Mod. Serajuddin v. State of Orissa[1975] 36 S.T.C. 136 (S.C.)., the facts of which case are as follows: "The appellant before the Supreme Court entered into two contracts with the State Trading Corporation for the sale of mineral ore and the corporation in its turn entered into similar contracts with foreign buyers for sale of the identical goods purchased by the corporation from the appellant. Under the terms of the contract between the appellant and the corporation the price was expressed in U.S. dollars per long ton, f.o.b. ocean liner vessel, Calcutta, and the material should be ready in Calcutta harbour for shipment by a particular steamer. The final sampling and moisture determination and the final ascertainment of weight should be done at the port of discharge by certain named persons and thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing contentions in support of his claim: The appellant had entered into negotiations with foreign purchasers and settled all the conditions of the contract and thereafter the corporation entered into an f.o.b. contract with the appellant and with the foreign buyer on identical terms. All the necessary steps including the payment of customs duty for shipment and export had been done by the appellant. Therefore the sale by the appellant to the corporation and the export by the corporation to the foreign buyer constituted one integrated transaction. Second, the export could not be made except by the corporation which could not have diverted the goods to a buyer in India without violating export and import control order. Therefore, the sale was in the course of export. Third, there was no sale in the taxable territory inasmuch as the contract between the appellant and the corporation being on f.o.b. basis, the property in the goods passed only on shipment when the goods were in the stream of export. Fourth, even if it was held that the appellant did not have any contract with the foreign buyer and that privity was essential the rigid rule of privity of contract should be relaxed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip between the appellant and the corporation was between two principals and there was no aspect whatever of principal and agent; (iii) that the mention of the f.o.b. price in the contracts between the appellant and the corporation did not render the contracts f.o.b. contracts with the foreign buyer. The shipment of the goods by the corporation to the foreign buyer was the f.o.b. contract to which the appellant was not a party. The directions given by the corporation to the appellant to place the goods on board the ship were pursuant to the contract of sale between the appellant and the corporation. These directions were not in the course of export, because the export sale was an independent one between the corporation and the foreign buyer. The taking of the goods from the appellant's place to the ship was completely separate from the transit pursuant to the export sale; (iv) that the fact that the exports could be made only through the State Trading Corporation did not have the effect of making the appellant the exporter where there was direct contract between the corporation and the foreign buyer. Restriction on export that export could be made only through the State Trading Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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