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TMI Blog1982 (3) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... e might be regarded as having taken place in the course of export. Where the STC has the monopoly of export-where it "canalises" the export, as it is some times called-then, by definition, the sale by the local dealer could hardly be regarded as the sale which, by its own force, occasions the export. On the contrary, what occasions the export, in such cases, is the subsequent transaction of sale by the STC to the foreign buyer. The relationship between the local dealer and the STC is one between principal and principal; even as the relationship between the STC and the foreign buyer is as between principal and principal. Hence it is that two successive transactions of sale are discernible in this mode of carrying on export trade. The first one is liable to sales tax as a local sale; and the subsequent one exempt from sales tax as a sale in the course of export. This, broadly, is the principle laid down by the Supreme Court in Serajuddin's case [1975] 36 STC 136 (SC). This is being applied in similar cases for some time now. The Supreme Court's decision, however, indicated that different considerations might prevail in a case where the actual exporter of goods only acted as the age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of export within the meaning of section 5 of the Central Sales Tax Act, 1956. The factual basis for the assessee's claim is not in doubt. As long ago as the stage of pre-assessment notice, the assessee formulated the facts as under: "In the second case, the assessees call these transactions 'done, for the quotaholders'. There is neither any sale nor any transfer of property between these assessees and the quota-holders. The latter pass on the word by phone that they have a quota for export, and the assessees attend to the rest of it all. They pack the goods, and send them to the harbour, pay the harbour dues, and all other dues payable at the point of export, are paid by them. Insurance in transit is covered by the foreign buyer. Goods are consigned by the assessees in the name of the quota-holders as consignor, and the foreign buyers as consignees. Bills of lading are taken accordingly, and these are endorsed by the titular quota-holders in favour of these assessees and they are presented by the assessees to the banks where the letters of credit are opened by the foreign buyers. The amounts are forthwith credited by the banks to the account of these assessees resulting in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act as agent of the quota-holders because the goods did not belong to them. What the assessee did was to use or misuse, other persons' export licences. In doing so, however, the assessee could not avoid the initial local sale to the STC. In other words, there were local sales of goods in both kinds of transactions, whether the quota licences happened to be in the assessee's own name or in the names of the other quotaholders. The result is that section 5 of the Central Sales Tax Act could not be applied even with respect to the latter transactions. The learned counsel for the assessee raised an alternative contention. He submitted that the transactions in question must be exempted from sales tax as sales effected by way of transfer of documents of title while the goods were on the high seas. Support for this contention was sought by the learned counsel from the fact that the bills of lading were endorsed by the quota-holders in favour of the assessee, and, as transferee of the bills of lading, the assessee presented the documents to the banks in which letters of credit had been opened by the foreign buyers. This fact, it was thought, brings the transactions under the second limb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transfer by way of endorsement on the bills of lading must be by the owner of the goods, and the endorsement by him must be meant by him as a transfer of title to the goods to the endorsee. An endorsement which merely enables the endorsee to collect certain moneys without making him the owner of the goods does not come within the contemplation of the section. So far as the quota-holders' endorsement in favour of the assessee is concerned, it would be strange to regard it as a transfer of title to the goods, when it is not the intention that thereby the assessee who had originally transferred the title to the goods must get the goods back by way of a retransfer by endorsement on the shipping documents. Looked at in every way, the argument addressed by learned counsel on the basis of the second limb of section 5(1) is far-fetched. We may make a general observation as to the applicability of the second limb of section 5(1) having regard to the normal trend of export operations. We think that the section is practically unnecessary for export operations covered by that limb. Import operations may be different, and transfers of documents of title to goods under import may present a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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