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TMI Blog1982 (4) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... red into contract with State Trading Corporation which had entered into contracts with foreign buyers for sale of identical goods purchased by the Corporation from the appellant. The Supreme Court, amongst others, made the following observations: ".............. The various decisions to which reference has been made illustrate the ascertainment of the pre-eminent question as to which is the sale or purchase which occasions the export..............The features which point with unerring accuracy to the contract between the appellant and the Corporation on the one hand and the contract between the Corporation and the foreign buyer on the other as two separate and independent contracts of sale................are these. The Corporation entered on the scene and entered into a direct contract with foreign buyer to export the goods. The Corporation alone agreed to sell the goods to the foreign buyer. The Corporation was the exporter of the goods. There was no privity of contract between the appellant and the foreign buyer. The privity of contract is between the Corporation and the foreign buyer. The immediate cause of the movement of goods and export was the contract between the foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of export. It was held to be a local sale attracting liability to tax under the U.P. Act. The facts noticed by the Division Bench in Nihal Shoe Factory's case [1976] 37 STC 154; 1976 UPTC 45 were that a preliminary inspection of the shoes was to be made in India and the final by the foreign buyers at the destination when the shipment arrived there. Shoes found to be of sub-standard quality or not conforming with the guarantee were to be rejected and the foreign buyers could claim refund of the price in respect of such shoes as also all incidental expenses. The damages so claimed as also the expenses were to be borne by Nihal Shoe Factory which was to export the consignment of shoes directly to the foreign buyers. It was to receive payment from the Kendra of the price payable by the foreign buyers at the destination minus override commission and the expenses of the Kendra which had been described as the agent entitled only to charge such commission. A large number of authorities were cited before the Bench in support of the view that, in fact, there was only one integrated sale as a result of which goods were exported from India to foreign countries and it was urged that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to be resolved in consultation with him. Where such resolution did not take place and the matter had to be decided by arbitration or court, the expenses were to be borne by the applicant which was also bound by the decision. The applicant was entitled to avail of all import benefits which were available to the State Trading Corporation under any scheme of the Government which may be enforced from time to time. The plea raised is that the two documents, namely, the one between the foreign buyers and the State Trading Corporation and the other between the latter and the applicant constituted one transaction. The contract between the applicant and the State Trading Corporation was not one of sale nor was the applicant a dealer making any sale qua the State Trading Corporation. It was nothing more than an entrustment of obligation by the State Trading Corporation to the applicant for fulfilment of the export order. In the case of Serajuddin [1975] 36 STC 136 (SC); AIR 1975 SC 1564, says the counsel, there was a contract of sale between the Corporation and Serajuddin as was evident from the terms of the agreement between them, of which a copy has been brought on the record of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1979 UPTC 809 was not attracted at all on the facts of the present case. He relies also on the decision rendered by this Court in Commissioner of Sales Tax v. Ganeshi Lal and Sons [1982] 49 STC 253; 1981 ATJ 38. In that case this Court ruled that before a sale could be held to be in the course of export, there should be a sale, goods must actually be exported and the sale must be one which occasions the export. Further, where there was no link between the agreement to sell and the export, the sale could not be treated to be the one in the course of export. The standing counsel also referred to the decisions of Supreme Court in Endupuri Narasimham and Son v. State of Orissa [1961] 12 STC 282 (SC) and in Himatsingka Timber Co. Ltd. v. State of Orissa [1966] 18 STC 235 (SC), wherein the principle laid down was that purchases made inside the State by a dealer to carry out obligations to constituents outside the State could not qualify for exemption from tax on the ground that they had been made in the course of inter-State trade. On the terms of the contract between the State Trading Corporation and the applicant properly understood, it is clear that though the applicant was entruste ..... X X X X Extracts X X X X X X X X Extracts X X X X
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